Raytheon to Make More MALD

The U.S. Air Force executed a further production option with Raytheon (RTN) for their Miniature Air Launched Decoy (MALD). These will be a new version called the MALD-J that adds jamming capability to the decoy.

The contract has a value of just over $80 million and will provide for 202 of the systems including a warranty and shipping containers.

The MALD is carried by aircraft and then is deployed. It flies autonomously simulating the aircraft by flying similar profiles and speeds with a similar radar return. It has a range of about 500 miles and contributes to confusion of enemy aid defenses by increasing the number of targets being detected and tracked.

The MALD-J is the newest version of the system adding a jammer capability to it. This means it will provide even more confusion to enemy air defenses.

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Budget Allows Navy to Move Forward on Carrier Contracts

The signing by President Obama of the full year’s funding bill has allowed the different U.S. services to begin issuing contracts that had been waiting to see how sequestration and the Continuing Resolution would be resolved.

On Friday the Navy moved quickly to issue a contract to Huntington Ingalls Industries (HII) for the overhaul and refueling of the U.S.S. Abraham Lincoln, a Nimitz class aircraft carrier. The contract has a value of around $2.6 billion.

The work is expected to take over 3 years and will include upgrades to different parts of the ships as well as refurbishing components and compartments along with refueling the reactors that power the ship. Included are the necessary modifications to operate the Navy’s version of the F-35 Joint Strike Fighter which will fly in a Short Take-Off-and-Landing (STOL) configuration.

HII was also awarded a contract worth over $400 million to continue buying material for the new CVN 79, designated John F. Kennedy. The CVN 79 contract was started in 2009 and is expected to be delivered in 2020. It is of a modified Nimitz design referred to as the Gerald R. Ford class.

HII is the only company able to build the large nuclear aircraft carriers for the U.S. Navy.

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Navy Awards Contracts for New Ship Components

The building of a modern warship requires not only the initial large contract with the builder but numerous other ones to buy components and support for the actual ships. Other systems are purchased with separate contracts and then items are provided to the builder for installation on the ships as they are assembled. The U.S. Navy is currently building new aircraft carriers, missile destroyers, Littoral Combats Ships (LCS), amphibious warfare ships as well as support vessels.

The LCS is being built by 2 different yards under 2 separate contracts. The LCS-1 design are made in Wisconsin by Marinette Marine and Lockheed Martin (LMT). The LCS-2 in Mobile, AL by Austal America and General Dynamics (GD). While they have dissimilar hull designs the basic weapon fit remains the same and both will carry mission modules. Up to 20 LCS are on contract to be built with the Navy periodically issuing contracts for 2 from each builder.

2 related contracts were recently awarded to support U.S. Navy ship construction. First General Dynamics (GD) received one for 8 MK 46 Naval Weapon Systems. The MK 46 is a 30mm cannon mounted in a stabilized turret. These will be installed on LPD-12 amphibious assault ships and the LCS. The contract is worth $26 million and is a follow on to previous contracts under which 30 systems have been delivered.

Then ATK (ATK), the ammunition and explosive manufacturer, received a contract for 30mm ammo. This $12 million contract is for incendiary rounds for the MK 46. It is a 5 year Indefinite Delivery / Indefinite Quantity (ID/IQ) contract with 1 base and 4 option years. As an ID/IQ the Navy will order off of the contract what is required to outfit ships with the Mk 46 weapon.

With Sequestration and the budget reductions recently passed by Congress and agreed to by the Obama Administration FY13 will probably not see many more major contracts awarded. There may be many though like these to support bigger programs already underway.

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Lockheed Receives Contract to Continue F-22 Upgrades

Lockheed Martin (LMT) has completed deliveries of the F-22 Raptor to the U.S. Air Force. Based on past experience the aircraft may remain in service to well into this century. Due to this projected service life the Government just awarded a contract to continue upgrades to the aircraft.

Similar to one issued in 2003 this almost $7 billion Indefinite Delivery / Indefinite Quantity (ID/IQ) contract will allow the Air Force to buy the necessary technical services and work to integrate new electronics, weapons and sensors onto the aircraft. The contract is for 10 years.

Like all ID/IQ contracts there is no guarantee that any work will be awarded or the full value of the contract reached.

The previous contract too had a value of over $7 billion and supported integration of different Increments for the aircraft.

