The U.S. Department of Defense ended the workweek with a bang Friday, handing out 45 separate defense contracts worth $4.95 billion in total. One single defense contractor, however, captured five of the contracts, and 81% of the monies on offer: Lockheed Martin (LMT +1.05%).
Lockheed's big win of the day was a $3.92 billion contract modification to pay for production of Terminal High Altitude Area Defense (THAAD) Interceptor missiles for use by the U.S. military, and also for the United Arab Emirates. These funds will "definitize" the cost of Lot 4 Interceptors purchase by the U.S., and include the cost of taking out an option to buy Lot 5. In total, it is likely that the U.S. will be purchasing 110 Interceptors, and the UAE, 192 more. Deliveries of the missiles are to begin in 2015, with the last units being delivered in 2019.
THAAD is an area-defense system designed to shoot down short-, medium-, and intermediate-range ballistic missiles such as Scuds. It is believed to have only limited utility in defending against long-range intercontinental ballistic missiles.
In addition to the big THAAD contract, Lockheed also won four other, smaller contract modifications:
- $46 million: to pay for "non-recurring" technical work needed to support production efforts on the F-35 Joint Strike Fighter, paid for as part of an advance acquisition contract for Low Rate Initial Production Lot VI of the warplanes.
- $24.8 million: funding technology upgrades on the computer operating system that runs Air Force F-22 Raptor fighter jet training systems.
- $20.5 million: to pay for electronic components needed for F-35 production and sustainment.
- $10.8 million: to pay for initial "non-prime mission equipment and interim technical support" for the F-35 Joint Strike Fighter United States Reprogramming Laboratory.
