Third Bridge专家访谈讨论KBR政府服务业务拆分与SpinCo竞争定位

[[00:02:36]]
Could you share an overview of KBR's MTS [Mission Technology Solutions] business, including the end markets that it touches and the core capabilities and areas of the portfolio where you view it as truly differentiated from peers across the industry?

[[00:03:13]]
KBR was built on what was called Government Services division. They've been building it up, I think, in preparation for doing a spin-off, whether that spin-off was a purchase or an acquisition or a merger. Then when they announced it, the focus was on MTS, what it's going to become. Before the SpinCo was announced, you looked at KBR was really two companies, which is why the split made sense. You had your oil and gas construction piece, which was the old KBR that everybody was used to that was doing that business. Then there was the Government Services, what's called Mission Technology Solutions and then the STS portions of the company. I was part of the MTS. When they announced MTS as a split, they narrowed all the business units down to two, just MTS and STS. I was part of that. When you thought of KBR at that time, KBR was a logistics services, base operation services is what MTS was known for. Traditional large contracts like logistics capability, the LOGCAP contract, had always been a LOGCAP holder. LOGCAP is currently on LOGCAP V, and they're beginning to develop… Compete LOGCAP VI. A long-time LOGCAP holder, which is really what KBR was known for.

KBR really cut their teeth in what was called the KBOSS programme, the Kuwait-based operations services and supply contract, supporting the wars in the Middle East is really where they grew their government business. In addition to LOGCAP, KBR was known to be an Army preposition stock contractor and have been doing that work for years. The last piece that the traditional KBR was really known for was our work with the Marine Corps. KBR MTS had the Marine Corps preposition contract for over 20 years and been very successful on that, as well as building out what became the GPN contracts or the global positioning node contracts, which is the Marine Corps putting locations starting out in the Indo-Pacific and building those. It's really what they were known for. The other thing that the other part of the business unit was known for was their NASA contracts. They've had several NASA contracts for decades, have been very successful and have won the recompetes on the NASA contracts, mainly with our human space flight.

[[00:06:13]]
What are your thoughts on KBR's 2025 announcement of its intention to create two separate pure-play businesses? I think the spin-off is currently slated for early January 2027, according to KBR President Stuart Bradie. Do you believe the internal cost structures and corporate overhead of the two businesses are sufficiently segregated today to allow for a "clean" break without significant dis-synergies or margin leakage?

[[00:07:17]]
When the SpinCo was first announced, there was a lot of internal communications, which has since become public, so I'm not going to talk about anything that stayed internal. It was very surprising internally when this was first announced and it was announced, I believe, in January '25 with a complete… With an execution date of around June '25 was the original announcement. The KBR was already split into, like I said, the STS, Sustainable Technology Solutions and Mission Technology. When they did that that was the first indicator to me that SpinCo was coming or something in their form. STS is splitting off and they will be called the traditional KBR. They'll focus on energy, oil and gas, construction. Then MTS, which was formerly Government Solutions and the National Security Solutions internally became MTS. MTS was being built up and mainly with the capabilities, the employees, the revenue to standalone. STS was not focused on government work. In my opinion, government work was actually a distraction to that part of the business, but you only had one Board that looked at everything and really looking at apples and oranges between the energy work and the government solutions work. When it was announced, and I think they've carried on, it's going to allow the MTS or SpinCo to have its own C-suite. They've already hired a CEO and CFO recently, were announced and both coming from government services, but not coming from a major competitor.

It also allows a separate Board of Directors to focus solely on the government business. That's an advantage as there's no other distractions to the C-suite. They're focused on the government business, which includes space, intelligence, logistics support. When MTS does break away, officially, whether… Originally, when they talked about it, they weren't sure, like I said, if it was going to be a merger or an acquisition. Now it's going as a spinning into a standalone company from what I can see right now. The main customers, I believe that MTS will have as soon as they spin off will be obviously Department of Defense, really focused on Space Force and NASA, the Missile Defense Agency, Space and Missile Defense Command as well as Intel work. That's the direction I'm seeing it go now. I have very few doubts that it's going to happen in January '27 because they have now announced the CEO and CFO, whereas it was a surprise when it did not happen in June '26 like it was supposed to. There's really a lot of people shrugging their shoulders in the industry saying, what's going on with this until the announcement came out about January '27. I believe that's on track, and I believe that will stay on track.

[[00:10:55]]
Do you have any thoughts on KBR naming Michael LaRouche as CEO and Nicholas Veasey as CFO of the upcoming SpinCo, which was announced in June 2026?

