BAE Systems Investor Brief - August 2007
31 Aug 2007
In This Month’s Brief:
MAJOR PROGRAMMES UPDATE
- Nimrod lightning strikes
- LROD™ System guards soldiers against RPG’s
- Three Astutes
- Type 45 six ship contract
- Daring performs above expectations
- Lyme Bay is handed over to Royal Fleet Auxiliary
CONTRACT AWARDS THIS MONTH
- Information Technology awarded GSA Alliant Contract
- Norfolk Ship Repair to overhaul Fast Combat Support Ship Arctic
- US Military Sealift Command's transport capability contract
- Maintenance of the US Coast Guard Cutter Monsoon
- THAAD seeker line begins production
- E&IS awarded new multi-year thermal weapon sight contract
- Armament Systems contract
- Two further Bradley remanufacturing contracts
- US Marine Corps MRAP contract
- Joint Assault Bridge (JAB) Launchers contract
- Further 44 RG31 vehicles for the US
- Land Systems Gear Ratio contract
- Insyte signs up to new way of working with customers
GENERAL NEWS
Acquisition of Armor Holdings complete
BAE Systems completed its acquisition of Armor Holdings Inc. on the 31 July 2007 after receiving all shareholder and regulatory approvals. Armor Holdings is a strong business with an excellent track record and a heritage of innovation and technology. This acquisition is excellent news for our business and positively impacts three key aspects of our strategy: growth in US, growth of global land systems business; and growth of global support, solutions and services business.
Armor Holdings’ Aerospace & Defense Group, to be renamed Mobility & Protection Systems, will be integrated into the Land & Armaments Operating Group, headquartered in Arlington, Virginia. The Products Group and Mobile Security Division will report directly to BAE Systems, Inc. U.S. headquarters.
Recognition for IASSF project
A formal letter of appreciation was received from the Australian Director Tactical Fighter Project Management Unit in recognition of the work BAE Systems’ Integrated Avionics System Support Facility (IASSF) team performed to integrate a new Air Combat Manoeuvring Instrumentation (ACMI) pod onto the F/A-18 Hornet fleet.
The letter included detail that BAE Systems “could take great pride in its efforts and knowledge that the training capability of both the Royal Australian Air Force and US PACAF had been enhanced.”
BAE Systems’ IASSF project provides software support capability to develop and certify the Royal Australian Air Force’s F/A-18 Hornet Operational Flight Programme (OFP).
MAJOR PROGRAMMES UPDATE
Nimrod lightning strikes
Military Air Solutions’ 358 hangar at Warton, recently became a test centre for lightning strike trials on the new Nimrod MRA4 aircraft. During the four-week test programme, aircraft PA03, was subjected to a series of simulated lightning strikes. Nimrods spend much of their time in maritime reconnaissance flying close to the sea surface where the effects of lightning are much more severe, and they have to fly in rigid flight patterns regardless of the weather. The successful lightning strike trials are a significant step forward in clearing the MRA4’s safety critical systems in the overall design and development programme.
LROD™ System guards soldiers against RPG’s
E&IS has installed the first two LROD™ rocket-propelled grenade (RPG) protection kits on US Army RG31 and RG31A1 mine-protected vehicles. LROD is a lightweight, modular bar-armor system that protects against RPGs without compromising the vehicle’s operational capabilities. Weighing less than half of comparable steel designs, LROD bolts onto the vehicle without welding or cutting, and can be repaired in the field.
Three Astutes
The first three Astute class submarines will shortly all be together in Barrow’s Devonshire Dock Hall construction facility. The first of class is due to be re-docked for three months of work following her first basin dive. She will join second of class Ambush, which has just had its forward engine room module shipped, and third boat Artful, whose key reactor compartment has arrived in the hall. The main hall floor will be at its busiest for a decade.
