Pentagon Awards $2.42 Billion in Defense Contracts Tuesday

Raytheon to supply Navy with RAMs, Novartis will inoculate against encephalitis, and American Apparel makes apparel for Americans.

Jun 25, 2014 at 1:18PM

The Department of Defense awarded 16 defense contracts in its Tuesday evening announcement of contract awards, released after stock markets closed for the day. The total value of contracts awarded came to $2.42 billion -- the largest such one-day contract announcement in weeks.

Raytheon (NYSE:RTN) won one of the day's larger awards, a $73.4 million firm-fixed-price contract to supply the U.S. and allied navies with rolling airframe missile, or RAM, round packs as required, and to supply spare missiles to the German military in particular. Raytheon's RAM, which was co-developed by and is co-produced with the German government, is an anti-ship-missile defense system capable of deployment aboard multiple ship platforms. Deliveries under this contract will continue through November 2016.

Ram
Raytheon's RAM in flight. Photo: Raytheon.

Among the other companies winning contracts, Novartis (NYSE:NVS) won a firm-fixed-price contract to supply the U.S. Army, Navy, Air Force, and Marine Corps with up to $22 million worth of Japanese encephalitis, or JE, vaccine. According to the U.S. Centers for Disease Control, JE is "the leading cause of vaccine-preventable encephalitis in Asia and the western Pacific." This initial one-year contract will run through at least June 24, 2015, and may be extended through invocation of a one-year option period.

Also, scandal-plagued American Apparel (NYSEMKT:APP), which recently fired its CEO amid allegations of sexual harassment at the company, won two awards:

  • The second of four possible one-year option periods attached to a contract to produce various types of combat utility uniform trousers for the U.S. Marine Corps. Valued at up to $16.2 million, this contract is now expected to continue in force through June 27, 2015.
  • A separate option exercise -- also by the USMC, and again, the second one-year period out of a possible four one-year extensions -- to supply up to $15.3 million worth of various types of combat utility uniform blouses. This contract will also continue in force through at least June 27, 2015.

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Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Raytheon. 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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