[[00:11:18]]
No. I did a little bit of research into the two appointees. The CEO, Mr. LaRouche, when you look at his background, I believe he's coming from a company called Serco, which is a… It's still a government service provider, but it's not a KBR or a V2X or an Amentum. His history is doing exactly what SpinCo was doing. They hired him for what he's been known for, is building new companies. I believe that was a very deliberate hire of the CEO. I didn't do a lot of research into the CFO. I think the indication of them appointing a CEO and CFO indicates a clean break. They didn't hire anybody internally. I believe this indicates a desire for a clean break. There are several reasons I believe that KBR wants this clean break. With the new CEO and CFO, that's what it's indicating. I don't know how the leadership will be under that. When you look at the old KBR and having been a KBR employee, when you show up somewhere, everybody says, "Oh, we used to get your dining facilities in Kuwait," and KBR wanted to shed that. They didn't want to be known as the company that ran dining facilities in Kuwait.

They wanted to be known as a technology integration type company, not as just running bases in Kuwait. In addition, there were some lawsuits that were going on, again, this is all public knowledge, that were going on and some other things that KBR just wanted to shed and start new. The oil and gas will keep the KBR name from what I read, which doesn't… The lawsuits and the other bad performance doesn't follow the oil and gas company. It's a clean break in MTS, SpinCo. Now what I saw is a disadvantage of that as a KBR employee is I would show up to a conference with my KBR gear on and everybody wanted to talk to us. Everybody would come up and say they know KBR. Name recognition was huge. Now you walk into a conference with SpinCo or whatever, it won't be called SpinCo, but whatever it's called, they're going to lose that name recognition. I think that's one of the downfalls. It's really a double-edged sword. You shed your reputation, but you lose your instant name recognition. I think that's the good and bad of it for as far as the SpinCo goes.

You talked about the areas where KBR has tried to mature or evolve its business into. It leads us into several different areas such as NASA, INDOPACOM [Indo-Pacific Command], as well as capability areas such as cyber, digital transformation and so on, which we'll talk about shortly.

[[00:14:10]]
KBR has noted several headwinds facing the MTS business. The company has talked about NASA's desire to in-source some core contractor roles, which has been qualified by management as a potential USD 50m-60m headwind in 2026 alone. Moreover, 2025 represented one of the most tumultuous years for the government services industry in some time, if not in history. When we think about this from the lens of a seller of government services, do you think we've seen normalisation in the procurement environment, or might those legacy 2025 challenges still be lingering in the background?

[[00:15:28]]
You're right, 2025 was a tumultuous year for several reasons, and I don't see that correcting itself in the near future. I think there's going to be… They're relooking at the whole acquisition system, and when you do that, it's not just an overnight change. It's a culture change and a long-time process change, which affects a lot of government… All the big government contracting agent or all big government contractors. I really don't see that normalising. Right down the road, in what, 2.5 years, we're going to have a change of administration one way or another, and who knows what's going to happen there. Do they go back to the way it was? Do they continue with the changes that are being made? In my opinion, they're not going to be able to go back to the way it was or change in momentum because this is going to be a several year build-out of the acquisition changes that they have. You've got to look at budgets. One of the things that initially came to my mind with KBR was at NASA. NASA has a declining budget and NASA is a very large part of the business for KBR. You're right, they're looking at doing some in-sourcing and they're really looking at their acquisition strategy. If they pull back on that that's going to really hurt KBR's bottom line because they get a lot of revenue out of NASA.

When you look at the market, too, and let's call… Let's not even talk about KBR, we just talk about SpinCo. When you look at the market and what's the competition out there, I think one advantage is, I think, the competitive field has shrunk in a couple of ways. You have the behemoth, which is Amentum, purchasing companies like PAE, DynCorp, Jacobs, they are now the USD 26bn behemoth. Then you've got SpinCo, which I believe is going to be USD 6bn-8bn. Then you got V2X, which is USD 5bn-6bn as the big three. You have Parsons trying to get into that logistics services space. Then you've got Fluor as a minor player. I think what I've seen lately is and what's coming up is I think you're going to really narrow the field of competitors in that space. That's a good and a bad thing. The other competition that's going to decline too is what are called the 8(a) organisations, the Alaska native, the native Hawaiian, the tribal organisations, the rules have recently changed very drastically for those organisations.

Some of the bigger ones, the Chugach, the Akimas, they were able to compete with the KBRs, V2Xs and Amentum. Those rules have changed recently that really hurt the 8(a) organisation. Once again, that even more narrows the field of competition for SpinCo. To me, that's a good thing. When you're KBR and V2X sitting at USD 6bn-8bn and you're competing with an Amentum at USD 26bn, that's tough. I did compete against Amentum on several contracts, and it's hard. I think to be competitive, the KBRs, V2Xs and Parsons and Fluors are going to need to work together on contracts. I think you'll see a little more of that coming up as Amentum continues to win contracts, it's really going to be the only way to compete, in my opinion.

