BAE Systems Investor Brief - January 2008
04 Feb 2008
In This Month’s Brief:
- Agreement to acquire MTC Technologies, Inc.
- Proposed acquisition of Tenix Defence
- BAE Systems to acquire Pitch Technologies
- UK Government and Commercial software business acquisition
- Insyte integrates Underwater Systems
- Pinzgauer announcement
- Bill Clifford appointed president of Ship Repair business 3
- Success in 2007 Engineering Awards
MAJOR PROGRAMMES UPDATE
- Tranche 3 proposal
- BAE Systems secures first F-35 production contract
- Thousands gather to watch the launch of Diamond
- South African manufactured MRAPs on schedule
- Panther update
- First integrated PAAMS(S) system handed over to the UK customer
CONTRACT AWARDS THIS MONTH
- NITEworks receives new 5 year contract
- U.S. Navy guided missile cruiser modernisation contract
- E&IS to lead DARPA imaging system program
- E&IS to supply remote weapon sights
- A-10A Thunderbolt II’s get upgrade
- L-ROD armor to protect Army vehicles
- Follow-on MRAP orders worth US$1.1 billion
- Contract to reset Bradley fighting vehicles
- Seawolf missile defence system
- Collaborative programme for future UK-French missile research
- Front line aircraft to have improved capability
- Through life support contract
GENERAL NEWS
Agreement to acquire MTC Technologies, Inc.
BAE Systems announced on 24 December it had entered into a definitive agreement to acquire MTC Technologies, Inc., a Dayton, Ohio-based company providing technical and professional services, and equipment integration and modernisation for the US military and intelligence agencies. The transaction is valued at approximately US$450 million.
MTC Technologies, which currently employs approximately 2,900 people, will become part of the Customer Solutions Operating Group as part of the company’s Technology Solutions & Services (TSS) line of business.
Proposed acquisition of Tenix Defence
BAE Systems has entered into an agreement to acquire Tenix Defence, a leading Australian defence contractor, for up to A$775 million (approximately £356 million) in cash. Tenix Defence comprises four wholly owned businesses and two joint venture interests and has over 2,500 employees at 25 locations.
The acquisition of Tenix Defence will more than double BAE Systems presence in Australia making it the largest in-country defence supplier to the Australian Defence Force. The acquisition is conditional upon receiving the required regulatory clearances and other third party consents.
BAE Systems to acquire Pitch Technologies
BAE Systems AB, has entered into a definitive agreement to acquire the Swedish high-tech company Pitch Technologies AB (Pitch) for a cash consideration of 61.3 MSEK. Pitch is an innovator of computer-based training and research simulation technologies.
Some of the largest and most complex simulation programs in governments and industries worldwide, including those in NASA, Boeing and Mitsubishi, employ Pitch’s state-of-the-art simulations products, services and solutions.
UK Government and Commercial software business acquisition
In another move designed to develop BAE Systems position in the National Security and Resilience (NS&R) market, Insyte has acquired the UK Government and Commercial software business from Petards Ltd. Insyte will seek to secure similar opportunities to lead the development of BAE Systems capability in NS&R as its market footprint widens.
Insyte integrates Underwater Systems
BAE Systems Integrated System Technologies (Insyte) was pleased to welcome its colleagues from the Underwater Systems business who joined Insyte from 1 January 2008. The integration of these businesses brings together complementary capabilities and skills base.
On 23 January plans to close the Pinzgauer manufacturing facilities at Guildford and Fareham, with potentially the loss of up to 102 jobs, and discontinue the production of the Pinzgauer 1 were announced. There are plans for a Pinzgauer support business, which will retain a core team of about 25 people at the Guildford site and will continue to support the Pinzgauer fleets, primarily in the UK and New Zealand. It was also announced that the development of the new Pinzgauer 2 vehicle will be transitioned to the Land Systems South Africa business.
Bill Clifford appointed president of Ship Repair business
Customer Solutions has appointed Bill Clifford president of its Ship Repair business, effective 1 April 2008. Clifford will succeed Al Krekich, who will retire 31 March 2008, after serving as Ship Repair’s president for the past 10 years. Clifford brings nearly 40 years of leadership experience in the United States Navy and private sector ship repair industry to the role.
