Newscast: January 31th, 2007

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Army Unable to Confirm US$ 38 Billions Spent on Reset

A US Government Accountability Office (GAO) released today the preliminary observations on the U.S. Army’s implementation of its equipment reset strategies. According to the preliminary report, due to reporting and tracking inadequacy, the Army is unable to confirm that the $38 billion that Congress has appropriated since fiscal year 2002 for equipment reset has actually been obligated and expended for this purpose. Lacking sufficient monitoring of actual reset spending, the report forewarns the Army cannot be assured its reset strategies will sustain equipment availability for deployed as well as non-deployed units while meeting ongoing operational requirements.

USAF, Navy Order Precision, Standoff Guided Weapons

The US Air Force awarded Lockheed Martin Missiles and Fire Control $294 million for continued production of AGM-158A lot six and seven of the Joint Air-to-Surface Standoff Missile (JASSM). This award sustains production through March 2008. The US Navy awarded Raytheon about $101 million for a third full rate production order of 376 AGM-154C Unitary Joint Stand-Off Weapon (JSOW-C). Production will continue through February 2009. A third $92 million contract was awarded by the USAF to Textron Systems Corp. for the delivery 291 Sensor Fuzed Weapons (SFW).

Venezuela Is Seeking Russian Tor M1 Missiles

The Russian Press indicated on January 30, 2007 that Venezuela is also interesting in aquiring Tor M1 systems at an estimated cost of US$290 million. Venezuela plans to have the new systems interoperable with new radars and fighter jets recently bought from China and Russia.

BAE Systems, GDLS Canada Offer RG-31 Mod 5 for MRAP

RG-31 Mk5 Mine Protected VehicleGeneral Dynamics Land Systems-Canada is teaming with BAE Systems Ground Systems Division, to offer vehicles to the MRAP program. The team is offering the RG- 31 Mk5, the latest version of the highly successful RG-31 vehicle family. GDLS Canada will provide the program management and logistic support while South African based BAE Systems Land Systems OMC will manufacture the vehicles in BAE Systems' facilities in York, Pennsylvania.

US Air Force Publishes Next Generation Tanker RFP

The U.S. Air Force released yesterday (Jan. 30, 2007) the Request for Proposal for the KC-X Aerial Refueling Aircraft, officially launching the Air Force's highest priority acquisition program in recent years. Two candidates are competing for the $30-40 billion KC-X program - Boeing (NYSE: BA), offering the KC-767 (or a derivative of the larger 777) and Northrop Grumman (NYSE: NOC)/ EADS offering a militarized version of the Airbus A330 designated KC-30. While the KC-30 is assumed to be more expensive than the KC-767, price will not be the only factor in selection as operational advantages could outweigh cost difference.

FAST Waveform to be Integrated into MIDS

The U.S. Air Force has selected BAE Systems and SRA International (NYSE: SRX) to develop the second spiral of the Flexible Access Secure Transfer (FAST) waveform into the Multifunction Information Distribution System Low Volume Terminal 1 (MIDS LVT1). The $7 million contract will enable the MIDS LVT1 to simultaneously transmit and receive both standard Link 16 and FAST waveform messages. FAST will provide a cost-effective solution enabling all U.S. and coalition forces to exchange multimedia communications including data, voice, and video over the MIDS terminals, in real-time.

Ceradyne Awarded Additional order for ESAPI Body Armor

Ceradyne, Inc. (NASDAQ: CRDN) received a $113 million delivery order for ESAPI (Enhanced Small Arms Protective Inserts) from the U.S. Army, Aberdeen Proving Ground, Maryland. Delivery is scheduled for six months starting April 2007.


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