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F-35 Joint Strike Fighter (JSF) Foreign Intrigues Continue

The F-35 “Lightning II” Joint Strike Fighter (JSF) will be used not only by the U.S. military to replace its aging F-16, A/V-8, F/A-18 and A-10 aircraft but also by many other NATO countries and allies. It is being purchased as a F-16 replacement by many of these and like the successful F-16 program will have manufacturing and parts co-share agreements with different international partners.

The delays and cost increases to the program have been well documented and these have caused some early planned users to question the financial sense of continuing the program. Many of these countries, though, have already contributed through development funds as well as already had their aerospace contractors sign contracts and agreements with Lockheed Martin (LMT) to produce parts for the aircraft which continues in its Low Rate Initial Production (LRIP).

Canada, the Netherlands and Australia have had and continue to have debates about their purchase of the advanced aircraft rather then existing systems like the F/A-18, Eurofighter, Rafael, SAAB Gripens and Russian alternatives. In Canada they are reviewing the whole cost analysis that had led to the decision to continue the purchase which could technically end it and look at other aircraft. That leads to editorials and articles like this one, “The Case for the Super Hornet As The RCAF’s New Fighter” from Canada or analysis in Australia such as this: “Politics first as white paper fails on big issues”.

At the same time the U.S. has been successful in adding Foreign Military Sales (FMS) of the aircraft most notably to Israel and Japan. There has also been interested expressed by other U.S. allies like the U.A.E.

The commitment of the foreign partners is somewhat critical to the whole program as a reduction in buy quantity will have a ripple effect on the whole program. Less purchased in total and annually will cause a cost increase for each aircraft and the whole program. The F-35 PEO, Lt Gen Bogdan, identified this risk in Congressional testimony in April. If somebody drops out the price the others pay will go up putting more pressure on their budgets and perhaps cause them to drop out too. This would then become a spiral causing issues for the U.S. and all of the other nations involved in the program.

Despite the issues with the aircraft over the last decade the U.S. remains committed to the program. Over 100 are on order and there is discussion to award a new 2 year production contract this summer for a further 60-70. Training is underway for both aircrew and maintainers of the U.S.A.F., Navy, Marines and allies. The big questions remain though about completing development, how many will be built, and who ultimately will operate the aircraft.

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UK Decisions on F-35 Aircraft Criticized by Parliament

The F-35 Joint Strike Fighter (JSF) program continues to be controversial. It is the largest defense acquisition program in history and will see the manufacture and deployment of 100’s of the advanced aircraft to the U.S. military and several allies across the world. One of the original and major customers is the U.K. which will replace its Harrier jump jet fleet with Lockheed Martin’s (LMT) aircraft.

Because the F-35 must equip the U.S. Navy, Air Force and Marine Corps there are different versions of the aircraft. Their is the F-35A optimized for the Air Force and use of fixed runways, the F-35B which has Vertical Take-Off-and-Landing (VTOL) capabilities and finally the carrier based F-35C. These will replace the F-16, AV-8 and F/A-18 respectively in the U.S. military.

The British utilize Harriers from ground bases as well as off of their aircraft carriers. They need to replace both missions. The Royal Navy is currently building 2 new aircraft carriers and originally the F-35B was the choice to use from these aircraft. That is also the current choice.

Unfortunately in the 2010 Defence Review the current Conservative government reviewed that decision and changed it to the F-35C carrier based version. It was related to the struggles the program has faced with schedule slips and cost increases. Now, though, that has been reversed again to the F-35B model. The estimated cost of these changes is around $160 million and further delays to receiving the aircraft.

The F-35 has faced problems with development and testing which has led to delays and slower then planned production. This has led some foriegn partners and customers to reevaluate their needs. Canada, for example, has now put their original production buy contract on hold and there are those in Holland who are questioning the whole plan due to cost growth. The U.S. continues to plug on with the program which is in Low Rate Initial Production (LRIP) while at the same time doing more testing.

The U.K. will continue its purchase for the carrier as options for other aircraft are very limited. It just will have to face further potential cost increases and delays associated with the program.