Success in 2007 Engineering Awards
Two Regional Aircraft employees have been recognised recently when they picked up awards in the 2007 Engineering Awards. Senior Materials Engineer Kirsten Dyer was named Regional Aircraft’s Engineer of the Year 2007, while Jim Boyce, a Project Design Engineer, picked up the Lifetime Achievement Award.
MAJOR PROGRAMMES UPDATE
In December, the Eurofighter Consortium submitted a comprehensive proposal for Tranche 3 to the four NATO Eurofighter and Tornado Management Agency nations within a very challenging timescale.
Tranche 3 is planned to cover 236 production aircraft valued above €10Bn and the submission went beyond simply the planned production programme, including additional information on alternative quantities of aircraft, elements of non recurring activity, new capabilities for the aircraft, and on support costs. The submission involved considerable effort across the entire industry and demonstrated how well the partner companies work together.
BAE Systems secures first F-35 production contract
BAE Systems has been awarded its first Low Rate Initial Production contract, marking the start of F-35 Lightning II production for Military Air Solutions (MAS) and the programme's first step in its transition from development to full rate production.
The contract is worth £25 million and will see the MAS team deliver the aft fuselage and empennage (vertical and horizontal tails) as well as key mission and vehicle systems for the two Conventional Take Off and Landing (CTOL) variants of F-35 that make up the first Low Rate Initial Production contract.
Thousands gather to watch the launch of Diamond
Diamond, the third Type 45 destroyer, was successfully launched from the Govan yard on Tuesday 27 November. The Lady Sponsor, Mrs Suzie Johns, wife of Vice Admiral Adrian Johns CBE, the Royal Navy’s Second Sea Lord and Commander in Chief Naval Home Command, named the ship at the ceremony.
South African manufactured MRAPs on schedule
Land Systems OMC had to work to a very tight schedule to deliver the 121 RG31 MRAP vehicles required before the end of 2007. During what is normal shut down summer holidays in South Africa, the Land Systems OMC team worked long hours and vehicle number 121 was accepted a day ahead of schedule.
The Land Systems Weapons & Vehicles Panther team achieved two significant milestones as 2007 came to an end. Following a detailed review of compliance against system requirements, the UK MOD declared System Acceptance. This declaration leads the way for the endorsement of a Panther In-Service Date in early 2008.
The authority has also requested that BAE Systems begin development work needed to upgrade Panther to a “Theatre Entry Standard” in anticipation of an operational deployment in 2008. This is likely to include fitting of various Urgent Operational Requirement related equipment. Production of Panther vehicles continues apace with the 100th vehicle rolling off the Newcastle production line and being accepted by the customer at the end of 2007.
First integrated PAAMS(S) system handed over to the UK customer
The Principal Anti-Air Missile System (Sampson) (PAAMS(S)) project successfully achieved a major project milestone on 19 December with the handover of a fully integrated PAAMS(S) System to the customer at the Type 45 Destroyer Maritime Integration Support Centre (MISC).
The system, comprising fully representative Command and Control, Multi-Function Radar (MFR) and System Control Panel equipments, integrated with a Vertical Launch Sub-system simulator, will now be used by the UK Type 45 community in support of Combat System Integration activities at Portsdown Hill, near Portsmouth.
The acceptance event, following a week of trials witnessed by the customer community, is the first time an integrated PAAMS(S) system has been handed over to the customer and thus marks the way for the ship-based acceptance events to come in future years.
CONTRACT AWARDS THIS MONTH
NITEworks receives new 5 year contract
A new contract was formally placed in November for the 5-year continuation and development of the NITEworks MoD and pan-Industry partnership. Led by BAE Systems, the partnership will now be evolved into a broad-based decision support capability within the MoD.
U.S. Navy guided missile cruiser modernisation contract
BAE Systems Ship Repair in San Diego has been awarded a US$31 million contract by the Naval Sea Systems Command for the maintenance, repair and modernisation of the guided missile cruiser USS Bunker Hill (CG-52). This award complements the cruiser modernisation work Ship Repair is delivering to the US Navy for the Atlantic Fleet at Norfolk Ship Repair.
