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Boeing Wins $35M Deal to Support Small Diameter Bomb Program

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The Boeing Co. (BA - Free Report) recently secured a modification contract worth $35 million for the integration, sustainment and support of the Small Diameter Bomb (SDB) Increment I miniature munition. The contract was awarded by the Air Force Life Cycle Management Center, Eglin Air Force Base, Florida.

Work related to the deal will be carried out in St. Louis, MO and is scheduled to be over by Apr 15, 2029.

The contract involves foreign military sales to Australia, Belgium, Canada, Denmark, Greece, Israel, South Korea, the Netherlands, Spain, Sweden, Turkey and Singapore, with an approved letter of offer and acceptance. Notably, Boeing will utilize fiscal 2015 and 2016 missile procurement and foreign military sales funds to complete the task.

A Brief Note on SDB

Boeing’s SDB is the next generation of low-cost and low collateral-damage precision strike weapons for internal and external carriage. It comes with a range greater than 60 nautical miles. The SDB carriage allows four weapons to be carried in one aircraft weapon station.

These precision weapons are 250-pound class bombs that allow the artillery system to hit targets from significantly longer distances and engage hard-to-reach targets while maintaining the SDB’s flight maneuverability and accuracy.

Currently, SDB is installed externally on F-15E, F-16 Block 30/40/50, Gripen and GR4 Tornado smart stations and is internally integrated in the bays of the F-22A, F-35A and Unmanned Combat Air Vehicles.

Our View

Boeing’s SDB is one of the very few weapon systems of its kind in the munitions market. Being one of the largest defense contractors in the United States, Boeing serves the U.S. aerospace and defense industry and its allies by producing, integrating and supporting precise, long-range and focused munitions capabilities. Currently, the demand for SDB is high, given the fact that apart from the United States, eight foreign allies of the country use this precision weapon.

With more nations bumping up their defense spending, Boeing consistently enjoys frequent order flow from international markets for advanced arsenal like SDB. The latest contract win is a further testament for that.

Notably, the fiscal 2020 defense budget proposal reflects a solid spending provision of $5.1 billion for munitions. This should usher in more contract flows for Boeing as it is a renowned munitions manufacturer in the United States.

Meanwhile, such impressive budgetary revisions should also prove to be beneficial for other defense majors like Raytheon (RTN - Free Report) , Lockheed Martin (LMT - Free Report) and General Dynamics (GD - Free Report) , which are prominent munitions manufacturers in the nation.

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