BAE Systems Investor Brief - July 2006
09 Aug 06
In This Month’s Brief:
- One of the best places to work in IT for 2006
- E&IS AIRS team receives NASA Service Award
- Harrier programme commended by CDL
- Farnborough International 2006
- ASTRAEA contract signing
- Hawk reaches one million hours
- Bahrain Hawk handover
- Lightning strikes twice for F-35 JSF
- F-35 JSF Support Services agreement
- Nimrod Production contract
- CS&S Australia awarded AMO Status
- LSD(A)
- Naval Export
- Ambush Milestone
- Ambush Early Closure
- Complex Weapons announcement by UK MoD
- CS&S Australia awarded AUS$39m contract
- Department of Homeland Security EAGLE contract
- US Army awards $1.4bn IDIQ for E&IS Sensors
- Home Station Reset contract on critical US Army Combat Systems
- Contract Modification to Reset Bradley Combat System Vehicles for the US Army
- Development Program for Precision Guidance Kits
- Hagglunds selected to develop Advanced Mortar System Prototypes
- FMV orders the Next Generations Vehicle System SEP
- PARS 3 contract
- Order from Italy for Teseo
GENERAL NEWS
One of the best places to work in IT for 2006
BAE Systems has been named by IDG Computerworld as ‘One of the Computerworld Best Places to Work in IT for 2006’. The Best Places to Work list is an annual ranking of the top 100 work environments for technology professionals, based on excellence and quality of work environment.
E&IS AIRS team receives NASA Service Award
The National Aeronautics and Space Administration (NASA) awarded BAE Systems’ Electronics & Integrated Solutions (E&IS) its Public Service Group Award on 8 June. The award recognizes the performance of the Atmospheric Infrared Sounder (AIRS) instrument aboard the Aqua satellite.
The AIRS was developed by E&IS’ Infrared Imaging Systems (IRIS) business in Lexington, Mass. and launched in May 2002 on NASA’s Earth Observing System (EOS) Aqua satellite. It is currently providing global 3-D measurements of atmospheric temperature, moisture and chemical composition of unprecedented accuracy and detail.
Harrier programme commended by CDL
The Harrier Joint Upgrade and Maintenance Programme (JUMP) team received a Chief of Defence Logistics Commendation from General Sir Kevin O’Donoghue at an awards ceremony at Abbeywood on 13 June.
The team, consisting of BAE Systems, DLO and RAF personnel, received the award for reducing costs, improving efficiencies and performance, through successful partnering. JUMP is forecast to achieve savings of £44m and GR7 to GR9 upgrade times have been reduced from 52 to 35 weeks.
Farnborough International 2006
Another successful Farnborough Airshow took place week commencing Monday 17 July. The Company hosted 90 overseas delegations from more than 40 countries during the week. Visits from key decision makers included the Deputy Prime Minister from Malaysia and Royalty from Bahrain and Oman. In addition Dignitaries from the UK included Prince Michael of Kent, the First Sea Lord, the Secretary of State and the Minister of Defence as well as Jeb Bush, the Governor of Florida.
MAJOR PROGRAMMES UPDATES
ASTRAEA contract signing
BAE Systems and the other partners and funding agencies for ASTRAEA, the Autonomous Systems Technology Related Airborne Evaluation and Assessment programme have announced contract signings together worth £32.4m.
These signed contractual agreements signal the formal start of the ASTRAEA programmes of 16 work projects, aimed at enabling the routine use of uninhabited air vehicles (UAVs) in all classes of UK airspace, without the need for restrictive, specialised or non-routine conditions of operation.
Hawk reaches one million hours
On 21 August 1974, chief test pilot Duncan Simpson took to the skies over Dunsfold in the first Hawk, Aircraft XX154. Duncan Simpson, now in his 80s, flew once again in a BAE Systems Hawk at RAF Valley on 5 July 2006. The occasion marked the one-millionth flying hour of the Hawk TMk1/1A in UK service.
Since the first flight, more than five million design hours have been spent ensuring ever-more capable variants of the aircraft. The advanced Mk 128, selected as the RAF’s new fast jet trainer, is the culmination of this work.
Bahrain Hawk handover
Following official acceptance at Warton, the first Hawk Mk129 for the Royal Bahrain Air Force (RBAF) was formally handed over to the customer in a ceremony at Farnborough International.
