production AH-6i Light Armed Scout Helicopter makes first flight

Saudi Arabia unveils part of strategic missile force – a deterrent move against Iran?

Washington to supply 14,000 TOW missiles to the Saudi National Guard

Washington to supply 14,000 TOW missiles to the Saudi National Guard

Egypt interested in buying 24 MiG-35s from Russia

GDLS Canada to Deliver Armored Vehicles Worth $10 Billion To Saudi-Arabia

MBDA Completes First MPCV Air-Defense Vehicles

Syrian Conflict Could Win Ankara a Saudi Order for Altay Main Battle Tanks

Turkey’s defense industry may sell hundreds of new generation Altay battle tanks (video) to Saudi Arabia, as the two countries show a common understanding on the civil war in Syria – Defense-Update reports. The rift between Sunni and Shiite... Read the whole post... »

Bundling Israel Paves Way for Pentagon Sale of Strike Weapons to Saudi-Arabia, UAE

A multi-billion arms deal offered by the US to key Middle-East allies bundles advanced fighter planes, strike weapons, radars and special mission aircraft, sold separately to Israel, Saudi Arabia and the UAE. Convinces the UAE to increase the number... Read the whole post... »

Lockheed Wins Two Training Contracts

With Sequestration affecting the U.S. defense budget that still does not mean contracts for new programs are not being awarded. In fact with the extension of the Continuing Resolution and the passing of a full year’s funding — not budget — the Services may now award some work that was on hold pending a decision in that matter.

Lockheed Martin (LMT) in the last 30 days received contracts for 2 new training systems. One from the U.S. Army and the other from an international customer, the Royal Saudi Air Force. Foreign Military Sales (FMS) and Direct Commercial Sales (DCS) are not affected by sequestration.

The first, Saudi, contract is worth up to $253 million and is for systems to support the Kingdom’s Boeing (BA) F-15SA fighters. The contract will provide maintenance and pilot training support by 2020. In the current day services are investing millions in computer and simulation based training devices to aid in operating and maintaining complex weapon systems.

The second one for the U.S. Army is for a command and control simulator to aid in training U.S. and allied country leadership in the conduct of military operations. That could be worth up to $146 million. The Joint Land Component Constructive Training Capability (JLCCTC) system builds off of an earlier simulator, WARSIM, that has been successfully used since 2012 for group leader training.

The advantages of computer based training is that it reduces overall costs and personnel required. They also collect data that may be reviewed and analyzed to support teaching and further training. Lockheed’s Orlando unit does a great deal of work in this area as do several other contractors like Cubic and L-3 Communications.

General Dynamics Wins 2 FMS Vehicle Contracts

As the U.S. Defense Department looks to the potential start of sequestration and the cuts required by that budget device it made an effort at the start of Fiscal Year 2013 to award as many contract and production options as it could. This means that future large contract awards may be limited as the year goes on. This may limit the potential contract actions remaining for U.S. defense contractors.

At the same time some budget decisions have already been made due to the drawing down of the Afghanistan commitment and the end of Iraq fighting. This has included decisions by the Army to not utilize General Dynamics (GD) tank manufacturing plan in Lima, OH due to their requirements being met.

General Dynamics like most other major contractors is trying to expand their already quite large foreign orders to make up for some of these cuts, real or potential.

In this vein the company was just awarded 2 Foreign Military Sales (FMS) contracts for U.S. allies. These are for M1 tanks to Saudi Arabia and Light Armored Vehicles (LAV) for Colombia.

The Saudi contract is for a further 69 of the M1A2S version of the Abrams tank. This contract is worth a little over $130 million and is for a tank specifically equipped to Saudi needs.

Colombia ordered 24 LAV III wheeled armored vehicles for just over $65 million. The LAV III have the latest in double hull armor for defense against IED and mines.

If the sequestration cuts are implemented then there will be more pressure to win these types of contract in an increasingly competitive markets. If not the U.S. may not be able to maintain manufacturing capability slowly built up over the last decade.

Saudi Arabia to Upgrade C-130 Fleet

The U.S. Defense Department informed Congress this week that they intend to sell to Saudi Arabia 25 C-130J and KC-130 aircraft. The aircraft are made by Lockheed Martin (LMT) outside Atlanta. If Congress does not object in 30 days, which they most likely will not, then the contract will begin. Estimate of the value including spares, support and other services is almost $7 billion.

It represents the largest C-130 Foreign Military Sale (FMS) contract in value.