[[00:19:18]]
Is it a prime contractor vs subcontractor-type relationship?

[[00:19:22]]
Yes. You look at a recent contract and the one that I just worked for another company as a consultant, you look at the ILS2, the INDOPACOM Logistics Services contract that just got turned in two weeks ago, a USD 3.5bn Indo-Pacific logistics contract and the competitive field really got narrowed down. I believe the final list of competitors was Amentum, KBR partnered with Parsons. V2X didn't have any major partnerships. Then you had companies like Leidos competing as well as ManTech with Fluor. What you saw with that USD 3.5bn GSA FEDSIM contract is you saw these companies looking at the landscape and saying, "I might be a logistics provider, but I don't do a whole lot in some of the other areas". In KBR's position is, "I don't have a lot of presence in the Indo-Pacific, so I need to partner with a company that has presence in the Indo-Pacific and has past performance in Indo-Pacific." KBR has had work in Indo-Pacific, but it's mainly been on the Marine Corps side and then on some smaller contracts, but really does not have a big presence, whereas Amentum has the three largest base operations services contract in the theatre.

I think what MTS is going to have to do is MTS, not in every contract because Amentum doesn't compete on every contract, but I think for the larger contracts like this, I think SpinCo is going to be forced to partner, not necessarily with a V2X or Parsons, but they're really going to have to look to partner to have the past performance and to have the capability to be a major competitor. It's not like it's going to hurt them. They have the capability to do it and they have a capability to do a lot of internal work, but their desire to do the Indo-Pacific is going to require partnership, in my opinion.

[[00:21:36]]
We've been talking about logistics and contingency support. When I think about capability areas such as defence and intel – whether that's digital modernisation or cybersecurity – how well do you think the MTS business pivoted into these capability areas? How competitive is it in this narrowing market that you alluded to? For instance, you talked about Amentum. Did that bring the Jacobs business with it?

[[00:22:10]]
Yes. They purchased Jacobs, yes.

[[00:22:12]]
From what I understand, Jacobs is a very strong cybersecurity business. How does the KBR business stack up in areas or categories such as defence and intel against some of the competitive sets that you've alluded to?

[[00:22:33]]
When you look at MTS, MTS itself was not strong in those areas, but part of SpinCo is also what was the National Security Service [sic], I think it was NSS, which brought with them things like the Air Force Research Lab, Space Force business, Missile Defense, Foreign Military Sales, the NASA work, all came over with the… Because part of SpinCo is MTS and National Security Services [sic]. They brought that with them, and they've got some really good past performance in that. I mentioned the NASA contracts that they've had for decades. They've also had the Air Force Research Lab that they've done a lot of test and evaluation directed energy work. Then you look at the National Security Space with Space Force, where they've looked at space operations, digital twinning and then the work with the Missile Defense Agency on modelling and simulation. They've also had intel work with agencies like Defense Intelligence Agency, National Geospatial[-Intelligence] Agency, the National Reconnaissance Office. SpinCo will be strong in those areas, has plenty of past performance and has done well in those areas.

I think it's actually a strength. I think when SpinCo sits back and I have… I haven't been part of the strategy sessions that they've been doing. If I was earlier, I wouldn't be able to talk about it. What I see them doing, and you could see the pivot already starting when I was there, looking toward really capitalising, getting away from being a traditional logistics contractor and really looking at digital mission engineering and then taking advantage of the expansion of the space business as well as everybody says AI and they throw it out there like a generic term, but the artificial intelligence, machine learning, cyber-type business, I think what we're going to see with SpinCo when they lay out a strategic plan, I think they're going to really look to capitalise on those areas. It differentiates. Part of the SpinCo is trying to shed the label of just being a traditional logistics contractor. In my opinion, I think when they lay out a strategy, that's what we're going to see them focused on.

[[00:25:09]]
How well-aligned do you think KBR's MTS business is as it stands today with the current US administration's priorities? For instance, there has been a lot of talk around Golden Dome as one of the priorities, and we've yet to see real traction in the funding of this programme. Does KBR, given their civil aerospace and NASA capabilites, stand to benefit in the medium-to-long term as the programme architecture for Golden Dome solidifies?