Astute will be prepared to go back into the dock by the year end for the critical sequence of tasks leading up to sea trials in the spring. The final major module installation on Ambush, the Command Deck Module, is due in November, to be followed by final combinations of the pressure hull. Three more units of Artful are due for delivery to the hall before the year end. Meanwhile steelwork is progressing in the New Assembly Shop on the fourth boat, Audacious.
Type 45 six ship contract
Defence Equipment & Support (DE&S) Director General Ships, Dr Andrew Tyler and Surface Fleet Solutions Managing Director, Vic Emery formally signed a new Six Ship Contract onboard the First of Class earlier this month, underpinning both organisations’ commitment to the partnership called for in the UK Defence Industrial Strategy.
The new contract, based on principles jointly developed with DE&S over the past 18 months, completes the contracting of the outstanding elements of ships 4 to 6 of the class and re-baselines the programme to reflect the knowledge gained since project launch in 2000. It also introduces a series of new features including a revised test and trials regime to engage the end user earlier, and an innovative delivery incentive plan to mitigate the programme against future schedule delay.
Daring performs above expectations
The world’s most advanced warship, HMS Daring, has completed her stage one sea trials and has received glowing reports after performing above all expectations. After an initial design target of 28 knots, the ship comfortably exceeded 30 knots and reached top speed in little over two minutes from a standing start, which is an outstanding performance for such a large ship.
Lyme Bay is handed over to Royal Fleet Auxiliary
The fourth and final ship in the new LSD(A) fleet, RFA Lyme Bay, was handed over to the Royal Fleet Auxiliary on 2 August in Portland. Completed nine weeks ahead of schedule, RFA Lyme left Surface Fleet Solutions’ Govan Shipyard at the end of June and then underwent a series of post-contract enhancements prior to handover. Surface Fleet Solutions continues to support the four LSD(A) vessels in the role as Delegated Design Authority for the Bay Class.
CONTRACT AWARDS THIS MONTH
Information Technology awarded GSA Alliant Contract
BAE Systems was selected as a prime contractor for the General Services Administration (GSA) Alliant Government-Wide Acquisition Contract. BAE Systems is among 29 award winners for this ten-year, $50 billion Multiple Award/Indefinite-Delivery, Indefinite-Quantity (MA/IDIQ) program.
The scope of the Alliant contract includes all components of an integrated Information Technology solution, including all current and new technologies which may emerge during the life cycle of the contract, and IT systems and services in support of National Security Systems.
The GSA Alliant Government-Wide Acquisition Contract is open to all federal, civilian, defense and independent agencies.
Norfolk Ship Repair to overhaul Fast Combat Support Ship Arctic
BAE Systems was awarded a contract by the U.S. Navy’s Military Sealift Fleet Support Command for a 60-day overhaul of the fast combat support ship USNS Arctic (T-AOE 8). The contract includes options, which if exercised, would bring the cumulative value of the work package to US$7.9 million. All work on the Military Sealift Command ship will be performed at BAE Systems’ Norfolk Ship Repair starting in July and is expected to be completed in September 2007.
US Military Sealift Command's transport capability contract
BAE Systems was awarded a contract by General Dynamics American Overseas Marine for the dry-docking and preservation of the USNS Brittin (T-AKR 305), Military Sealift Command’s Bob Hope class Large, Medium-Speed Roll-on/Roll-off (LMSR) Ship. The 50-day work package, valued at $4.6 million, began on June 1 with the ship’s arrival at BAE Systems Norfolk Ship Repair.
Maintenance of the US Coast Guard Cutter Monsoon
BAE Systems was awarded a US$2.1 million contract from the Southwest Regional Maintenance Centre for maintenance on United States Coast Guard Cutter Monsoon. All work will be performed at BAE Systems Ship Repair in San Diego and is scheduled for completion in early December.
THAAD seeker line begins production
E&IS has received a US$62.3 million contract from Lockheed Martin Corp. to begin production of the Terminal High Altitude Area Defense (THAAD) Interceptor Seeker, which provides infrared imagery of the targeted warhead to the missile to guide the interceptor to its target. The first THAAD systems will be fielded in 2009 and ready for worldwide deployment in 2010.
