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JAGM to Follow JCM in Obama’s Latest Budget

The Joint Air-to-Ground Missile (JAGM) program is an Army run one to develop a replacement for the air launched Hellfire and Maverick missiles. The Hellfire is fired from helicopters and started life as a laser guided anti-tank missile. It now has a variety of warhead options and has seen heavy use in Iraq and Afghanistan from AH-64 and AH-1W attack helicopters. The Maverick is fired from fixed wing aircraft primarily by the U.S. Air Force and too was initially an anti-tank system.

Several years ago there was a similar program in development called the Joint Common Missile (JCM). This was cancelled around 2005. The JAGM program began a few years later. Originally it was planned to have two teams compete for designs and then take one into production. Raytheon (RTN) and Boeing (BA) formed a team and Lockheed Martin (LMT), who had been the prime contractor for the JCM, also competed. One of the requirements for JAGM is the use of a 3 mode seeker utilizing radar, infrared and laser guidance.

In 2012 the Army rather then continuing the contest decided to delay final development and production of the system. Rather the two teams would be given contracts to continue their work and this could then support a later production decision if it was decided to finish out the program. Both contenders were given about $60 million contracts for this work.

Now in the latest budget submitted by the Obama administration last week it looks like a final decision has been made to cancel JAGM. Only the costs of the current development plan are considered which would save a little over $200 million in the 5 years the budget plan covers. It is of course up to Congress to decide whether to remove the funding and end this program.

The Hellfire has a successful history but the JAGM, and JCM, would have offered improvements in size, range and guidance capability. If sequestration continues then the U.S. military will be faced with more choices of deferring new development, using existing equipment or investing in new capabilities for them. The current budget without considering those mandatory cuts already is starting to make those kind of decisions.

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5th LRIP Batch of F-35 JSF to be Awarded

Lockheed Martin (LMT), the prime contractor on the Joint Strike Fighter (JSF), and the U.S. Department of Defense have pretty much wrapped up negotiations for the latest batch of F-35 Joint Strike Fighter (JSF) production. This goal was to complete and award this by the end of 2012 and it looks like that will be met.

The FY13 order will be for 32 more of the advanced aircraft split between the 3 variants. The bulk, 22, are the Air Force’s Conventional / Take Off and Landing (CTOL) version. These are intended to replace the F-16 and A-10 platforms currently in use. Then there are 3 F-35B Short/Vertical (S/VTOL) for Marine Corps to meet the AV-8A mission and finally 7 F-35C carrier based aircraft for the Navy. Estimates for the cost of the aircraft along with engineering services and other money is in the $3.8 – 4 billion range.

The F-35 program remains several years behind original schedules and cost have increased greatly but much progress has been recently made. There are now over 150 aircraft delivered or in production with this order. They are supporting test and development along with training for pilots and ground crew.

Due to the high concurrency remaining with the program Lockheed will have to go back and modify many of the current production aircraft to the final standard after they are delivered. This is due to the much more T&E remaining for things like the advanced helmet, software and other parts of the aircraft. The F-35 continues to remain on track to be the most expensive defense acquisition program in history.

Photo from U.S. Navy Imagery’s flickr photostream.

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More Punisher Work for ATK

The XM-25 Punisher is a man portable weapon that fires 25mm programmable air burst shells. It is the result of the U.S. Army’s attempt to develop a new rifle earlier this century. The XM-8 rifle program was cancelled but it was decided to continue work on the XM-25. Alliant Techsystems (ATK) is the prime contractor for the XM-25. The system was issued in small numbers and tested in Afghanistan over the last several months and proved very effective. It is issued at the squad level and provides fire support for the members.

In March ATK was given a contract to continue the Engineering, Manufacturing and Development (EMD) of the Punisher. This was worth about $70 million. Now a further contract to continue EMD was issued this week. That one has a value of around $17 million.

The continued contract awards show that the Pentagon has interest in the Punisher and its further limited production and use. Once EMD is complete a decision will be made to bring it into large scale production.

ATK also will support a further assessment of the weapon in Afghanistan by providing another 36 XM-25 for use. The data collected in these types of trials will only aid development and providing the best systems possible.

