General Dynamics Corporation
) subsidiary National Steel and Shipbuilding Company (NASSCO) has
received a modification contract, worth $11.2 million, from the
U.S. Department of Defense (DoD). Per the agreement, the company
will outline exhaustive designs for the adjustment of the Afloat
Forward Staging Base (AFSB) on the U.S. Navy's Mobile Landing
Platform (MLP) vessels.
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The adjustments of the AFSB will be incorporated in the MLP 3 and
MLP 4 vessels. This new variant has an expanded flight deck to
operate helicopters and tilt-rotor aircrafts on special
operations. This activity will take place at General Dynamics'
facility in San Diego, Calif. and is scheduled to be completed by
The MLP is a new class of support vessel. The MLP idea was tested
by the U.S. Navy through a sequence of at-sea assessments. The
ships are 239 meters long with a beam of 50 meters and a design
draft of 12 meters. It has sustained speed of 15 knots. The full
load displacement of the vessel is 80,000 tons. The navy intends
to utilize these vessels for a range of military activities -
disaster response, humanitarian support and combat operations.
Earlier, General Dynamics received an MLP contract, worth $744
million, from the U.S. Navy in May 2011 to construct the first
two ships - MLP 1 and MLP 2. The company recently handed over MLP
1 to the U.S. Navy and intends to deliver MLP 2 in first-quarter
2014. General Dynamics has already begun work on MLP 3 from Feb
General Dynamics has a long-standing business association with
the U.S. defense establishments and tries to meet its commitments
in terms of maintaining products and services standard along with
delivery timing. Recently, the company received a
cost-plus-fixed-fee modification contract, worth $7.6 million,
from the DoD to procure and construct a sea sentry mast and
The defense operators' performance primarily depends on the
orders coming from the national and international defense
establishments. U.S. defense budget cuts due to the ongoing
sequester could impact the performance of the defense operators.
We believe the defense companies' effort toward wining more small
ticket-size domestic as well as overseas orders will enable them
to retain a regular revenue flow.
Moreover, some companies are also repositioning themselves in
order to trim operating expenses and streamline their operations.
These initiatives will help the defense companies to offset the
General Dynamics currently has a Zacks Rank #3 (Hold). Other
stocks from the sector that are presently performing well include
The Boeing Company
Alliant Techsystems Inc.
) with a Zacks Rank #2 (Buy).