The F-22 was developed over two decades ago and was in production for over ten years. It is not surprising that there will be new weapons such as the Small Diameter Bomb (SDB) or missile systems that need to be added. There will also be new air-to-air systems as well as data links, sensors and more efficient electronics and engines that ultimately could be added to the aircraft.

It is also conceivable that some of the technology being developed for the F-35 could also be added to the F-22 like the new helmet.

As with many military systems the OEM will be making money off of them well after production ends.

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Oshkosh to Build MRAP Vehicles for the UAE

Air shows and exhibitions are often times when new contracts are announced. At the Paris or Farnborough shows Boeing (BA) and Airbus take it in turns to say who bought what aircraft. There are also military contracts. At the recent IDEX 2013 in Dubai the UAE government continued its practice of doing this with some major contract awards.

One of these was reportedly for 750 Mine Resistant Ambush Protected (MRAP) vehicles from the U.S. company, Oshkosh (OSK). Oshkosh has made trucks for the U.S. military for some time even though its primary markets are construction and emergency vehicles.

Due to the mine and Improvised Explosive Device (IED) threat in Iraq and Afghanistan the U.S. military and some of its allies invested heavily in Mine Resistant Ambush Protected (MRAP) vehicles from a variety of suppliers. These were heavily armored trucks designed to resist mines and were used for troop transport and route clearance. They were not primarily tactical vehicles.

In 2008 Oshkosh won a contract to build a lighter, more maneuverable MRAP for use in Afghanistan called the MRAP-AT After building several thousand of these the contract is basically over as the U.S. reached its acquisition goal. This means that Oshkosh needed to look to other customers for this product.

The announcement of the UAE deal worth over $350 million is a major sale for the company. Often times with these programs the first sale is the hardest and once others start using a system it becomes easier to sell. As with any vehicle contract Oshkosh stands to make further revenue off of spares, engineering support and maintenance services.

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Air Force Awards GPS Contracts

Even as the nation heads towards sequestration and its dramatic effects on defense spending the Pentagon continues to execute programs and award necessary contracts. Recently the Air Force awarded 2 separate Global Positioning Satellite (GPS) contracts. GPS satellites provide signals that allow receivers to locate themselves. It is used heavily by both the military and in many civil applications.

The Air Force is in the process of upgrading the existing satellite systems to the new Block III status. Lockheed Martin (LMT) received a $62 million contact to buy long lead materials for GPS Block III satellites #5 & 6. These are the last two systems on a contract to procure the Block III satellites. Ultimately up to 32 will be built and placed into orbit. The first one is planned for launch next year.

At the same time Boeing (BA) received a contract that was worth $51 million to support launch of the Block IIF satellite. This has one base year and up to 4 option years. Up to 12 Block IIF satellites will be launched with 3 currently in orbit. This contract will prepare the systems for launch and support them once in orbit.

Maintaining a viable GPS constellation has become critical to the U.S. military as it allows precision guidance of everything from a patrol of Soldiers or Marines to ships and bombs and missiles. The military has worked hard to execute available options on contracts prior to the sequestration but have been hampered by the Continuing Resolution Authority (CRA) that still exists.

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P&W Receives JSF Engine Contract

The Joint Strike Fighter (JSF) is produced by Lockheed Martin (LMT) but the engine for the advanced tactical aircraft comes from United Technologies (UTX) Pratt & Whitney. As with many other aircraft programs the engine is procured under a separate contract and then provided to the aircraft manufacturer. This means as aircraft options are executed another contract action must take place for the engines.

P&W received their contract recently to support the most recent JSF order. This contract will be for 32 more F135 engines and is the 5th order so far to match the first 5 Low Rate buys of the F-35. No value was given but earlier estimates were of a cost that was close to $40 million per unit.

For several years Congress funded against DoD wishes another engine development program as risk reduction. This was with General Electric (GE) and Rolls-Royce (RR) and several hundred million dollars was given to them for the F136 engine. The idea was to have enough production capability or maintain schedule if there were issues with the primary F135 engine. In the first Obama administration this was a program that was terminated.

The JSF program continues to gain momentum as more are produced, more training conducted and development continues. It still is several years behind its original schedule and has had significant cost growth. This has led to some of the original international partners to re-consider how many aircraft they will buy and the terms of their contracts.

As the largest part of the Pentagon’s budget it would face cuts of several hundred million dollars if the required reductions are spread evenly. This would affect this years operations and perhaps cause further delays in the overall program.

