Bloomberg News

Raytheon Contests Pentagon Backing Lockheed Ship-Sinking Missile

June 19, 2013

Raytheon Co. (RTN:US), the world’s largest missile maker, is challenging a Pentagon plan to use a Lockheed Martin Corp. (LMT:US) anti-ship weapon and is asking for a chance to offer an alternative.

“We think it should be an open competition,” Raytheon Vice President Harry Schulte told reporters today at the Paris Air Show.

The U.S. Defense Department should seek other offers instead of just pressing ahead with an adaptation of Lockheed Martin’s Jassm missile to arm combat jets, Schulte said. The Pentagon plans to spend about $1 billion for development of the missile from the next budget year through fiscal 2018.

Raytheon has long dominated Navy missile programs with weapons that include the ship- and submarine-launched Tomahawk cruise missile and the AIM-9 dogfighting weapon on combat jets. Navy jets also use the so-called JSOW glide missile, and the Waltham, Massachusetts-based company proposes adding a motor to attack ships at long range.

“A powered JSOW would be a third or a fourth of the cost” of a modified Lockheed Martin missile, Schulte said. “If you look at the current price of the Jassm, it is fairly significant.”

Own Money

Raytheon is spending its own money to demonstrate its missile’s capabilities, said Schulte, who once backed the weapons from Bethesda, Maryland-based Lockheed Martin in favor of JSOW when he ran U.S. Air Force arms programs. A powered Raytheon missile would be able to fly almost 300 miles (483 kilometers).

Representatives of Lockheed Martin, the world’s largest defense contractor, weren’t immediately available for comment at the air show today. Raytheon’s missile systems business was the company’s biggest by revenue in its 2012 fiscal year, at $5.69 billion of a total of $24.4 billion.

Schulte said it isn’t clear how many missiles are at stake in a program that should start seeing significant funding starting in October, when the U.S. government’s fiscal year begins.

The project, called the Offensive Anti-Surface Warfare Weapon, is due to deliver a missile before 2025 with a contract award to begin development in the 2015 fiscal year, according to the Pentagon’s latest budget plan. Details such as the cost of each weapon aren’t yet available.

Raytheon also faces a loss of business in ship-based strike weapons under the government’s plan to arm Navy vessels with a version of the Lockheed missile. Upgrading the Tomahawk cruise missile, which was used as recently as in the war in Libya, would be cheaper, Schulte said.

To contact the reporter on this story: Robert Wall in Paris at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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Companies Mentioned

  • RTN
    (Raytheon Co)
    • $92.96 USD
    • 0.86
    • 0.93%
  • LMT
    (Lockheed Martin Corp)
    • $160.31 USD
    • 2.13
    • 1.33%
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