February 4, 2013
One of the great things about being in the munitions business is that, as a general rule, whenever your customer "uses" your product, it needs to immediately buy a replacement. Bullets, mortar rounds, rockets, and missiles -- one thing they all have in common is that they are consumable.
But as a contract award just announced by the Department of Defense reminds us, sometimes a defense contractor can earn extra cash even when its customer doesn't use (i.e., shoot) its product.
On Monday, Raytheon (NYSE: RTN ) won a $14.2 million cost-plus-fixed-fee contract to perform "intermediate level maintenance, all-up-round recertifications and special maintenance tasks" on standard missiles stored at U.S. Navy depots, as well as for certain unspecified foreign customers. Because if the Navy (or whoever) hasn't gotten around to shooting off the missiles just yet, it still wants to know that when the time comes to press the "launch" button, the missiles will be in a condition to do just that.
The services in question will be performed from fiscal 2013 through fiscal 2017.
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