On Tuesday, the Department of Defense announced the award of more than $50 million via two new contracts for Northrop Grumman (NYSE:NOC). Both contracts fall under the broad category of "electronic warfare" products, but one is offensive, and the other defensive.
The larger, offensive equipment award calls upon Northrop to supply $30 million worth of "contractor logistics support services" on the company's "precision geo-location and non-traditional intelligence, reconnaissance and surveillance" radar pod, the AN/ASQ-236, for the U.S. Air Force. The AN/ASQ-236 is an externally mounted, self-contained antenna and radar system installed on the Boeing F-15E Strike Eagle. Northrop is to service the equipment in question through March 11, 2016.
The larger, defensive award is a $20.6 million contract modification through which Northrop will provide both hardware and support services for the Air Force's Large Aircraft Infrared Countermeasures System (LAIRCM). LAIRCM uses Northrop's high-intensity Viper Laser to target and blind incoming heat-seeking missiles, to disable them before they can engage a defended aircraft. LAIRCM is already installed on some Sikorsky CH-53E helicopters. The Pentagon has been working to expand its deployment on fixed-wing transport aircraft, such as C-17 and C-130 transports, as well as other helicopters. The current contract, however, is labeled "involves Foreign Military Sales" -- so deployment plans may extend beyond U.S. military forces.
LAIRCM is estimated to cost approximately $3 million per unit, adding $3 million to the cost of each aircraft upon which it is installed. Northrop's work on the instant LAIRCM contract is to be completed by April 30, 2015.
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Northrop Grumman. 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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