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Reports Canada to Commit to F-35 Joint Strike Fighter

The U.S. led Joint Strike Fighter (JSF) program has seen its struggles over the last few years. It has had test, schedule and cost issues that have increased the total cost of the program and stretched out its planned development and production. Designed to replace the aging fleet of F-16, F/A-18 and AV-8 aircraft used by the U.S. and its Allies its has been developed by Lockheed Martin (LMT) and funded by the U.S., United Kingdom, Australia and other countries that ultimately will receive it.

Due to the cost increases some of the countries in the joint program have been reconsidering their commitment. Holland’s legislature has made noises about delaying their further investment due to the lower quantities that their budgeted money will buy. The problem the Allies face is that they based their budgets on the lower estimated costs and now either have to find more money or face a smaller fleet of the new F-35.

Due to the program’s delays all of the planned users face a “fighter gap” as their current fleet ages and the JSF is not there to replace them. This means that more money must be spent to maintain the older aircraft or capability will be diminished. The U.S. Navy is planning to extend the production of their F/A-18 to help fill the gap.

Canada is expected to announce today that they are keeping their commitment to the program by awarding Lockheed a contract for up to sixty-five of the aircraft at a cost of over $15 billion. This plan has raised objection from the opposition Liberal party who would like to wait and possibly hold a competition to buy a replacement for the countries CF-18 aircraft.

Certainly there is an argument for delaying the contract award and perhaps looking at other aircraft already in production. The counter would be that these would not be as capable or last as long as the F-35 which is expected to be in service well past the mid-point of the current century.

The U.S. Department of Defense despite all of the cost and schedule issues has remained committed to getting the F-35 into production and in the last year the program has seen quite a bit of progress. The problem may be in a few years when the Federal budget and defense spending may have to be cut. The JSF is the largest procurement program in that budget and might seem attractive to cuts.

Even small cuts around the edges may cause long term problems as they would stretch out production increasing the total cost of the program.

Canada may be wise to award their contract now if they structure it correctly to protect against further delays and cost increases. Of course they may have limited options to do that.

The decision by Canada to support the program will aid it in keeping on track and keeping its funding. Canada may help the JSF get done.

Photo from Rob Shenk’s flickr photostream.

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Relyant Gets U.S. Contract to Clean Up Old Battlefields

Afghanistan has been a scene of combat since the Soviet invasion in Christmas, 1980. The Russians left and the government they left behind was overthrown by the Taliban. That group fought different opponents until Winter of 2001 when the U.S. and its Northern Alliance allies through them out. This means that the country is littered with old ordnance, weapons and equipment. Tennessee company Relyant has now been given a contract by the U.S. Army to help clean up these old weapons in Afghanistan.

The contract is worth about $49 million and has one base year and two option years. Relyant already provides support services to the U.S. military in Afghanistan including construction, transportation and security. The company has expanded quite a bit since its formation in 2006 and operates in the U.S. as well as Africa and Asia.

The company will actively demine areas of Afghanistan. They will primarily be looking for old ordnance from the Soviet fighting.

Despite the shift in focus with the Obama Administration and the current Congress from using contractors they will be necessary to provide services to deployed military. The U.S. Armed Forces are not large enough to do everything and contracts like this will still need to be issued. It may be that smaller companies such as Relyant may have an advantage in winning these contract as the larger suppliers such as Halliburton and Dyncorp have been tainted rightly-or-wrongly by past events and contracts.

Photo from The National Guard flickr photostream.

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Canada Considering Entering New Fighter Sweepstakes

Right now two of the biggest military aviation contracts out there are new fighters for Brazil and India. Both of these contracts have attracted bids from United States and European defense contractors. In Brazil the contest seems to be between the Boeing (BA) F/A-18 and the French Rafael. In India there have been offers from Boeing, Lockheed Martin (LMT), MiG of Russia, Rafael. Eurofighter and SAAB of Sweden. These contracts are interesting as all of these companies face declining markets at home due to budget difficulties and the decision by the U.S. and many of its Allies to focus on the F-35 Joint Strike Fighter (JSF) headed up by Lockheed.