[[00:26:02]]
I think they're aligned strategy-wise. I think they're slightly behind with past performance to compete for some of the Golden Dome work. I imagine that one of the big contracts that's coming that's being competed right now, actually, there's two of them out in the Marshall Islands is the Reagan Test centre and then the, what's called the ROSIE contract, which is Kwajalein base operations support services type contract. I imagine KBR is really going to be focused on the Reagan Test centre. The reason that's aligned is every year, the administration puts out what's called the Pacific Deterrence Initiative, the PDI. There's very few programmes that have dollars tied, and again that's all public. PDI is all public knowledge. It's publicly available. They put specific dollars to specific programmes, and they don't do that throughout the document. Where they did do that was the Reagan Test centre. KBR is focused on that and not as a logistics provider, I imagine they'll be competitive for the Kwajalein-based services, but it's really the Reagan Test centre… Reagan Test Site contract that, I think, they're going to look at, which is modelling and simulation, test support, systems engineering.

I think that's going to be a focus, and it's going to be a pretty large contract. I think it's going to be a focus area of SpinCo when they look at that. I think they're aligned looking at the missile defence. The problem is when you look at another area like Guam in the Northern Marianas, they're looking at that being part of the Golden Dome and doing the, what's called the Defense of Guam contract. That's going to be a priority for KBR. They've got no work in Guam. I think they've got one small contract they've done there, and that's going to hurt them going out. That's going to be a large contract. In the Pacific Deterrence Initiative, the Defense of Guam was named specifically in there. At the moment, I don't see KBR having the past performance in that area to be as competitive as maybe some of the other competitors. I think they are aligned, and I think that's why you're seeing a shift in the strategy of SpinCo into digital and systems engineering and AI because that's where the administration is looking.

For decades, KBR has relied on the LOGCAP contracts, the logistics capabilities contract from the Army. With the ILS2 contract coming out, the LOGCAP contract in the Indo-Pacific is going to be smaller, and the LOGCAP contracts as a whole are going to be smaller. They're going to narrow. There won't be as many as before. I think that's one of the reasons for getting away from a traditional logistics contractor, and I think that's what MTS… That's what SpinCo is going to look to do. Their NASA work will help. Of course, when you're looking out at things in the Indo-Pacific as well as the stuff that they have done with the Missile Defense Agency. I think that's going to help them out there. I personally think that they are aligned with the current administration.

[[00:29:57]]
How much of the revenue that comes from the Indo-Pacific market would you say is split across categories such as logistics and contingency support versus defence and intel, versus and so on vs missile defence, science-based categories or defence and intel?

[[00:30:18]]
For the past five years, it's been logistics and sustainment services. That's been the big play out there. This ILS2 contract is a USD 3.5bn contract. There's other contracts that are operating out there like LOGCAP, like I mentioned, the Air Force Capabilities contract or AFCAP, which is a sister contract as well as another contract called WEXMAC. Those contracts will continue, but those contracts don't have specific dollars and specific mention in the Pacific Deterrence Initiative or in the National Defense Authorization Act, the National Defense Strategy, whereas I think you're going to see a shift. I think you're still going to have the revenue from the logistics you have to because of the way the theatre is set up. I don't think that's ever going to go away. I do think you're going to see an increase, and you're going to see a shift from other theatres into the Indo-Pacific, specifically looking at space and missile defence.

[[00:31:18]]
Could you talk about the strategy to grow the INDOPACOM [Indo-Pacific Command] strategy in general through the lens of KBR and how that fits the broader growth narrative? What are your thoughts on the headwinds or potential risks in the Middle East market?

[[00:31:45]]
I've built an Indo-Pacific strategy for V2X and for KBR. Without going into a lot of details, the biggest challenges and not that I don't want to go into detail, but there's also things I probably can't say. I'll keep it general. My general impression as an Indo-Pacific person, what I consider probably a subject matter expert is the way you have to build your business in the Indo-Pacific, which KBR is currently behind the other contractors is you have to be, they call it spaces, not bases, is how the leadership talks about it in the Indo-Pacific, the military leadership. You have to be in spaces. Right now, KBR is not in a lot of places that is not well known in the Indo-Pacific. If you look at the contracts that they have out there, all public knowledge is they… One of the largest contracts they had out there was what's called Diego Garcia, base operation services contract, and they just lost that to Amentum. They have other smaller contracts in Japan, a couple of small contracts there. They just don't have a lot of Indo-Pacific work. They have some Marine Corps work out there in addition to work in the Philippines where they stood up what's called a global positioning node for the Marine Corps.

A preposition site in the Philippines was really the last big… Probably the biggest win they've had there to get to another place in the Indo-Pacific. Right now, they are not positioned well in Indo-Pacific. You look at V2X, has the LOGCAP contract out there, and they're working in Kwajalein and other areas. You look at Amentum with the three largest base operation services contracts out in Indo-Pacific. KBR is behind. In order for them to become competitive, they've got to be willing to go after some smaller contracts to get into locations. To get into Mainland Japan, to get onto Honshu, get a contract in Okinawa, get some contracts in Indonesia, Malaysia, Singapore, you've got to be known in the theatre, you got to be operating in the theatre because the Indo-Pacific theatre has challenges that no other theatre has.

