AECOM [ACM] said Monday it plans next year to spin off its multibillion-dollar government contracting branch into a separate publicly traded company.

The Board of Directors to the Los Angeles-based infrastructure multinational unanimously signed off on the separation, which is expected to occur in the second half of 2020, according to an AECOM press release.

In a message Monday to company employees, AECOM Chairman and CEO Michael Burke called the spinoff “a strategic move that unlocks new value and will accelerate long-term growth for both companies.”

“This decision, which was approved unanimously by our Board of Directors, acknowledges the success and potential of Management Services, as well as our confidence that both companies separately can attain even greater heights,” Burke wrote. “On its own in 2020, Management Services will immediately become a competitive powerhouse in the fragmented government services sector – a Top 20 provider with more than 25,000 employees, $4 billion in revenue and the ability to more quickly expand and acquire the capabilities it needs to meet evolving and complex client demands.”

In AECOM’s latest earnings report in May, for the second quarter of its fiscal 2019, Management Services reported slightly more than $1 billion in revenue. That represented a 14% rise on a year-over-basis, from $897.8 million in the same quarter of 2018. It was roughly 20% of AECOM’s total revenue for the second quarter.

For the full fiscal year 2018, Management Services brought in $3.7 billion in revenue, which generated $200 million in operating income and $239 in adjusted operating income, the press release says.

AECOM, through Management Services, has been a major player at nuclear weapons labs owned by the Department of Energy’s National Nuclear Security Administration (NNSA). The company was until November a partner on the management and operations contractor for the Los Alamos National Laboratory and remains a partner on Lawrence Livermore National Security: the management contractor for the Lawrence Livermore National Laboratory in California.

The two weapons labs designed all of the nuclear weapons in the U.S. stockpile and retain a role in maintaining and modernizing those weapons.

AECOM left Los Alamos last year after a series of high-profile nuclear safety lapses that led the NNSA to put the management pact for the nation’s oldest nuclear weapons laboratory back on the street almost a decade before the final option on former incumbent Los Alamos National Security’s deal.

 

This story first appeared in Defense Daily affiliate publication Weapons Complex Morning Briefing, which covers the Department of Energy’s nuclear weapons and waste programs.