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Raytheon Gets Two Significant Gulf State Contracts

by: Matthew Potter
January 27, 2011

Category: Boeing, Business Line, Companies, Congress, Contract Additions, Contract Awards, Countries, Department of Defense, development program, Events, Federal Budget Process, FMS, Kuwait, Lockheed Martin, logistics, Massachusetts, Military Aviation, missile defense, production program, Raytheon, Saudi Arabia, Services, States, UAE, United States | RSS 2.0

The friendly states in the Persian Gulf have always been good customers of the United States. While they also due to their financial resources have purchased some items from the European defense industry due to ties with former colonial powers they have in recent times turned to the U.S. for their needs. This is especially true in the area of missile defense. Overseas sales have become more important as the expected downturn in U.S. domestic defense spending will require expansion in other areas to make up the revenue.

Raytheon (RTN) has been one of the biggest beneficiaries of this as they make the PATRIOT surface-to-air missile system that also engages ballistic missiles. They also make radars and other components of the larger THAAD system developed by the U.S. Army.

The U.A.E. and Kuwait have invested in PATRIOT and the U.A.E. has also been able to buy THAAD systems. The major concern of course at this time is Iran’s growing military power including short and medium ranged ballistic missiles with the potential for Weapon of Mass Destruction (WMD) warheads.

These nations have also been building up their conventional arms including new aircraft, ships and support equipment. American defense contractors have been able to get some of this business including Boeing (BA) and Lockheed Martin (LMT).

With this in mind Raytheon announced two large contracts this week to these customers.

Kuwait ordered $145 million of new GEM-T PATRIOT missiles to equip their launchers. They also recently received a $20 million technical support contract for the PATRIOT as well.

The Massachusetts based company also signed a contract with Saudi Arabia to provide Paveway guided bomb kits. This contract is worth almost $500 million. The kits add a sensor and guidance fins to a bomb to make it more precise as it homes in on a laser illuminating a target on the ground.

These contracts continue to illustrate the importance of this market to the U.S. defense industry. As long as these states feel threatened they will invest in weaponry. Their economies and political situation also means they will be willing to buy small quantities of advanced systems from across the Globe but with a large amount of sales going to America. Certainly the U.S. government is willing to support these sales and will help influence them if they are able.

Photo from Luhai Wong’s flickr photostream.

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