With the passage of Obama's $1.1 trillion Omnibus spending
measure in Jan 2014, Pentagon seems to be back strengthening its
artillery. The U.S. Department of Defense (DoD) granted a total
of eight contracts on Apr 9, 2014.
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Among the winners,
General Dynamics Corp.
(HRS) and Thales Defense & Security together won a $988
million contract for SRW Appliqué Radio Systems.
Again, Pentagon provided funds to Thales-Raytheon Systems Company
LLC for using the option to acquire Sentinel Mode 5
Identification Friend or Foe kits and spares. The contract is
worth $17.7 million and is slated for completion on Sep 30, 2016.
Thales-Raytheon Systems Company is a 50:50 joint venture between
) and Thales Group.
Separately, Raytheon's Integrated Defense Systems division has
also been awarded a $17.0 million firm-fixed-price delivery
contract. The contract was for the procurement and fabrication of
AN/SPY-1 Radar Transmitter Multi-Mission Signal Processor
Capability ordnance alteration kits, RF Coherent Combiner
ordnance alteration kits, Kill Assessment System ordnance
alteration kits, High Volt Power Supply Sidewall Capacitor
ordnance alteration kits, 10 kW Traveling Wave Tube monitoring
circuit ordnance alteration kits, Aegis Weapon System
Modernization requirements for Japan, and installation and test
services in support of the AEGIS modernization effort. Work will
likely be completed by Apr 2016.
The Boeing Co.
) also received an $8.9 million modification contract from the
defense department for a CH-47F cargo helicopter. The contract -
expected to be completed by Dec 31, 2020 - calls for Boeing to
provide additional production lot 13 long lead funding and
additional production lot 12 over and above funding.
Pentagon's prime contractor,
Lockheed Martin Corp.
), also did not fail to collect funds from the daily funding list
of the DoD. Though a small award, the company received an $8.5
million modification contract for securing options for Low Cost
Conformal Array production units, spare modules and spare
outboard electronics canisters. Work on this contract is expected
to be completed by Feb 2016.
Though the aerospace and defense industry is vulnerable to
defense budget cuts and sequestration, the defense companies have
diversified their businesses and are not lacking in DoD
Apart from small pickups from DoD contracts, these companies are
also clinching deals of higher value. Recently, Boeing won a
sizeable $1.16 billion contract modification to supply the U.S.
Army with AH-64E Apache helicopters.
Raytheon and General Dynamics stocks, with a Zacks Rank #2 (Buy),
are worth accumulating now.