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Raytheon Company (RTN), The Boeing Company (BA), Oshkosh Corporation (OSK) – Pentagon Week: Hunting Subs, Building Trucks, and Arming Iraqis

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). Lately, however, the generals have been focusing primarily on belt-tightening — and last week was no exception, with the Pentagon awarded just a bit more than $1.5 billion in new contracts. Among them …

Marco? Polo!
The Pentagon’s contracting week started off slow on Monday, with a near-record low $49 million in contracts being awarded. Probably the most interesting of these, though, was the $7 million award issued to ERAPSCO, a joint venture between Britain’s Undersea Sensor Systems and America’s Sparton Corporation (NYSE:SPA), to buy 9,400 AN/SSQ-53F Sonobuoys.


Sikorsky Seahawk deploying an air-dropped sonobuoy.

Deployed from aerial subhunters such as Sikorsky’s Seahawk and the new The Boeing Company (NYSE:BA) P-8A Poseidon, these sonobuoys are used to “ping” enemy submarines with sonar signals, helping to track down underwater bad guys.

Oshkosh Corporation (NYSE:OSK) keeps on truckin’
Seven million dollars barely registers on the Pentagon spending scale, of course. But Wisconsin-based Oshkosh Corporation (NYSE:OSK) won a somewhat larger contract later in the week. Tacking on $77 million to a circa-2009 contract to build “family of medium tactical vehicles” trucks, or FMTVs, for the Army, Oshkosh Corporation (NYSE:OSK)’s contract win now surpasses $4.7 billion in total value and still has more than a year left to run.

Designed to use a common chassis, the FMTV platform can be tweaked to churn out multiple types of “trucks” needed by the Army, from materiel handlers to tractors, vans, to wrecking trucks to dump trucks. And Oshkosh gets to build all of ’em.

Look! Up in the sky! Is it a plane? (Then shoot it down.)
Meanwhile, Raytheon Company (NYSE:RTN) was keeping itself busy notching multiple contract wins for its new SM-3 Block IB missile. On Tuesday, Raytheon Company (NYSE:RTN) won a pair of follow-on contracts for the SM-3IB, when the U.S. Missile Defense Agency exercised options to buy or new SM-3IBs for delivery in 2015, and fund the purchase of parts necessary to build 29 more SM-3IBs subsequently. In total, two contracts will be worth more than $268 million to Raytheon Company (NYSE:RTN).

Incidentally, the first of these contracts appears to restore funding for four missiles — funding had been cut from Raytheon Company (NYSE:RTN)’s contract just one month ago.

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