Defense Procurement News

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.

Lockheed Martin was awarded a contract from the National Geospatial Intelligence Agency (NGIA) to provide training to its employees and other intelligence analysts across DoD. See a press release here. The contract has a value of $32 M and is an option on an existing contract. Lockheed Martin is responsible for running the in-house training for the agency. NGIA is what used to be called the Defense Mapping Agency (DMA) and provides maps, charts and other information to the US defense services and other agencies.

Pasco, Wash - Viper Aircraft is pleased to announce that Bayview Edison Industries; a production, tooling and mold design firm located in Mount Vernon, Washington has been awarded the production contract to create plug tooling for the newest aircraft on the Viperjet flight line - the Viper FanJet.

“We are really looking forward to working with Bayview during the manufacture of plugs for the new Viper FanJet.  They have a wide range of experience and great state-of-the-art facility,”  says Scott Hanchette, president, Viper Aircraft.  He adds, “In designing the next generation aircraft for Viper, one of our main focus efforts was to achieve optimum efficiency in all phases of our manufacturing, allowing each customer-built aircraft to be assembled faster and with relative ease.  This foundation starts with high quality tooling.”

The Viper FanJet is 21% larger than its predecessor, the Viperjet MK II Executive.  The Viper FanJet will accommodate an efficient engine and boasts over 25 cubic feet of baggage area.

To learn more about Viper FanJet aircraft, contact Dan Hanchette at 509.543.3570 or dan@viper-aircraft.com

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.

DARPA awarded CombiMatrix a contract to conduct basic research into their core technologies. See a press release here. The contract is worth up to $250 K. CombiMatrix works with molecules to develop detection systems for things like bio and chemical weapons. The technology also has commercial applications. DoD has put a lot of funding into a variety of technology to detect chemical and biological weapons beyond the current systems of swipe tests and sampling. This contract is just one small part of this effort and also illustrates how diverse the DoD Science and Technology (S&T) investment is.

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.

AAR RECEIVES 10-YEAR CONTRACT TO SUPPORT
HONEYWELL TECHNOLOGY SOLUTIONS INC. AT HILL AIR FORCE BASE

WOOD DALE, ILLINOIS (July 31, 2008) - AAR CORP. (NYSE: AIR) announced today that it has
been awarded a 10-year contract to provide logistics support services to Honeywell Technology
Solutions, Inc. (HTSI). HTSI provides logistics services and depot maintenance support for the
B-2 Spirit stealth bomber and C-130 Hercules aircraft at Hill Air Force Base.
“AAR is very proud to support Honeywell Technology Solutions, Inc. and the U.S. Air Force,”
said Timothy J. Romenesko, AAR’s President and Chief Operating Officer. “This adds to the
growing list of strategic Air Force assets supported by AAR and is a testament to the flexibility
and scalability of AAR’s supply chain management capabilities.”
AAR is a leading provider of products and value-added services to the worldwide aerospace and
defense industry. With facilities and sales locations around the world, AAR uses its close-to-thecustomer
business model to serve aviation and defense customers through four operating
segments: Aviation Supply Chain; Maintenance, Repair & Overhaul; Structures & Systems and
Aircraft Sales & Leasing. More information can be found at www.aarcorp.com.
# # #
This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties
that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled “Risk Factors”, included in the Company’s May 31, 2008 Form 10-K. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those
described. These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company’s control. The Company assumes no obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For
additional information, see the comments included in AAR’s filings with the Securities and Exchange Commission.

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.

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.

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.

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.

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.

B.L. Harbert International won the contract to build two new building complexes at Redstone Arsenal (RSA) as part of the last round of BRAC moves. See a press release here. BRAC was good to RSA as it moved the headquarters of the US Army Material Command (AMC) and the US Army Security Assistance Command (USACA) to the base. AMC is responsible for buying, fielding and supporting most of the Army’s material. USACA helps transfer US weapons to foreign countries. The $100 M plus contract will build the necessary buildings to house the commands.