The industry’s largest acquisition in two decades, Lockheed Martin’s $9 billion deal to purchase Sikorsky Aircraft last month, was not the only announcement the company made, as Lockheed also revealed that it is planning to either sell or spin off $6 billion in government-services businesses it currently owns.

While not as dramatically sounding as a $9 billion purchase of a helicopter manufacturer, it could prove equally as significant. Many people in the know think that this comes as a direct result of significant federal government cutbacks that have dramatically reduced the profitability for government service providers.

This has caused companies that provide essential services such as computer systems, information technology, and cleaning services to the public sector to try and exit the government service industry. Federal service contracts are a huge business for companies throughout the nation with the total annual expenditure at around $282 billion.

The cutbacks have been so severe, that some of the largest contractors have lost over 20 percent of their sales over the last four years, while most of the pure-play services companies have lost even more, with up to 30 percent of their revenues gone in the same period.

Whether these kind of extreme cutbacks are sustainable is certainly arguable; there will be anti-trust concerns as this kind of activity almost inevitably leads to consolidation as companies move to increase efficiencies by merging together.

It is not a surprise then, that this will most likely usher the next big defense consolidation spree, opening the door to a new wave of defense deals. Scott Thompson, the U.S. Aerospace & Defense Assurance leader for PwC, expects that mergers coming from this will reduce the number of major players by at least 50 percent.

Lockheed Martin already stated last month that they will separately “conduct a strategic review of alternatives for its government IT and technical services businesses, primarily in the Information Systems & Global Solutions business segment and a portion of the Missiles and Fire Control business segment. The programs to be reviewed represent roughly $6 billion in estimated 2015 annual sales and more than 17,000 employees.”