InfoBase/DACIS’ “Defense Mergers & Acquisitions” reports that worldwide defense and aerospace companies completed M&A deals worth more than $40 billion in 2006, with a total of 370 transactions completed. The top 5 deals accounted for only 32% of the total value for the year. As a comparison, during the record year of 1999 the top 5 deals accounted for 77% of the year’s $65 billion. Editor Stuart McCutchan explains this by saying:
“Defense spending remains at historic highs, and the commercial aerospace marketplace is at full stride. Industry players are flush with cash, and private equity money is pouring into the marketplace. In 2007 we could see the 1999 record finally eclipsed. [173] Deals worth $25 billion have already been announced or completed — by far the fastest start we’ve seen this decade.”
Note that their approach to “Program Cost per Unit” (PCU) used in their chart is to divide the total cost of each program, as stated in the Pentagon’s latest Selected Acquisition Reports, by the number of units to be produced. This means that each PCU includes research and development costs, and even some support costs. Actual acquisition prices tend to be lower, and PCU can be moved significantly up or down if the number of aircraft bought rises or falls. Small-numbers programs are particularly vulnerable to this effect, and will also show up as especially expensive because very few aircraft absorb the entire R&D cost.
Some examples of PCU and numbers for aircraft DID has covered include:
The GM/ GDLS Defense Group LLC Joint Venture in Sterling Heights, MI has been contracted to provide “contractor logistics support for other customer’s remote weapon station systems.” In plain English, these are automated, unmanned turrets that can be operated from inside a vehicle, with the gunner using a joystick for firing and control while looking at a screen that shows visual, infrared, or other images from the turret’s built-in sensors.
The group’s M1126 Stryker infantry vehicles all mount M151 Kongsberg Protector systems, for instance, which have advanced optics and can be targeted and operated from inside the vehicle.
CROWS w GMG, Iraq
Recon/Optical’s CROWS system is also widely popular in theater due to its stabilization feature for firing on the move; it equips many American Hummers and packs a .50 caliber machine gun or a 40mm grenade machine gun. A subsequent GDLS release, however, notes that the contract is confined to RWS systems on Stryker vehicles (i.e. Kongsberg systems).
The thing is, Kongsberg lacks an extensive on-the ground support networks on the front lines – and GM/General Dynamics has one. See below for related contracts and delivery orders…
On April 13 we noted that StrikeLink software was being asked for target designation software on an “urgent need” basis to go with BAE Bofors’ new GPS-guided XM982 Excalibur shell, which has been late to field owing to glitches but recently completed final testing. Excalibur shells will be fired from the M777A2 ultra-lightweight 155mm howitzer, and are due to be fielded in Q3 2007.
M777 howitzer
Raytheon Missile Systems in Tucson, AZ recently received a $32.5 million firm-fixed-price contract for Excalibur Block IA-1 shells. Work will be performed in Tucson, AZ (39%), Farmington, NM (1%), Niceville, FL (18%), Heraldsburg, CA (7%), Cincinnati, OH (5%), Minneapolis, MN (6%), Anaheim, CA (4%), Thousand Oaks, CA (3%), Williamsport, PA (2%), Joplin, MO (2%), Fort Lowel, MA (1%), Minneapolis, MN (1%), and Karlskoga, Sweden (11%), and is expected to be complete by June 31, 2009. This was a sole source contract initiated on March 16, 2007 by the U.S. Army Joint Munitions and Lethality Life Cycle Command at Picatinny Arsenal, NJ (W15QKN-07-C-0100).
SERCO, Inc. in Vienna, VA is being awarded a $39.3 million single award, indefinite-delivery/ indefinite-quantity, cost-plus-incentive-fee with an option for fixed-price orders, performance-based contract to provide Sea Enterprise C4ISR support services. The contract, referred to as Sea Enterprise West, is valued at $208.1 million if all 4 one-year options are exercised over its 5-year term. Serco has operated under a similar contract with SPAWAR since 1997.
Under the contract, Serco will support SPAWAR in providing program management, engineering design, and installation support services to deliver fully operational and sustainable C4ISR(Command, Control, Communications, Computing, Intellligence, Surveilance & Reconnaissance) systems. A key objective of the Sea Enterprise contract is to reduce the costs of installations by improving productivity and achieving long term efficiencies.
Work will be performed in San Diego, CA (85%) and miscellaneous locations including: public/private shipyards and numerous sites in the continental U.S. and overseas (15%) and is expected to be complete by April 2008. The contract was competitively procured under full and open competition, with the RFP(Request For Proposal) posted on the Space and Naval Warfare Systems Center E-Commerce website and 2 offers received. The Space and Naval Warfare Systems Center, Charleston issued the contract (N65236-07-D-8852). SERCO release.
The Defense Supply Center Philadelphia in Philadelphia, PA recently issued a series of fixed price with economic price adjustment base contracts to a number of small business qualifiers. Date of performance completion is October 11, 2008:
Produce Source Partners in Newport News, VA won a maximum $27.6 million contract for full-line fresh fruit and vegetable support for Army, Navy, and Marine Corps installations in southern Virginia and Norfolk, VA. This proposal was web solicited and 3 responded (SPM300-07-D-3216).
Foster-Caviness Co., Inc. in Colfax, NC won a maximum $37.6 million contract for full-line fresh fruit and vegetable support for military installations (Army, Air Force, Marine Corps) and USDA School Lunch participants in the state of North Carolina. This proposal was web solicited and 2 responded (SPM300-07-D-3217).
East Coast Fruit Company in, Savannah, GA received a maximum $25.6 million fixed price with economic price adjustment contract for full-line fresh fruit and vegetable support for Army, Navy, Air Force, and Marine Corps installations and USDA School Lunch participants in the state of South Carolina. This proposal was web solicited and 1 responded (SPM300-07-D-3218).
B.L. Harbert International in Birmingham, AL won a $13.7 million firm-fixed-price contract for the design and construction of a dining facility at Fort Knox, KY. Work is expected to be complete by Oct. 31, 2008. There were 54 bids solicited on Nov. 21, 2006, and 2 bids were received by the U.S. Army Corps of Engineers in Louisville, KY. (W912QR-07-C-0017).
