Defense Procurement News

The US Army awarded Lockheed Martin a contract to produce Hellfire missiles. These are normally fired from AH-64 and OH-58D helicopters and some Air Force aircraft. The missile is used by the US and its Allies. In Iraq and Afghanistan the Army has been using these with great effect to strike a variety of targets. The contract is valued at over $350 M and will purchase 1400 missiles. It is estimated that over 6000 have been used to date in the Global War on Terror.

For more see the Orlando Sentinal.

The Army awarded Boeing a 5 year contract for CH-47F cargo helicopters. The number procured is 181 with 10 options. There will also likely be some FMS sales from this contract. The CH-47F is the latest variant of the helicopter with sophisticated avionics and improved capabilities. 48 have been built to date. The CH-47F is one of the programs that was birthed from the Comanche termination. The others being the UH-60M, UH-72A and the JCA fixed wing aircraft. The CH-47F is especially effective in Afghanistan due to its high altitude and temperature capabilities.

To see the press release go to the Wall Street Journal’s MarketWatch here.

Hellfire Systems Limited Liability Co., Orlando, Fla., was awarded on Aug. 15, 2008, a $356,665,089 firm-fixed price contract for Hellfire II High-Energy Anti-Tank missiles. Work will be performed in Orlando, Fla., and is expected to be completed by Oct. 31, 2011. Contract funds will not expire at the end of the current fiscal year. One bid was solicited on Oct. 22, 2007. U.S. Army Aviation & Missile Command, Redstone Arsenal, Ala., is the contracting activity (W31P4Q-08-C-0361).

BAE Systems Land & Armaments, Inc., York, Pa., was awarded on Aug. 15, 2008, a $11,160,117 cost-plus fixed fee contract for Bradley M2/M3 improved explosive device mine armor kits and mine armor kits. Work will be performed in York, Penn., and is expected to be completed by Mar. 31, 2009. Contract funds will not expire at the end of the current fiscal year. One bid was solicited on Dec. 17, 2007. U.S. Army TACOM, Warren, Mich., is the contracting activity (W56HZV-05-G-0005).

GE Engine Services, Inc., Cincinatti, Ohio, was awarded on Aug. 14, 2008, a $9,999,400 firm-fixed price contract for maintenance and overhaul of 10 conversion / recapitalization T701C to T701D engines. Work will be performed in Arkansas City, Kan., and is expected to be completed by Aug. 31, 2012. Contract funds will not expire at the end of the current fiscal year. Three bids were solicited on Jan. 17, 2008, and three bids were received. U.S. Army Aviation and Missile Command, Redstone Arsenal, Ala., is the contracting activity (W58RGZ-08-D-0226).

L-3 Communications System West, Salt Lake City, Utah, was awarded on Aug. 14, 2008, a $7,195,110 firm-fixed price contract for E-ROVER systems. Work will be performed in Salt Lake City, Utah, and is expected to be completed by Oct. 31, 2008. Contract funds will not expire at the end of the current fiscal year. One bid was solicited on Jun. 4, 2008. U.S. Army Aviation and Missile Command, Redstone Arsenal, Ala., is the contract activity (W58RGZ-07-C-0209).

Taylor Brothers Construction Co., Inc., was awarded on Aug. 12, 2008, a $6,024,699 firm-fixed price contract for rehab project of five buildings. Work will be performed in Butlerville, Ind., and is expected to be completed by Aug. 7, 2009. Contract funds will not expire at the end of the current fiscal year. Seven bids were solicited on Jun. 10, 2008, and two bids were received. USPFO, Indianapolis, Ind., is the contract activity (W912L9-07-D-0004).

BAE Systems received a contract for M777 howitzers. See a story here. The M777 is a light weight towed piece that is used by the US, England and Canada. These countries have ordered 700 of the weapon. The contract is worth over $80 M.

AM General was awarded a contract to build more HUMVEES for the Army. See a press release here. The contract is worth over $240 M. The HUMVEE is the ubiquitous jeep replacement in the US military. Although the soft skinned version has been replaced in Iraq and Afghanistan by up armored versions and MRAPS, the US military still uses thousands of them all over the world as a general purpose vehicle.

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.

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.

This article describes the economic effect of the Army decision to begin pushing components of the multi-system Future Combat System (FCS) out-the-door faster. Due to this decision several hundred million dollars are flowing to Arizona companies earlier then originally planned by the Army. The two systems with the most effect are the non-line of sight missile system that uses a box launcher with integrated fire control and several unmanned systems. The Army benefits two ways by this type of decision; first, they get needed technology upgrades into the field earlier; and secondly they get testing under real world conditions.

Picture by Derek Farr

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.

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 »

Fresh off all of the problems with the contract let to AEY, the US has moved to a more traditional source for ammo for Afghanistan’s military and police. See the press release here. Allied Defense Group has been awarded a FMS contract to provide ammo. Allied has grown significantly over the last 7 years as the demand by the US for ammunition of all types, but especially small arms, has increased.