Canada currently operates a force of older F/A-18 aircraft and is planning a potential buy of more modern aircraft worth about $9 billion (Canadian). Canada has put some money into the development of the JSF as have countries like Great Britain, the Netherlands, Australia and Japan but is not committed to buy the aircraft. They certainly could do that when the aircraft is ready in the 2015 – 2017 time frame or they could conduct a new competition. If they did this they would certainly draw a diverse group of suitors similar to what India has. The market for new fighters was supposed to stagnate as thousands of F-35 replace the F-16 aircraft of numerous U.S. Allies. Now with the delays and cost increases to that program some countries are having second thoughts.

A third major competition would be good for the industry and would allow some production lines like the SAAB Gripen to remain hot as the JSF program tries to get itself sorted out. If countries like Holland do decide to go a different path the market for current in production aircraft will increase greatly.

More fallout as the JSF program struggles with its cost and schedule may be expected as current customers re-think their commitments. This will increase the cost to the U.S. military while reducing Lockheed’s chances of making up some of their losses on the development piece of the contract. Canada if they choose to not buy the JSF may be the start of some bad news for the program and its prime contractor.

Photo from TMWolf flickr photostream.

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Alliant Techsystems To Provide Composite Structures For F-35 Joint Strike Fighter

Despite the cost increases and the schedule delays Lockheed Martin (LMT) continues to work on building, testing and getting ready to deliver F-35 Joint Strike Fighter aircraft to the U.S. military and Allies. The recent defense budget revealed that estimated costs for the advanced aircraft have almost doubled. As part of the construction Lockheed buys assemblies and parts from a number of U.S. companies.

Yesterday, Alliant Techsystems (ATK) announced that they had received a contract worth about $250 million to provide composite fuselage, engine and wing pieces for the JSF. The contract illustrates the diversified industrial base required to build the sophisticated aircraft.

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Curtis-Wright To Provide Parts For The F-35

Lockheed Martin (LMT) awarded Curtis-Wright (CW) a contract to provide structural components and some hardware for the F-35 Joint Strike Fighter’s missile carrying and launching system. There was no value reported for this contract.

Lockheed is the prime contractor for the troubled advanced, stealthy jet that ill replace the F-16, F/A-18 and AV-8 aircraft in use by the U.S. and many allies. The program has suffered major cost increases over the last few years including a report this year of a significant breach to the Cost Baseline. This will require Congress to re-certify the need for the program which is expected due to its extreme importance.

The JSF is being assembled out of many different parts and pieces from several companies. Alcoa and Northrop Grumman are providing major fuselage assemblies, Pratt & Whitney the engine and so on.

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U.S. To Buy More M2 Machine Gun Parts

The U.S. Defense Department placed a contract with Sabre Defence Industries for barrels for the M2 0.50 caliber machine gun. The venerable M2 has been in use with the U.S. military and many allies since World War II. A new machine gun firing that ammunition has been developed and entered service but the M2 is still around and in heavy use in Iraq and Afghanistan. The contract is for 8,000 barrels and is worth $6.7 million.

Sabre Defense is a small business that makes assault rifles and M2 parts for use by military, law enforcement, and shooting competitors. They are based out of Nashville, TN. They continue to demonstrate that there remains a market for support to older, effective equipment even if it is not being used necessarily by front line forces.

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U.S.M.C. Gives Support Contract To Force Protection

Force Protection had a heyday a few years ago as a manufacturer of Mine Resistant Ambush Protected (MRAP) vehicles. In 2005 – 2007 the U.S. military could not buy the vehicles fast enough as Congress showered them with money for them. The IED and mine threat at that time was consistently inflicting the most casualties on the U.S. and its allies. It still remains a potent threat in Afghanistan but not as much in Iraq as the U.S. slowly pulls its troops out.

Force Protection was unable to keep its sales up as more companies entered the market. There have been some recent sales to overseas customers but the main U.S. defense buys have dried up. The company was able to announce today that it had signed a contract with the U.S.M.C. for field service support to its existing vehicles. This contract is worth over $26 million.

