As top-tier defense contractors begin to move away from an era of big-ticket weapons procurements, they are scrutinizing their portfolios in an effort to weed out lower-performing businesses. And one problem area keeps coming to the forefront: low-margin government services businesses. When the U.S. Defense Department moved to outsource more of its work in the late 1990s, contractors took over high-skill functions such as advanced engineering and sole-source platform maintenance and repair, areas where they continue to make a lot of money.
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