Lockheed Martin Corp.’s (LMT) business unit Mission Systems and Training won a U.S. Navy contract for low rate initial production and fielding of Surface Electronic Warfare Improvement Program (SEWIP) Block 2 systems.
This firm-fixed-price, cost-plus-fixed fee, and cost-type-letter contract has a ceiling value of $147.5 million and includes options, which, if exercised, would bring the contract value to $158.8 million.
Under this SEWIP development program, Lockheed will upgrade existing out-of-production AN/SLQ-32(V) electronic warfare systems by providing improved electronic support receivers and combat system interface. Work under this contract is expected to be completed by Sep 2017.
Block 2 is the latest version of the "blocks" that the Navy is pursuing for its shipboard electronic warfare system. The original AN/SLQ-32 system was developed by Raytheon Company (RTN). It uses radar technology for early warning, identification and tracking of enemy threats. The system is fully compliant with the Navy's Product Line Architecture strategy and helps in rapid introduction of new technology into the fleet.
Although the threat from sequestration remains for periods beyond fiscal 2015 and casts a shadow of uncertainty on long-term funding, these defense deals bear testimony to the wide range of products at the disposal of Lockheed Martin. The company receives over 80% of its revenues from the U.S. government, including around 60% from the U.S. Department of Defense.
Recently, Lockheed Martin received a $232.8 million contract from the U.S. Naval Air Systems Command (NAVAIR) to perform non-recurring sustainment activities, to include procurement of 19 training devices and 69 items of complex support equipment. The work on this contract is expected to be completed in Jun 2017. This was a modification to a $535.3 million F-35 Lightning II Low Rate Initial Production (LRIP) Lot VI contract awarded in Aug 2011.
Lockheed Martin holds a Zacks Rank #2 (Buy). Other well-ranked defense stocks worth considering include Air Industries Group (AIRI) and General Dynamics Corp. (GD). Air Industries carries a Zacks Rank #1 (Strong By), while General Dynamics holds the same rank as Lockheed Martin.
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