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U.K. Military Continues to Buy Qinetiq’s Support

Qinetiq is a British company that was formed several years ago when the U.K. privatized parts of their Research, Test, Development & Engineering (RDT&E) support structure. This included labs, ranges and the employees who had formally been civil servants. Over the last 2 decades the British governments have been very aggressive about converting formally government positions and roles to private companies with a goal of cost savings. This was the opposite policy of the U.S. which had tried converting contractor positions to government ones in the past with the same goal.

Qinetiq due to the fact that it provides fairly critical services to the U.K. military through the testing & evaluation (T&E) services it provide signed a 25 year contract in 2003. This had a predicted value of over $8 billion if all parts were fully executed.

Now the U.K. government has announced that the last 5 year option has been executed. This option is worth about $1.6 billion.

These types of arrangements are not unheard of in other countries and the U.S. relies on contractors to provide many of the services Qinetiq does to the U.K. military. It is just they don’t normally transfer title of the facilities and management to the contractors. Often equivalent U.S. test ranges have contractors doing most of the work under oversight of the U.S. government.

In 2010 the company underwent a shake up in management as well as a re-organization. Qinetiq had expanded its business interests beyond the U.K. including work in America. Some problems caused the CEO to resign and the company to refocus on their core, original purpose.

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South Korea Interested in Global Hawk

It is being reported that South Korea has requested to purchase 4 of Northrop Grumman’s (NOC) long range, strategic Unmanned Aerial Vehicle (UAV), the Global Hawk. With supporting parts, services and other items the contract is estimated at around $1.2 billion. Congress will have to approve the sale.

The Global Hawk conducts long range surveillance and intelligence data collection missions. It is currently used by the U.S. Air Force and will also support European and U.S. Navy missions. The Global Hawk has been in service since the early part of this century and has flown thousands of hours of missions in support of Iraq and Afghanistan. The system has consistently been upgraded with new sensors and other equipment over time.

In their original 2013 budget the Obama Administration had proposed reducing the number of Global Hawks that they planned to buy as well as retire some others. Congress fought this proposal questioning the rationale of continuing to use manned U-2/TR-1 aircraft for these missions.

This contract will follow on to a European order for 5 and the annual buys by the U.S. Air Force and Navy to support their programs.

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Navy Proposes Multi-Year for P-8 Production

The P-8 is the new maritime patrol and anti-submarine aircraft developed for the U.S. Navy. It will replace the venerable P-3 Orion aircraft that have been in service for almost 50 years. It is based on a Boeing (BA) 737 commercial airliner. The program is currently in low rate production for the Navy as well as India.

The most recent production order was placed earlier this year for 11 aircraft from the FY12 budget.

Now the Navy has asked for the authority to utilize a multi-year contract for the procurement of 72 aircraft. This contract could be worth well over $10 billion. It would support FY15-19 production indicating there would be two more annual orders placed in FY13 and FY14.

Normally large aircraft programs transition to a multi-year once production is at a steady state and the service has received approval of full rate production. The Navy believes that by FY15 these conditions will be met and a multi-year is the most effective way to buy the aircraft.

The Navy also operates the 737 in transport and command and control configurations.

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Annual Production Options Continue to be Executed as V-22 Buy Goes Through

Despite the “Fiscal Cliff” and sequestration facing the U.S. Federal budget the U.S. military has continued to execute their FY13 buys for hardware. The vote last night in the house delayed sequestration issues and also extended some of the Bush tax cuts. The options on existing contracts are able to be awarded under Continuing Resolution Authority so they are not tied to any new budget or legislation.

One of the most recent was the production buy for the V-22 from Boeing-Bell (BA). The Marine Corps and Air Force will purchase a further 22 V-22 for just over $1.4 billion. These will be delivered in 2014-2015.

This follows the current production contract for 21 aircraft being delivered at this time.

This is the second multi-year production contract for the versatile tilt rotor aircraft that has seen use in Iraq and Afghanistan.

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Despite End of C-17 Production Boeing Still Generating Revenue

The C-17 has been the standard strategic transport for the U.S. Air Force for the last two days. Flying alongside the much smaller C-5 fleet it has flown thousands of missions carrying cargo and passengers in support of Iraq and Afghanistan. Congress and the Air Force decided to end production for the Air Force a few years ago although there are still some open Foreign Military Sales (FMS) cases and hopefully a few more remaining. Even so the C-17 will remain in U.S. service for several more years.

