Undead Robots Walk the Earth

Future Combat Systems is dead! Long live Future Combat Systems?

It's been well over a year since the coroner pronounced the time of death on the $160 billion, jointly led Boeing (NYSE: BA  ) / SAIC (NYSE: SAI  ) mega-defense program mercifully acronymed-down to "FCS." Suddenly it looked like no non-line-of-sight artillery systems would be forthcoming from Raytheon (NYSE: RTN  ) . And Textron's (NYSE: TXT  ) "unattended ground sensors" would be put back on the shelf, too. 

But in the spirit of Halloween, at least part of FCS reached up out of the grave this week, tapped investors on the shoulder, and whispered: "I'm ba-ack!"

Earlier this week, we received word that the SUGV program, a tiny cousin to the military's more famous "PackBot" bomb-disposal robot, is indeed alive and kicking. Seems the U.S. Air Force rummaged around in its couch cushions and found $3.84 million in spare change, then tossed it to iRobot (Nasdaq: IRBT  ) with a request that they use it to build 70 Model "310" small unmanned ground vehicles.

As Pentagon contracts go, $3.84 million is of course the very definition of "small potatoes." It dwindles further in significance when you notice that this indefinite delivery, indefinite quantity contract will stretch from now through September 2012. ($1.9 million a year? That's like one half of one percent of iRobot's annual revenues -- and they'll have to share some of this loot with Boeing, too.)

Then again … the Air Force, did you say? Not ordinarily the folks you'd expect to take point on IED disposal. It seems to me that if the Air Force can find need for 70 SUGVs, then once the Army and Marines begin buying these robo-buggies in bulk, we could see sales mount up right quick. Plus, with the details of the USAF deal in hand, we can finally slap a rough price tag on what each unit sale is worth -- about $55,000.

So small potatoes for now, yes. But it looks to me like SUGV could eventually make for some mighty fine eatin'.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

SAIC is a Motley Fool Inside Value pick, iRobot is a Motley Fool Rule Breakers recommendation, and Fool contributor Rich Smith owns shares of iRobot company named above. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 21, 2010, at 9:14 PM, beeradford10 wrote:

    The contract amount of $3,849,600, or about $55,000 apiece, seems low for 70 SUGVs.

    Have a look at the government website announcing the award: https://www.fbo.gov/index?s=opportunity&mode=form&id...

    Toward the bottom of the page there is a link to a PDF file giving the single source justification for the award. This PDF indicates that the total dollar amount of the contract is $9,310,000 or exactly $133,000 per SUGV package.

  • Report this Comment On October 22, 2010, at 12:16 AM, TMFDitty wrote:

    Good find. Even more interesting is the redaction of any mention of iRobot from the document. The context before and after the blackouts make it pretty clear who is being discussed in several locations.

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