The soaring costs of the ARH program have caused a Nunn-McCurdy Cost Breach. See a story here. The 40% increase in unit cost has caused the Army and DoD to rethink, again, proceeding with the contract. Nunn-McCurdy cost breaches were established in the 80’s as part of the overall reform of Congressional monitoring of programs.   Read the rest of this entry »

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.

The Army signed a contract with EnergySolutions for disposal of low-level nuclear waste. See the press release here. It is a five year contract worth over $20 M. There is no description of where the waste is being generated, but it is most likely from the manufacture or disposal of Depleted Uranium ammunition. This is used by a variety of Army weapons such as the 25mm cannon on M2/M3 Bradleys, the 30mm on AH-64 and the 120mm on the M1 tank for vehicular targets.

This article describes the FN plant in South Carolina. FN makes M16, M240 and other weapons for the US military there. FN has been expanding the plant steadily over the last few years and is waiting for the biggest prize in the US small arms business - next years M4 competition. Currently Colt makes all of the M4 carbines and has since the Nineties. There have been many complaints about its performance and even if FN won the contract many of the design issues could not be fixed without going to a whole new weapon. The contest next year will be interesting.

Slowly over the last several years, FN, the Belgian small arms manufacturer has been expanding its US operations. They have developed several NATO standard weapons that have been adopted by the US military - such as the M249 SAW and the M240 LMG. Now, according to this article, they plan to bid on the next M4 contract. The M4, and Colt, have had issues since 9/11. There are many complaints about the weapon and its jamming in dusty environments. The US Special Forces have adopted a separate weapon, the SCAR, and have also looked at 6.8 mm rifles. There have also been issues with how the US Army has managed the contracts for the M4. It will make for an interesting contract process next year.

The US Army awarded BAE a $1.6 B contract to buy 10,000 medium tactical vehicles. See a story here. The contract if all options are exercised could be worth over $2.0 B. The contract will be for three years base, and it makes BAE one of the top ten defense contractors selling to the US military now. This has been done through judicial acquisitions and expansion in the US, as well as some successful joint ventures.

The US Army awarded Konsberg a contract to provide Crew Remotely Operated Weapon System (CROWS) II turrets. See an article here. Konsberg is a Norwegian company that is involved in the oil industry, commercial shipping and defense. There website is here. The contract is worth $117 M and will provide weapon mounts that fit within the CROWS turret. The CROWS is mounted on US Army vehicles and allows the gunner to stay inside it and operate whatever weapon is installed - usually machine guns or automatic grenade launchers.

This is not a defense procurement issue but I have fond memories of working with THAAD ten years ago. The First Unit Equipped (FUE), Alpha Battery/4th Air Defense Artillery Regiment, 11th Air Defense Artillery Brigade, 32nd Army Air & Missile Defense Command, was activated on 28 May. See a press release from Lockheed Martin here. THAAD is the Army’s long range ballistic missile defense system, layering on top of the existing PATRIOT systems.

The US Army’s Space and Missile Defense Command (SMDC) awarded SAIC a one year plus four option years contract to provide NBC defense for US military bases. See an article here. If the full contract is executed it could be worth up to $500 M. Since 9/11 the US has greatly increased the ability of their bases to respond to chemical and nuclear attacks.

This article says that the FY09 Defense Budget includes $1 B for the Stryker system. I am assuming that this means all types of funding, not just procurement. $1 B would buy a lot of Strykers, but this amount probably includes the Operations & Maintenance and any R&D funding for the program. As a good example of an article that highlights how important contracts are to an area it brags about the jobs “saved” by the budget. The local Congressman takes credit for the funding. One hopes that the DoD budgets based on need and requirements, not as a job program.

FLIR Systems won a contract modification for the Army worth up to $380 M to build force protection systems. See an article here. This adds to an existing ID/IQ contract for the delivery of such systems. FLIR has built equipment for the US Army and other services to go on aircraft, vehicles and now ground mounted systems for surveillance around US bases. The stock closed at over $37 today.

According to this article the Commanding General of the Army’s Aviation and Missile Command (AMCOM) is worried about the potential supply of workers in the Huntsville, AL area in the future. The last round of BRAC moved two major commands to the Redstone Arsenal in Huntsville. Many of the people working there will not move for a variety of reasons. Major General Myles is concerned that the vacancies will suck people out of the existing Aviation and Missile commands to work at the Army Material Command and Missile Defense Agency. On top of that it is predicted for every government job moved at least one contractor job will be created. These workers have to come from somewhere and MG Myles hopes that local government, industry and higher education will train them without relying on subsidies from the Army. As in the past people will move to Huntsville, like your humble correspondent, to get these jobs, but that may not be enough.

Bump - Boeing employee arrested for vandalizing aircraft. Story is here.

In a way this is good news. If it had been a quality issue then it might delay restarting the production line as they worked out new procedures and where they had gone wrong. The other good thing is they discovered the damage before they were fielded. The CH-47 is being used a great deal in Afghanistan and Iraq, as are all Army aviation assets, but in Afghanistan it is key due to the high altitude which limit smaller helicopters.