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Raytheon to Continue JAGM Development

Following the award of a similar contract to competitor Lockheed Martin (LMT) in August, Raytheon (RTN) received a contract from the U.S. Army to continue development of their proposed solution to the Joint Air-to-Ground Missile (JAGM) requirement.

The $65 million contract will provide for a Preliminary Design Review (PDR) and then ultimately allow mating of the Raytheon guidance sections with other missile components. Raytheon will continue to utilize their tri-mode seeker developed as part of the Small Diameter Bomb (SDB) program.

Lockheed received a $64 million contract at the end of Fiscal Year 2012 for the same purpose.

The JAGM is a new missile that will replace the existing Hellfire and Maverick missiles launched from a variety of helicopters and fixed wing aircraft to strike ground and vehicle targets. The Hellfire has seen a great deal of use in Afghanistan and Iraq providing precision fire support for ground troops.

The Army had looked at cancelling JAGM but decided instead to continue development through these small contracts. If the program does go on to complete development and enter production the requirement could be for thousands of missiles at a cost of $10-12 billion. The Hellfire has also seen significant Foreign Military Sales (FMS) and the JAGM would be expected to as well.

Raytheon JAGM mock up photo by Author.

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Boeing and DoD Release Latest Estimate for KC-46A First Phase Contract

The Hill is reporting that Boeing (BA) currently estimates the first phase of the KC-46A contract at about $5.2 billion or 6% above the $4.9 billion ceiling price. All of that increase if that is what it turns out to be will be paid for by Boeing. The cost share of the difference between $3.9 billion target price and the $4.9 billion ceiling will be split between the Government and Boeing.

There was some consternation when the reports of Boeing’s efforts costing a great deal more then the $3.6 billion price at which the contract was awarded. This led to charges that Boeing “bought in” the contract by bidding deliberately low so that competitor EADS North America, part of European aerospace giant, EADS (EADS:P), could not win.

As the contract goes forward the total cost will change depending on what challenges the program faces and if it needs more time and investment to develop the variant of the Boeing 767 airliner. It may end up being less then $5.2 billion or even more as the program evolves.

Boeing Unloads National Security Risks of “EADS”

Using the example of EADS (EADS:P) marketing a helicopter in Iran in 2005 Boeing (BA) is raising the idea that a successful EADS win of the KC-X might be a security risk. EADS North America of course has shot back that the issue is really not a part of this contest and that the U.S. Defense Department has not issues with their participation. It is really not a fair criticism in this situation. Boeing has certainly sold aircraft to many different nations some of whom are not friendly to the U.S. right now.

The idea of dual placed loyalties for a competitor such as EADS that is located overseas is not an uncommon criticism in these situations. Ideally there would be multiple domestic sources for any government contract but especially defense related ones. The problem is for the KC-X there is only two real world sources for this type of aircraft and only one is American. The real issue here is the decline of the U.S. industrial base over the last twenty-five years.

No Shock Here – Washington State Politicians Support Boeing

In this report the Governor of Washington, Ms. Gregoire, and Senator Patty Murray make clear that awarding the KC-X contract to Boeing (BA) will protect jobs in that state. The two Democrats rightly point out that several thousand jobs at Boeing support the 767 program as well as supply parts and components to the company.

In another not surprise the two showed up at a rally with union members and local officials.

Once again the U.S. finds itself in this situation due to the severe reduction in the defense industrial base twenty years ago that leaves only Boeing and its competitor European company EADS (EADS:P). For there to be any chance at competition with a goal of saving money for the Pentagon the two have to bid against each other – jobs or not.

BAE Systems Protests U.S. Army’s Family of Medium Tactical Vehicles Rebuy Decision

ARLINGTON, Va.--(BUSINESS WIRE)--BAE Systems has filed a protest with the U.S. Government Accountability Office (GAO), asking the agency to review the decision by the U.S. Army to award a contract to a competitor for the Family of Medium Tactical Vehicles (FMTV) rebuy program. After a detailed analysis of the information provided by the Army, before and during the formal competition debrief, the Company believes that the Army did not properly evaluate the proposals, consistent with the Governmen

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