An OEM often has the ability to sell maintenance, support and modification services to the military once production of an article is completed. Eventually the defense department may turn to other providers so that market too ends. It behooves a company to keep improving their products or make new ones that attract the market.

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UK Buys Force Protection MRAPs

Force Protection announced that they had signed a contract to provide the United Kingdom twenty-three Mine Resistant Ambush Protected (MRAP) vehicles. The contract was signed through the USMC. The vehicles will most likely be used in Afghanistan to support the British forces there.

The continued operations there have demanded extreme efforts to protect against the mine and IED threat. The U.S. and its Allies continue to invest in MRAP vehicles while trying t figure out how best to fit then into their traditional organizations.

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Plasan Gets Another Armor Contract For The MRAP-ATV

Oshkosh builds the MRAP-ATV for the U.S. military for use in Afghanistan. This is a lighter, more maneuverable Mine Resistant Ambush Protected (MRAP) vehicle then the older designs. They utilize the Israeli company, Plasan, to make armor kits for these vehicles. Because the U.S. has been buying billions of dollars worth of the vehicles Plasan as well has been receiving substantial contracts as well.

The company announced yesterday a further $170 million contract to build 1,460 kits. Plasan has been growing steadily as the world’s demand for armored vehicles, especially those optimized for protection against IED and mines, has also grown. As the U.S. and its allies build out their fleets of vehicles ultimately demand will decline. The MRAP market has already seen some changes as the focus of effort shifted from Iraq to Afghanistan and will again as the U.S. ends its commitment there.

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More Foreign Sales Of The F-16

Fresh off of a recent sale of F-16 fighters to Morocco Lockheed Martin announced a further deal with a North African country. Egypt through the U.S. Air Force will go ahead and purchase up to twenty-four of the aircraft. These two deals will help keep the production line open for several more months. The U.S. and many of its allies are moving out with the F-35 JSF as a replacement for the F-16 Falcon which has been in use for thirty years.

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U.S. Allies Move In Different Directions On Missile Defense

December 25, 2009 by · Comment
Filed under: BNET, Syndicated Industry News 

The U.S. and its Allies have made significant investments in missile defense over the last twenty years. Changes in policies and leadership though…

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U.S. Allies Move In Different Directions On Missile Defens

December 24, 2009 by · Comment
Filed under: BNET, Syndicated Industry News 

The U.S. and its Allies have made significant investments in missile defense over the last twenty years. Changes in policies and leadership though…

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Morocco Completes F-16 Order

Two years ago the North African nation of Morocco selected the F-16 Fighting Falcon to be the basis of their new fighter force. They awarded an initial contract in 2008 for the twenty-four aircraft to Lockheed Martin. Now they announced the rest of the money will be paid. The total contract is worth over a billion dollars with the bulk, $840 million, executed this week.

The F-16 serves with many NATO and other U.S. allies as well as Egypt and Israel. Lockheed Martin continues to sell and build the aircraft for overseas sales despite the plans of the U.S. and many other countries to replace or at least supplement it with the F-35 JSF.

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Thales Pitches New Australian MRAP

The market for Mine Resistant Ambush Protected (MRAP) vehicles has grown over the last five years incrementally. The United States and its Allies have bought thousands of the vehicles for operations in Iraq and Afghanistan where the major threat has been from mines and Improvised Explosive Devices (IED). The U.S. military is beginning its winding down of operations in Iraq which will mean less requirement for new MRAP vehicles. The U.S. has also awarded Oshkosh large contracts for a new MRAP-ATV to support their troops in Afghanistan. The world market though for these types of vehicles should be fairly solid as the IED has been demonstrated as a weapon of choice.

Thales in Australia has successfully marketed and sold their larger Bushmaster vehicle to both its home forces as well as The Netherlands for use in Afghanistan. Now it has developed the lighter Hawkei MRAP. This vehicle is targeted towards replacing tactical vehicles like the Land Rover or HUMVEE. It has removable armor to facilitate transportation and is configurable to conduct a variety of missions. Thales is hoping that the Australian military will invest in it to supplement their Land Rover vehicles as well as marketing it to other countries.

