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Jacobs to split engineering consultancy from government services business

Jacobs has announced a plan to separate its engineering business from government services business Critical Mission Solutions (CMS), creating two independent companies.

It is understood the separation of the two businesses - expected to be completed in the second half of fiscal year 2024 - is designed to enable the growth of both, aligned to their individual sectors.

Jacobs CEO Bob Pragada, who took took on the role earlier this year, said the move would enable Jacobs to transform “into a higher-growth, higher-margin company more closely aligned with key global mega trends and growth sectors".

The separation, which has received approval from the board of directors will see Jacobs continue to operate as an infrastructure specialist providing consulting, planning, engineering, design and program management targeting state, local and national governments and private sector clients globally. The business will maintain its focus on the water and environment, energy transition, transportation and advanced manufacturing sectors across three areas of focus: climate response, consulting and advisory and data solutions.

Excluding the businesses to be separated, Jacobs generated US$10.5bn (£8.4bn) in revenue in fiscal year 2022.

Meanwhile, CMS, which generated US$4.4bn (£3.52bn) in the same period, will focus on technical consulting, applied science research, training, intelligent asset management and program management services to federal government agencies, primarily in the space, national security, nuclear remediation and 5G technology sectors. Steve Arnette, EVP and president of CMS, will continue to lead CMS.

Pragada said: “As an independent company, CMS will be better able to focus on its distinct strategy and operating needs, driving further momentum in its business.”

The company said both Jacobs and the CMS business would benefit from the ability to pursue individual strategies and operational initiatives specific to the industries in which they each operate. Jacobs said the restructure would also allow for tailored capital allocation towards each company's respective growth opportunities and industries.

Each division will also have a greater ability to attract and retain talent through incentive programs aligned with each business' individual objectives and performance.