You've got to prove to the government when you're competing for contracts that you can operate in the Pacific and you can do it efficiently. Right now, I think KBR is behind in that. Unless if they win ILS2, that will put them right at the forefront because it's going to… Like I said, USD 3.5bn contract supporting all services. If one of the competitors wins ILS2, they'll be even farther behind than they are right now. I think that's a shortfall that MTS is going to really have to go after and really put resources toward. That's how you can tell when a company is serious about a strategy, which I think SpinCo will be very serious about when they set their strategy is putting resources toward a specific strategy. We'll see once they lay this out for everybody if they're really serious about it.

[[00:34:58]]
I think KBR pulled some resources from the MTS business to budget for the STS [Sustainable Technology Solutions] business, given some of the headwinds we talked about in NASA, as well as the general procurement environment and some of the malaise we've seen there in terms of awards being doled out, etc.Thinking about the new SpinCo as of January 2027, where would you place your strategic chips? What bets are you making in terms of rightsizing this business within the areas that are in the company's control? Obviously, there are exogenous factors that we can't control for, but what would you focus on most?

[[00:35:49]]
If they put me in their strategic growth, whatever they're calling it, where they have pillars that they're looking at. If they hired me and put me in there, the first thing that I would… ILS2, there's nothing we can do about it. It's turned in. The selection will be made and it starts 1 October. That's water under the bridge and however that shakes out, it shakes out. My focus that I would give to MTS is you have to spend the money to go after smaller contracts and be in more locations because you're not known right now in the Indo-Pacific. I can't go to South Korea and sit there in front of US Forces Command and talk about KBR. You're not working on the peninsula. I can't go to US Forces Japan and talk about KBR because they're not working there. Same with the Philippines, they got that contract there. Singapore, who's KBR? Malaysia, Indonesia, and I can keep going down and down and down. The first thing I would do is talk about doing that. The other thing that KBR doesn't have, they don't have an office in the Indo-Pacific. I can say this because I was their guy in Indo-Pacific is when I would go out there to do engagements, there was nowhere to meet.

The competitors have offices on Oahu because what I always talk about is the only place in the world where you have the geographic component command, which is PACOM, now they're called, and all the service component commands is on Oahu. It's the only place in the world where you have all that. If you're serious about the Indo-Pacific, why do you not have an office on Oahu that interacts with those commands on a daily basis? I think that's the next piece of advice I would give them is you've got to be there. The other thing that KBR has not competed for in the past, and it's all philosophy in how you look at things is getting… Because there's contracts out there that get you on to the staff. In other words, there's a contract out there, and I forget the name of it, but KBR did not compete for it. It's called INDOPACOM Alpha. This is all public knowledge. They are not a seat-holder for INDOPACOM Alpha. What INDOPACOM Alpha does and it's one of several contracts, it gives you positions on the combatant command staff. In the intelligence office for Indo-Pacific, in the logistics office, in the different Marine Forces Pacific, PACFLT, PACF, USARPAC, it gets you positions on all these staffs.

What that does for you is, again, it gives you visibility, but also gives you knowledge of the theatre. Having worked in Indo-Pacific for so long, if you go in there, you don't understand the theatre. You can't talk first, second, third island chains. You can't talk approaches. You can't talk that you're not credible. Right now, KBR has a shortfall for KBR is understanding and being able to talk the theatre with senior leadership. Those are three areas that I would tell them right away that they need to go out. The other thing I would tell them is with LOGCAP VI coming up and however LOGCAP VI shakes out. I don't know if they're going to still do four or six different contracts like they have in the past. EUCOM, NORTHCOM, PACOM, CENTCOM, AFRICOM and SOUTHCOM. There's talk about it just going down to three, but Indo-Pacific should have its own LOGCAP contract. I would tell them, whether you win ILS2 or not, you need to go put all your resources after competing for LOGCAP VI Indo-Pacific because that's where the money is going to go over the next decade or so, and that you really need to focus your strategy on that. You really need to focus your resources and your investment on being the most competitive for LOGCAP VI.

[[00:39:54]]
What's the forecast award date for that?