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Netherlands Looks At Leaving F-35 Program

The Joint Strike Fighter (JSF) program led by prime contractor Lockheed Martin (LMT) was designed similar to the successful earlier F-16 aircraft. Different NATO and other allied nations would contribute towards the development and also the production to spread the costs and benefits of the advanced fighter. The Netherlands was one of those countries that did this with a commitment of R&D funding and ultimately having a plant that would support their and Italian aircraft deliveries.

Now driven by austerity and cuts to the budget the Netherlands’ Parliament voted on leaving the program. New elections will be held later this fall and by then the plan is to report on the costs to the country of abandoning participation.

For several years some representatives have expressed concerns with the growth of the unit cost of the aircraft and the delays to the schedule making it hard for the Dutch to buy the necessary amount of aircraft with the funding available. This vote just formalizes those concerns.

Even with the vote the program continues to move along. The Japanese military has gone ahead with their order. The U.S. has placed orders related to Lot VI and VII of the production while continuing to negotiate Lot V.

At the same time the cost growth experienced by the overall program is making all purchasers re-evaluate how many they may buy. Cuts to production orders will only further increase unit costs as there will be less aircraft to spread development funds over as well as reduce economies of scale. The situation where a program is stretched out and annual buys reduced is a common one in defense acquisition leading to higher unit and overall costs.

While the JSF has shown a great deal of improvement over the last four years it still has a long way to go and its final numbers will most likely be much lower then originally planned.

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More F-35 Work for Lockheed Martin

The Pentagon awarded Lockheed Martin (LMT), the prime contractor for the F-35 Joint Strike Fighter, another $237 million of work on the advanced aircraft program. This contract action is to add to the fourth low rate production batch some changes that have been developed over recent times. The F-35 program is very concurrent with testing and development ongoing while production is as well.

This means situations like this where aircraft already delivered or on the production line will be retrofitted with changes that have come out of the test program or experience flying the system. This concurrency is one of the reasons the program has suffered cost and schedule problems. At the same time it allows Lockheed to deliver aircraft to support training and testing and ultimately deployment.

Originally the contracts for production had been cost plus where the government was responsible for any increases in cost related to changing requirements or specifications. The most recent production one due to pressure to control cost has a cap above which Lockheed will be responsible for any additional costs.

Despite the fact that their line workers remain on strike for what is now approaching three weeks the company continues to work on the aircraft.

The F-35 program continues to be the most expensive defense acquisition program in history and recent moves to stretch out deliveries by several years will only add to that total cost.

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MDA Awards Boeing GMD Support Contract

UPDATE – Lockheed announced today that it and its partners would not protest the decision to award the contract to Boeing.

For the last two year the U.S. Missile Defense Agency (MDA) has been working to award a new contract to manage and support the land based Groundbased Midcourse Defense (GMD) system. This system consists of interceptors based in Alaska and a world wide system of sensors to detect threats and guide the missiles to their targets. The GMD is designed to protect the United States from limited ballistic missile attack.

Boeing (BA) has been the prime contractor for the development, deployment and operation of the system since the early Nineties. A few years ago the Obama Administration cancelled plans to expand the system by installing missiles in Europe but decided to keep the existing assets operational. Last year MDA announced a competition for the support of the system and bids were delivered by Boeing and a team made up of Lockheed Martin (LMT) and Raytheon (RTN).

The announcement of the winner was supposed to have been made this summer but the MDA kept pushing it back so that ultimately it was announced just before New Years. The winner was the incumbent, Boeing, who will now receive a contract that has a value of up to $3.5 billion over the next seven years.

Obviously Lockheed and Raytheon are disappointed but there has been indications that they will protest the decision.

The bidders had submitted their final, revised proposals just before Thanksgiving which meant it took the MDA about thirty days to make their final decision.

While all three companies are involved in other missile defense programs that the current defense plans see as being expanded or invested in the win by Boeing is a big deal to that company as it keeps one of the largest programs in their hands. MDA may be one of the areas that sees flat budgets over the next few years as the U.S. adjusts its defense spending due to the end of the fighting in Iraq and Afghanistan and attempts to reduce the deficit.

