Raytheon Co. RTN received a TACOM Strategic Service Solutions (“TS3”) indefinite delivery/indefinite quantity or IDIQ contract from the U.S. Army. The five-year multiple-award vehicle has a ceiling value of $634 million.
Per the contract, Raytheon will work on sensors, fire control systems, active protection systems, and robotics and autonomous systems for a variety of U.S. Army platforms.
As a prime contractor, Raytheon will manage the TS3 contract at its IDIQ Service Center so as to boost efficiency and contract optimization. Most of the task orders are expected to be performed by Raytheon's Missile Systems business in Tucson. IDIQ contract vehicles aim to provide utmost value, flexibility, and a streamlined competitive mechanism for Federal government customers.
Based in Massachusetts, Raytheon is one of the largest aerospace and defense companies in the U.S. with a diversified line of military products. With 93 years of know-how, the company provides state-of-the-art electronics, mission systems integration and other capabilities including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems, and technical services.
To counter the sequestration effect, the company has been heavily investing in technological upgrades. Research and development expenses totaled $142 million during the first quarter 2015, up 27.9% from the year-ago number.
Although Raytheon’s earnings and revenues in the first quarter took a beating year over year in a budget-constrained U.S. defense market, Raytheon raised its 2015 profit forecast after reaching a contract settlement with the U.K. It saw a healthy demand for its products, mainly from foreign customers. Its distinct focus on international operations will likely bode well in a mature U.S. market.
Zacks Rank
Raytheon currently has a Zacks Rank #2 (Buy). Some well-placed stocks in the industry include a Zacks Ranked #1 (Strong Buy) company TransDigm Group Inc. TDG, and Spirit AeroSystems Holdings, Inc. SPR and Hexcel Corp. HXL, both carrying a Zacks Rank #2 (Buy).
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