E&IS to lead DARPA imaging system program
The Defense Advanced Research Projects Agency (DARPA) awarded Electronics & Integrated Solutions (E&IS) an US$18.5 million contract to lead their Autonomous Real-Time Ground Ubiquitous Surveillance Imaging System (ARGUS-IS) program. E&IS will develop, integrate, and demonstrate advanced intelligence, surveillance, and reconnaissance systems and capabilities for wide-area persistent monitoring in Department of Defence unmanned and manned surveillance platforms.
E&IS to supply remote weapon sights
Electronics & Integrated Solutions TIM 1500 Remote Weapon Station (RWS) thermal sight has been selected by Kongsberg Defence and Aerospace (KDA) as the thermal imager for KDA’s Common Remotely Operated Weapon Station (CROWS) program for the U.S. Army. The CROWS program is a five-year contract with a maximum order quantity of 6,500 RWS and a potential value of US$200 million.
A-10A Thunderbolt II’s get upgrade
The Air National Guard and Air Force Reserves have selected Electronics & Integrated Solutions to upgrade the A-10A Thunderbolt II’s situational awareness and targeting control. The modifications will increase pilot awareness of the position of friendly ground forces and reduce pilot workload by automatically transferring target coordinates to other networked aircraft.
L-ROD armor to protect Army vehicles
Under a new US$14.5 million contract, Electronic & Integrated Solutions will provide lightweight bar-armor kits for 215 U.S. Army route clearance vehicles. The Army’s RG31 and Cougar vehicle will be equipped with L-ROD aluminum armor to protect vehicles and occupants against rocket-propelled grenades.
Follow-on MRAP orders worth US$1.1 billion
BAE Systems has received two follow-on delivery orders worth a total of US$1.1 billion under the U.S. Marine Corps’ current Mine Resistant Ambush Protected (MRAP) contract for 600 RG33 Category II vehicles and 668 Caiman Category I vehicles. BAE Systems is currently contracted to build three of the five MRAP variants, and is now under contract to deliver 2,126 Category I vehicles and 1,453 Category II vehicles.This award, when combined with previous contracts, brings the total value of BAE Systems’ MRAP contracts to US$2.24 billion.
Contract to reset Bradley fighting vehicles
BAE Systems has been awarded a contract modification totalling US$709.4 million from the U.S. Army TACOM Life Cycle Management Command for the reset of Bradley Fighting Vehicles and associated components. This modification is the largest national level reset award for Bradley Combat Systems to date. When combined with an earlier award of US$234 million for long lead materials and an option worth US$57 million, this effort represents over US$1 billion for the reset of Bradley Fighting Vehicles.
Seawolf missile defence system
Insyte will upgrade the Seawolf missile defence system on board HMS Sutherland as part of a £35m upgrade programme. HMS Sutherland has been designated as the Type 23 first of class ship for the Seawolf Mid Life Update programme which will provide a significantly enhanced capability.
Collaborative programme for future UK-French missile research
The UK and French Ministries of Defence have awarded the first tranche of a three-year €21 million Missile Innovation and Technology Programme (ITP) contract to a MBDA-led consortium of UK and French companies.Under the contract, the value of the government contributions will be matched by the ITP consortium, resulting in a programme value of €42 million. This ground-breaking arrangement is expected to become the cornerstone of future collaborative research and technology demonstration programmes in the defence industry. MBDA’s primary industrial partners are Thales Air Systems, Thales Missile Electronics, Microturbo, Selex, Roxel, QinetiQ and Nexter Munitions.
Front line aircraft to have improved capability
Military Air Solutions has received contracts from the UK MOD to update the RAF’s front-line fast jets. The Harrier GR9 fleet will be upgraded to a new standard, called Capability E under an £84m contract, whilst Tornados will be upgraded in a contract worth over £200m called CUS(P), the Capability Upgrade Strategy (Pilot). Both upgrades will include the provision of secure communications and tactical data links.
Surface Fleet Solutions, in conjunction with its consortium partners A&P Group, BMT and James Fishers, has been awarded sole preferred supplier status for the role of Commercial Ship Maintenance Cluster Management for the Landing Ship Dock (Auxiliary) Bay Class. Negotiations are currently taking place to finalise this through life support contract to provide both fleet time and non-fleet time support to the LSD(A) Bay Class for a period up to 25 years.