Despite the lack of production orders Boeing (BA) is still able to generate revenue from the platform through maintenance, retrofit and service contracts with the American defense department. They were just awarded a ten year contract for software, hardware and weapon system upgrades worth almost $900 million.

In most cases these days the military rarely buys full data rights to a weapon system due to the prohibitive costs involved. This means that many times the OEM receives the bulk of the support and sustainment contracts. In the end these can easily dwarf the value of the production contract.

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ATK Receives Contract from the MDA as Budget Execution Continues

Despite the “Fiscal Cliff” negotiations and the fact that the Federal Government continues to operate under Continuing Resolution Authority (CRA) the Department of Defense continues to execute contract options. Under CRA new ones cannot be awarded but options on existing contracts may be executed. That explains why a production option for the F-35 could be issued even though it is worth over $3 billion.

ATK (ATK), for example, recently received a contract from the Missile Defense Agency (MDA) related to the development of Modular Divert and Attitude Control Systems (MDACS) technology for the Navy’s SM-3 Block IIB interceptor. The SM-3 is a ship launched missile that ultimately places a kill vehicle outside the atmosphere to engage the enemy missile threat.

The recent North Korean launch highlighting potential threats that the SM-3 is designed to perhaps deal with. It was reported that the U.S. and Japanese Navy deployed ships with the SM-3 capability in response to the launch.

The contract has a value of almost $53 million.

Because the kill vehicles are based on ships they cannot use liquid propelled DACS so solid rocket ones must be developed. They are flown like miniature space ships using controlled thrust from little rockets to move them. ATK is working on extending the performance of the DACS systems already used on the SM-3 program.

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Raytheon to Continue JAGM Development

Following the award of a similar contract to competitor Lockheed Martin (LMT) in August, Raytheon (RTN) received a contract from the U.S. Army to continue development of their proposed solution to the Joint Air-to-Ground Missile (JAGM) requirement.

The $65 million contract will provide for a Preliminary Design Review (PDR) and then ultimately allow mating of the Raytheon guidance sections with other missile components. Raytheon will continue to utilize their tri-mode seeker developed as part of the Small Diameter Bomb (SDB) program.

Lockheed received a $64 million contract at the end of Fiscal Year 2012 for the same purpose.

The JAGM is a new missile that will replace the existing Hellfire and Maverick missiles launched from a variety of helicopters and fixed wing aircraft to strike ground and vehicle targets. The Hellfire has seen a great deal of use in Afghanistan and Iraq providing precision fire support for ground troops.

The Army had looked at cancelling JAGM but decided instead to continue development through these small contracts. If the program does go on to complete development and enter production the requirement could be for thousands of missiles at a cost of $10-12 billion. The Hellfire has also seen significant Foreign Military Sales (FMS) and the JAGM would be expected to as well.

Raytheon JAGM mock up photo by Author.

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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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GD’s Force Protection Divison Wins U.K. Contract

Force Protection was one of the first and largest manufacturers of Mine Resistant Ambush Protected (MRAP) vehicles used by the U.S. and its Allies in Afghanistan and Iraq. For a time during the first decade of this century the company won a large number of contracts to build, service and maintain these vehicles as the U.S. quickly ramped up its inventory.

Over the last few years though it was a different story as the company faced struggles due to declining demand and the fact that the new MRAP for Afghanistan, the MRAP-AT, contract was won by Oshkosh (OSK). Eventually the company and its assets were acquired by General Dynamics (GD) who also has made MRAP and armor for these vehicles.

That does not mean that different military forces are not investing in MRAP just that the market has shrunk significantly. The U.K. just awarded GD a contract for 51 more Force Protection Foxhound vehicles for use in Afghanistan. The value is just over $73 million.

The U.K. already operates Foxhounds and in 2010 ordered 376 of them. They are made in the U.K. by the former Force Protection.

The military vehicle market still remains strong as the U.S. needs to replace and upgrade large amounts of vehicles from the 1980’s that have seen heavy use since 2001. They also need to fit the stocks of MRAP’s into their tactical formations and doctrine.

Photo from Think Defence flickr photostream.

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ATK Gets Order for Aircraft Survivability Components

The A-10 is one of the aircraft equipped with the AAR-47.