[[00:39:57]]
I believe it's '28. There's a draft RFP out right now that the companies are looking at, but there's just a lot up in the air right now, and I haven't been part of the conversations. There was conversation about it going down to just three an international LOGCAP, a NORTHCOM, a Western Hemisphere LOGCAP and an Indo-Pacific LOGCAP. There's talk about getting rid of SOUTHCOM and getting rid of AFRICOM and making a new Com. There's a lot of talk on how they're going to do this, But a lot of the work that… I know this because I work LOGCAP V Indo-Pacific, a lot of the stuff that they're doing is now going to transition over to what's the ILS2 contract. It's going to be scoped down, but if you want to be a player and be competitive for the money that's going to be coming to the Indo-Pacific, you need… ILS2, if you don't win it, you better be very competitive for LOGCAP VI and make Indo-Pacific your priority, because if they don't get LOGCAP VI Indo-Pacific and they don't get ILS2, then you're not a player out there.

You could carve out a niche with… they are competitive for the Reagan Test Site because they do have the past performance in modelling, simulation and testing support. That's a very large contract, very high visibility. That's going on right now, and I don't know where it is in the process, but that's another area they need to put all their resources toward and be, because the Reagan Test Site is not going anywhere, and it's only getting more money.

[[00:41:34]]
LOGCAP [Logistics Civil Augmentation Program] VI is the US Army's flagship global sustainment and base operations contract. I believe I saw it valued at USD 80bn-plus. Does that sound about right to you?

[[00:41:51]]
Yes, USD 80bn.

[[00:41:55]]
I believe LOGCAP VI outsources central services – foodservice, power generation, supply chain, logistics and so on to the commercial contractors themselves. Thinking about everything we've discussed around the LOGCAP contract, the current major primes – KBR, V2X, Amentum and, I believe, Fluor – how do you think this will shake out going forwards, given the competitive positioning and other dynamics playing out within the KBR business? Do you see the company being positioned as one, two, three, four or five? How should we break down this LOGCAP contract, even though it is probably almost 18-24 months away?

[[00:42:50]]
I believe they're going to consolidate some of the LOGCAP contracts and who that's going to hurt. There's only two companies right now that got two of the contracts. KBR got EUCOM and NORTHCOM, and V2X got Indo-Pacific and CENTCOM. For the next contract, it's been very well-known that no contractor will get two. Right away, KBR and V2X are going to lose some business there because the writing on the wall is nobody will get two. The other piece is Amentum was a brand-new company when they competed LOGCAP V. Amentum proper did not get a LOGCAP contract. Now they purchased PAE and by those rights, they are part of the SOUTHCOM LOGCAP contract, but they are not one. They will get one of the LOGCAP contracts. I think the positioning, I think competitive-wise, if I'm KBR, I think what I recommended when I was there, as I would put… of course, I'm an Indo-Pacific guy, is I think they need to compete there. I don't think they're the most competitive there because Amentum has these three largest base operation services contract in the theatre right now. I think they're best-positioned. If that's a determination, then I would go strong at NORTHCOM.

With the NORTHCOM, they've talked about even breaking it into NORTHCOM east and NORTHCOM west… Going to be western hemisphere command. Western Hemisphere east and west, there's going to be money there because if you look at being aligned with the administration, support to Western Hemisphere Command is important. They got to make a determination. If they ask me right now where they should put their focus being that they haven't won any significant work in Indo-Pacific, I would focus strictly on… I would put all my focus on NORTHCOM with the money coming out of there. The biggest part of that contract is the National Training Center at Fort Irwin, which is not going away and it's going to continue to get work, and it's a very good part of the contract they had there. Then you've got other work that's coming up with NORTHCOM. I would tell you right now, I think Amentum is best-positioned for the LOGCAP contracts. KBR has had it in EUCOM for years. It is very strong and well-known in EUCOM. I believe they're the strongest in NORTHCOM and EUCOM and not in the Indo-Pacific. When you look at V2X, V2X has had the CENTCOM contract for a long time.

For LOGCAP, they've had the Indo-Pacific contract now for five years and have really not done well out there performance-wise, and they really haven't grown the business out there. I think if you're looking at positioning, Fluor has AFRICOM. AFRICOM may go away. In fact, I would be a betting man that they're just going to roll it up under EUCOM because there's not a lot of work. I don't think Fluor is going to win one. I think they're going to have to work with another company to work… If I'm KBR and I want to be competitive for EUCOM/AFRICOM, I bring Fluor on my team, and I say, "Hey, let's work together. We'll get your AFRICOM experience, our EUCOM experience and now we're competitive there." You can't forget about when you talk about the LOGCAP contracts is also the Army prepositioning stock contracts, which are… They're not a part of the LOGCAP contract, but they kind of are.

Those are all also aligned and what's going to happen in Army prepositioning. You look at the APS-3 programme, which is the Afloat programme that KBR has had for years, that's going away because they're now downloading that stuff at different locations around the world. KBR has Europe, the APS-2. The good thing about Europe is that's going to be… That contract is stable for the next five or six years because they've issued a lot of prepositioning equipment. It's got to get all turned back in. If the administration decides to scale down in Europe, that's all going to be turned back in and fixed. That's going to be a viable APS contract. You can't forget about those APS contracts when you look at it, too. I personally think Amentum by itself is the strongest and where they decide to put their focus for LOGCAP, I think they'll win that.

