Saudi Patriot Deal Receives Government Approval

by: Matthew Potter
December 1, 2011

Category: Business Line, Companies, Congress, Contract Additions, Contract Awards, Countries, Events, logistics, missile defense, production program, Raytheon, Saudi Arabia | RSS 2.0

One of the largest markets for all defense contractors but especially U.S. ones is the Kingdom of Saudi Arabia. That state utilizing its oil resources has spent billions on its military and National Guard to equip them with modern equipment from the U.S. and Western companies. This has included ground vehicles, aircraft, weapons and C4ISR systems.

The Kingdom had already invested heavily in Raytheon’s (RTN) PATRIOT air and missile defense system after the first Gulf war. The PATRIOT is the primary ground based system used by the U.S. Army and many U.S. allies. Over the last two decades the U.S. has spent money upgrading the radar, software and missiles so that the current standard is the PATRIOT PAC-3.

The PAC-3 includes a new missile from Lockheed Martin (LMT) that is smaller and optimized for ballistic missile defense. The PATRIOT also has upgrades to the radar and software to support this mission and also deal with other threats. The PAC-3 has been in production for several years now.

Saudi Arabia had applied to buy the PAC-3 capability through an upgrade to its existing PATRIOT systems. That deal has just received approval by the U.S. government as the deal was such that it had to be signed off of by both Congress and the Department of State. The contract could have a total value of over $1.7 billion making this a very important contract to Raytheon.

If the U.S. defense budget does see significant cuts then contractors will continue to develop and hope for contracts like this one to help mitigate those cuts. Unfortunately that market

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