Lockheed Martin Corporation (LMT - Analyst Report) won a $90.6 million U.S. Army contract for providing maintenance services to the Modernized Target Acquisition Designation Sight/Pilot Night Vision Sensor (“M-TAD/PNVS”).
The firm-fixed price contract is the first of three options falling under the Performance Based Logistics (PBL) project, valued at $111 million and conferred in 2012. The total value of the contract is $375 million and will be carried out in four years.
The PBL is a strategic model exercised by the U.S. Department of Defense ("DoD") that offers product system support and sustainment. The program boosts the quality of system readiness, accentuates mission effectiveness, lowers operation and support expenses and enhances the situational awareness and flying skills of the Apache helicopter pilots as provided by the M-TAD/PNVS.
The M-TAD/PNVS is a cutting-edge electro-optical fire control feature that allows Apache pilots to fly safely during day and night and also in missions during extreme weather conditions.
The M-TAD/PNVS contract enables Lockheed Martin to deliver high-quality, reliable and efficient products to the fighter pilots and at the same time minimizes costs.
Lockheed Martin collected a string of such logistics and support contracts in Jan 2013. The key deals include a $73.7 million contract from the U.S. Hill Air Force Base for providing support for the maintenance and repair of the F-22 fighter jets and a $104 million U.S. Air Force Space Command Space and Missile Center contract for supporting the ground control systems in the Global Positioning System (“GPS”) programs.
Despite the likelihood of spending cuts in the defense sector, we believe Lockheed Martin’s top-line could witness significant upside given its strong order backlog of $75.6 billion. Additionally, the company’s diversified operations in unmanned systems, cyber-security force protection, and missile defense would enhance its sales potential.
We note that the DoD’s spending on PBL has increased substantially from $1.4 billion to $5.0 billion over the period 2001 to 2009 and is projected to further increase by 10.3% in 2013. This will certainly bode well for Lockheed Martin’s business prospects. The company’s stock currently retains a Zacks Rank #2 (Buy).
Another defense contractor who is busy picking up logistics and support contracts is Zacks #3 Ranked Northrop Grumman Corporation (NOC - Analyst Report). The company secured a $14.1 million contract from the Naval Systems Sea Command to support system development and demonstration phase via preliminary design evaluation for the Joint Counter Radio-Controlled Improvised Explosive Device (“RCIED”) Electronic Warfare (“JCREW”) 3.3 System.
Based in Bethesda, Maryland, Lockheed Martin is a $30.45 billion company engaged in the research, design, development, manufacture, integration, and sustainment of advanced technology systems and products.