BAE Systems Investor Brief - February 2006
03 Mar 06
In This Month’s Brief:
- Revised Partnering Arrangement signed
- Supply Chain Partnering
- AFV Fleet Partnering Agreement
- CVF Project
- Sale of AEROSTRUCTURES
- JFS Update
- Strong Start for Nimrod MRA4 in 2006
- Type 45 Update
- NITEworks - Next Steps
- First JTRS Radios Vehicles
- M88A1 Reset Vehicles
- FRES Technology Demonstrator Programs
BAE SYSTEMS CONTRACT AWARDS THIS MONTH
- Canadian Hawk contract extended
- Qatar Coastguard contract
- Aegis Class Destroyers
- IFF Systems contract
- Korean Trainer Aircraft
- E&IS to give Black Hawk Pilots better control
- Mk 41 VCertical Launching Systems (VLS)
- TAGS US Army Contract
- First M1068A3 Conversion Vehicle
- SAXON Urgent Operational Requirements
- RG31 US contract
GENERAL NEWS
Revised Partnering Arrangement signed
In January, Ian King and the Chief of Defence Logistics, Sir Kevin O'Donoghue, signed the Revised Partnering Arrangement. The arrangement confirms the strategic intent of “Together delivering effective support to the Armed Forces” and the focus given to through-life and end-to-end solutions. The Partnering Arrangement emphasises the strategic outcomes which both organisations wish to establish across their shared business interests:
- Coherence of Approach
- Enhanced, consistent performance leading to improved user confidence
- Through life decisions embedded early in the acquisition cycle
- Efficiency of process through an integrated supply chain
- Preparation for future contracts
- Integrity and availability of data
- Sharing innovation
The Partnering Arrangement will help to enhance confidence and develop deeper understanding between BAE Systems and the DLO (Defence Logistics Organisation). In addition, the Arrangement will contribute to the DLO transformation to a role of strategic decision maker.
Supply Chain Partnering
Also under the Partnering Themes, CS&S and Defence Logistics Organisation (DLO) have agreed a programme of activity to share best practice in the supply chain between the two organisations. The work will be sponsored by David Allott and Major General Malcolm Wood (DG Log Supply Chain). Captain Mike Bullock and Nigel Trundle will lead the programme on their behalf.
AFV Fleet Partnering Agreement
The publication of the Government’s Defence Industrial Strategy in December 2005 represents a significant opportunity for Land Systems in 2006. As the Design Authority for 95% of the British Army’s Armored Fighting Vehicle Fleet (AFV), Land Systems has signed a Partnering Agreement with the UK Ministry of Defence (UK MoD) which will give effect to the long-term partnering arrangement required to improve the reliability, availability and effectiveness – through-life – of the existing AFV fleet.
CVF Project
Peter McIntosh has now been appointed to head the Alliance Management Team. In this capacity of Chief Executive, Peter McIntosh will lead a central management team made up of representatives from the Alliance.
Sale of AEROSTRUCTURES
BAE Systems announced on 31 January 2006 that it had signed an agreement with Spirit AeroSystems Inc. for the sale of the Aerostructures business, based in Samlesbury (80 employees) and Prestwick (760 employees). The next few weeks will be taken up completing the outstanding legal requirements and regulatory approvals prior to the transfer of all employees and the business.
The BAE Systems Regional Aircraft business (460 employees) will remain on the Prestwick site with long-term leases to be tenants of Spirit AeroSystems (Europe) Limited.
MAJOR CONTRACTS UPDATE
JSF Update
Work on the first JSF aircraft (AA-1) is progressing well in Ft Worth, Texas. The aircraft is due to be delivered to the flight-line in February 2006 for a programme of final testing, including testing of the Fuel System, which is being led by BAE Systems.
Air Systems also began production of the first UK components for the first JSF Short Take-Off/Vertical Landing (STOVL) variant (BF-1) in January. The Advanced Machining Centre at Samlesbury started work on one of the major frames that will form part of the first STOVL aft fuselage.
Strong Start for Nimrod MRA4 in 2006
The Nimrod MRA4 three aircraft development fleet achieved its 100th flight in late January, and the programme continues to make good progress. The first and second aircraft, PA01 and PA02, have each accounted for 45 flights, while the third, PA03, has flown 11 times, and, like PA02, is now in RAF livery. Other significant achievements already this year include the longest MRA4 flight to date, of just over 5 hours, and the first MRA4 night landing, which helps extend the daily window for the flight trials schedule.
Type 45 Update
The successful launch of Daring on 1 February was a significant achievement, not only for the technical complexity of launching such a large ship from the Scotstoun facility but also for the delivery of such a key milestone on programme.
NITEworks – Next Steps
The UK Ministry of Defence (MoD)/Industry NITEworks partnership (Network Integration Test and Experimentation Works) is due to complete its initial three-year Assessment Phase in July 2006. UK MoD is now looking to take NITEworks through Main Gate in mid 2006 and gain Investment Approvals Board approval for the next phase to run from early 2007. BAE Systems is currently supporting the UK MoD in achieving this goal.
First JTRS Radios delivered
Electronics & Integrated Solutions (E&IS) delivered the first of four Joint Tactical Radio Systems (JTRS) Cluster 1 radios to the Boeing Cluster 1 team in Anaheim, California. The radios will support the Future Combat Systems (FCS) program bringing internet-like capabilities to the soldiers on the move.
Cluster 1 provides a multi-channel software-programmable digital radio via a digital radio networking infrastructure. Communication, Navigation, Identification and Reconnaissance (CNIR) will deliver JTRS radios through June 2006 with a follow-on opportunity for an additional 146 radios through 2008.
