Congress Asked to Approve $6.2 Billion Apache Sale to Iraq

Boeing, Lockheed, GE, and Raytheon all stand to benefit from this deal, and they're only the tip of the iceberg (so to speak).

Jan 27, 2014 at 10:49PM

American Apaches -- heading back to Iraq? Photo: Wikimedia Commons

The U.S. Defense Security Cooperation Agency notified Congress Monday of plans to sell the government of Iraq two dozen AH-64E Apache Longbow attack helicopters. Combined with a separate but related contract to sell Iraq equipment to be installed aboard the Apaches, the value of the potential sales approaches $6.2 billion.

Specifically, Iraq has requested that the U.S. sell to it a package of:

  • 24 AH-64E Apache Longbow attack helicopters.
  • 56 General Electric T700-GE-701D Engines to power them.
  • Various integral target acquisition sensors, night vision sensors, fire control radars, and other electronics.
  • 60 Hellfire missile launchers.
  • 480 AGM-114R Hellfire missiles.
  • 152 AGM-114 K-A Hellfire missiles.
  • 30 mm chain guns, Hydra rockets, rocket launchers, and other armaments and munitions.
  • Related equipment.
Apache Hellfire

What good is an Apache without Hellfires to shoot with? Photo: Wikimedia Commons

The proposed sale is divided into two separate contracts, valued at $4.8 billion and $1.37 billion, respectively. The smaller sale will precede the larger and will involve the leasing of six Apaches to Iraq to "allow Iraqi Security Forces to begin training on maintenance and operation of the helicopters" -- before delivery of the 24 newly built helos, which will be delivered under the larger contract.

Boeing (NYSE:BA), Lockheed Martin (NYSE:LMT), General Electric (NYSE:GE), and Raytheon are all named as prime contractors on the larger contract; Boeing, Lockheed, and GE are also named as prime contractors on the smaller contract.

As DSCA explained in both notices, the sale of these weapons will "directly support" Iraq against "terrorist and conventional threats" -- namely, al-Qaeda insurgents who are infiltrating Iraq and attacking Iraqi forces. Says DSCA, Iraq needs "a fleet of multi-mission attack helicopters capable of meeting its requirements for close air support, armed reconnaissance, and anti-tank warfare missions."

DSCA assured Congress that "there will be no adverse impact on U.S. defense readiness as a result of this proposed sale." Nor will the sale "alter the basic military balance in the region."

What it means to you
Today's DSCA notice, while large in size, is in fact only the most recent in a series of sizable proposed arms sales to the Iraqis -- sales that include hundreds of millions of dollars worth of Bell helicopters, Stryker armored personnel carriers from General Dynamics (NYSE:GD), F-16 fighter jets from Lockheed and FA-50 fighters from Lockheed partner Korea Aerospace Industries, and even ScanEagle drones from Boeing.

Against all odds, even with the U.S. officially "out" of Iraq, America's defense contractors appear to be set to make significant profits from selling weapons into the country. And for a change, this time, it won't be U.S. taxpayers footing the bill.

Heads, you win. Tails, you don't lose
Boeing and Lockheed? General Electric and Raytheon? It almost sounds like everyone in the defense industry is getting a piece of this contract. Like, no matter which stock you pick, it's going to be a winner! And if that's the case, then all of these companies should serve their shareholders pretty well -- which is just the way we like it. As world-famous investor Warren Buffett tells us, there's no need to go searching for long shots. Pick your best ideas, bet on them big, and ride them to riches. That's why our own CEO, nearly-as-legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover three companies we love the most. 

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of General Dynamics, General Electric, and Lockheed Martin. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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