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BAE Gets Contract for Radford Ammo Plant

Two years ago the British based BAE Systems (BAE:LSE) was able to win away from ATK (ATK) the contract to run the U.S. Army’s Radford facility that manufactures explosives. ATK had had the contract to operate it for several years and due to the demands of the fighting in Afghanistan and Iraq the plant generated a great deal of revenue for the operator. It was a hard fought win due to a protest and there being multiple competitions to evaluate the different proposals.

With the current budgetary situation and the end of Iraq’s fighting along with the winding down of Afghanistan it could be expected that demand for the products at Radford may go down. Luckily for BAE the Army has just announced that they awarded the company a large contract to manufacture explosives primarily for artillery shells at the facility. This could be worth up to $780 million if all options are executed.

As the U.S. military returns from Afghanistan it will need to replenish stocks of munitions as well as continue building newer, more reliable one. Training operations will also need to be supported. While this means that demand may not be as high as before there will still be consumption of artillery and other shells which will require production of new stock at Radford.

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