Back in October Alliant Techsystems (ATK) received a contract from the U.S. Army to provide replaceable components for the AN/AAR-47 aircraft defense system. This was an Indefinite Quantity/Indefinite Delivery (ID/IQ) contract under whichthe military could order what they needed. Even though the total value could be close to $70 million there was no guarantee that orders would be placed.

The AAR-47 Missile Warning Set is a series of sensors, analysis and display systems mounted on helicopters and aircraft to detect, identity and inform the crew about surface-to-air missile threats. It is currently a product of ATK only but was developed by that company along with Loral in the 80’s.

The ID/IQ contract is to purchase basically replacement parts for the system.

The first order was placed this week an has a value of just over $30 million.

ATK manufactures aircraft components, ammunition and pyrotechnics. They have had a rough 12 months but things recently have got a lot better for the company. They did lose a major contract to operate the Radford Ammunition but kept the one for Lake City. Declines in orders for that type of product by the U.S. military is expected as fighting winds down in Afghanistan. They recently reorganized and the last quarter earnings showed good results from their efforts.

Photo from The National Guard’s flickr photostream.

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AAR Afghanistan Airlift Support Continues

Due to the terrain and nature of the threat in Afghanistan the American and Coalition Forces operating there rely heavily on rotary and fixed wing transport. Not all of this may be provided with their own military assets so as with many other types of support they contract it out. One of the companies that has been providing this service for several years is AAR.

Yesterday AAR received another option on their contract to continue to provide this support. The option on the initial 2010 contract is worth about $160 million and will utilize several commercial helicopters to fulfill. Normally this would be a five year contract so there are at least one more option to award.

While the U.S. Army and Marine Corps provide the majority of the rotary wing assets in Afghanistan this use of contractors to supplement military resources has grown more common over the last 3 decades. The U.S. military has focused on their combat units with a corresponding reduction in support elements. Most of the housekeeping services are now contractor provided.

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Lockheed Receives Order for 2 More SBIRS Satellites

The Space Based Infrared System (SBIRS) is the new missile warning satellite constellation being placed into orbit by the U.S. Air Force. It will consist of 2 different systems. One of these will be in high orbits and the others in geosynchronous orbits. Lockheed Martin (LMT) is a major contractor with the program.

The Air Force recently awarded a contract to Lockheed for the next 2 geosynchronous satellites – GEO 5 and 6. The initial value of the contract is a little over $80 million. This will fund further non-recurring effort on the 2 satellites as well as begin some long lead procurement.

GEO-1 satellite was launched last spring and is in orbit conducting tests. GEO-2, 3 & 4 are in production with the launch date of GEO-2 set for March of next year.

Over the next several years the rest of the systems will be built and placed into orbit replacing older Cold War era systems.

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Northrop to Support HII Ship Construction

Last year Northrop Grumman (NOC) spun off its shipbuilding division into a new company, Huntington Ingalls Industries (HII). This meant that the company was no longer building ships for the U.S. Navy. HII assumed the yards owned by NOC in Louisiana and Mississippi and the current contracts.

That does not mean that Northrop no longer is part of the military shipbuilding program though. It was just recently awarded a contract to provide a component for a new amphibious warship under construction by HII. The approximately $50 million contract will provide the Machinery Control System (MCS) to HII for installation on the new ship.

The Navy is building a new class of LHA ships to supplement existing LHA’s of the Tarawa class and the LHD ships of the Wasp class. These new LHA will combine features of both previous class ships and carry helicopters, V-22 tiltrotors and landing craft. They will be able to support Marine units and transport them to shore. The new LHA-6 America class ships also have the capability to support the F-35 Joint Strike Fighter providing a measure of ground attack and air defense capability.

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Raytheon Continues Light Weight Torpedo Production

The U.S Navy exercised an option with Raytheon (RTN) for the production of Mk 54 Light Weight torpedoes. This is the standard surface vessel and air launched system used by the Navy and some allied nations. The option had a value of a little over $45 million.

It provides for one years production as well as test and engineering services for the system. The Mk 54 is carried by the SH-60, P-3 and cruisers, destroyers and frigates. It just recently completed testing from the new P-8 maritime patrol aircraft that will eventually replace the P-3.

The Mk 54 is also used by the Australian Navy and will be by the Indian as well as they will operate several P-8I aircraft.

