The Contract

The US Department of Defense Press Desk released today that both Lockheed Martin [NYSE:LMT] and Raytheon [NYSE: RTN] have been awarded a contract to the sum of $900,000,000 for the Long Range Standoff weapon’s technology maturation and risk reduction acquisition phase. This contract is meant to lead to the replacement of the AGM-86B, the current primary nuclear munition of the US Air Force.

 

Source Excerpt

Department of the Air Force Contract:

Lockheed Martin Corp., Orlando, Florida, has been awarded an approximately $900,000,000 cost-plus-fixed-fee contract for the Long Range Standoff weapon’s technology maturation and risk reduction acquisition phase.  The contract supports replacement of the AGM-86B air-launched cruise missile.  Work will be performed in Orlando, Florida, and is expected to be completed by 2022. Air Force Nuclear Weapons Center, Air Delivered Capabilities Directorate, Eglin Air Force Base, Florida, is the contracting activity.

Raytheon Co., Tucson, Arizona, has been awarded an approximately $900,000,000 cost-plus-fixed-fee contract for the Long Range Standoff weapon’s technology maturation and risk reduction acquisition phase. The contract supports replacement of the AGM-86B air-launched cruise missile. Work will be performed in Tucson, Arizona and is expected to be completed by 2022.  Air Force Nuclear Weapons Center, Eglin Air Force Base, Florida, is the contracting activity. Air Force Nuclear Weapons Center, Air Delivered Capabilities Directorate, Eglin Air Force Base, Florida, is the contracting activity.”

Source

 

Contract Interpretation

  • Cost-Plus-Fixed-Fee: Such a contract provides for the payment of allowable incurred costs, to the maximum amount listed. This cost is negotiated on an initial basis, and due to being fixed, cannot be renegotiated or adjusted further. More
  • Technology Maturation and Risk Reduction Acquisition Phase: This is the phase of the acquisition process that is designed to reduce technical risk, confirm cost estimates and sort out manufacturing processes and/or requirements. More

 

The Long Range Standoff Weapon Program

Directly from the unclassified source: “The Long Range Stand-Off (LRSO) effort will develop a weapon system to replace the Air Force’s Air Launched Cruise Missile (ALCM), operational since 1986. The LRSO weapon system will be capable of penetrating and surviving advanced Integrated Air Defense Systems (IADS) from significant stand-off range to prosecute strategic targets in support of the Air Force’s global attack capability and strategic deterrence core function.LRSO Unclassified Source

To break it down in the simplest of terms, this program is designed to replace the USAF’s current air-launched cruise missile, the Boeing AGM-86B. The AGM-86B program began back in 1974, and the first missiles were ordered in 1980. It is a missile capable of carrying 3,000 lb of high-explosives (AGM-86C) or even a nuclear armament (AGM-86B). Their range extends across 1,500 miles, and a single B-52 Stratofortress can carry up to 20 of them. They first saw action during the 1991 Persian Gulf War. Below is a video, courtesy of the department of defense, that shows the AGM-86 being test-launched from a B-52 in 1980.

The new weapon the USAF seeks must be capable of carrying the same payloads across similar distances while enduring and pushing through the defense systems of any current or potential future enemies of the United States. The primary function is deterrence, but in order to maintain this mission, it must be a fully operational and effective weapon.


Disclaimer

As of this moment, I do not own shares of Lockheed Martin Corporation or The Raytheon Company. My opinions are entirely my own and may or may not reflect the opinions of my peers on TickHounds. I am not being compensated for sharing my due diligence in any way other than what tips may be accrued.

Most information for this post was retrieved from various sources listed throughout the post. For other sources, see below:

AGM-86B, Boeing.com
Featured Image, WikiCommons