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 Canadian government announced today that they are taking steps to improve the aviation assets for their troops in Afghanistan. See a story here. Up to now the Canadian ground forces relied on either Allied lift or use ground transportation. Now they are leasing Russian Mi-17 and buying CH-47D and F aircraft. The CH-47D will be used immediately, but the CH-47F will be new construction and available in 2013. The country is also leasing and buying UAV assets to support intelligence and surveillance operations.

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.

With the decision here to relax the off set provisions required for work on Indian defense contracts India received six new proposals for their new advanced fighter aircraft, the MMRCA. See a story here. Boeing, Lockheed Martin, EADS, MiG, SAAB and D’Assault submitted proposals. Aircraft from these companies are currently under evaluation with a decision to be made in the next several months.

Looking at several major contracts to be awarded in the next ten years, India’s government has decided to relax their offset requirements. See a story here. As previously discussed here, India had been demanding major off set investments that some foreign companies felt were too difficult to meet. Now the government will allow companies to just hold funding to meet the offset requirements. This will make it easier for companies to bid on the contracts.

The House Appropriations Committee marked the FY09 budget before taking their August recess.  See a story here. The Army’s struggling Armed Reconnaissance Helicopter (ARH) program was marked to delete 13 aircraft, and the Navy’s Presidential Helo was also decremented. The House also ordered that consideration of jobs would be a criteria for the source selection of the KC-45 tanker. Boeing won its protest of the award to Northrop-Grumman and EADS and forced DoD to reconsider the contract. The Senate needs to also mark the bill and then there will be a Conference mark up as well.

The US Army awarded FLIR Systems a $30 M contract for more systems to support ground based force protection systems. See a press release here. FLIR Systems has long built sensors for aircraft but recently the US has invested in this technology for the monitoring of perimeters and base security. FLIR Systems has won several contracts and options for this type of equipment while continuing its success with aviation systems.

According to reports the Iraqi government is planning on buying six C-130J aircraft and associated support equipment. See an article here. The total contract could be worth around $1.5 B. The sale would be handled through the Pentagon’s Defense Security Assistance organization.

India has decided to put out an RFP for light helicopters after all the back-and-forth. See an article here. As previously discussed the planned acquisition was canceled, then planned again, and now it will be for a reduced number than the last attempt. Now rather then going with a 100% foreign buy the contract will be split between a non-Indian company and HAL. One positive of this is that they plan to limit the tech transfer, requirements that recently have been seen as onerous, to only those for the support of the aircraft.

Recently the US Navy announced that it was not going to continue the DDG-100 program. Two ships are under construction by Northrop-Grumman and General Dynamics. Not unexpectedly the Senators from the affected states, mainly Massachusetts and Maine, have protested. See an article here. The major recent the Navy cites is the continued cost growth of the program. The first two were projected at under $4 B each, but now the estimates are over $5.5 B. Other than the shipbuilders, Raytheon is the most affected company as it was building the combat system of sensors for the ship. The Navy intends to continue production of the DDG-51 class instead.   Read the rest of this entry »

India canceled a contract with Boeing for P-8 maritime patrol aircraft due to disagreements over end-user limits on the US technology involved. See an article here. The $2.2 B contract was ready to go for final approval when talks broke down over how to review equipment to prevent technology transfer. India objected to the harsh provisions. This does not mean that the contract could not be renegotiated, but it may be India turns to another provider.

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.

The USMC purchased 773 MRAP from General Dynamics. See a press release here. The contract is worth over $500 M. These are RG-31 MRAP designed in South Africa and will be sent to Afghanistan. The RG-31 was selected as it is smaller and lighter then other MRAP in the inventory and according to this article the US military is now concerned with rollovers and the size of the MRAP vehicles already purchased. Although wheeled they are very heavy and have issues with the roads and bridges in Iraq and Afghanistan. MRAPs are very all as well and can roll over more easily then other tactical vehicles.

The USMC awarded a contract to Hawker Beechcraft for 6 new transport aircraft. See a story here. These will replace older UC-12 aircraft also made by Hawker Beechcraft that have been in service for a few decades. These will most likely be used for personnel transport in more benign environments. The Army has been working to buy larger tactical transports through the Joint Cargo Aircraft (JCA) program but are struggling with the USAF on requirements and quantities.

The GAO released a report stating that in their rush to purchase Mine Resistant Ambush Protected (MRAP) vehicles the services may have set themselves up for some long term costs that were avoidable. See the story here. No kidding. The USMC and Army were thrown money and direction by Congress to purchase as many MRAP as possible and rush them into service. Do you think that there were some thought and steps in the contracting process that could have been more thorough? In the long term neither service wants the MRAP, which was a knee jerk reaction to the IED threat anyway. They are not very mobile or tactical and there will be issues in the future trying to transport them to whatever the next battlefield is.

The US Navy, along with the USMC, and acting for FMS customers awarded a contract to Sabre Defence to manufacture M16 rifles. See a press release here. Sabre becomes only the third company to manufacture military specification M16 rifles since its introduction in the early Sixties. The order seems small at under 6,000 rifles but the Army and USMC have turned to the Colt Industries M4 carbine over recent years. The Special Operations Command went with their own unique HK product as well. The number of M16 rifles in the US inventory is large and will probably support needs in the near future.

Raytheon subcontracted with the small business Sonju Industrial to build missile components. See an article here. Sonju Industrial is a small business and will partner with Raytheon through the Missile Defense Agency (MDA) mentor-protege program. The contract will allow significant growth of Sonju Industrial. This is another example of how defense dollars flow to every part of the US and their significance to the nation’s economy.

The Defense Logistics Agency (DLA) signed a contract with SAFT for batteries. See the press release here. While SAFT is a French company the batteries will be made in NC at their plant. The contract is for up to 5 years and could be worth $170 M. With the amount of electronics proliferating on the battlefield, battery technology is very important as the US and other countries strive for lighter batteries that provide more power.

Armstrong Tools announced that they were awarded a contract to provide standardized tool sets to the US Army and Marine Corps. See the press release here. One of the key components of the contract is that it is Berry Amendment friendly. The contract is for over 90,000 kits and is worth over a $100 M.   Read the rest of this entry »

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.

In light of the GAO report the USAF and DoD decided to recompete the new tanker contract. See an article here. This, like the CSAR-X, means that a whole new competition will be held. The Air Force will rewrite the RFP and Boeing and Northrop Grumman will resubmit proposals. Much of the work preparing these will be already done which will speed up the process for the bidders.

Force Protection was awarded a contract by the USMC to support MRAP vehicles. See the press release here. The contract is worth over $40 M and will last over a year. Force Protection had recently had some issues winning MRAP contracts, and this win will be welcome. For more see this and this.

Lockheed Martin awarded a Norwegian company, Kongsberg, a contract to make parts for the F-35 JSF. See an article here. In an unrelated matter Norway is looking at buying either JSF or Swedish Gripen aircraft to replace their F-16 fleet. Kongsberg will get the contract worth up to $1 B or more even if Norway does not buy the JSF.

The Department of Defense has provided financing to Brush Wellman, a division of Cleveland-based Brush Engineered Materials, for expansion of their beryllium processing facility near Toledo. See an article here. Beryllium is a strategic metal that DoD stockpiles in support of their systems production. Brush Wellman is the nation’s largest beryllium producer. DoD and the company will jointly finance the new expansion.

India has decided to not continue their indigenous main battle tank program. See an article here. India had developed and put into production their own Arjun system, but have now decided that it is not what they need for the long term. No more production contracts will be placed and they will instead build out the 120 or so on order. They will look to foreign firms for a more advanced system.   Read the rest of this entry »