There is certainly will continue to be people willing to invest in these type of vehicles especially if it is priced competitively and offers some capabilities that other don’t.

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Algeria Struggles With Russian Arms

The former Soviet Union used to provide weapons to its proxy states and allies across the world for almost nothing. They did this as a way to reward them and also to allow them to fight their wars for them. Many times the weapon systems were stripped down versions of their own aircraft with less capable engines, electronics and weapon systems. Some countries like North Vietnam did receive the best that the USSR could supply to help them in their wars.

Since the break up of the Soviet Union the new Russia has seen a huge decrease in the size of their military and industrial base. They have attempted to increase the overall technology level of their weapons but have had limited funds to invest. The Russian Government has attempted to sell modern systems overseas to help fund their procurements and provide R&D dollars. To this end the MiG and Sukhoi fighters have often been exported and are contenders in India’s new fighter programs.

It is now reported that Algeria is having problems with their advanced MiG-29 fighter aircraft ordered back in 2007. The thirty-four aircraft were part of a much larger arms deal signed as a way for Russia to forgive some of Algeria’s debt. Algeria supposedly returned the fifteen aircraft delivered and canceled the remaining ones due to poor performance and quality.

According to a Russian investigation the problem has been that one of the sub-contractors for the aircraft provided not new parts but ones that had been recycled from old aircraft. This has been an issue in the past in all countries with aircraft production and repair. It is a scam that may often happen with new part prices being paid for old, reconditioned parts. This problem led to the issues with Algeria ending their order.

The problem faced by Russia is that it needs the good will of its customers to keep the money flowing as without the foriegn funds it might not be able to keep sustaining parts of its arms industry. There is just not enough domestic business. Russia has been using some of its oil revenue to modernize their military but still needs to keep up its foriegn sales.

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Defense Business Remains Interanational As Boeing Subs To MB Aerospace

The British company MB Aerospace announced that it had secured a further contract from Boeing to build launch systems for the Harpoon Surface-to-Surface anti-ship missile. This award is a four year extension of an original one year contract. This original contract was for about $10 million in work and the four year extension will add another $30 million.

This contract continues to illustrate the global integration of the defense business. This is especially true for the Western NATO allied countries. Because Harpoon is a system used not just by the U.S. but a variety of their allies and foriegn customers it makes sense to build parts for it in other nations. It may be a way to secure a better price or faster production or it may help sales to a foriegn customer. The overseas customers also provide necessary competition to U.S. sub-contractors.

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Defense Department Awards Further RFID Contract

Continuing their investment in Radio Frequency Identification (RFID) the United States’ Defense Department awarded an Indefinite Quantity/Indefinite Delivery (ID/IQ) contract for RFID equipment. Intermec, Inc. was one of the winners. If all options on the contract are awarded it could be for nine years with a value up to $418 million.

Intermec has been making equipment for the electronic tracking of goods for over twenty years and has received significant contracts from DoD in the past. RFID has made it easier and more efficient to track and ship materiel by providing quick means to identify cargo and route it. Under the Automatic Identification Technology (AIT) – IV contract not only DoD entities but the U.S. Coast Guard, NATO and other allies as well as foreign countries may purchase this technology. Intermec like with all ID/IQ contracts is not necessarily guaranteed any work from it depending on how the U.S. wants to exercise the contract.

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Latest JSF Order Placed

The United States government acting for itself and its Allies awarded a contract to Lockheed Martin for the next procurement of the F-35 Joint Strike Fighter (JSF). The $2.1 billion contract option restructured an existing advanced procurement contract into a Cost Plus Incentive Fee (CPIF). It was the third option to an existing Low Rate Initial Production (LRIP) contract.

As part of this option seventeen aircraft were ordered for delivery by the first quarter of Fiscal Year 2012. Seven of the JSF will be for the U.S. Air Force and seven for the U.S. Marine Corps. One was purchased for Norway and two for Britain as part of the several JSF international partners.