Lightning strikes twice for F-35 JSF
The F-35 Joint Strike Fighter (JSF) was officially named Lightning II, in a special ceremony held at Lockheed Martin's site in Fort Worth, Texas. The name echoes those of two formidable fighters from the past: the World War II-era Lockheed P-38 Lightning and the mid-1950s Lightning supersonic jet, built by English Electric, which later became BAE Systems.
F-35 JSF Support Services agreement
BAE Systems and Lockheed Martin have announced that they have signed an agreement that defines how F-35 JSF support services will be provided in the UK throughout the life of the F-35 Lightning II program.
In the UK, Team JSF will draw on all of the resources of the F-35 JSF industrial team. BAE Systems, as a principal team member, will take the lead in providing sustainment activities for the life of the F-35 JSF program there, which is expected to extend through the next 40 years.
Nimrod Production contract
During Farnborough Airshow, the Secretary of State for Defence, the Rt Hon Des Browne MP announced that the UK Government had signed a production contract for a 12-aircraft fleet of the next-generation Nimrod, the MRA4.
Nimrod MRA4 will give the RAF a hugely capable maritime reconnaissance and intelligence gathering platform with a sophisticated mission system, excellent communications, advanced defensive aids and the potential to carry a wide range of modern weapons.
CS&S Australia awarded AMO Status
CS&S Australia has been awarded Authorised Maintenance Organisation (AMO) status to provide deeper maintenance of the avionics mission equipment fitted to AP-3C aircraft, operational mission simulator and systems engineering laboratory.
This milestone represents a significant achievement and further reinforces BAE Systems Australia’s commitment to becoming the Australian Defence Force’s preferred capability partner in supporting equipment throughout its operational life.
LSD(A)
On Thursday 13 July 2006, the Ministry of Defence made a formal announcement that it would be closing its contract with Swan Hunter for the LSD(A) work. As a result, BAE Systems has agreed a contract amendment with the DPA that increases its role to that of overall Project lead, being now responsible for design authority going forward, lead yard services, vendor management, post PAD change management service, 4 ship warranty, integrated logistic support (ILS) and completion of Lyme Bay.
Naval Export
BAE Systems has received a Letter of Intent from the Government of Malaysia for the procurement of two frigates for the Royal Malaysian Navy. Although considerable work on the programme will be conducted with an industrial partner in Malaysia, it is good news for Naval Ships and will protect several hundred engineering and production jobs for a number of years.
Ambush Milestone
A key ‘four-in-one’ milestone has been achieved six days early on the second Astute class submarine Ambush. Completing assembly of the main propulsion machinery package ready for final commissioning activities and trials in the autumn was a key milestone as well as a Submarines 2006 common objective.
Ambush Early Closure
Closure of the reactor compartment of a nuclear powered submarine is a critical event in the boat’s construction. It has been achieved on second of class Ambush several months in advance of the equivalent achievement on first of class Astute. This is thanks both to lessons learnt from Astute and also to the introduction of outfitting submarine units in the vertical, rather than horizontal ‘shipwise’ position.
Complex Weapons announcement by UK MoD
The UK Minister for Defence Procurement, Lord Drayson, announced a package of key enabling contracts on 19 July at the Farnborough Air Show aimed at sustaining the UK Complex Weapons (CW) industry.
The MBDA-led “Team CW”, which includes four other partners, Thales Air Defence, Thales Missile Electronics, Roxel and QinetiQ, will work with the MoD towards a Loitering Munitions Demonstration and Manufacture contract, potentially worth more than £500m.
Other enabling contracts that were announced, where MBDA will lead, cover capability insertion for the Storm Shadow air-to-ground stand-off missile and development of the UK’s requirement for the Future Anti-Surface Guided Weapon.
CONTRACTS AWARDED THIS MONTH
CS&S Australia awarded AUS$39m contract
CS&S Australia has been awarded a AUS$39m contract to supply additional Nulka Active Missile Decoy Systems to the Royal Australian, United States and Canadian navies in 2008. This new contract takes the value of the Nulka business awarded to BAE Systems to more than AUS$550m.
Department of Homeland Security EAGLE contract
The Department of Homeland Security has selected BAE Systems as a prime contractor for the Enterprise Gateway for Leading Edge Solutions (EAGLE) program. BAE Systems will be among 25 companies to compete for task orders under the indefinite-delivery, indefinite-quantity contract.
