Major defense contractor
) won a major part of the $375 million Department of Defense
(DoD) contracts awarded on Jul 8, 2013. The company has been
awarded a cost-plus-incentive-fee contract with a value of $279.4
million for the development of a new electronic jammer for the
This contract for the technology development (TD) phase of the
Next Generation Jammer (NGJ) will replace the ALQ-99 tactical
jamming system used on the U.S. Navy EA-18G Growler
electronic-attack aircraft manufactured by
The Boeing Company
). Under the TD phase, Raytheon's work would include the building
of critical technologies and design for the initial block of the
The main purpose behind this 22-month technology development
phase contract, which runs through May 2015, is to make enemy
radars useless with the help of the jamming pods. This new jammer
will be vital for future battle missions and is expected to be
ready for use by fiscal 2020.
Upon successful completion of the TD phase, a 4-1/2-year
engineering and manufacturing phase will follow. During this
phase, the pods developed by Raytheon will be flight tested on
The latest contract is a significant win for Raytheon. The TD
phase follows a 33-month technology maturation period in which
four companies developed and matured several critical
technologies key to the NGJ program. Apart from Raytheon, the
other contractors were
BAE Systems plc
), ITT Exelis and
Northrop Grumman Corp.
Raytheon is one of the best-positioned companies among the
large-cap defense players due to its non-platform-centric focus.
This insulates the company from program specific risk related to
cancellation or deferral of any specific program.
Recently, Raytheon entered into an agreement with the U.S. Naval
Air Systems Command for the manufacture of an integrated
multi-intelligence (Multi-INT) system to protect warfighters at
the forefront. The company's Intelligence, Information and
Services business will be responsible for this program.
Raytheon won another contract, worth $126 million, from the DoD
for the procurement of material needed to manufacture up to 29
Standard Missile-3 Block IB missiles. Also, it received a
sizeable $534.8 million firm-fixed-price contract for the
production of Advanced Medium-Range Air-to-Air Missiles for the
U.S. Air Force and the militaries of Oman and Saudi Arabia.
Raytheon is flooded with a number of contracts from several
government establishments. The company has a total backlog of
$33.5 billion at the end of first-quarter 2013. However,
apprehensions over future growth of the U.S. defense budget, the
fate of high-cost programs, risks related to key project
executions and order cancellations keep us concerned.
Raytheon holds a Zacks Rank #3 (Hold).
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