Lockheed And Raytheon To Gain With New Sea Based Focus On Missile Defense

When the Obama Administration decided to end the investment in the long range ground based system developed by the Army and currently installed in Alaska and planned to be placed in Europe it touted a new focus on the Navy sea based system. The AEGIS based naval system utilizes a missiles and radars built by Lockheed Martin (LMT) and Raytheon (RTN). These have for the last ten or so years undergone development and testing.

The primary range to test this system is located on the island of Kauai the western most island in Hawaii. This Pacific Missile Range Facility (PMRF) has for years been used to test air defense systems and has slowly been upgraded to support ballistic missile tests. Not only for the Navy systems but also the Army’s theater defense programs such as THAAD and PATRIOT.

It has now come out that right around the time Obama announced that he was ending the construction of radars and interceptors in Europe the head of the Missile Defense Agency, Lieutenant General O’Rielly, asked that some of the money planned to support this be reprogrammed to continue updating the PMRF facility.

To make this even more interesting because of the late decision to end the European component O’Reilly couldn’t ask for the change in funding until after the bill was complete by the Senate Armed Services Committee. This means that the change will have to be done by amendment to the full bill when it is voted on by the Senate. This reverses the normal flow of how business is done. Of course the Chair of the Committee is Senator Inouye (D-HI) so he would have good reason to support the expansion of the PMRF range.

The reprogramming of the money to this purpose rather than to another one which could have been done as a shift to a higher priority indicates that MDA and the current Administration will support the sea based component of America’s long range missile defense. This is good for the two companies involved in making the radars, software and STANDARD Missile III interceptors. The work adding facilities and sensors to the range will also help Native Hawaiian businesses and those supporting testing there.

The expansion of this sea based system will also mean more ships will be modified to support it or be built to use it. Because of the geometries involved several ships will be needed to provide the kind of coverage the ground based system would from its two planned locations. This is good news as well for General Dynamics (GD) and Northrop Grumman (NOC) who are making the current class of DDG 51 missile destroyers and the future DDG 1000 replacement or what ever new ship will come down the line.

The big loser is Boeing (BA) who was the system integrator and support contractor for the program that ended. They do not have much in the way of a role in the AEGIS based program. The company will have to find other work to make up for the loss.

This unfortunately is what happens when there is a shift in focus from one program to another. One company loses and another gains. Sometimes this happens when the Government changes contractor and sometimes when a different solution is chosen for a mission.