Moody's: KBR 'clear winner' in LOGCAP V competition

By Marjorie Censer / April 22, 2019 at 2:00 PM

KBR, which won three slots in the Army's LOGCAP V competition, "moved into the program's strongest position, based on recent task orders per region," according to a new report from Moody's Investors Service released today.

The report calls the awards, which went to KBR, Vectrus, Fluor and a PAE-Parsons team, "surprising."

Moody's states KBR, in receiving the Afghanistan area, "won the most active LOGCAP region," which it notes is currently served by DynCorp International and Fluor.

"Afghanistan represents a most challenging region from an executional perspective," the report states. "For LOGCAP V, the Army prioritized past performance, proposal quality and capabilities ahead of price. KBR's proposal was likely so superior that the Army viewed the risk of replacing current vendors already in-theater to be worthwhile."

Moody's writes that DynCorp's "complete shutout was the worst possible outcome for the company and was also unexpected based on the level of mission support tasks the Army had been steering toward DI's areas of responsibility under LOGCAP IV."

The report states the company generated about 20 percent of its annual sales from the program.

"The LOGCAP V loss will hurt DI but not heavily erode the company's mission support capabilities; it could actually spur DI's effort to expand its service offerings through [mergers and acquisitions]," Moody's writes. "While DI's financial performance improved over the past three years, consolidation of defense service contractors across the past decade has produced a more broadly skilled set of competitors."