U.S.A.: Army to Split Translation Work now Held by Single Company

The U.S. Army plans to split the worldwide translation work now held by Titan Corp. into three contracts when the current $400 million award runs out in September, to make more room for involvement by small businesses.

The Army plans to issue separate contracts covering the 6,050 mainly Arabic linguists needed for Iraq, the 525 mainly Pashto interpreters needed for Afghanistan and Guantanamo Bay, Cuba, and the 300 mainly Arabic speakers used for training exercises in the continental United States, Army spokeswoman Deborah Parker said Friday.

The Army will issue its formal request for proposals for the five-year contracts in June, and expects to select the winners before Titan's current one-year award runs out Sept. 30, Parker said. Translation work is San Diego-based Titan's largest single contract, accounting for $247 million, or 12 percent, of the company's 2004 sales of $2.05 billion.

Splitting the work is "clearly negative" for Titan, said Cynthia Houlton, an analyst at RBC Capital Markets in New York. She rates the company's shares "sector perform" and doesn't own them.

Three days ago, Titan chief executive Gene Ray said at a Bear Stearns-sponsored investor conference in New York that he expected the company would win a competition for the next award. Titan spokesman Wil Williams would not comment Friday.

Shares of Titan fell 11 cents to close Friday at $18.36 on the New York Stock Exchange.

Titan has held the worldwide linguist contract since 1999. Its previous contract, valued at $657 million, expired last September. The Army had to cancel its competition for the next award after a protest that small businesses were unfairly excluded. The new award structure is intended to address those concerns, Parker said.

Titan is still the favorite to win the work in Iraq, which is the largest contract, said Jason Kupferberg, a New York-based analyst with UBS Investment Research.

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