Photo from U.S. Missile Defense Agency’s Flickr photostream.

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Mercury Computer Systems Selected to Deliver Multiple High-Speed Satellite Communications Subsystems

CHELMSFORD, Mass.--(BUSINESS WIRE)--Mercury announced that it will provide a leading prime contractor with products for use in a high-speed satellite communications system tasked with transferring ISR data from UAVs to ground forces.

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L-3 Declares Quarterly Dividend

NEW YORK--(BUSINESS WIRE)--L-3 Communications (NYSE: LLL) announced today that its board of directors has declared a quarterly cash dividend of $0.45 per share, payable on June 15, 2011 to shareholders of record at the close of business on May 17, 2011. Headquartered in New York City, L-3 Communications employs approximately 63,000 people worldwide and is a prime contractor in C3ISR (Command, Control, Communications, Intelligence, Surveillance and Reconnaissance) systems, aircraft modernization

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DOJ Selects Citizant for $1.1 Billion ITSS-4 Contract

CHANTILLY, Va.--(BUSINESS WIRE)--Citizant, a leader in IT solutions for the federal government, has been selected as a prime contractor on the Department of Justice’s new Information Technology Support Services-4 contract.

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Globecomm Receives an Increased Scope Under a Multi-Year Contract with a Major U.S. Government Prime Contractor

HAUPPAUGE, N.Y.--(BUSINESS WIRE)--Globecomm Systems Inc. (NASDAQ: GCOM), a leading global provider of communications solutions and services, announced today that the Company’s wholly-owned subsidiary, Globecomm Services Maryland, has received an increase in the total value of a five-year contract from a major U.S. Government prime contractor. During the first four years of the contract $95.0 million has been authorized by the customer. The customer has now exercised its option to authorize $57 m

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General Dynamics’ Small Caliber Ammunition Program Manufactures One Billion Rounds For U.S. Army — Press Release

General Dynamics’ Small Caliber Ammunition Program Manufactures One Billion Rounds For U.S. Army

Dynamics (NYSE: GD), has achieved a significant milestone in producing one billion rounds of ammunition in support of the U.S. Army’s Second Source Small Caliber Ammunition program.

General Dynamics was awarded a five-year contract by the Army in August 2005 to produce various types of 5.56mm, 7.62mm and .50 caliber ammunition. The contract established General Dynamics as a second-source prime contractor overseeing a consortium of worldwide small-caliber ammunition producers.

Managed by the U.S. Army Project Manager – Maneuver Ammunition Systems, the Small Caliber Second Source program was established to address the critical demand for small-caliber ammunition during Operations Enduring Freedom and Iraqi Freedom.

“This is a significant milestone for General Dynamics and our U.S. Army customer. The Small Caliber Second Source program served a vital role in meeting the urgent needs of our warfighters, and it continues to enable the combat readiness of our U.S. Armed Forces,” said Steve Torma, vice president of small-
caliber ammunition.

For more information about General Dynamics Ordnance and Tactical Systems, please visit www.gd-ots.com.

More information about General Dynamics is available online at www.generaldynamics.com.

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ADDING MULTIMEDIA Orbital Awarded Systems Integration Contract by Thales Alenia Space for Iridium Next Satellites

DULLES, Va.--(BUSINESS WIRE)--Orbital Sciences Corporation (NYSE: ORB), one of the world’s leading space technology companies, today announced that it has signed a systems integration and test contract with Thales Alenia Space, the prime contractor for Iridium NEXT, the next-generation satellite constellation of Iridium Communications Inc. (Nasdaq:IRDM) of McLean, Va. Under the new contract, Orbital will integrate the communications payloads and platforms of the low-Earth orbit Iridium NEXT sate

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SecureInfo and Diligent Consulting Team Awarded Information Assurance Contract by Air Force Air Education and Training Command (AETC)

WASHINGTON--(BUSINESS WIRE)--SecureInfo® Corporation, a market-proven provider of Information Assurance solutions, today announced that the company, under the prime contractor, Diligent Consulting, has been awarded a re-competed AETC contract for Information Assurance (IA) services. SecureInfo provided IA services under a previous prime contract with AETC. As part of AETC’s commitment to veterans, the re-competed contract was to be awarded to a Service Disabled Veteran Owned Business (SDVOB). Se

