The U.S. Defense Security Cooperation Agency, or DSCA, notified Congress Tuesday of plans to sell the government of Mexico an arms package consisting of UH-60M Black Hawk helicopters and associated equipment, parts, training, and logistical support. If approved, this sale will generate new revenues of approximately $225 million for principal contractors United Technologies (NYSE:UTX), which manufactures the Black Hawk, and General Electric (NYSE:GE), which builds the engines that power it, as well as for the manufacturers of the equipment that will be installed aboard the helicopters.
The specific equipment that Mexico is asking to buy includes:
- Five UH-60M Black Hawk helicopters in the standard configuration used by the U.S. government, plus added "designated unique equipment and government furnished equipment."
- Five Star Safire III Forward Looking Infrared Radar systems, manufactured by FLIR Systems (NASDAQ:FLIR)
- 10 installed and three spare T700-GE-701D engines, manufactured by GE.
- 10 installed and two spare embedded global positioning systems/inertial navigation systems.
- 10 M134 7.62mm machine guns.
- A single Aviation Mission Planning System.
- A single Aviation Ground Power Unit.
- Associated communication security equipment, Identification Friend or Foe systems, spare parts, support equipment, and training and support services.
The equipment package included in this current planned sale mirrors almost exactly the equipment included in a previously notified sale of 18 Black Hawks to Mexico back in April. This week's per-aircraft value to the defense contractors, however, is higher -- approximately $45 million per helicopter, versus less than $38 million per helicopter in the sale notified to Congress two months ago.
Explaining the latest planned sale to Congress, DSCA repeated past assertions that "Mexico has been a strong partner in combating organized crime and drug trafficking organizations" and that "[t]he sale of these UH-60M helicopters to Mexico will significantly increase and strengthen its capability to provide in-country airlift support for its forces engaged in counter-drug operations."
According to DSCA, "there will be no adverse impact on U.S. defense readiness as a result of this proposed sale." Nor will the sale "alter the basic military balance in the region."