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JSF Second Engine Fighting For Its Life

One of the programs cut by Secretary of Defense Gates’ in his proposed budget is the second source for the F-35 engine. This has been a controversial program since its inception. Now with the plan to end the program Rolls Royce and General Electric are arguing it is cheaper and more sensible to continue the program.

The Air Force and Navy have always been ambivalent about the program but Congress has kept it funded. The fact that Congress cuts aircraft production to find the funding has raised the hackles of some people. Now that the Defense Department has decided to end the program the contractors, and their allies in Congress, are arguing that most of the planned money has been spent and the program should at least complete development.

Of course if the engine did go into production and was used to power some of the JSF aircraft to be used by America and its allies the amount of revenue available to GE and Rolls Royce as well as Pratt & Whitney who make the primary engine would be quite substantial. The second source providers say that the bulk of the $3.5 billion allocated to the program has been spent so rather then terminating the program at some cost just complete it.

As with all of these programs recommended for termination it will be Congress who will have the last say in the budget. But since Gates moved quickly to halt the contracts for FCS and VH-71 it wouldn’t surprise me to see a stop work order on this one as well.

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India Releases Helicopter Requests For Proposals

India has released this week two separate Requests for Proposals (RFP) for new helicopters. The first one is to purchase twenty-two advanced attack helicopters. The second for fifteen heavy lift aircraft. India faces many of the same problems that the Allied forces in Afghanistan do because of the high, hot environments that aircraft must fly in.

The country had released a RFP last year for attack helicopters but withdrew after receiving non-responsive bids. India has looked at major upgrades to its armed forces by broadening the base of whom they buy from. Rather then relying primarily on Russian or British equipment Israel and the United States have begun to make inroads into the market. India also had invested heavily in domestic development and production but to get more technology faster has started buying overseas in greater amounts.

With the new proposals Boeing is considering a bid for each. They make the AH-64 Apache and CH-47 Chinook both heavily used in Afghanistan by the U.S. and Allies. Boeing is also looking at taking major hits in the Obama budget and will try to counter that with sales overseas.

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Textron unit wins contract for test equipment

AAI Corporation, an unit of Textron, won a contract form the USAF to build Joint Service Electronic Combat Systems Tester (JSECST) systems. See an article here. These will be used to test the electronic warfare equipment and avionics on various US aircraft. Since they are joint they will be used by USAF, Navy, USMC and Army aircraft. Even helicopters are starting to carry more sophisticated electronic and infra-red countermeasures as the threat has got more complicated. The contract is worth up to $67 M if all options are exercised. Sophisticated electronic systems require expensive test equipment to support their operations. The JSECST has been in production for several years and is used by the US and some allies.

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SecDef says KC-45 meddling by Congress may provoke retaliation

According to this story during testimony about the FY09 Defense budget Secretary of Defense Gates warned that adding a requirement to contract awards for US jobs would only provoke retaliation by US allies in Europe and Asia. Currently Federal procurement law does not have increasing or protecting US jobs as a consideration for evaluating and awarding contracts. Congress can certainly add that to the law, and some have mooted they will, but it would come at a price. The US defense industry is now dependent on non-US companies for many parts and products. US allies are also dependent on US companies for a large amount of their systems as they do not have the capability to produce them. Any attempt by the US government to prevent foreign companies from competing could backfire and reduce the market for US companies. As we have stated here many times with the consilidation in the US industry in the Nineties it is hard to get decent competition for these kind of procurements. Only Boeing, EADS and Russian companies could have bid on it; McDonald Douglas is long gone, so Congress needed to expect this kind of situation.

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Fear of US export control laws lead Canada to deny sale of company

April 10, 2008 by · Comment
Filed under: Acquisitions, Alliant Techsystems, Canada 

According to this article the Canadian government denied the sale of MacDonald Dettwiler and Associates Ltd.’s satellite business to Alliant Techsystems Inc. See a previous post about the planned sale here. Canada cited the fact that if the company became American the laws protecting US technology exports would deny Canada access to the company’s satellite that focuses on the Canadian Arctic. Due to several scandals in the Nineties the US ramped up the laws governing technology transfer and export and make it very difficult to do this. Read more

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