[[00:47:14]]
If we think about EUCOM [European Command], you touched on a potential reduction in NATO exposure or troop movements from the US going forwards. In terms of KBR's MTS business, particularly as it spins off into a standalone company, how should we be thinking about that exposure in the EUCOM market? Could you discuss the challenges in the CENTCOM [Central Command] market? How will this impact the bookings pipeline, the current environment there and how it's affecting what seems to be a sizeable business that KBR has in areas such as Saudi Arabia and Bahrain? In KBR's Q1 2026 earnings call, released in May, I think the talk was more positive and upbeat. At that time, we did see an unusual environment – for example, the US had entered a ceasefire with Iran. Meanwhile, in July 2026, we're now back into a full-scale resumption of the Middle East conflict. What are your thoughts on that?

[[00:48:40]]
I see CENTCOM despite what's been going on lately, CENTCOM has… Their business is declining. The spending out in CENTCOM has been declining. I don't see it growing anymore. You look at some of the prepositioned stocks, part of the APS-5 stocks that are out there, which is mainly Amentum and Parsons work in the APS V, I don't see that growing. There was talk before everything kicked off with Iran of getting significantly downscaled. I think that's been slowed down because of what's going on over there. If you look at the Army business out there, we're not doing a lot with ground troops. On the Army side, on the Army Marine Corps side, the ground troop side, I don't see it growing. If I was V2X, who's had the CENTCOM LOGCAP contract for a while, I would not recompete for the CENTCOM LOGCAP contract because I don't think there's a lot of growth there. We talked AFCAP earlier. When you look at the AFCAP contracts, the Air Force Capability Contract, AFCAP V, the KBR has won some good work there. Most of their work with AFCAP V has been the Middle East. That's a maintain for them because I don't think the air bases and such are going away over there.

I don't see CENTCOM as a growing market, and it's nothing that I would prioritise. If I'm KBR, I prioritise it after EUCOM, NORTHCOM and INDOPACOM. I put it fourth just because of the growth potential that's there despite what's going on with Iran. Once the Iran piece is done, we're not going back into Iraq. We're not going to go back into Afghanistan. I think we'll have our fill will be done with the Iran piece, I think, after this current conflict is done. Now what's going to continue in CENTCOM will be the work with Saudi Arabia. If you look at Saudi Arabia, our big work is with the Saudi National Guard. It's called OPM-SANG contract that's out there. There's two big things in the Middle East that will continue, and it will be work with the Saudi Arabian National Guard and it will be what's called Foreign Military Sales. If I'm going to look at work in the Middle East, I'm going to look to maintain what I've got for the AFCAP contract, and I'm going to look to increase my OPM-SANG, my Saudi Arabian National Guard business as well as increasing my… There is a significant Foreign Military Sales business out in the Middle East right now that KBR has, I would look to sustain rather than grow if I was providing advice.

[[00:51:39]]
If the US were to put boots on the ground or touch foot on Kharg Island, these would be minor incursions, not a full-scale ground invasion – at least at first, although you never know how these things will play out. If we did see this take place, would that reverse that sentiment and change your perception of what we're discussing? Would KBR stand to benefit?

[[00:52:17]]
It's a risk they have to take a look at. You've got to guess. Guessing with a for-profit company is not real popular, but you've got to look at the length and you got to look at… I would still take a look at Europe and INDOPACOM and NORTHCOM and say that is a long-term business. When you look at the LOGCAP contract, I believe it's seven or eight years. I can't remember, it's seven or eight years. Do we really think there's going to be a prolonged ground incursion that's going to last that long. When you look at how we're probably going to do it, and again, I'm not privy to the war plans, but I think the major ground forces will be the marines. Initially, if we're going to go to Kharg Island and such, there'll be an Army task force there. I think predominantly the ground force is going to be a marine ground force initially. It wouldn't change my perspective. I would still do a hold on the business I have there and don't lose it, expand Foreign Military Sales because that's not going to go anywhere either. Middle East always have money. Middle East is in a bad neighbourhood, and they always want to get more Foreign Military Sales, and that's where I would focus my business on CENTCOM if I was advising KBR. I would not look to grow or go after the CENTCOM LOGCAP contract.

[[00:53:38]]
How should we think about the risks and opportunities when it comes to the EUCOM market market? In terms of risk, I think we alluded to the uncertainty we're seeing around NASA troop commitments and things of this nature. How should we think about the opportunities in the EUCOM market vs the risks?