The C-130J is the latest version of the venerable propeller driven transport which has been in use since the Fifties. Several hundred of the model are now in service with the U.S. Air Force, Marine Corps and many different nations around the world. The fighting in Iraq and Afghanistan which due to the vehicle threat emphasized tactical transport with aircraft like the C-130 and rotary wing assets drove some of the sales in the last 10 years.

Saudi Arabia already operates 50 older versions of the aircraft so this contract represents a significant upgrade to that capability.

With the potential for less domestic contracts U.S. contractors will be looking overseas for more sales.

Photo from kingair42′s flickr photostream.

FY12 Defense Contracts Flow and Lockheed Martin Benefits

The Pentagon may be planning to reduce or hold spending flat in the upcoming years but with the final passage of the 2012 defense budget major contracts are now flowing to different contractors as Project and Program Offices place production orders. Lockheed Martin (LMT) benefited from this yesterday as they received the latest production contract for the PATRIOT PAC-3 missile.

The PATRIOT air and missile defense system is made up of two major parts: the radar and the interceptor. Currently Raytheon (RTN) is the prime contractor for the radar and command and control systems while Lockheed manufactures the current standard missile, the PAC-3. The PAC-3 version of the system in use since the late Eighties incorporates modifications to maximize missile defense capabilities while the missile is smaller, relies on hit-to-kill technology and is a significant upgrade to the earlier PAC-2 missile as it allows more rounds to be used by each launch unit.

The FY12 order is for both U.S. Army use as well as a follow on delivery for Taiwan. It has a value of just over $900 million and represents a rather significant contract. The work includes not only the missiles but also kits, spares, support equipment and engineering services.

The PATRIOT represents the shorter ranged part of the Army’s missile defense capability with the Theater High Altitude Area Defense (THAAD) system made by Lockheed providing longer range and larger area defense.

The PATRIOT has seen significant foreign military sales to countries like Germany, the Netherlands, Israel, Saudi Arabia, U.A.E. and Taiwan. It is especially valuable to those countries facing a ballistic missile threat like Israel, Taiwan and the Gulf States.

The PAC-3 missile has been in production for several years from Lockheed’s facility in Camden, AR.

Photo from Tumbleweed:-)’s flickr photostream.

Gulf States Continue to Invest in U.S. Hardware

Over the past two weeks some major deals were announced between Gulf States and the U.S. defense industry. These contracts continue the Saudi and Emirates investment in their military to provide greater defensive capability most likely due to the continuing threats emanating from Iran.

The U.A.E. followed through on earlier discussions with a contract to purchase two Terminal High Altitude Area Defense (THAAD) missile defense systems. The THAAD is a ground based system developed by the U.S. Army that provides longer range engagements and protects larger areas then the earlier PATRIOT PAC-3 system. THAAD relies on a missile from Lockheed Martin (LMT) and a large radar from Raytheon (RTN). The overall contract including support and services is almost worth $2 billion.

Image from Bundeswher-Fotos Wir.Dienen.Deutschland.’s Flickr photostream.

The THAAD deal had been supposedly agreed two last year but in the summer the U.A.E. was seen as perhaps not going through with it but now obviously they decided they needed to.

The other contract is an even larger one with Saudi Arabia for F-15 fighter aircraft, engines and the necessary support. The Kingdom already operates the F-15 and this contract will add 84 more aircraft as well as modernize the existing ones. The value is in the range of close to $30 billion. Boeing (BA) is the primary manufacturer of the F-15 which in the U.S. will slowly be replaced with F-22 and F-35 aircraft.

Saudi Arabia is also reportedly not complete with their planned purchases for their armed forces. This will be a good thing for the U.S. and European defense industry who are facing reduced opportunities at home. These kind of contracts will help make up cuts in domestic defense spending.

The U.A.E. is also trying to decide on a major fighter buy themselves. Originally it was though they would go with the French Rafael aircraft but at the Dubai airshow last month it became clear that they may not choose that aircraft. This could open up the contract to competition to a wide variety of companies.

It can be expected that further contracts of this type and size will be announced for the next several months as Saudi Arabia, the U.A.E., Qatar, Kuwait and other Gulf States continue to invest in military equipment to upgrade and improve their capabilities.

Saudi Patriot Deal Receives Government Approval

One of the largest markets for all defense contractors but especially U.S. ones is the Kingdom of Saudi Arabia. That state utilizing its oil resources has spent billions on its military and National Guard to equip them with modern equipment from the U.S. and Western companies. This has included ground vehicles, aircraft, weapons and C4ISR systems.

