Defense News Roundup: Lockheed Goes Back to Space, Army Advertises for a Few Good Men

Here's our weekly rundown of the major stories in defense spending.

Apr 6, 2014 at 3:30PM

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.


So what has the Pentagon been up to this week?

DoD is budgeted to spend about $6.2 billion a week on military hardware, infrastructure projects, and supplies in fiscal 2014. (A further $5.6 billion a week goes to pay the salaries and benefits of U.S. servicemen and servicewomen.) So far this year, the Pentagon has announced contracts worth approximately $36.78 billion, including just $2.64 billion awarded over the past week. In both cases, that's less than half what we'd ordinarily expect to have been spent by this point.

 And what did the generals get for their (read "our") money?

Better GPS service for the military ...
The week's biggest contract award went to Lockheed Martin (NYSE:LMT), which won a $246 million addition its cost-plus-incentive-fee contract to build the Air Force's constellation of "Global Positioning System III" satellites. Specifically, this money will fund work on Space Vehicles 07 and 08 under the project, with work expected to continue on "07" through April 1, 2018, and Oct. 1, 2018, on Space Vehicle 08.

GPS III is America's next-generation satellite system, designed to take the place of America's current GPS constellation. When complete, it will improve position, navigation, and timing services and provide advanced anti-jam capabilities for the military. Location tracking is said to be three times more accurate than current GPS system, and signal strength for the military will be three times more powerful than the present system.

... and more bombs to be guided by it
In a complementary contract win, Boeing (NYSE:BA) was awarded a contract Tuesday to perform up to $80 million worth of work on GPS-guided Joint Direct Attack Munitions ("JDAMs" in military parlance, "smart bombs" to the rest of us) for the U.S. Air Force and Navy. Boeing will be working to upgrade and improve guidance on the smart bombs, and performing work on software integration, aircraft integration, and upgrading the hardware as well.

Floating the boats ...
Another of the week's big contracts went to privately held AMSEC LLC, which won $188 million from the Navy to perform a raft of database and related software program support for the U.S. Navy. AMSEC will be identifying "material condition discrepancies" among Navy warships, updating and maintaining configuration and availability report database systems, and helping out also with onboard training and curriculum development for sailors. These funds will pay for AMSEC's services through April of next year.

... and flying the robots
A smaller, but still potentially rewarding, $44 million contract modification went to Northrop Grumman (NYSE:NOC), which has been asked to deliver to the Navy five of its MQ-8 Fire Scout unmanned aerial vehicles, plus a ground control station to run them. These robotic helicopters will be used as part of the Navy's Vertical Take-off and landing tactical Unmanned Aerial Vehicle program for improving the Fire Scout's airborne endurance and "rapid deployment capability effort." Delivery is expected to be made by the end of next year.

Bill all that you can bill
Meanwhile, back on solid ground, the Pentagon has awarded advertising giant Interpublic Group's (NYSE:IPG) subsidiary McCann World Group an extra $196 million to run its advertising/recruiting campaign. The funds will pay for "a full range of professional marketing and advertising services in support of a nationwide advertising campaign for recruitment and retention programs throughout the Army."

So despite a generally slow week for contract awards, there were still some sizable winners. Tune in next week, and we'll see if overall spending picks up its pace, or if the year-to-date slowdown in spending really has become the new normal at the Pentagon.  

Thanks for all the great stock tips, Pentagon!
You don't always have to look far to find good investments. Sometimes, profiting from our increasingly global economy can be as easy as investing in your own backyard -- and the Pentagon's helpful habit of publishing all its contracts daily as they're awarded certainly makes that easier. Want to find more "easy to understand" investments? Read The Motley Fool's brand-new special report, The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin and Northrop Grumman. 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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