E&IS awarded new multi-year thermal weapon sight contract
The US Army awarded E&IS a US$183 million contract to produce thermal weapon sights, under a five-year indefinite delivery/indefinite quantity contract that could reach US$1 billion. E&IS’s microbolometer thermal imaging technology enables soldiers to see deep into the battlefield in all weather conditions, both day and night, and increases the soldier’s surveillance and target acquisition range.
Armament Systems contract
BAE Systems was awarded an US$8 million letter contract in July from Raytheon Corporation for the first two shipsets of the MK57 Vertical Launching System (VLS) on the U.S. Navy's DDG 1000 Zumwalt class of destroyers. The contract, with a potential value of up to US$64 million, covers the continuation of design, integration, requirements verification, and the initial purchase of materials for the first two shipsets. Work on this contract award begins immediately and continues until January 2012.
Two further Bradley remanufacturing contracts
BAE Systems has been awarded two contract modifications from the US Army TACOM Life Cycle Management Command, totaling US$411.7 million, to remanufacture and provide spares for Bradley A3 combat systems.
BAE Systems will upgrade 108 infantry fighting vehicles, 60 cavalry fighting vehicles and four fire support team vehicles to the A3 baseline, working through the company's Public Private Partnership with Red River Army Depot (RRAD).
Initial disassembly and subsystem rebuild will be performed at RRAD, final disassembly and structural modifications will be completed by BAE Systems in Fayette County, Pennsylvania, and final assembly, integration and test will be conducted at the company's facility in York, Pennsylvania.
US Marine Corps MRAP contract
BAE Systems received a US$213.9 million delivery order from the US Marine Corps for 425 Category I 4x4 Mine Resistant Ambush Protected (MRAP) Vehicles and 16 Category II 6x6 MRAP Vehicles configured as ambulances.
Joint Assault Bridge (JAB) Launchers contract
BAE Systems has been awarded a contract from the US Marine Corps for six production units of the JAB Launcher. The contract is worth more than US$9 million. This launcher, based on the Titan system, is to be integrated into Abrams M1A1 main battle tank hulls, and will be capable of launching the in-service US MLC 70 Bridge. The US has a total requirement for more than 160 launch mechanisms and a further contract is anticipated to be awarded in 2009/2010 if requirements increase into full rate production.
Further 44 RG31 vehicles for the US
The US Army TACOM Life Cycle Management Command has awarded General Dynamics Land Systems Canada (GDLS-C) a contract to provide 44 RG31 Mk5 mine protected vehicles. Under this contract, GDLS-C will provide program management, while BAE Systems Land Systems OMC will manufacture the vehicles at its facilities in Benoni, South Africa. Deliveries will occur from October 2007 to November 2007.
US forces have previously ordered or received 448 RG31 vehicles. The vehicles have proven to be highly effective against mines, improvised explosive devices (IED's) and ballistic threats encountered by US and allied forces in both Iraq and Afghanistan.
Land Systems Gear Ratio contract
Land Systems Gear Ratio has been awarded an order for a further 410 FV430 transfer gearboxes from BAE Systems Land Systems UK. This follows an existing order of 550 gearboxes which are currently being manufactured. Deliveries under the new order will start in September 2007.
Insyte signs up to new way of working with customers
Insyte has achieved a managed service contract with the UK Ministry of Defence (UK MoD) for the Submarine Broadcast Processing System (SMBPS), valued at £37m. The contract will ensure that the SMBPS is available to its end-users located in UK submarine fleets 24 hours a day 7 days a week.
The SMBPS managed service provides reassurance to submariners that they will be able to access and use the system whenever it is required. SMBPS is a Command, Control and Communications (C3) system that acts as ‘air traffic control’ for submarines.
It combines the management of communications, information and operations into one system, enabling improved cost forecasting, transparency and predictability of service levels for the submarines.