The Kingdom had already invested heavily in Raytheon’s (RTN) PATRIOT air and missile defense system after the first Gulf war. The PATRIOT is the primary ground based system used by the U.S. Army and many U.S. allies. Over the last two decades the U.S. has spent money upgrading the radar, software and missiles so that the current standard is the PATRIOT PAC-3.

The PAC-3 includes a new missile from Lockheed Martin (LMT) that is smaller and optimized for ballistic missile defense. The PATRIOT also has upgrades to the radar and software to support this mission and also deal with other threats. The PAC-3 has been in production for several years now.

Saudi Arabia had applied to buy the PAC-3 capability through an upgrade to its existing PATRIOT systems. That deal has just received approval by the U.S. government as the deal was such that it had to be signed off of by both Congress and the Department of State. The contract could have a total value of over $1.7 billion making this a very important contract to Raytheon.

If the U.S. defense budget does see significant cuts then contractors will continue to develop and hope for contracts like this one to help mitigate those cuts. Unfortunately that market

Dubai Air Show Disapoints So Far

The Dubai Air Show held in the United Arab Emirates (U.A.E.) every year has become one of the three most important air shows and military exhibitions. It joins the alternating Paris and Farnborough air shows that take place in France and the U.K. ever other year and the Singapore Air Show as one of the ways defense contractors market their wares to a wide variety of customers. The Dubai due to its location obviously focuses on the U.A.E. and other Gulf States.

In the past the show has been the scene for announcing major defense contracts. In 2009 the U.A.E. bought military transports from Lockheed Martin (LMT) and Boeing (BA) as well as made a major investment in missile defenses with planned purchases from Lockheed and Raytheon (RTN). These contracts whetted the appetites of the companies for further deals with a goal of offsetting the coming reductions in domestic defense spending.

In 2010 there were no major contracts announced although the U.A.E. did make some investments in joint ventures between domestic companies and foreign ones to provide support to existing systems and build new ones at home. It was safe to say that 2010 was not what the U.S. and European defense contractors had hoped for.

The current 2011 edition has seen many different contracts for civil aviation. EADS (EADS:P) and Boeing have sold airliners to various Gulf based companies as well as different maintenance and upgrade plans have been signed but so far no real military contracts.

There is hope that the U.A.E. will commit finally to a new fighter with France’s Dassault and Eurofighter considered top contenders but that has been talked about for many months. The same story was being discussed at last year’s show. The U.A.E. did discuss its plans for upgrading and improving its air defenses next year including plans to add a UAV to its military in 2013. While the state is negotiating supposedly with Dassault it also expressed interest in another more advanced fighter.

Boeing was also hoping to announce that a contract for their new version of the OH-6 helicopter, the AH-6I, could be executed. So far that has not happened. Jordan and Saudi Arabia are considered contenders for the light attack aircraft.

While there are different things being considered by the Gulf States none of these have yet to come to fruition. It may be another disappointing show for the Western defense contractors. Faced with the potential for reduced sales in their home countries these types of foreign deals will become more necessary to maintain revenue and earnings.

Raytheon Gets Two Significant Gulf State Contracts

The friendly states in the Persian Gulf have always been good customers of the United States. While they also due to their financial resources have purchased some items from the European defense industry due to ties with former colonial powers they have in recent times turned to the U.S. for their needs. This is especially true in the area of missile defense. Overseas sales have become more important as the expected downturn in U.S. domestic defense spending will require expansion in other areas to make up the revenue.

Raytheon (RTN) has been one of the biggest beneficiaries of this as they make the PATRIOT surface-to-air missile system that also engages ballistic missiles. They also make radars and other components of the larger THAAD system developed by the U.S. Army.

The U.A.E. and Kuwait have invested in PATRIOT and the U.A.E. has also been able to buy THAAD systems. The major concern of course at this time is Iran’s growing military power including short and medium ranged ballistic missiles with the potential for Weapon of Mass Destruction (WMD) warheads.

These nations have also been building up their conventional arms including new aircraft, ships and support equipment. American defense contractors have been able to get some of this business including Boeing (BA) and Lockheed Martin (LMT).

With this in mind Raytheon announced two large contracts this week to these customers.

Kuwait ordered $145 million of new GEM-T PATRIOT missiles to equip their launchers. They also recently received a $20 million technical support contract for the PATRIOT as well.

The Massachusetts based company also signed a contract with Saudi Arabia to provide Paveway guided bomb kits. This contract is worth almost $500 million. The kits add a sensor and guidance fins to a bomb to make it more precise as it homes in on a laser illuminating a target on the ground.

