Defense Procurement News

DoD reported that all four of the appropriate defense committees approved the reprogramming for ISR assets. See a story here. The transaction will move $1.3 B from various Army, Navy and Air Force procurement programs to buy various systems to support current operations in Iraq and Afghanistan. The focus of the money will be UAVs and their support systems. The majority of the money came from Army tactical wheeled vehicles and some communications systems.

The US Army awarded TeleCommunications Systems (TCS) a sole-source ID/IQ delivery order contract for tactical satellite communications systems. See a press release here. If all options are exercised the contract could be worth up to $246 M. TCS builds small, portable systems based on its proprietary software. The systems are configurable for man pack or vehicle mounts and will initially be used by Special Forces, but could be supplied to other Army and Defense organizations.

Lockheed Martin has moved to buy a joint venture it had set up in Australia today. See a press release here. RLM Holdings was a company established by Lockheed Martin and the Tenix Group to manage the Jindalee Operational Radar Network (JORN) and provide other defense services. The JORN is a large array over-the-horizon surveillance system that can detect surface and aerial targets at very long range. RLM also manages other defense radar systems as well as providing services to the Australian defense forces. This acquisition will have to be approved by the Australian Government.

ManTech is a second tier defense contractor that provides services and support to the US military. For the quarter ending in June ManTech reported income of $21.9 M. See a press release here. This was a substantial improvement over the same quarter in 2007. Much of the increase came from large IT support contracts for various services. There was also substantial business with classified contracts. Many of the defense contractors that have reported to date have done well over the last quarter.

Boeing won a contract to develop the bankrupt Iridium communication satellites for DoD. See an article here. Iridium is a network of low earth orbit satellites that were to be used to provide telephonic communication. Motorola had led the original consortium that put the satellites in orbit, but they company went bankrupt. The Navy Research Lab awarded Boeing a contract to exploit the Iridium satellites to support the GPS network already deployed. DoD has been using the satellites for communications purposes, along with commercial customers.

General Dynamics was one 23 companies awarded a possible right to get work under a large ID/IQ contract for planning and support. See a press release here. The contract if all options are exercised could be worth up to $5 B. Like all of these contracts, though, there is no guarantee that any company will get work, or that any will actually be exercised. This contract again demonstrates that DoD is paying a great deal of money to support its soldiers, retirees and dependents.

The Scottish company, WFS, has won a development deal from GD. See an article here. WFS works on advanced radio waves propagation techniques. Like many Europeon companies they have looked to the US and the expanded defense budgets of the last 7 years to gain work. It also again demonstrates that in the long run it is cheaper and more efficient for US companies to look overseas for existing capabilities, rather than develop them internally.

General Dynamics as part of the Mobile User Objective System (MUOS) satellite base communication network installed the antennas for the first of four groundstations. See a press release here. MUOS will provide a cell phone like communication system through satellites. It will eventually have four ground stations with the first being in Hawaii. This system continues the US focus on upgrading communications through more use of satellites.

Raytheon was awarded a contract today to continue work on Cooperative Engagement Capability (CEC).  See a press release here.  CEC is a natural development of the work the Navy has done with datalinks for the last 50 plus years.  By the Nineties the Navy was able to share the sensor picture from one ship with others over a tactical data link.  Even during the Gulf War this was not good enough for targeting.  CEC’s goal is to develope a netted sensor grid that will support providing a fire control solution good enough that one ship can guide a missile launched from another.  The Navy was installing CEC on selected ships by the end of the Twentieth Century. For more on CEC see this.

CombiMatrix received a contract from DoD to continue development of hand-held diagnostic equipment for use in the field. See the press release here. The contract is worth over $900 K. DoD as well as other government agencies are evaluating products based on CombiMatrix’s systems to detect bacteriological and chemical systems. This contract builds upon those earlier efforts.

CNNMoney has a preview of the upcoming earnings report for a variety of US defense contractors. See this for more. Not surprisingly the outlook is good. The US defense budget remains large and will probably not see any downturn until 2010 at the earliest depending on the US election. Rockwell Collins reported yesterday and they came in with 24% improvement over last quarter. See the press release here.

Lockheed Martin, who won the next increment of the JTRS AMF, awarded a subcontract to Northrop Grumman to provide technology to support production. See an article here. Earlier this year Lockheed Martin was named the winner of the JTRS AMF radio contract. They now have given Northrop Grumman a subcontract to lead the small airborne radio part of the system.

Lockheed Martin was awarded a contract by the Department of Homeland Security to provide human resources support to the Transportation Security Administration (TSA). See an article here. The contract could last eight years and have a value of over $1 B dollars. The company will provide support to all aspects of the TSA’s personnel system.