[[00:54:06]]
The risk is that the administration actually acts and pulls us out of Europe. Personally, I just don't see that happening because national security-wise, that's such an important area. I don't see that going away. Now when you look at risk, let's say we pull out of EUCOM like the administration is talking about, like I mentioned, all that prepositioned equipment has been issued. That's going to take years to be turned back in, fixed and put back in storage. I think throughout the LOGCAP VI contract, I think there will be steady business in the EUCOM AOR on the LOGCAP and the APS side. I don't think that's going away. Trying to read the administration is very difficult sometimes. I have a magic eight-ball on my desk and I spin it once in a while. Are we going to build permanent bases in places like Poland and places like Romania who want permanent bases. If we're going to do that, which we were doing that until about six months ago, then that continues to be a growing business. If I'm advising KBR, I tell them, this is why I would rank it second behind NORTHCOM for them is you've been there for a long time doing… Everybody in EUCOM knows KBR. You've been there for a long time, build off of that.

Right now, and again, this is just my projection, is they just finished the USD 3.5bn ILS2 contract for the Indo-Pacific, and it's done a lot of good things. It rightsized what LOGCAP is supposed to be. When LOGCAP was put into place, it was a 72-hour or less reaction-type contingency contract, and it's grown into support everything. When you look at ILS2, what that's going to do in the Pacific, I personally think there's going to be an ILS2 Europe, whatever they're going to call it, ELS2 maybe or whatever they call it, I think that's coming next. You maintain your presence, you maintain your past performance in Europe, so when that comes down, and I anticipate that coming down, I haven't heard that from any leaders, but I can anticipate that when you hold steady what you have there, you're now competitive, and it may not be USD 3.5bn because it's a different type of theatre, but it's going to be a USD 1bn contract, I think, so I would advise them to maintain what you got in EUCOM so that you are competitive when that comes up.

[[00:56:40]]
Given all the variables and question marks surrounding the broader macro environment and how those tie into KBR's business on the MTS side, would you expect any pushing-out of the January 2027 separation, which has already been pushed out? Let's say that this actually does play out and we see a spin-off in 2027. How should we think about the growth profile of this business going forwards? I think KBR adjusted its revenue outlook downwards by 2-6%. Considering everything we've discussed, how should we think about the revenue profile for KBR? Is that low- or mid-single digits? Could we see flat or even potentially low-single-digit negative declines?

[[00:57:51]]
I think there's a push. The short answer is I think you're going to see an increase. The reason I say that is when you look at the type of work they're going to look to do, traditional logistics contractors is low-margin work. When you look at things like space, digital engineering, mission engineering, AI, it's a higher-margin work. I think that's one of the reasons that KBR is looking to go into down those roads to get higher-margin work. I believe it's going to start out flat. I don't think they're going to lose any business because MTS is doing the core business right now. I don't think they're going to lose. I think whether it goes up or down is going to depend what the leadership comes out and prioritises. If the leadership prioritises and puts all the resources toward the Indo-Pacific, I think you're going to see an initial downtrend only because the large contracts that are out there to win in the Indo-Pacific are ILS2, which has already been turned in, the Kwajalein contract, which they're going to be a part of, whether they win or not, and LOGCAP, which is being scaled back.

I think it's going to depend where the leadership puts their priority. I think if the leadership looks to focus on the Northern Command… Western Hemisphere Command and focus on European Command, I think you'll see an uptick because I think we're going to see an increase in funding for Western Hemisphere Command, and KBR is known in Western Hemisphere Command. They're doing work there now. They're doing good work there now. They're known. I think the current administration is looking to put more funding toward Western Hemisphere Command. They just stood up a four-star command called Western Hemisphere Command. They're taking down Army North, Army South and putting it all at Western Hemisphere Command. I think that signals an increase. I also think they're going to combine NORTHCOM and SOUTHCOM, and I know this is going way beyond the question you asked, but I think they're going to combine NORTHCOM and SOUTHCOM, which makes this Western Hemisphere Command a growth business. if I'm KBR, that's where I focus my attention. If they do that, I think you'll see an increase. That wasn't a clear answer, but that's how I see the playing field.

[[01:00:25]]
There's nothing clear about this market right now, it seems.

[[01:00:30]]
Then I made my point.

[[01:00:31]]
It's been a real pleasure to speak with you today. We will end the Interview here. Let me close by saying thank you for taking the time to speak with us today, and for the wonderful input and insights. Thank you, clients, as always, for choosing Third Bridge. We do hope you enjoyed the conversation today. Lastly, a big thank you to all the team members who helped to put this discussion together today. Goodbye, everyone.

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