Textron Wins Contract for Cluster Bomb Sale

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The U.S. Department of Defense awarded a total of only eight contracts on Tuesday yet still managed to spend more than $760 million. One single contract, however, consumed more than 83% of the funds on offer. Its winner: Textron (NYSE: TXT  ) .

Textron won a $640.8 million contract modification, adding funds to a preexisting firm-fixed-price contract for the supply of cluster bomb units to the U.S. Air Force. In total, the current contract modification will pay for 1,300 cluster bombs valued at $492,923 per unit. At least some of these bombs will be used by the Royal Saudi Air Force, and the Pentagon is designating this contract as "involving" foreign military sales for that reason. The contract should be completed by December 31, 2015.

Cluster bombs are a form of air-dropped ordnance where the main "bomb" comprises multiple smaller "bomblets." Prior to impact, the main bomb releases the bomblets so as to disperse their destructive effect over a wider area. Due to their wide-ranging areas of effect, and inability to precisely target combatants (leading to greater-than-ordinary civilian casualties), cluster bombs have recently become a more controversial form of weapon, and in May 2008, several nations ratified a Convention on Cluster Munitions that bans their use in warfare.

To date, 112 nations have signed this Convention and 83 have ratified it. Neither the United States nor Saudi Arabia has signed the Convention on Cluster Munitions.

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Rich Smith

I like things that go "boom." Sonic or otherwise, that means I tend to gravitate towards defense and aerospace stocks. But to tell the truth, over the course of a dozen years writing for The Motley Fool, I have covered -- and continue to cover -- everything from retailers to consumer goods stocks, and from tech to banks to insurers as well. Follow me on Twitter or Facebook for the most important developments in defense & aerospace news, and other great stories besides.

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5/5/2016 12:35 PM
TXT $38.02 Down -0.03 -0.08%
Textron, Inc. CAPS Rating: ****