Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Raytheon Company (RTN), SAIC, Inc. (SAI): Are Drones About to Take Over the Sea?

Lately, there’s been a lot of talk about drones and their place in safeguarding America. And while there’s still controversy surrounding their use, there’s no denying that drones are an effective weapon of war — both for spying, er “observation,” and taking out enemy targets. They are so effective, in fact, that a new frontier is opening up to drone warfare — namely, the sea. For both Raytheon Company (NYSE:RTN) and SAIC, Inc. (NYSE:SAI), this is good news.

Raytheon Company (NYSE:RTN)Unmanned to the rescue
Right now there are an estimated 600 submarines from 43 countries that the Navy is responsible for tracking, according to Defense Advanced Research Projects Agency, or DARPA. Understandably, this isn’t the cheapest venture for the Navy, but because of the potential security threat these subs pose, it’s essential. Consequently, DARPA, along with Raytheon Company (NYSE:RTN) and SAIC, Inc. (NYSE:SAI), have teamed up to develop a cost-effective solution — the Anti-Submarine Warfare Continuous Trail Unmanned Vehicle, or ACTUV.

Scott Littlefield, project manager at DARPA, stated that the goal of the program is “to transition an operational game-changer to the Navy,” at “one-tenth their cost of building subs.” In total, the program costs $61 million, and while the project is still in the development phase, if successful, would allow for active and passive observation.

Who’s doing what
The project combines prime contractor SAIC, Inc. (NYSE:SAI)’s prototype trimaran vessel, with sub-contractor Raytheon Company (NYSE:RTN)’s Modular Scalable Sonar System (MS3). When asked, project managers from both SAIC, Inc. (NYSE:SAI) and Raytheon Company (NYSE:RTN)seemed pretty confident in their companies’ products.

SAIC, Inc. (NYSE:SAI)’s senior vice president and operations manager, Pete Mikhalevsky, said, “Drawing on SAIC, Inc. (NYSE:SAI)’s technical depth in marine hydrodynamics, ship design, sensors, and advanced autonomy, we’re confident that the SAIC, Inc. (NYSE:SAI) team will meet or exceed DARPA’s requirements for ACTUV, a revolutionary autonomous maritime vessel.”

And Ed Hoak, Raytheon Company (NYSE:RTN)’s project manager, told Business Insider that “When there’s some sort of intelligence or something of interest, [the ACTUV] will autonomously move, all by itself, obeying all the rules of the road for the ocean.” Upon finding “suspicious contact,” the ACTUV “will trail and actively track that submarine for up to three months.”

Will it float?
Because this project is still in the development phase — Raytheon Company (NYSE:RTN) still has a year and a half before it has to deliver the sonar system — there’s no guarantee of its success. However, as we’ve seen with aerial drones, and in particular Northrop Grumman‘s Global Hawk, if this project is successful, it could definitely be lucrative for SAIC and Raytheon. Plus, with defense contractors feeling the pinch of sequestration and defense spending cuts, new ventures in technology, especially ones that save money, are probably good for business. Consequently, investors in these companies also stand to profit.

The article Are Drones About to Take Over the Sea? originally appeared on

Fool contributor Katie Spence owns shares of Northrop Grumman (NYSE:NOC). Follow her on Twitter: @TMFKSpence. The Motley Fool owns shares of Northrop Grumman and Raytheon.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.