Raytheon’s [RTN] win last week of the next-generation radar to replace the existing radar on the Patriot air and missile defense system is worth at least $20 billion over the life of the program, senior company officials said on Thursday.
The Lower Tier Air and Missile Defense Sensor (LTAMDS) will replace and upgrade most, if not all, 250 existing Patriot radar systems that have been, or are being, acquired by customers in 17 countries and will also be available as a stand-alone forward deployed radar system, the officials said on the company’s earnings call.
Raytheon beat bids from Lockheed Martin [LMT] and Northrop Grumman [NOC] for the initial $384 million contract for development and delivery of six production representative LTAMDS systems (Defense Daily
, Oct. 17).
“This is really the premier franchise for the company and its going to be here well past our time for sure,” Anthony “Toby” O’Brien, Raytheon’s chief financial officer, said on the company’s third quarter earnings call. “This radar has capability that has not been seen on a battlefield anyplace in the world and it’s just going to change the entire dynamics relative to integrated air and missile defense for U.S. forces and also its coalition partners,” Thomas Kennedy, Raytheon’s chairman and CEO, also said on the call.
The LTAMDS contract was awarded through an “Other Transaction Authority,” which is a non-traditional contract vehicle and should allow for faster than usual development and transition to production, Kennedy said. Once the radar is in use with its customers, that will generate more demand “both domestically and internationally,” he added.
O’Brien and Kennedy said Raytheon is happy with the contract in terms of intellectual property (IP) rights, with O’Brien saying the government and company both got what they want. Kennedy added that Raytheon will have “the right IP to be able to retain our position for the next several decades.”