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The Metropolitan Museum

Andrew Leckey has some interesting observations about the US defense industry as a whole right now. The hot tickets, he says, are information technology, communication, and high-tech equipment designed to assist soldiers in the field. These trends have helped drive recent acquisitions of defense IT firms (CACI International Inc. – Information Systems Support Inc.; General Dynamics – Anteon International Corp.; L-3 – Titan; Lockheed Martin – Aspen Systems Corp.; ManTech – Gray Hawk; et. al.).

He also quotes some analysts who see the small-mid cap defense technology companies outperforming large caps throughout the whole cycle of upturns and downturns in defense spending. Acquisitions drive that, too, and are are driven in turn by US government procurement policies. Some create set-asides for small businesses, which drives the consistent formation of new companies. These set asides also encourage cooperation with larger defense firms via strategic partnering, which is given a further boost by contract vehicles like NetCents. These smaller firms may get bought by larger firms in time, and so the cycle continues. Additional thoughts on key sectors, stocks to watch, and industry performance can be found in the article itself: “Tech Firms Big Guns In Defense Sector” (defunct) | FindArticles.com version | RedOrbot version.

UPDATE: The acquisition trend has continued; between the March 2005 selection of firms eligible to compete for the $20 billion ITES-2 contract, and its final resolution of awards in November 2006, 3 of the 17 firms on the original short list had been acquired by larger firms.

E-6B TACAMO
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L-3 Vertex Aerospace LLC in Madison, MS received a $27 million indefinite-delivery/ indefinite-quantity contract for logistics services in support of the E-6B Mercury fleet (aka. TACAMO, as in TAke Charge And Move Out). With the exercise of four, one-year options, the total value of the contract could reach $142.3 million.

Services will be provided to the Commander, Strategic Communications Wing ONE (CSCW-1), and three TACAMO squadrons at Tinker Air Force Base, OK (70%). Support for operations will be given at Travis AFB, CA (10%); Naval Air Station (NAS) Patuxent River, MD, including the Systems Integration Lab (10%); and Offutt AFB, NB (10%), and are expected to be complete in October 2006. This contract was competitively procured via an electronic request for proposals; one offer was received by the Naval Air Systems Command in Patuxent River, MD (N00019-06-D-0011). Sources: DefenseLINK, L-3 corporate release.

See DID’s FOCUS Article on the E-6 Program. These “survivable airborne communication system” airplanes support the US Navy’s SSBN ballistic missile submarine force and overall strategic forces. With the advent of the new “Tactical Trident” converted Ohio Class special operations subs, their unique capabilities become even more useful. The E-6B version also has a secondary role as a “Looking Glass” Airborne National Command Post.

N.B. A minor typo in transcription led DID to report originally on the EA-6B, which is the Prowler electronic warfare aircraft. DID salutes reader Robert Frost of the VQ-4 “Shadows” for catching the error, and sending us the improved TACAMO picture.

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L-3 Henschel in Newburyport, MA is being awarded a $7.6 million firm-fixed-price contract for Data Acquisition Unit shipsets, training, and testing site sets together with engineering services and provisioned items. Work will be performed in Newburyport, MA and is expected to be complete by October 2006. The contract was competitively procured and advertised on the Internet, with one offer received by the Naval Sea Systems Command in Washington, DC (N00024-06-C-4200).

This contract is in support of the CG-47 Ticonderoga Class Cruiser Integrated Ship Controls (ISC) Program. The ISC Program integrates all ship control functions by utilizing commercially available technology. Installation involves removing old analog consoles and replacing them with modern digital workstations. The new workstations generally take up less space, are more trouble free, and are easier to use. Ain’t Moore’s Law grand?

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CF-18: which way?
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Canada’s Department of National Defense awarded Boeing a C$ 39 million contract for installation of the second and final phase the CF-18 Modernization Project. The upgrade will add a Link 16 system, a helmet-mounted sight system, new cockpit displays and a new flare-dispensing electronic warfare system to 78 CF-18 Hornet fighter aircraft. Two additional aircraft will be modified for the essential validation and verification of the planned upgrade, bringing the total to 80.