M88A1 Reset Vehicles
BAE Systems Land & Armaments participated in the roll out of its first M88A1 Reset Vehicle, after the vehicle passed the Automotive Testing at the Anniston Army Depot Test Track. BAE Systems was awarded the contract to overhaul (reset) the M88A1 vehicles in 2005, and has received Delivery Orders to overhaul 146 vehicles through September 2006.
FRES Technology Demonstrator Programs
BAE Systems had been awarded contracts by the UK MoD for a Future Rapid Effect System (FRES) Chassis Concept Technology Demonstrator Program (TDP) and a FRES Gap Crossing TDP as part of the FRES Integrated Technology Acquisition Program (ITAP).
The ITAP is focused on reducing risk around the latest technologies and their integration into FRES to ensure that FRES will deliver significant capability enhancement at Initial Operating Capability (IOC).
BAE SYSTEMS CONTRACT AWARDS THIS MONTH
Canadian Hawk contract extended
A £16m extension to the Canada Hawk support services contract was agreed in December 2005 with Bombardier. The support services contract will cover a four year period from August 2006 until August 2010 providing technical/management services and materiel support to NATO Flying Training in Canada, Moose Jaw and Cold Lake air bases.
Qatar Coastguard contract
Flagship has won a new contract with the Royal Navy’s Recruiting and Training Agency (NRTA) to manage an Officers’ training programme for the government of Qatar. Flagship will provide welfare support for the programme, as well as assess the students’ progress.
Aegis Class Destroyers
BAE Systems Norfolk Ship Repair will be performing work on USS Bainbridge (DDG 96) and USS Forrest Sherman (DDG 98), as part of the Bath Iron Works (BIW) - BAE Systems Post Shakedown Availability (PSA) Team. The US Navy recently awarded BIW a $30.9m modification to a previously awarded contract to perform PSA maintenance, repair and upgrade work for two Arleigh Burke-Class Aegis destroyers homeported in Norfolk. Work at the shipyard in Norfolk on USS Bainbridge begins in May 2006 and is expected to be completed in August. The PSA for DDG 98 begins in August 2006 and will complete in November.
IFF Systems contract
E&IS in Greenlawn, New York, has received a $15.5m modification to an existing contract to supply up to 63 AN/APX-117(V) and 293 AN/APX-118(V) Common Identification Friend or Foe (IFF) Digital Transponder (CXP) systems; and 100 AN/APX-118(V) spares and associated equipment and services for the US Navy, US Army, Special Operations Command, US Coast Guard, and for the Governments of Germany, Norway, Japan, Korea, Greece, and Chile under the Foreign Military Sales Program. The contract includes manufacturing, testing, modification, and delivery of the transponder systems for use on both ships and airborne weapon system platforms.
Korean Trainer Aircraft
Korean Aerospace Industries, Inc. (KAI) has awarded E&IS Integrated Solutions a $23.5m contract for line-replaceable units (LRUs) for the Republic of Korea’s T-50 trainer aircraft. Deliveries are scheduled to begin in September and continue through 2010.
E&IS to give Black Hawk Pilots better control
Sikorsky Aircraft Corp. has selected E&IS Platform Solutions (PS) to develop the active pilot inceptor systems for the US Army’s UH-60M Black Hawk program. The system will replace the mechanical pilot controls on the current UH-60 with active technology that saves weight and provides pilots with intuitive tactile cues for easier handling and reduced workload. PS also has development contracts for active inceptor technology for the F-35 Joint Strike Fighter and the T-50 aircraft trainer.
Mk 41 Vertical Launching Systems (VLS)
The VLS team concluded negotiations with the Navy for the FY05 purchase of MK 41 VLS Launchers. The Navy agreed to pay $24.2m for 36 Reconditioned Modules. Reconditioned Modules consist of all new components except for the deck, which will be overhauled.
TAGS US Army Contract
In January, BAE Systems delivered the first 1,000 Transparent Armored Gun Shields (TAGS) to U.S. Army troops in Iraq under a contract worth up to $4.7m from the US Army's Tank-automotive and Armaments Command (TACOM). The contract, awarded in December 2005, called for the delivery of the kits for installation on M1114 High Mobility Multipurpose Wheeled Vehicles (HMMWV) by January 2006.
First M1068A3 Conversion Vehicle
BAE Systems Land & Armaments in Anniston, Alabama, completed its first delivery of M1068A3 vehicles under its current $90m Conversion Contract. The contract requires delivery of 356 M113 family of vehicles variants through January, 2007. Two other variants will be produced: the M1064A3 Mortar Carrier and the M577A3 Command Post System. The vehicles are to be fielded to units in the heavy brigade combat teams (HBCT).
SAXON Urgent Operational Requirements
Land Systems has been awarded a contract to convert 6 Saxon General War Role vehicles into Saxon Ambulance variants for immediate operational deployment. Working closely with our partner, ABRO, the first 4 vehicles will be completed in January with the remainder by March. Land Systems has also been contracted to upgrade the Saxon braking system to enhance braking performance as payloads increase due to the installation of additional armor and Bowman.
RG31 US contract
Land Systems OMC successfully completed the production of the 148 highly acclaimed RG31 vehicles for the US Army, with the acceptance during December 2005 of the last batch of 10 vehicles. As the vehicles were delivered to the US Army, they were dispatched directly into the operational theatres in Iraq and Afghanistan from where many reports have since been received of the excellent in-service performance of the RG-31.