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L-3 Declares Quarterly Dividend

NEW YORK--(BUSINESS WIRE)--L-3 Communications (NYSE: LLL) announced today that its board of directors has declared a quarterly cash dividend of $0.40 per share, payable on December 15, 2010 to shareholders of record at close of business on November 17, 2010. Headquartered in New York City, L-3 Communications employs approximately 65,000 people worldwide and is a prime contractor in C3ISR (Command, Control, Communications, Intelligence, Surveillance and Reconnaissance) systems, aircraft moderniza

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Globecomm Receives a $2.5 Million Increased Scope Under a Multi-Year Contract with a Major U.S. Government Prime Contractor

HAUPPAUGE, N.Y.--(BUSINESS WIRE)--Globecomm Systems Inc. (NASDAQ: GCOM), a leading global provider of satellite-based communications infrastructure solutions and services, announced today that the Company’s wholly-owned subsidiary, Globecomm Services Maryland, has received a $2.5 million increase in the total value of a four-year contract from a major U.S. Government prime contractor. This contract is part of the four-year contract originally signed on January 2, 2008. Globecomm will provide sat

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BAE Systems to Provide Cyber Security to FBI in $40 Million Order

ARLINGTON, Va.--(BUSINESS WIRE)--BAE Systems was selected to provide critical information security safeguards, including certification and accreditation, to ensure the confidentiality and privacy of FBI computer networks in the United States and around the world. Under a $40 million order, BAE Systems serves as the prime contractor offering information security risk assessments, a form of quality control. The information assurance process is cyclical and is continuously monitored and improved as

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Comtech Deal to Acquire CPI Ends

In July we wrote about the U.S. Army awarding its next increment of the Blue Force Tracking (BFT) contract to ViaSat. One of the losing contenders was Comtech Telecommunications (CMTL).

BFT is a system of terminals, radios and datalinks that allow units to track the position of other friendly units. The goal of the system is to avoid friendly fire incidents that proved such an issue in Desert Storm. Northrop Grumman (NOC) is the prime contractor for BFT with ViaSat winning a contract to build parts of the system.

The loss of the contest for this contract was a major blow for Comtech and its stock price suffered accordingly. This then put pressure on the planned acquisition of CPI International for over $470 million. This deal was heavily based on CPI International shareholders receiving Comtech stock. The fall in price of shares affected how much money would be transferred.

Now in part due to the loss of the BFT contract Comtech announced that the deal has been terminated by mutual agreement.

At a time when M&A within the defense industry is supposed to pick up this illustrates that not all deals will go through. Comtech certainly had good reason to acquire CPI as it would have increased their market share in a variety of products and also expand their customer base. Unfortunately the two companies could not negotiate a deal based on the current status of Comtech’s stock.

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CPI Aero Announces $600,000 Production Program Order from Major Aerospace Prime Contractor

EDGEWOOD, N.Y.--(BUSINESS WIRE)--CPI Aerostructures, Inc. (“CPI Aero®”) (NYSE Amex: CVU) announced today that it has received a purchase order from a leading global aerospace and defense company to produce aircraft structural assemblies, valued at approximately $600,000. Work on this order will commence immediately and deliveries are scheduled to occur during the first half of 2011. About CPI Aero CPI Aero is engaged in the contract production of structural and other aircraft parts for leading p

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ATK To Continue To Support Hellfire Program

The helicopter, UAV and ground launched Hellfire was developed as a heavy guided anti-tank missile to replace the TOW system in use with the U.S. military in the 1980’s. Since 9/11 it has evolved into a precision strike system for targeting buildings and even groups of infantry. Lockheed Martin (LMT) is the prime contractor for the system but ATK (ATK) makes engines and warheads for the missile.

