Defense News Roundup: Pentagon Trains for WMD, and Are Helicopters Heading to Africa?

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.) However, for the third week in a row, Pentagon spending ran considerably under budget last week, at just $2.09 billion in contracts awarded.

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

Cleaner air for Ospreys
A week of weak defense spending produced few contracts of real size -- and even contractors that won sizable contracts sometimes had to share. Take Textron (NYSE: TXT  ) and Boeing (NYSE: BA  ) , for example. On Tuesday, the two firms, which jointly produce the tiltrotor V-22 "Osprey" aircraft for the military, were awarded a contract to improve engine inlet particulate filtration (i.e., keeping dust out of the engine) aboard Navy CV-22 Ospreys.


In one of the week's biggest contracts, Textron Bell and Boeing will perform engineering work on U.S. Air Force CV-22 Ospreys. Photo: Wikimedia Commons.

Valued at $70 million, the four-year contract should generate about $35 million in new revenues for each of Textron and Boeing.

A slightly better aircraft carrier
On Thursday, Huntington Ingalls (NYSE: HII  ) , builder of the United States' nuclear aircraft carrier fleet, was awarded $14 million to perform unspecified maintenance work on the U.S. Navy's nuclear aircraft carrier USS Ronald Reagan (CVN 76).

WMD training
A bigger contract win went to Cubic Corp. Wednesday, when the U.S. Defense Threat Reduction Agency hired Cubic to assist with chemical, biological, radiological, nuclear, and high-yield explosive exercises for its J3/7 department, the DTRA unit responsible for operations, readiness, and exercises. This contract could ultimately be worth up to $500 million for Cubic over the next 10 years.

News flash: There's still a war on
And finally, for those of you who thought the war in Afghanistan was all but over -- you might want to think again, because the Pentagon is still investing in upgrades for its armored vehicles to fight it. On Friday, Navistar won a $28 million contract modification funding upgrades to its MaxxPro Dash and long-wheel base ambulances for use in the Afghan war.

Opportunities on the horizon
So much for the contracts that everyone knows about. Now, let's end this week's round-up with one contract that you may not yet have heard of.

On Thursday, the U.S. Defense Security Cooperation Agency, which coordinates sales of military services and hardware to foreign governments through the Pentagon, notified Congress of the planned sale of one dozen UH-60M Black Hawk helicopters to the government of Tunisia. Equipped with T700-GE-701D Engines -- 24 to power the helicopters themselves, plus six spares -- and armed to the teeth with 7.62mm and .50 caliber machine guns to Hydra rockets to Hellfire missiles, these 12 helicopters are expected to be bring approximately $700 million in incremental revenue to principal contractors United Technologies (NYSE: UTX  ) and General Electric (NYSE: GE  ) .

Mind you, this contract is not "official" yet, and the Pentagon hasn't yet announced its award. In all probability, most investors don't even know that it's in the works -- except that now, you do.

Risk-free for 30 days: The Motley Fool's flagship service
Tom and David Gardner founded The Motley Fool over 20 years ago with the goal of helping the world invest ... better. Their flagship service, Stock Advisor, has helped thousands of investors take control of their financial lives and beat the market. Click here to sign up today.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3045547, ~/Articles/ArticleHandler.aspx, 11/25/2014 7:36:07 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement