The U.S. economy may be in the doldrums, but the federal government keeps plugging away, signing contracts and purchasing assets and services from private companies.
While McKenna Long & Aldridge partner Jeremy Silverman wouldn’t say the federal government
is water-tight safe from the recession, he did offer that federal government contractors seem to be immune from the current economic downturn. Moreover, Washington is increasingly privatizing many of its functions, creating a boon for government contractors.
“There has been a huge increase in federal spending with private firms over the last decade,” said Silverman, an M&A partner in Atlanta.
Federal spending on government contracts increased from $209 billion in 2000 to $430 billion in 2007, according to USAspending.gov.
The steady stream of business generated by federal contracts has caught the eye of investors. One such deal involved i2S Inc., a Columbia, Md.-based company that provides information-technology services to federal agencies like the Defense Intelligence Agency and the National Reconnaissance Office, as well as private government contractors like Northrop Grumman.
In the transaction, the management of i2S acquired control of the company from the Grosvenor Funds of Washington. Silverman and other McKenna Long attorneys advised i2S on the deal.
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