As Jacobs continues to re-define their portfolio and capabilities, we felt they deserved a follow-up assessment to keep our readers informed on who Jacobs is and where you may see them compete in the future. We wrote a blog on Jacobs in December 2018 where we first explored their shifting portfolio, and the company’s continued focus on this shift has resulted in a few immediate, and interesting, successes.
New brand, new company
Figure 1 – Out with the old, in with the new
Jacobs has introduced a new brand to reflect their shift from an engineering and construction company to a technology solutions company. They are also planning to change their name from “Jacobs Engineering Group” to “Jacobs Solutions” to drive their new identity and have re-named their lines of business.
Previously, Jacobs operated under their Aerospace, Technology, and Nuclear (ATN) and Buildings, Infrastructure, and Advanced Facilities (BIAF) lines of business. They have re-named these units as Critical Mission Solutions (CMS) and People & Places Solutions (PPS), respectively. These new business lines emphasize the company’s focused on higher-end technology solutions in enterprise IT / cyber / data analytics and more traditional Jacobs infrastructure work, respectively.
Shaping the portfolio through M&A
In our previous look at Jacobs, we noted how their acquisition and divestitures were helping to shape their new capabilities. These included the acquisitions of CH2M Hill and Blue Canopy and the sale of their Energy, Chemicals, and Resources (ECR) business segment. Since that assessment, Jacobs has made two additional acquisitions that further their portfolio focus on advanced technology capabilities and high-end nuclear solutions:
- In April 2019, Jacobs acquired KeyW for $815 million. KeyW is a provider of advanced technologies in cyber; intelligence, surveillance and reconnaissance (ISR); and analytics capabilities primarily focused on U.S. intelligence, cybersecurity, and counterterrorism communities. KeyW has been integrated into Jacobs’ CMS line of business.
- In August 2019, Jacobs acquired John Wood Group’s Nuclear Business for $300 million. Wood Nuclear provides solutions that span the entire lifecycle of the nuclear industry, including program management, technical, and consulting services in areas such as decommissioning, nuclear new build, and operational support in the civil nuclear and defense segments. Wood Nuclear will also be integrated into Jacobs’ CMS line of business once the acquisition closes.
Categorizing and quantifying their portfolio changes
Figure 2 – Changes in Jacobs’ federal contract obligations between FY14 and FY19. Source: FPDS-NG.
541712 & 541715 (unmarked due to space) is the NAICS code for Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology & Biotechnology)
Jacobs’ portfolio shift is evident through their funded work based on North American Industry Classification System (NAICS) codes. Take a look at their biggest changes in federal contract obligations between fiscal years 2014 and 2019, noted in the above chart. Their most significant increases occur in higher-end technology or IT-related NAICS codes.
Their two IT NAICS codes in the above table have doubled or quadrupled over the past five years and their other major increases have support R&D and management and consulting services (which represent where Jacobs appears to be headed) and construction services (which is still important to the business). Other core work, such as engineering services (541330) and facilities support services (561210), as remained fairly consistent.
Contract wins leading the “new” focus
Jacobs has long been successful on contracts such as U.S. Department of Energy (DOE) management and operations (M&O) and remediation; NASA operations, engineering, and support contracts; and DOD test and engineering support contracts. However, their re-focused portfolio has resulted in some recent wins that would be surprising to those with a dated view of the company. We preface the below wins as indicators of the shifting direction of Jacobs before the new branding. They built the proof points of capabilities before they unveiled the new Jacobs.
- In our last blog, we noted their August 2017 award of the Integrated Research & Development for Enterprise Solutions (IRES) contract for the Missile Defense Agency (MDA). This contract has realized contract obligations at $482 million under this 8.5-year, $4.6 billion contract. This contract supports test, training, and operations for MDA missions (which fits “old” Jacobs) as well as support for the MDA enterprise communications and IT environment (which fits “new” Jacobs). This award was a takeaway from Northrop Grumman, who held the previous two iterations.
- In March 2019, Jacobs was awarded the U.S. Army Intelligence Center of Excellence (USAICoE) support contract. This 7.5-year, $785 million contract provides education and support for intelligence-related military jobs and professional development through classroom delivery, practical exercise, and simulation/virtual exercise training. This award was a takeaway from Raytheon, who previously supported USAICoE under their Warfighter FOCUS contract.
- In November 2019, Jacobs was awarded the Defense Cyber Crime Center (DC3) Cyber Training Academy (CTA) Under this 5-year, $217 million contract provides modernization, design, development, and delivery of specialized cyber training to the Defense Criminal Investigative Organizations and certifies them in computer incident response and forensic examinations. This contract, a takeaway from General Dynamics Information Technology (GDIT, pending protests), was awarded by GSA’s Federal Systems Integration and Management Center (FEDSIM).
The FedSavvy Strategies take on Jacobs
Jacobs’ portfolio evolution appears to be seeing some early successes and we shouldn’t expect that to change. The company is likely still figuring out who they are, who they want to be, and how to get there, so they’ll likely emerge in some unexpected places.
You should expect to come across Jacobs as a focused competitor in newer spaces such as cybersecurity and intelligence, training, data analytics, and mobility and connectivity, as well as more traditional fields to include test and evaluation, infrastructure support, and environmental services. They’ve unseated several long-term incumbents as well, so make sure you’re not suffering from “incumbentitis” or they may unseat you, too.
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