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Who Wants a Robot Navy? The Pentagon Does!

By Rich Smith - Jul 12, 2015 at 3:07PM

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A little-noticed contract gives a big clue to where the Pentagon is heading.

The missile-carrying USS Wyoming (SSBN 742) is a cornerstone of today's U.S. naval arsenal. Could its job one day be performed by a robot? Source: U.S. Navy.

For years, we've been talking about the U.S. Navy's infatuation with robots -- everything from robotic helicopters to robotic fighter jets that can land on an aircraft carrier -- unaided. From swarming, remote-controlled small patrol boats sailing the seas to tiny submarines that look like fish.

Granted, many of the Navy's experiments in the realm of robotic seafaring so far have been limited in scope, and small in dollar value. But no more. This week, the Navy jumped into the robo-cean feet first.

Will Robo-Tuna (seriously, that's its name) one day be king of the sea? Source: Boston Engineering.

This time, we're serious
In a development that's received little attention from the mainstream media, the U.S. Department of Defense announced Monday a major push to develop "unmanned maritime systems" to take on the task of detecting and disarming floating antiship mines.

The contracts awarded range from  $846 million to $1.43 billion in combined value. They hire a fleet of seven separate defense contractors to spend the next three years -- and potentially the next five years -- designing, building, testing, and fielding both hardware and software for use aboard unmanned systems, both on the ocean's surface and submarine.

The Navy's new "yellow submarine" is one robot already under development. Source: U.S. Navy.

Precisely what "hardware and software" the Navy intends to acquire is not made clear -- only that it will facilitate the minesweeping mission. But we do know who will be working to build it. Participants in the new Navy contracts include several well-known, and publicly traded military defense contractors, among them:

  • Military communications specialist Harris Corporation (LHX 2.36%), whose Exelis subsidiary won a base three-year contract worth $135.6 million, with the potential to be extended to five years and a total of $228.5 million.
  • IT specialist Science Applications International Corp (SAIC 1.43%), recipient of a $128.9 million, three-year award that could similarly rise to $217.5 million over five years.
  • and Lockheed Martin (LMT 1.26%). The nation's largest pure-play defense contractor, and maker of the world's first operational stealth fighter jet, has recently become a force to reckon with in maritime matters, now that it's building half of the Navy's Littoral Combat Ship vessels. Under the new robotic warship contract, Lockheed will receive anywhere from $126.4 million to $214.2 million over a three-to-five year timespan.

Who benefits most?
Of course, the question facing investors is which of these three firms has the most potential to win further, lucrative shipbuilding contracts as the Navy's robotic warship efforts gain steam. If I were a betting man, I'd be putting my money on the stock that won the smallest of the three contracts: Lockheed Martin.

The reason goes back to Lockheed Martin's role in the Littoral Combat Ship, or LCS, program, a potential $50 billion program that's already morphed into one new class of warship (a new frigate). Lockheed, as one of only two companies contracted to build the LCS (and the follow-on frigate), has an innate advantage over other contractors vying for this work, and an advantage that will grow over time.

As you may recall, when the Pentagon announced plans to shift away from building LCSes earlier this year, and toward building frigates instead, it explained that the first 32 LCSes already being built would be largely assigned to minesweeping missions. Lockheed's role as a primary builder of the LCSes will give the company specific experience in building ships for minesweeping operations. It will have an added advantage, in that any "hardware and software" designed to support robotic minesweeping surface- and underwater vehicles, will likely need to integrate into the motherships from which these missions will be based: Lockheed Martin's own LCSes.

Logically, this gives Lockheed Martin a leg up over the other defense contractors that won robot work under last week's contract. Although Lockheed won one of the smaller contracts awarded as part of the multi-party robotic warship contract last week, it's well-positioned to win even more such work, and more defense dollars, in years to come.

Lockheed Martin's first Littoral Combat Ship, the USS Freedom (LCS 1) at sea. Photo: U.S. Navy via Lockheed Martin.

Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. Neither does, or is, The Motley Fool. You can find Rich on Motley Fool CAPS, publicly posting his stock picks and pans under the handle TMFDitty, where he's currently ranked No. 301 out of more than 75,000 rated members.

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Stocks Mentioned

Lockheed Martin Corporation Stock Quote
Lockheed Martin Corporation
$434.24 (1.26%) $5.39
L3Harris Technologies, Inc. Stock Quote
L3Harris Technologies, Inc.
$236.74 (2.36%) $5.45
Science Applications International Corporation Stock Quote
Science Applications International Corporation
$93.69 (1.43%) $1.32

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