The U.S. defense budget encompasses spending on all different types of products and services. The increase in spending after 9/11 required a ramp up of suppliers for all of the things the Pentagon wanted to buy. Due to the shrinking of the U.S. industrial base in the Nineties after the “Peace Dividend” was executed by President Clinton and Congress this meant for some items the U.S. had to turn to foreign suppliers. Many of these defense contractors also expanded their U.S. operations through mergers & acquisitions of U.S. based corporations.
That did not mean, though, that some suppliers had already entered the market. Swedish aerospace company SAAB (SAAB:Stockholm) has been delivering training targets to the U.S. Army since the 1970′s. They continue this work with qualification on a recent Indefinite Quantity/Indefinite Delivery (ID/IQ) contract to supply these targets. SAAB is one of five contractors qualifying and they could win up to $475 million in orders if all parts of the contract is executed.
SAAB has been providing similar systems since 2002 for the Army and Marine Corps. The targets will be used on different ranges to support weapon qualification and training.
SAAB recently won a major contract to install their Sea Giraffe radar system on U.S. Navy Littoral Combat Ships (LCS). The radar will be used by the Austal America version of the LCS built in Mobile, AL. The shipbuilder’s parent company is Austal in Australia so the program has a definite international flare.
Even though the U.S. defense budget is expected to decline significantly over the next decade that does not mean international providers will be forced out. Many of them have a substantial U.S. presence now and some provide products necessary for the U.S. There will also be contracts that they will win because they have the best bid but it will become harder for them to do this.
