Plans That Missile Defense Contract May Grow Means Opportunities For Big Contractors

(MoneyWatch)  As one of their major changes to the United States defense budget President Obama and Secretary of Defense Gates restructured the various missile defense programs. The land based Ground Based Midcourse Defense (GMD) system operated by the Army was ended and a shift made to shorter ranged systems and those based on Naval ships. The Bush Administration had made GMD their primary system and had already installed interceptors in Alaska and planned to do so in Eastern European NATO countries.

In September Obama canceled the systems for Europe which leaves a partially complete system. This will still be maintained and operated. Previously Boeing (BA) as the primary contractor for the system provided logistic support through a contract with the Missile Defense Agency (MDA). The new contract to provide this support was released by the MDA last week.

The contract had already attracted Lockheed Martin (LMT) and Northrop Grumman's (NOC) interest as it is fairly large and all three companies provide logistical support of complex systems that this would entail. The contract is even more interesting now that it contains more then just support for the existing system. It also will require the contractor to be able to provide "future development; fielding; test; systems engineering, integration and configuration management; equipment manufacturing and refurbishment; training; and operations and sustainment support." This indicates that there is a possibility of future development and improvement to the system which will be another revenue stream for the company holding the contract.

It makes sense that the system if the U.S. plans to continue to use it will need incremental upgrades and improvements. This could include such sophisticated developments as new rocket motors, kill vehicles and data links. All of these will cost the MDA a great deal of money to develop, test and produce and it looks like the logistic support contractor will be taking the lead on these kind of efforts. If the contract does have this kind of potential it will make up for the loss of the planned expansion of the system into Europe and other sites.

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