These contracts continue to illustrate the importance of this market to the U.S. defense industry. As long as these states feel threatened they will invest in weaponry. Their economies and political situation also means they will be willing to buy small quantities of advanced systems from across the Globe but with a large amount of sales going to America. Certainly the U.S. government is willing to support these sales and will help influence them if they are able.

Photo from Luhai Wong’s flickr photostream.

Raytheon Signs $475 Million Paveway™ Contract With the Kingdom of Saudi Arabia — Press Release

Raytheon Signs $475 Million Paveway™ Contract With the Kingdom of Saudi Arabia

TUCSON, Ariz., Jan. 20, 2011 /PRNewswire/ — Raytheon Company (NYSE: RTN) signed a contract worth $475 million with the Kingdom of Saudi Arabia for the combat-proven Paveway family of precision-guided munitions. Raytheon’s Paveway is a kit that transforms “dumb” bombs into precision-guided munitions.

“Raytheon’s Paveway family of weapons provides the warfighter unmatched precision and standoff capability,” said Dr. Taylor W. Lawrence, Raytheon Missile Systems president. “This sale is the latest chapter in Raytheon’s four decade-long commitment to the Kingdom of Saudi Arabia and regional security in the Arabian Gulf.”

This deal cements Raytheon’s long-standing commitment to Saudi Arabian industry and keeps production lines operational in the U.S.

“By using many of our usual suppliers to produce Paveway subcomponents, the contract keeps Americans employed. We will also partner with Saudi Arabian industry to fulfill the support equipment portion of the contract,” said Mike Jarrett, vice president of Supply Chain Management at RMS. “This year, Raytheon will host a supplier workshop in the Kingdom of Saudi Arabia to gain a better understanding of its industrial base and enable local industry to better understand Raytheon.”

Raytheon Company, with 2009 sales of $25 billion, is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. With a history of innovation spanning 88 years, Raytheon provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as a broad range of mission support services. With headquarters in Waltham, Mass., Raytheon employs 75,000 people worldwide.

www.raytheon.com

Raytheon Awarded $55 Million Contract to Deliver TOW Missiles to Saudi Arabia

Raytheon Awarded $55 Million Contract to Deliver TOW Missiles to Saudi Arabia
July 18, 2010

FARNBOROUGH, England, - Raytheon Company (NYSE: RTN) received a $55 million contract to deliver TOW (Tube-Launched, Optically-Tracked, Wireless-Guided) 2A Radio Frequency missiles to the U.S. government as part of a foreign military sale to Saudi Arabia's National Guard.

"TOW RF missiles are tremendous weapons because of their high mobility, rapid response and close-fire support capabilities," said Jim Riley, Raytheon's vice president of Land Combat. "This missile can give soldiers at the lowest tactical echelon immediate, precision firepower."

TOW RF missiles include an RF transmitter added to the missile case and an RF receiver located inside the missile. Since no launcher modifications were required for the transition to wireless, this growth in capability is transparent to TOW customers.

"On today's battlefield, potential targets are hiding in caves, behind boulders or in the mountains," said Shawn Ball, Raytheon's TOW international business development manager. "TOW RF missiles are more than capable of taking out these kinds of targets. The RF link enhances operations in urban environments by providing greater reliability and precision performance."

TOW missiles are the most used precision heavy assault weapons in war today. Available on more than 10,000 airborne and ground platforms, the missiles are used by 40 countries in combat operations around the world.

Technorati Tags:
Contract win, Missiles, Raytheon (NYSE:RTN), Saudi Arabia

More Sniper Pod Sales For Lockheed Martin

The Royal Saudi Air Force ordered Sniper targeting pods from Lockheed Martin (LMT). The Sniper has been purchased by the U.S. military as well as several allies to aid in the designation of targets for air launched munitions. The contract will be worth about $40 million when all options are exercised. This is the second buy of the pods for the RSAF.

The Sniper pod has been purchased in large numbers and has seen some use in Iraq and Afghanistan. The pod includes a laser targeting system and tracker to aid in the use of laser guided weapons.

Raytheon Establishes Raytheon Technical Services Middle East LLC

Raytheon Establishes Raytheon Technical Services Middle East LLC
May 10, 2010

AMMAN, Jordan, -- Raytheon Company (NYSE: RTN) has created a private limited company in Riyadh, the Kingdom of Saudi Arabia, to pursue training opportunities in the kingdom and the region.