ATK was awarded a contract last week to produce over 7,000 engines and 2,200 warheads for Lockheed. This is a continuation of earlier work on the system. The warheads are “metal augmented charge” which means they are optimized for anti-building and personnel missions rather then anti-tank. The Israelis due to their use of the Hellfire from AH-64 Apache aircraft required a warhead optimized for attacking buildings for use in the Gaza Strip and West Bank. This began the development of a system that is similar to the U.S.’s requirement.

http://www.flickr.com/photos/emeryjl/ / CC BY 2.0
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AAI Wins Sub-contract From Lockheed For eCASS Components

Lockheed Martin (LMT) is the prime contractor for the next generation of test equipment for U.S. Navy aircraft. The electronic Consolidated Automated Support System (eCASS) program will develop this for use on aircraft carriers and at land bases to support maintenance of key electronic systems on the F/A-18 and other Navy aircraft.

As part of the development and production of eCASS Lockheed gave AAI, a part of Textron Inc. (TXT), a contract to build radio frequency components. These mission equipment kits production is worth about $43 million if all options are exercised. AAI will provide over fifty of the units including two for depot use. As military programs become more-and-more complicated sophisticated test equipment aids in rapid diagnoses and fixes which minimized repair time and maximizes systems availability.

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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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EADS NA Struggling To Find U.S. Partner

It seems that EADS North America the subsidiary of the EADS (EADS:P) is searching for a U.S. company to partner with them on the KC-X tanker contract. Reports are that L-3 Communications (LLL) had been the prime target for this role but now they are rethinking that role.

EADS had planned to be a sub-contractor to Northrop Grumman (NOC) providing A330 aircraft that would then be militarized by Northrop. Now they are planning on being the prime contractor with a U.S. company to aid them. The roles are different enough that it will put pressure on EADS to prepare most of the proposal themselves as well as provide most of the contract management. With their history so far in the U.S. that might be a bit too much for them.

EADS To Consider Extension

EADS North America released a statement last night about the sixty day extension granted for KC-X proposals. They stated:

“Since the Department of Defense indicated their interest in EADS’ participation as prime contractor in the KC-X tanker competition, the company has carefully assessed the many requirements necessary to participate. We have firmly indicated that a 90-day extension would be the minimum time necessary to prepare a responsible proposal for this $40 billion program. We will consider the Department’s decision to offer a 60-day extension.”

This seems to indicate that EADS may still have given themselves an option not to participate by claiming the need for ninety days vice sixty.

Reports of Other Bidders for KC-X Emerge?

Over the weekend it was reported that the Russian state owned aircraft company, United Aircraft, might be interested in bidding on the KC-X proposal. With Northrop now planning on not participating with EADS only Boeing was left as a confirmed bidder. Russia was about the only other country that had the capability to submit a proposal as they have already made tankers for themselves, India and other users. The thought though of Il-76 based tankers fueling F-22 is sort of hard to imagine. Documents provided to the Seattle Times show that United Aircraft would team with a World Aviation Maintenance to form a new company to bid. The proposal would be based on the Il-96 airliner rather then the older transport tanker already in service.

At the same time there are reports that EADS may submit a bid with themselves as the prime. Earlier this month the company said that it was not confident of being able to do this. EADS-North America could certainly be used as a prime contractor. The time needed for the company to prepare a proposal of this magnitude is why there is talk of extending the deadline three months.

It would be good for the U.S. Defense Department and Air Force to have some form of competition in the latest attempt to award this contract. Whether the Russian or EADS based bids would be viable is another matter. It is going to be difficult though to award what amounts to a sole-source contract with the mood in Congress of many Northrop and EADS supporters.

Air Force Contracts With Biotechnology Company UES Inc.

The United States Air Force Research Lab (ARFL) contracted with Ohio based UES Inc. to provide biotechnology and nanotechnology research in support of materials development. The contract is worth about $44.5 million to the company and will be a major expansion of its work for that service. The ARFL is tasked with managing and funding most of the basic research performed by the service focusing on areas to improve aviation technology.

The contract will be carried out at Wright-Patterson AFB in Ohio where UES already conducts some work. The focus will be on looking at how biotechnology, nanotechnology and natural processes may be used to strengthen and protect materials. Obviously the Air Force needs to invest in material development as they are looking for lighter, stronger and stealthy ones to build advanced aircraft out of. UES has been growing recently and looking to become a prime contractor for these kind of contracts rather then just being a sub.

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