The Department of Defense (DoD) offered a string of contracts yesterday out of which Textron Inc. (TXT - Analyst Report) clinched two back-to-back contracts totaling $82.2 million. Other major contract winners included Lockheed Martin Corp. (LMT - Analyst Report) and Raytheon Company (RTN - Analyst Report).
Both the contracts were awarded to Textron’s Bell Helicopter operating division. Of the two, the highest was a modification contract worth nearly $61.0 million for the procurement of 12 new metal scout helicopter cabins and 12 additional part kits to furnish the OH-58D Kiowa Warrior scout helicopters.
The latest version of the Kiowa army reconnaissance helicopters comes with a pack of cutting-edge technological features like infrared jamming equipment, laser warning detectors, radar warning receivers and everything from .50 caliber machine guns to Hydra rockets and Hellfire missiles.
The contracting activity is the U.S. Army Contracting Command – Redstone Arsenal (Aviation) in Redstone Arsenal, AL. The upgrade tasks related to the contract will be carried out mostly at Amarillo, Texas while a minor part will take place in Hurst, Texas.
The second contract worth $21.2 million involves the supply of rotary wing blades. The firm-fixed-price contract will be performed in Texas and is expected to be concluded on Jan 30, 2017. The Defense Logistics Agency Aviation, Philadelphia, PA is the contracting activity.
The 2013 U.S. defense budget lays emphasis on upgrading and strengthening the country’s existing defense capabilities. This explains the slew of modernization contracts from the DoD lately. Textron’s efforts to upgrade its technological know-how have helped it to secure considerable contracts.
Moreover, Textron can capitalize on the spiraling global security issues in the Middle East, Africa and Asia by way of foreign military sales contracts. Recently, Textron landed a lofty order worth $641 million for the delivery of 1,300 cluster bomb units to the U.S. Air Force of which a sizeable portion will be sold to the Royal Saudi Air Force.
Defense players like Textron are relying on international contracts to keep its revenue stream stable in the face of U.S. budget austerity. At the moment, Textron carries a Zacks Rank #3 (Hold). Textron as of now has a market capitalization of $7.74 billion. A better-placed industry operator is Zacks Ranked #2 (Buy) ITT Corp. (ITT - Analyst Report).