"Establishing Raytheon Technical Services Middle East LLC allows us to better serve customers and to develop deeper relationships necessary to long-term success," said John Harris, Raytheon Technical Services Company LLC president. "We provide the highest-quality technical and professional solutions and are honored to be open for business in Saudi Arabia."

Mark Littel, president of Raytheon Technical Services Middle East LLC, said there is a demand in the Middle East for the creative and tailored training approaches Raytheon provides.

"Raytheon addresses specific needs by working in partnership with customers to develop and deliver the right solutions," Littel said. "Having a permanent presence in one of the largest and fastest-growing economies in the region will help us to be not only responsive but also to be more competitive in the market."

Technorati Tags:
Corporate restructuring, Raytheon (NYSE:RTN), Saudi Arabia

SELEX Galileo launches dedicated Saudi Arabian subsidiary

SELEX Galileo launches dedicated Saudi Arabian subsidiary
March 29, 2010

On the 15th March, SELEX Galileo, a Finmeccanica Company, launched a new limited liability company dedicated to its business activities in the Kingdom of Saudi Arabia. Wholly owned by SELEX Galileo, the launch of “SELEX Galileo Saudi Arabia Company Limited” demonstrates the firm’s commitment and confidence in a long term relationship with Saudi Arabia.

The new company will be based in a permanent in-country office and will participate in key defence events, as well as working with Saudi Arabian companies and Academia to strengthen ties between the Kingdom and SELEX Galileo.

SELEX Galileo has been working with Saudi Arabia for over 30 years to deliver innovative technology into the Kingdom. A leading supplier in-country, SELEX Galileo is willing to support the development of the Saudi Arabian defence industry.

Notes to Editors

SELEX Galileo has taken part in several large programmes in Saudi Arabia such as Al Yamamah and Salam, where SELEX Galileo has worked with the country to supply systems and in-country support for the Tornado and Typhoon aircraft. Through this and numerous support and training projects, the Company’s representatives in Saudi Arabia have grown in understanding of the Saudi culture. The relationships that have been built have helped the Company to meet the precise needs of the Kingdom.

Technorati Tags:
Finmeccanica (SIFI:MI), Saudi Arabia

RSAF Awards BAE Systems Support Contract For Typhoons

A few years ago Eurofighter sold the Royal Saudi Air Force (RSAF) seventy-two Typhoon advanced fighters. BAE Systems is one of the three major companies that make up Eurofighter which is also providing aircraft to Germany, England and Italy.

BAE Systems is under investigation by the English government for possible bribes involved in the deal with the Saudi military. Despite these allegations Saudi Arabia went ahead and awarded a logistics support contract to the company. The value of the contract was not announced but a similar award by England was worth over $700 million.

BAE Systems will provide logistical support, maintenance and parts as well as training for the RSAF under the contract for the next three years. This is not an uncommon contract where the provider of the hardware will also provide training and support possibly until the operator transitions to organic support or lets another contract.

England Looking At Harder Line On Typhoon Buy

Update — It was reported on Monday that the expected penalties and cancellation fees related to the UK’s buy in this round for the advanced aircraft will be over two billion pounds ($3 billion or so). This amount of money may make it more feasible to purchase the aircraft. While penalties are capped at the two billion figure there would still be termination fees. The economic effect of ending the program would also be substantial as there are several thousand jobs in the UK that rely on the program. The decision on this effort will not be easy for the Brown Government already facing a dire financial situation.

As we wrote about previously England’s budget struggles are causing it to rethink the upcoming contract buy of Typhoon fighters. If England does not participate fully in the third option then either the other countries will have to renegotiate the prices most likely to a higher number. England does have the option of ending their participation in the multi-national contract but would have to pay substantial termination fees that might end up higher then the cost of buying the aircraft.

The interesting thing is that it was England worried that some of the other participants may have left the contract that worked to have the high fees put in the contract. England is trying a third option where most of there scheduled buy will go to Saudi Arabia rather then to them allowing some savings. The Brown government like Obama in the U.S. is facing trying to pay for a large economic stimulus package as well as increased social spending. This has put pressure on a military budget already suffering from the combined campaigns in Iraq and Afghanistan. Like Obama is doing one way to save money is to end large procurement programs to save defense spending. They can either be stopped in development or less units can be bought, like the F-22. Unfortunately the less you buy the more they cost so total savings may be limited.

If England does renege on this contract there will be significant future issues with their partners and for the Eurofighter consortium.

Saudi Arabian arms deal to go forward

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.

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