CSEL Handset

Boeing Co. in Anaheim, CA received a $22.7 million firm-fixed-price contract modification for the Combat Survivor Evader Locator (CSEL) full rate production FY06 effort. This includes procurement of the following: 2,645 radio sets; 269 radio set spares; 2,645 prime radio set batteries; 3,876 rechargeable radio set batteries; 240 radio set adapters; 56 radio set adapter spares; and 1,961 rechargeable radio set battery adapters. This work will be complete by March 2007. The Headquarters 653d Electronic Systems Wing at Hanscom Air Force Base, MA issued the contract (FA8807-05-C-0004/P00008).

Our April 2005 article “L-3 Subsidiary Under Criminal Investigation Over Radio Units” noted that Boeing subcontractor L-3’s Interstate Electronics Corp. division was under federal criminal investigation, after it supplied defective GPS-related parts used in CSEL emergency radios to locate downed military pilots, special forces, et. al. The article also discussed the events in Bosnia that led to the CSEL program, CSEL’s impressive range of capabilities, some of the other development issues CSEL has faced, and competitors like General Dynamics’ AN/PRC-112B “Hook-112” with QuickDraw et. al.

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Prophet

L3 Communications Titan Corp. in San Diego, CA received a $17.3 million modification to a fixed-price-incentive-fee contract to add Block III Spiral I Electronic Support AN/MLQ-40(V)4 Capability to AN/MLQ-40(V)3 Prophet Block I Vehicles. Our May 2005 article describes the Prophet land-based signals intercept/ electronic warfare program in detail. L3 Communications Titan Corp. is the prime contractor for the program.

Work on this contract will be performed in San Diego, CA and is expected to be complete by Oct 31, 2007. This was a sole source contract initiated on Aug. 1, 2005 by the U.S. Army Communications-Electronics Command at Fort Monmouth, NJ is the contracting activity (DAAB07-01-C-L539). See all DID coverage of the Prophet system.

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Sentinel C4I van

L-3 Communications subsidiary Wolf Coach Inc. in Auburn, MA received an $8.5 million firm-fixed-price contract for special vehicles to support homeland security. Wolf Coach specializes in mobile communications vehicles, and their web site outlines the kinds of vehicles contemplated by this contract.

Work will be performed in Auburn, MA and is expected to be complete by Nov. 22, 2006. This was a sole source contract initiated on May 22, 2006 by the Army Tank-Automotive and Armaments Command in Warren, MI (W56HZV-06-F-0102).

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Private sector version

L-3 Communications’ Link Simulation and Training division received an initial $51.9 million contract from the Naval Air Systems Command to build six F/A-18C/D Tactical Operational Flight Trainers (TOFTs: 4 for single-seat F/A18C, 2 for two-seat F/A-18D) under the U.S. Navy’s new five-year F/A-18C/D Roadmap Procurement Program (RPP) initiative. As part of this program, the firm is also establishing a software action team tasked with inserting new training device capabilities, in order to keep the training system concurrent with the latest modifications made to the aircraft.

At the dsame time, their F/A-18C Distributed Mission Training (DMT) system, installed at Naval Air Station (NAS) Lemoore, CA, has been conditionally accepted by the U.S. Navy. The next step is to upgrade the currently fielded F/A-18C DMT system at NAS Oceana, VA…

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C-23 Sherpa in-theater
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(updated December 6, 2006)

Defense Tech casts a gimlet eye on the US Air Force’s recent maneuverings re: the “Joint Cargo Aircraft” (JCA). The idea is to buy smaller and cheaper planes than the C-130 Hercules, which could provide tactical transport in-theater into smaller airfields, with smaller loads, more quickly, and at less cost than C-130s or maintenance-intensive CH-47 helicopters. The $1.3 billion program for 33 initial aircraft is an Army priority, as its C-23B Sherpa and C-12 Huron aircraft are wearing out quickly and the current war has highlighted this area as a problem for soldiers on the ground. DID would add testimony that we recently covered, explaining combat commanders’ complaints re: air transport that couldn’t make full use of the shorter runways found throughout CENTCOM’s areas of operation. Despite this, the JCA program was recently on the receiving end of almost total FY 2007 cuts from a Senate committee.