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AN/APG-77 Test

In yesterday’s issue, DID covered a request from Australia’s military for information re: combat ID and forward air controller equipment, in preparation for a procurement initiative in that area. Seems only fair that the sharing should go both ways. In “Elec Tricks: Turning AESA Radars Into Broadband Comlinks,” DID chronicled some very intriguing work by Northrop Grumman and L-3 that turns advanced AESA devices into secure broadband data and communications links, as well as extremely effective radars. Dr. Carlo Kopp of Air Power Australia recently wrote to DID with this interesting addendum:

“My PhD thesis project completed in 1999 involved the theoretical modelling required for the adaptation of AESAs as high speed long range datalinks and their adaptation to networking. It was a monster project involving around 1000 large scale simulation runs on a 60 CPU cluster (eq to a Cray) and ended up with a 480 page thesis…. In practical terms Northrop-Grumman and L-3 have yet to hit the really hard problems….”

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In a recent DID article covering the ‘merger’ of Thales Naval France into DCN, DID noted Thales’ bid for Bremen-based naval electronics firm and sonar specialist Atlas Elecktronik. Thales took great pains to insist that this naval merger did not make Thales’ naval business a creature of the French government, as German domestic political considerations were hindering the firm in its efforts to acquire Atlas from BAE Systems. There were even rumours that Thales was trying to entice a joint bid from ThyssenKrupp, a defense systems integrator and customer of Atlas Elektronik who is also an important builder of surface warships and submarines (as HDW) for the German Navy and others.

If so, Thales failed. ThyssenKrupp Technologies and EADS signed an agreement with BAE Systems on December 30, 2005 for the joint acquisition of Atlas Elektronik. In accordance with the agreement, ThyssenKrupp Technologies will hold 60% of Atlas and EADS 40%, creating a new “Maritime Electronics House.” Financial details remain undisclosed, but Thales was rumored to be offering EUR 300 million, while EADS-ThyssenKrupp were rumored to be offering EUR 250 million.

So, what does this mean? Perspectives vary.

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AN/USC-42 Mini-DAMA

L-3 Titan Systems Corp. in San Diego, CA received a not-to-exceed $5.9 million firm-fixed-price letter contract to procure 13 AN/USC-42A(V)2 Mini-DAMA terminals, 39 DSP II cards, 40 E-HUB COMSEC assemblies plus other ancillary Mini-DAMA hardware. This contract contains requirements for the Governments of Australia, Canada, Germany, Italy, Netherlands, South Korea, and United Kingdom under the Foreign Military Sales program.

What’s a DAMA? For that matter, what’s a mini-DAMA? Glad you asked…

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E-4B NAOC
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The U.S. Air Force awarded Boeing a contract as Product Support Integrator (PSI) for the USAF E-4 National Airborne Operations Center fleet. These 747-200 derivatives serve as complete flying command posts for national and military authorities, and are hardened to resist the effects of nuclear attack.

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AVCATT

L-3 Communications Link Simulation and Training in Arlington, TX received a $33.4 million modification to a previously awarded fixed-price-incentive-fee contract (N61339-00-C-0002) to exercise an option for Lots 12, 13, 14, and 15 of the Aviation Combined Arms Tactical Trainer (AVCATT). Work will be performed in Arlington, TX and is expected to be complete in May 2007. The US Naval Air Warfare Center Training Systems Division in Orlando, FL issued the contract. See all DefenseLINK awards under this contract, beginning in 1999.

As DID has noted before, AVCATT-A creates a virtual wargaming world that provides an interactive, networked environment for five helicopter platforms, including the AH-64A Apache, OH-58D Kiowa Warrior, UH-60 Blackhawk, CH-47D Chinook and AH-64D Longbow. The system lets Army aviation units conduct collective training on a real-time, computerized battlefield that includes land and helicopter forces. Link’s SimuView PC image generation system provides computer-generated images of the simulated battlespace, which pilots view through a helmet mounted display system. Training includes intelligent, semi-automated enemies. The result is a highly competitive battle scenario that maximizes training effectiveness, followed by a review of their mission performance in AVCATT-A’s After Action Review Theater.

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G550 AWACS
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In a December 11, 2005 article, DID noted that South Korea was looking to award its E-X airborne early warning aircraft contract and get on with the program. Their $1.1 billion choice was the G550 platform offered by an American-Israeli consortium of General Dynamics Gulfstream, L-3 Communications, and Israel Aircraft Industries.

Unfortunately, DID also noted that snags with tech transfer of basic equipment like Link 16 avionics risked holding up the program. While the $1.3 billion deal with Eurocopter that DID also mentioned in that article went through smoothly yesterday, The Chosun Ibo reports that the E-X program does indeed face a delay over US technology transfers until some time in 2006. Read DID’s earlier report for the full briefing re: the two contending E-X bids, and the list of “banned” items.

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