The Mk 54 has been in production for 8 years and replaced the Cold War era Mk 50 and Mk 46 systems. It is fired from the traditional Mk 32 launch systems in use for decades, the ASROC rocket as well as from aircraft.

Until the full effects of sequestration are decided upon by Congress the Pentagon continues to exercise their planned FY13 budget under the existing 6 month Continuing Resolution Authority.

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Pentagon Plan JSF Upgrade Contract

The U.S. Air Force and Navy Joint Project Office for the Joint Strike Fighter (JSF) announced recently that they plan to tender a contract to upgrade the first 93 F-35 aircraft to be consistent with a later production version. This covers 4 years of Low Rate Initial Production (LRIP) aircraft that are currently being delivered.

No value for the contract was estimated but it should be several hundred million dollars to modify that number of aircraft.

It would be expected that Lockheed Martin (LMT), the prime contractor on the current JSF development and production effort, would be awarded the contract. The announcement though did leave an opening for others to submit proposals to do the work. This would be extremely hard for another contractor to do depending on how much technical data the Government owns and is available. Just estimating the cost of the work without that information would be difficult.

The JPO is expecting this contract to take some time to develop, negotiate and award as the LRIP 5 production contract remains in negotiation with Lockheed and probably won’t be awarded until the end of this year. Those aircraft would be coming off of the production line in several months. This will allow the program to continue production, testing and training while then beginning to retrofit the existing aircraft.

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Rolls-Royce Continues Support of T-45

One of the advantages the OEM has when it comes to winning defense contracts is that they often will get the support and maintenance work from the government. It is uncommon now for the military to purchase complete Technical Data Packages (TDP) from the OEM’s and this makes it hard for some of the effort to be transferred to another supplier.

The engine in the T-45 trainer was actually developed jointly by Rolls-Royce and France’s Turbomeca originally for the Jaguar attack aircraft. That aircraft has been retired but the companies continue to support the power plant in its current uses.

The British company just received a further contract option to support the T-45 engine maintenance and parts support. This is the 4th option on the contract and is worth about $100 million.

The T-45 is a product of Boeing (BA) and BAE Systems (BAE:LSE) and is used by the Navy as a carrier training aircraft. It has been in use since 1991.

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ATK Keeps Major Contract for Lake City Plant

Alliant Techsystems (ATK) is a mid-sized defense contractor. It primarily manufactures ammunition, pyrotechnics and rocket motors. The company is experiencing some struggles due to the ending of the fighting in Iraq and Afghanistan and the potential defense budget cuts. It has made several changes recently to adjust to these new market conditions but key to the company’s near term success was retention of the contract from the U.S. Army to manage the Lake City ammunition plant operations.

Last year the company lost the contract for the Radford Plant in Virginia to BAE Systems (BAE:LSE). BAE was also aggressively targeting the Lake City contract as well. ATK had run these plants responsible for large amounts of ammunition and explosives for the U.S. military for several years and they were a core part of their revenue and earnings. Short term the loss of the Lake City contract would have been a blow to the company.

Yesterday it as announced that the Army had decided to award the contract to ATK again. The initial contract is for seven years but it has options for a further three. No value has been reported yet.

To indicate the size of the production at Lake City in September the company and Army celebrated the delivery of 2 billion 7.62mm rounds from the plant. Due to the demands of the last ten years of combat ATK had expanded the plant to produce over 1.5 billion rounds annually of 5.56mm as well as other sizes.

The winning of this contract gives ATK more time to continue its adjustments and reorganization to address the changing market it finds itself in and establish a good foundation for future performance.

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ULA Wins Contract for Further Launch Services

As the fiscal year came to an end this weekend the Pentagon closed it out by awarding several FY12 contacts. One of the biggest was to United Launch Alliance (ULA) for launch services in FY 2013.

ULA is a joint venture between Boeing (BA) and Lockheed Martin (LMT) and builds Atlas and Delta rockets used to launch military payloads. The overall program is the Evolved Expendable Launch Vehicle (EELV). Under the contract ULA provides both the launchers as well as engineering, management and launch activity support.

This part of the contract option for FY13 is worth a little over $1 billion and the number of launches planned for this year was not specified.

The original plan for EELV a decade a go was to support both Boeing and Lockheed as separate launch vehicle providers but eventually the decision was made to establish a joint venture between the two companies as a way to reduce costs.

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