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Contracts Flow in for Defense Cos.

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Data Link Solutions, Alliant Techsystems Inc. (ATK), FLIR Systems Inc. (FLIR) and Lockheed Martin Corporation (LMT) have received Department of Defense (DoD) contracts on Jun 20, 2013. A total of 22 contracts have been issued with a cumulative value of less than $500 million.

Data Link Solutions − a joint venture between BAE Systems plc (BAESY) and Rockwell Collins Inc. (COL) − won a firm-fixed-price contract with a value of $38.2 million. The contract calls for Data Link to perform repair works on Multifunctional Information Distribution System (MIDS) units for the 402nd Maintenance Wing (:MXW) at Warner-Robins Air Logistics Center.

It will be executed at BAE Systems in Wayne, N.J., Rockwell Collins in Cedar Rapids, IA, and the 402nd MXW at Robins Air Force Base, GA, and is slated to be completed by Jun 20, 2019.

Alliant Techsystems has been awarded a $20 million contract modification in order to acquire various AN/AAR-47 Missile Warning System Weapons Replaceable Assemblies for the U. S. Navy and Air Force. The contract is expected to be completed by Dec 2015.

Again, FLIR Systems received a contract worth $14.4 million to supply and maintain sensor components on Legacy Rapid Aerostat Initial Deployment Base, Expeditionary Targeting and Surveillance Systems. This is a firm-fixed-price, multi-year contract wherein the sensor components used are airborne, blimp-based sensor arrays that provide early warning of hostile activity in the vicinity of U.S. forward operating bases in Iraq, Afghanistan and Southeast Asia.

Meanwhile, a Lockheed Martin unit, Mission Systems and Training, won a $6.9 million cost-plus-incentive-fee, cost-plus-fixed-fee contract to perform additional Aegis development work for the U.S. Navy. The deal though minor has an option, which would raise the total value to $304.4 million, if exercised.

Despite a flurry of contracts, the threat of sequestration, fear from budget uncertainty, the fate of high-cost programs, risks associated with key project executions and order cancellations cannot be denied.

We believe more international order wins will partly counter the budget austerities of the U.S. DoD, providing a regular stream of revenues for the defense prime. Some companies are also repositioning themselves in order to streamline their operations and reduce operating expenses. These initiatives will help the defense companies to tackle the ongoing headwinds.

Alliant Techsystems currently has a Zacks Rank #2 (Buy) while FLIR Systems, Rockwell Collins and Lockheed Martin carry a Zacks Rank #3 (Hold).

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