EAGLE contracts have a five-year base with two one-year options for renewal, for a total estimated value of $45bn. BAE Systems has been selected in two functional areas: software development and management support services.
US Army awards $1.4bn IDIQ for E&IS Sensors
The US Army awarded BAE Systems a sole-source contract on May 19 for the purchase of more Electronics & Integrated Solutions’ (E&IS) Common Missile Warning Systems (CMWS). The CMWS protects Army fixed- and rotary-wing aircraft from heat-seeking missiles.
The contract is a five-year indefinite delivery, indefinite quantity (IDIQ) agreement with a maximum ceiling of $1.4bn. Under this contract, the Army has already ordered 80 CMWS systems.
The CMWS is currently on Army and allied helicopters and fixed-wing aircraft in support of the global war on terrorism. The CMWS is credited with saving multiple aircraft and crews from man-portable air defense missiles. E&IS has been delivering CMWS systems — part of the Advanced Threat Infrared Countermeasures (ATIRCM) system — to the Army under a previous IDIQ contract awarded in 2004.
Home Station Reset contract on critical US Army Combat Systems
On 28 June, BAE Systems received a $10.8m contract to reset key US Army combat systems at various military installations throughout the US from the Army’s Tank-automotive and Armaments Command Life Cycle Management Command.
The contract covers the Home Station Reset of Bradley Combat Systems vehicles, the M113A3 family of vehicles, M109A6 Paladin self-propelled howitzers and M992A2 Field Artillery Ammunition Supply Vehicles.
Contract Modification to Reset Bradley Combat System Vehicles for the US Army
On 28 June, BAE Systems received a $27.2m contract modification from the US Army Tank-Automotive and Armaments Command Life Cycle Management Command to reset 44 Bradley A2 Operation Desert Storm (ODS) vehicles returning from Iraq.
When combined with the $227m previously funded in March, this modification brings the total FY06 Reset contract value to $254.4m. Work on this contract will begin immediately with deliveries scheduled to be complete by May 2007.
Development Program for Precision Guidance Kits
BAE Systems has received a $3m six-month contract from the U.S. Army’s Project Manager, Combat Ammunition Systems to participate in a competitive technical development program for the Precision Guidance Kit for use with Army cannon artillery ammunition.
Hagglunds selected to develop Advanced Mortar System Prototypes
The Swedish Defence Materiel Administration (FMV) has awarded a contract for the development and production of two prototype armored advanced mortar systems (AMOS) to BAE Systems Hägglunds AB. The SEK 500 million order (approx US$70m) includes options for maintenance systems, ammunition and preparations for a new battlefield management system. The two prototypes will be delivered to the Swedish customer in early 2011.
FMV orders the Next Generations Vehicle System SEP
On 17 July, FMV (the Swedish Defense Materiel Administration) placed an order on development of the next generations military vehicle system SEP from BAE Systems Hägglunds AB. The order value amounts to 500 million Swedish Kronor (approx US$70m).
The development order contains two SEP 6X6 wheeled vehicles and two SEP tracked vehicles, both as troop transport and logistic configurations. The development process will be completed by 2011 and the Swedish Ministry of Defense is planning on having the SEP system working operatively by 2014.
SEP is a military vehicle system based on both wheeled and tracked configurations which can carry a number of different role modules depending on purpose.
PARS 3 contract
Following its earlier approval by the German parliament, the contract for the industrialisation and volume production of the PARS 3 LR system was signed by the BWB (the German defence procurement agency), MBDA Deutschland and Diehl BGT Defence (DBD) on 30 June.
PARS 3 LR is a long-range third-generation missile for delivery to the German army and is the principal weapon system on the Tiger support helicopter in Germany. The project will be managed by PARSYS, a 50-50 joint venture between MBDA and DBD. The contract is worth €380m and covers the scheduled delivery of 680 missiles between 2009 and 2014.
Order from Italy for Teseo
On 28 June, the Italian Ministry of Defence awarded a contract to MBDA for the supply and modification of four Teseo MK2 ship systems for the De La Penne and Horizon class vessels.
Teseo is a long-range ship-launched anti-ship missile system. The agreement also covers logistical support, and the retrofit of 12 MK2 operational missiles and 7 telemetry missiles for a total sum of €28m. The contract also includes the supply of an optional lot potentially worth an additional €17m. This contract opens important prospects for export orders.
