The U.S. military has a reputation as a somewhat secretive organization. But in one respect at least, the Pentagon is one of the most “open” of our government agencies. Every day of the week, rain or shine, the Department of Defense tells U.S. taxpayers what contracts it’s issued, to whom, and for how much — all right out in the open on its website.
DoD is budgeted to spend about $6.2 billion a week on military hardware, infrastructure projects, and supplies in fiscal 2013. (A further $5.6 billion a week goes to pay the salaries and benefits of U.S. servicemen and servicewomen). But as you may recall, the Pentagon went a wee bit over budget a couple of weeks back. It’s been on a financial diet ever since, and last week, ir spent less than $1.5 billion.
That works out to a bit less than $0.25 on the department’s budgeted defense-spending dollar — making last week’s actions literally “two-bit.” Yet there was still some news of note.
Raytheon’s jam session
Right out of the gate, Raytheon Company (NYSE:RTN) won one of the week’s biggest contracts Monday. Valued at $279 million, its deal to help develop a Next Generation Jammer, or NGJ, for the U.S. Navy accounted for nearly 20% of the funds awarded last week. Over the next 22 months, Raytheon Company (NYSE:RTN) will work to develop a new electronic warfare system offering “significantly improved airborne electronic attack capabilities against advanced threats.”
Once ready for market, NGJ will replace the ALQ-99 tactical jamming system now in use aboard Boeing EA-18G Growler and Northrop Grumman EA-6B Prowler electronic warfare aircraft.
Half as large in dollar value, but infinitely bigger in political controversy, is America’s plan to build an Aegis Ashore Missile Defense System to defend against Iranian ballistic missiles. The base is going up near the village of Deveselu, Romania — about 125 miles southwest of Count Dracula’s Transylvanian castle.
Raytheon Company (NYSE:RTN)’s rockets will be deployed to defend the base, while Lockheed Martin Corporation (NYSE:LMT) is managing the overall project. And last week, we found out who will build it, when government contractor KBR, Inc. (NYSE:KBR) was awarded $134 million to turn the 430-acre site into a missile base.
Screen shot from Atari’s Missile Command. Source: Wikipedia.
Opportunities on the horizon
That was about it for contracts of significant size awarded last week. Sure, there were other awards: $13 million for Lockheed Martin Corporation (NYSE:LMT) to repair some helicopters here, $8 million for Exelis Inc (NYSE:XLS) to deliver some spare parts there. But really, the more interesting news last week concerned future contract wins — and because those aren’t “news” yet, they’ve received much less attention in the media and offer more potential for profit for investors.
