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General Dynamics Wins 2 FMS Vehicle Contracts

As the U.S. Defense Department looks to the potential start of sequestration and the cuts required by that budget device it made an effort at the start of Fiscal Year 2013 to award as many contract and production options as it could. This means that future large contract awards may be limited as the year goes on. This may limit the potential contract actions remaining for U.S. defense contractors.

At the same time some budget decisions have already been made due to the drawing down of the Afghanistan commitment and the end of Iraq fighting. This has included decisions by the Army to not utilize General Dynamics (GD) tank manufacturing plan in Lima, OH due to their requirements being met.

General Dynamics like most other major contractors is trying to expand their already quite large foreign orders to make up for some of these cuts, real or potential.

In this vein the company was just awarded 2 Foreign Military Sales (FMS) contracts for U.S. allies. These are for M1 tanks to Saudi Arabia and Light Armored Vehicles (LAV) for Colombia.

The Saudi contract is for a further 69 of the M1A2S version of the Abrams tank. This contract is worth a little over $130 million and is for a tank specifically equipped to Saudi needs.

Colombia ordered 24 LAV III wheeled armored vehicles for just over $65 million. The LAV III have the latest in double hull armor for defense against IED and mines.

If the sequestration cuts are implemented then there will be more pressure to win these types of contract in an increasingly competitive markets. If not the U.S. may not be able to maintain manufacturing capability slowly built up over the last decade.

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