Defense News Roundup: U.S. Bolsters Aircraft Missile Defenses, May Increase Assistance to Iraq

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

Aug 4, 2014 at 5:45PM

The U.S. military has a reputation of being 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.

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So what was the Pentagon up to last week?

Between "base" spending levels, and supplementary spending on overseas contingency operations (OCO), the DoD is budgeted to spend about $11.8 billion a week in fiscal 2014, of which $6.2 billion goes to military hardware, infrastructure projects, and supplies. All through July, however, the Pentagon ran under budget. This past week, hardware, infrastructure, and supply contracts totaled only $4.22 billion in value.

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

Better missile defenses for (military) airplanes
Last week the DoD awarded defense contractor Exelis (NYSE:XLS) a $190 million contract to supply the U.S. Special Operations Command, or SOCOM, with as many Suite of Integrated Radio Frequency Countermeasure, or SIRFC, components and services for its fleet of CV-22 Osprey tiltrotor aircraft as SOCOM needs over the next five years.

Designed to detect, jam, and decoy missile-guidance radars, SIRFC is an onboard electronic warfare system already used aboard U.S. Army helicopters such as the Black Hawk, Apache, and Chinook to defeat incoming radar-guided missiles. It is designed specifically to defeat such anti-aircraft weapons as surface-to-air missiles, and also radar-guided anti-aircraft "flak" guns.

Better protection for soldiers, too
A smaller contract went to Oshkosh Corp. (NYSE:OSK) to bolster protection for troops on the ground. Valued at $45 million, the award will fund repairs and upgrades on 800 of the company's Mine-Resistant, Ambush-Protected All-Terrain Vehicles, dubbed "M-ATV," and used primarily to transport troops and supplies in Afghanistan. Work performed under this contract will continue through the end of next year -- which suggests U.S. troops will be present in Afghanistan at least that long as well.

And don't forget about the allies
Foreign buyers of U.S. military equipment were behind a number of contracts awarded last week. Among them:

  • Honeywell (NYSE:HON) won one of the week's biggest contracts to support the militaries of U.S. allies Australia, Morocco, Turkey, and the United Arab Emirates. Honeywell will be shipping out to these countries a total of 440 T55-GA-714A engines and 365 T55-GA-714A engine fielding kits. Among other aircraft, the T55-GA-714A engine is used to power CH-47 Chinook transport helicopters, an aircraft that is present in (or, in the case of Turkey, on order by) the militaries of all four countries. The total value of this contract modification to Honeywell will be nearly $122 million.
  • Lockheed Martin (NYSE:LMT) won a $50 million contract to supply the militaries of South Korea and Finland with M934E6 and M934E7 warhead fuses for use with these countries' arsenals of Stinger shoulder-fired anti-aircraft missiles (often called "MANPADS," short for man-portable air defense systems). Deliveries of the fuses will continue through Aug. 25, 2018.
  • Textron's (NYSE:TXT) Cessna unit won a $64 million contract to provide "support" and training services to Afghan pilots and mechanics servicing 26 C-208B "Caravan" and six T-182T "Skylane" utility aircraft through based at Kabul International Airport, Kandahar Air Base, and Shindand Air Base in Afghanistan through Jan. 31, 2016.

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

Here again, it's Textron that looks to be a winner. Early last week, 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 parts and equipment, plus "aviation sustainment support, on-the-job maintenance training, and maintenance advice" -- this time for the Iraqi Aviation Command.

Valued at $500 million in total, Textron will be helping to keep Iraq's fleet of Bell 407, OH-58, and Huey II helicopters flying, as the government deploys them to fend off attacks by ISIS insurgents.

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

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Iraq Air Force UH-1H II "Huey." Photo: Wikimedia Commons.

Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin and Textron. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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