The UK government, fresh off of awarding the construction contract for the two new aircraft carriers, has now awarded a second major one related to the effort. BAE has been awarded a contract to develop the IT backbone for the ships. See this article for more. This over $500 M contract will develop the system that integrates everything on the ship. Sure to be key as one of the goals of the new design must be to minimize crew size.

The Australian Ministry of Defence is reviewing ways to save money through improvements to its liscensing agreement with Microsoft. See a short article here. Like many large organizations, government and private, the MoD has invested in MS products - windows, office and project - to run things. They probably buy thousands of licenses and any efficiency there will save money in the long run.

The DARPA and US Army awarded a follow-on contract to UltraCell for continued work on hydrogen fuel cell systems to power military hardware. See an article here. The UltraCell process utilizes methanol and converts it into hydrogen to provide electricity. The current system is used to provide power for laptops, but UltraCell is working on scaling it for use with larger fixed installations. The advantage this offers is that for comparable power the fuel cell is smaller and lighter then existing batteries. There is also no requirement for a separate electrical system to charge the batteries as is currently done.

Bearingpoint was awarded a contract by the US Navy to provide management tools for the Recruiting Command. See a press release here. The contract is worth over $12 M and is a continuation of Bearingpoint’s work over the last few years. As with many other types of corporations the military spends a great deal of money on custom software and database applications. This is actually a large business and is often subsumed within the SETA support contracts.

This syndicated post on Defense Procurement News from UPI.com discusses a new biometric identification system manufactured by Neurotechnology of Lithuania. The article described it as a “scanning technology”. We were contacted by the company to clarify that they do not make “scanning” systems, but iris recognition technology. These are utilized to identify individual iris’s.

Poland which has actively supported US operations in Iraq and Afghanistan as well as moving to more NATO standard equipment obviously needs to upgrade from its Soviet era equipment. According to this press release they bought $15 M worth of Harris Equipment tactical radios to support overseas operations. As Poland and the other former Warsaw Pact countries continue their integration further orders like this will take place.

Harris Corp won a contract from the US Navy to build ship-board satellite communications terminals. See an article here. The contract is a one year base with four option years and could be worth over $70 M. Harris continues to add radio and communications equipment contracts.

According to this article, GD is rapidly expanding their facility in Pittsfield, MA due to several contracts from DoD. The Advanced Information Systems Division is responsible for developing weapon control systems and other electronic networks for Navy ships. They have recently built a new facility and have created over 140 jobs. This again illustrates how important the DoD budget is in creating high paid, high skilled jobs all over the country.

Boeing has been building a modified B737 aircraft to act as an Airborne Early Warning and Control (AEW&C) aircraft. Delivery of the first has now slipped four months according to this report. Any issues Boeing has with these types of contract only serves to reinforce the US Air Force’s belief that they could not meet the KC-45 timeline as well as Northrop-Grumman and EADS will. The contract is a fixed price one so a delay will eat into Boeing’s profits as well. The company is also building a similar aircraft for Turkey.

This article describes efforts by the US Justice Department to investigate a non-profit charity somehow hired by the US military to do intelligence work. In a somewhat related issue it happens to be in Johnstown, PA home of many companies the creation of Congressman John Murtha (D-PA) purely used to shovel US tax dollars into the local economy. The company became noticed when it hired a gentlemen waiting to start his political appointee job in the Air Force and paid him $26 K even though he admitted doing no work for them, or anybody else for that matter. Mr. Murtha has created a network of different companies that he just earmarks funds for. A non-profit company also has the ability to be preferred for US contracts. Somehow Mr. Murtha knows all this, but contracting officers and DCMA don’t.

SAIC reported that their first quarter profits were up 25% over last year. See a story here. The company chose to highlight there contracts providing support to the various MRAPs deployed to Afghanistan and Iraq as part of the reason results were so good. Of interest is that the CEO, Mr. Dahlberg, complained of the fact that they cannot generate commercial growth to their satisfaction. This is often true of various large defense contractors. If there are significant decreases in the US defense budget in the future these companies may find it hard to sustain growth and profitability.

These three articles illustrate how the US defense budget as it has grown over the last several years effects localities economically. This one and this one discuss how Western Pennsylvania relies on the budget to support local industry. This article about Hawaii shows the effect of the Pacific Missile Range Facility on the island of Kaua’i. Although tourism is the major economy on that island the conduct of AEGIS missile defense tests certainly adds money to the local economy.   Read the rest of this entry »