Defense Tech traces the reasons behind these proposed cuts to the JCA program, and the US Air Force doesn’t exactly cover itself with glory. This DID article will also cover ongoing developments within the JCA program, which could run as high as $6 billion for 145 planes.

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C4ISR Visualization Center
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The Headquarters Aeronautical Systems Center at Wright-Patterson Air Force Base, OH has issued a $90 million indefinite-delivery/ indefinite-quantity time-and-materials, firm-fixed-price, cost-reimbursement, cost-plus fixed-fee contract to three firms. It will fund task orders, simulation analysis facility (XR-SIMAF) capabilities, integration services, and performance based acquisition with a three years base period (CY 2006-2008) to provide enterprise modeling, simulation, and analysis and infrastructure built to support AF-ICE (Integrated Collaborative Environment) and Accelerated Acquisition.

What is AF-ICE/AA, and who won the contracts?

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Both BAE Systems and EADS have confirmed that BAE has initiated a discussion on the potential disposal of BAE Systems’ 20% stake in Airbus.” Negotiations were described as being in “the very early stages”; BAE’s 20% holding is valued at EUR 3.5 billion ($4.3 billion) in EADS’s books, but The Scotsman newspaper noted that analysts expect any sale to be worth GBP 3.0-4.5 billion ($5.2-7.8 billion at current conversion). EADS adds that the initiation of these discussions does not represent an exercise of the put option held by BAE Systems in relation to this stake.

More details regarding the potential deal, its military procurement significance, and some analysis regarding both its strategic implications and BAE’s future options can be found below… along with updates as the deal progresses.

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P-3 with CG 54
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Earlier DID articles have noted the extra effort required to preserve the USA’s P-3C Orion maritime surveillance & patrol aircraft in light of airframes that were wearing out, coupled with increased demand for the plane that includes overland operations in Kosovo and Afghanistan, radar upgrades, and even weapons upgrades. Lockheed has even opened a new production line for the international fleet to cover wings that have to be replaced. Its 737-based successor the P-8A MMA, will not begin to enter service until 2011 at the earliest, and UAV supplementation via a Maritime version of Global Hawk or a successor system like the BAMS is still at least a couple of years away.

In line with the USA’s efforts to preserve and upgrade its shrinking P-3C fleet, L-3 Communications Integrated Systems LP in Greenville, TX received a $104.1 ceiling-priced modification to previously awarded firm-fixed-price indefinite-delivery/ indefinite-quantity multiple award contract N00019-05-D-0008. It exercises an option for the P-3C Sustainment, Modification and Installation Program (SMIP). Work will be performed in Greenville, TX (50%); Waco, TX (25%); and Birmingham, AL (25%), and is expected to be complete in December 2006. Contract funds will not expire at the end of the current fiscal year. The Naval Air Systems Command in Patuxent River, MD issued the contract.

UPDATE: Almost 2 months later, L-3 Integrated Systems got around to detailing this contract, and explaining the SMIP process, in a release…

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F-35 JSF Variants
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DID reader Endre Lunde drew our attention to an article that was published March 1, 2006 on the official web-site of the Norwegian military. The article is in Norwegian, but Mr. Lunde helps by explaining:

“It is reporting from a recent visit by representatives of the Norwegian MoD and key figures of the RNoAF to the Lockheed Martin JSF research plant. In this article, as it reads, the secretary of state of the ministry of defense (equals deputy minister) states that if there are no signs of improved industrial relations between Lockheed Martin and the Norwegian defense industry by the time the next partnership-payment is due, Norway will resign its JSF partnership. This payment, due in June, amounts to roughly 18 million US dollars. It is said, however, that a notice of intention to withdraw must be posted by April. This means, that if there are no new contracts or general improvement of relations within two months, Norway might just be withdrawing from the JSF development project.”

Norway is a Tier 3 JSF consortium member who joined on June 20, 2002 with a $125 million contribution. Gripen International director of sales Bob Kemp seems to think withdrawal is a real possibility, and Mr. Lunde adds:

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Breugel: click to visit
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.