“All options are on the table” according to a CSC official in response to questions about how the federal portion of their business might fare in the merger announced last week between HPES and CSC.  CSC just spun off its federal services business in 2016, an operation that has now merged with SRA and is known as CSRA.  CSC is prohibited from competing with that entity for two years, one indication that the federal chunk of HPES business may be spun off or sold.  Such an action could be catalyst for further M&A activity among government contractors.  Although there has been some action here, many believe that there is substantial pent up demand as entrepreneurial mid-size firm executives look to cash out and start something new.  Companies that provide product-heavy solutions may also be part of the picture due to thin margins in that sector.  Larger “small” firms may want to use their success to date to attract a suitor, rather than forge ahead and become a medium-sized company with increased challenges.  Contractors must always be on the look-out for firms with which they could merge or just buy outright.  Your competitors are agile and you should be, too.