Defense Procurement News

Boeing will continue the C-17 production line for a few more years. See a press release here. No details of how many aircraft or contract value were provided. Boeing is on contract for 190 C-17s for the USAF, of which 175 have been delivered. 15 more were just placed on contract as part of the FY08 Defense Supplemental bill. Boeing had been seeing the end of the production line with the finishing of USAF and foreign orders. Depending on the size of the Qatar order it may extend the line for some time.

Fresh off all of the problems with the contract let to AEY, the US has moved to a more traditional source for ammo for Afghanistan’s military and police. See the press release here. Allied Defense Group has been awarded a FMS contract to provide ammo. Allied has grown significantly over the last 7 years as the demand by the US for ammunition of all types, but especially small arms, has increased.

According to this article in 2007 Israel passed Britain to become the fourth largest defense exporting country. They follow the US, Russia and France now. The two biggest customers are the US and India. The recent win of the Indian AWACS contract, reported here, had a great deal to do with that. The Israeli government and industry have made major strides in recent times increasing their exports rather then just focusing on domestic needs.

According to this article the US DoD has proposed selling 48 F-16 fighters to Romania. This would be one of the biggest FMS sales to a former Warsaw Pact nation. The addition of the F-16 would be a major upgrade to the capability of the country. The Czech Republic has looked at buying some Western equipment and there has been some purchases of companies like Poland’s PZL by Western countries. The movement into NATO of some of these countries will also accelerate these kind of purchases as there will need to be movement towards standardization.

Force Protection announced that they had been awarded a contract to deliver 157 MRAP to the UK armed forces. See the press release here. Force Protection had been struggling as they won very little of the last US contract for MRAP vehicles. This contract will certainly tide them over for several months as it is worth an estimated $125 M. See a post here on Force Protection’s situation.

The Department of Defense ordered the six Indian C-130J aircraft from Lockheed Martin. See the article here. As in the case of most Foreign Military Sales (FMS) India just piggy-backed on the current production contract. This gives them the lowest price possible due to production quantities and stability. The total contract is worth over $1 B, but the aircraft part is about $600 M.

Northrop-Grumman received a contract worth $37 M to upgrade Japan’s E-2C aircraft. See an article here. Originally a carrier based Airborne Warning and Control System (AWACS); several countries like Egypt, Israel, Singapore and Japan have bought it to base on land and use in their restricted airspace.

Australia has expressed an interest in procuring F-22 Raptor aircraft. Currently they are planning on buying JSF ultimately. Currently US law prevents the export of the F-22. In this article from News.com.au, the US Secretary of Defense, Robert Gates, expresses the sentiment that Australia would be good stewards of the F-22 if they received them. Obviously the law is to prevent the transfer of what is considered the best technology that the US has, but there are certain allies in the past that have been able to share it. As previously discussed technical transfer laws have become very restrictive and have affected US programs.

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According to this article in NisNews.nl, the Dutch government has come up with a way to make money on the foreign currency they transfer to the US to buy weapons and training. Rather then doing a direct government-to-government transfer of the $350 M or so they spend each year, they utilize a commercial account and pay over time. This allows them to get interest on the money.

The President has informed Congress that he intends to sell to Saudi Arabia $123 M of JDAM guidance kits. This extends the recent batch of orders to Arab states. See this article here for more. Their were some thoughts within Congress to try and delay or stop the deal, but diplomatic desires over ruled this.

The US Navy awarded Raytheon a $126.7 M contract for AIM-9X Sidewinder Air-to-Air Missiles (AAM) production for both the Navy and Air Force. See DefenseLink.mil here for more. The contract also includes FMS sales to Australia and South Korea.

According to Rueters, Lockheed-Martin won a $498 M contract to provide 18 F-16C and D aircraft. The money from the US to Pakistan keeps flowing. Pakistan already operates some F-16 aircraft. With the previously stated intent of selling American designed and manufactured weapons to India, we may end up on both sides if another war breaks out between the two nations. For more details see the article here.

I say awarded rather then won as who else will do the work? These will support Egyptian and Taiwanese systems previously purchased. More details here. As previously discussed, FMS is a great multiplier of procurement programs abilities through cost reduction and savings. It also has a great political overtones as the US will favor a country with advanced capabilities.

Lockheed-Martin was awarded a contract by the Missile Defense Agency (MDA) to provide AEGIS radars and support to the Japanese Navy. The contract is for $40 M and will be paid through Japanese FMS funds. It looks like it will outfit one Kongo class cruiser with the antennas and software. Who would have thought that MDA would be running FMS contracts? When I was there we did not even discuss it. More information on the contract award is here. More information on the Kongo class is available here.

According to sources in the new Australian Government of Prime Minister Rudd, all planned defense procurements will be reviewed and considered for change or cancellation. The last Australian government had decided to buy 24 F-18 Super Hornets to fill the gap before the Joint Strike Fighter (JSF) aircraft was available. The Age reports that this contract will be reviewed as part of a new look at the nation’s air defense needs. If the contract is cancelled it will be a blow to both the US Navy and Lockheed. US defense programs rely on Foriegn Military Sales (FMS) to lower the price of equipment through increasing quantities to get price breaks from the contractors. The fact that a new government, though, is reviewing the previous one’s defense plans is not new, and will happen in the US in the Spring of 2009. For example, in 1992 two budgets were submitted to Congress, one by the outgoing Bush administration and one by the new Clinton one.