Congress Asked to Approve $241 Million in Arms Sales to Brazil

British defense contractor BAE stands to benefit from both contracts.

Jun 12, 2014 at 9:32AM

The U.S. Defense Security Cooperation Agency notified Congress Wednesday of plans to sell the Brazilian Armed Forces two separate arms packages, worth a total of $241 million combined.

The smaller package, valued at $110 million to principal contractor BAE Systems (NASDAQOTH:BAESY) (LSE:BA), consists of 40 M109A5 kits to upgrade 40 M109A5 self-propelled howitzers to the M109A5+ configuration, plus necessary spare parts, tools, test and support equipment, training, logistics, and other related services.

The larger package, valued at $131 million and also with BAE as the principal contractor, consists of 434 M113A2MK1 kits to upgrade M113 armored personnel carriers, or APCs, to the M113A2MK1 configuration. Again, spare parts, tools, and related services will be included in the arms package's price.

In each case, DSCA describes the sale as helping to "modernize and improve" the Brazilian Armed Forces, with Brazil being characterized as "an important force for regional stability and economic progress in South America."

The APC upgrades are designed to provide the Brazilian Army with "a more reliable, agile, and effective infantry vehicle capability," while the howitzer upgrades are designed to modernize Brazil's "artillery capability and enhance the Brazilian Armed Forces' readiness."

According to DSCA, neither sale will create an "adverse impact on U.S. defense readiness as a result of this proposed sale." Nor will these sales "alter the basic military balance in the region." 

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