Stocking up on Standards: Japan Buys Naval Defense-ABM Missiles

JS Myoko

The US Defense Security Cooperation Agency notified Congress of a pair of requests from Japan for Standard-family naval air and missile defense systems. The total value, if all options are exercised, could be as high as $528 million.

The Japan Maritime Self Defense Force (JMSDF) has four Kongo Class AEGIS destroyers operating with SM-2 missiles at sea; the 5th and 6th destroyers are under construction. Kongo Class ships with missile defense upgrades and SM-3 missiles will be combined with short-range land-based PAC-3 Patriot missiles to form the initial ballistic missile defense shield for mainland Japan.

The key deals and principal contractors will be:

ScanEagle to Detect Biological Agents

ScanEagle BCAS
(click for alternate view)

Boeing Phantom Works and a team of U.S. bio-defense companies have been given a two-year $8.2 million Phase I contract to modify the Boeing/Insitu ScanEagle unmanned air vehicle (UAV) to look for biological warfare agents as part of a program funded by the USA’s Defense Threat Reduction Agency (DTRA). Under the Biological Combat Assessment System (BCAS) Advanced Technology Demonstration (ATD) program, the DTRA and the Boeing-led team will work with U.S. Pacific Command and the U.S. Navy Third Fleet to design and develop a remote sensor system that can assess battle damage and collateral effects, and also locate, track, collect and detect simulated biological warfare agents in a designated area.

The team will integrate the sensor system into the Boeing-Insitu ScanEagle UAV and then will demonstrate the system’s capabilities in flight tests. Successful flight tests will lead to a possible Phase 2 follow-on contract and limited production options with the DTRA worth approximately $15 million.

This is the first time Boeing has served as a lead systems integrator on a program directed solely toward chemical and biological defense, so they’re drawing on scientists and engineers from across the company and industry. Industry team members include the Midwest Research Institute, Applied Research Associates and Steris. Internal Boeing participants, meanwhile, will be drawn from Boeing Commercial Airplanes, the Advanced Systems group of Integrated Defense Systems, and the Engineering & Information Technology and Advanced Homeland Security groups within Boeing’s Phantom Works unit for advanced R&D. See Boeing’s June 2006 release | The Bright Onyx sensor contract | Boeing’s March 2008 release.

United Technologies Settles Pentagon Litigation

United Technologies Corp., whose subsidiaries include Sikorsky and Pratt & Whitney, has entered into a $283 million settlement of government contract accounting matters with the U.S. Department of Defense. The agreement ends litigation over Pratt & Whitney’s cost accounting for engine parts on commercial engine collaboration programs from 1984 through 2004. Since January 1, 2005, Pratt & Whitney has used an alternative method approved by the US government for allocating overhead costs, which is based on the value added by Pratt & Whitney in the manufacturing process.

UTC reports that reserves relating to these matters exceeded the settlement amount by approximately $0.05 per share, and the company anticipates restructuring charges over the course of 2006 will equal or exceed this difference. UTC reaffirmed guidance of earnings per share in the range of $3.50 to $3.60. See corporate release.