Does anyone have any experience with Government Contracting Companies?

I'm looking at a potential acquisition of a facilities support company in the federal contracting space. The company itself is not an attractive acquisition target as it's showing a loss, but there are two contracts (total of $2.4mm per year) that if completely separated from the rest of the company would generate substantial profit. Each contract runs at a 40% margin, was recently renewed, and has project managers onsite. Owner involvement has been limited to a few hours per month. The sale would also include their GSA Schedule.

The owner is 82 years old and is open to a reasonable offer. I'd like to base my offer on the value we see in the business which would be those two contracts. Has anyone ever acquired standalone government contracts and/or would be able to share any insights on valuations?