Qinetiq wins NASA deal worth $2bn

City A.M. Reporter
UK DEFENCE technology group Qinetiq has won a multi-year engineering contract with US Space Agency NASA worth up to $2bn (£1.25bn).

Qinetiq’s US arm will provide engineering support and ground operations to the Kennedy Space Centre in Florida from March 2011, although contract terms are still being finalised.

The deal is for at least five years, with options for a further three, and is worth up to $2bn (£1.25bn).

Profit margins will be at the lower end of Qinetiq’s range due to the size and quality of the contract.

The work is expected to include designing and developing ground systems and equipment for NASA launch vehicles and spacecraft and technology for NASA mission requirements and operations, among others.

Qinetiq shares closed up by 1.25 per cent at 113.70p as investors welcomed the news, which comes at a time of government spending cuts on both sides of the Atlantic.

The UK Ministry of Defence budget has been cut by eight per cent in real terms over the next four years while the US recently cancelled NASA’s $108bn Constellation manned space programme to get astronauts to the Moon by 2020 and Mars by 2030.

Qinetiq shares fell by more than a third in October after it lost a major MoD army, navy and air force training contract, but rallied last week as it announced a 14 per cent rise in 2010 first half profits.

The group employs about 6,000 people in the UK and has staff in most US states.

It was forced to issue two profit warnings in November 2009 and January 2010 due to delays in UK and US government contract decisions.