Defense News Roundup: Army Goes Helicopter Shopping, Iraq Joins Drones Craze

The U.S. military has a reputation as a somewhat secretive organization. But in one respect, at least, the Pentagon is one of the most "open" of our government agencies. Every day of the week, rain or shine, the Department of Defense tells U.S. taxpayers what contracts it's issued, to whom, and for how much -- all right out in the open on its website.

So what has the Pentagon been up to this week?

DoD is budgeted to spend about $6.2 billion a week on military hardware, infrastructure projects, and supplies in fiscal 2014. (A further $5.6 billion a week goes to pay the salaries and benefits of U.S. servicemen and servicewomen). This week, however, the generals had to cut their shopping spree short for Christmas -- with the result that they only managed to spend about $4.16 billion by week-end.

And what did they get for their (read: "our") money?

"On the first day of Christmas week, my true love gave to me ..."
Fifty-seven combat helicopters. In the single largest defense contract awarded last week, the Pentagon agreed Monday to pay United Technologies roughly $724 million to supply it with 33 UH-60M Black Hawk transport helicopters and 24 HH-60M combat search-and-rescue helicopters

Three days later, the Army went back to the well, this time ordering helicopters from UTC rival Boeing . In a Thursday contract worth nearly $618 million, the U.S. Army contracted with Boeing to buy six new CH-47F Chinook helicopters, to "remanufacture" 22 Chinooks in need of refurbishment, and to begin preparations to remanufacture 13 more.

Boeing's Chinook. Source: Wikimedia Commons.

Among the Pentagon's other purchases this week ...

Monster trucks
The supposed $2.5 billion contract that Oshkosh  won to build a "family of medium tactical vehicles," or FMTVs, for the military back in 2009 just keeps getting bigger -- and bigger. At last report, Oshkosh had delivered more than $4.7 billion of these heavy trucks to its favorite customer. This week, the Pentagon ordered up 545 more FMTVs, and 79 trailers to hitch to them. Total cost: $105 million.

Nuclear radio
  won a $134 million contract to design and develop new Global Aircrew Strategic Network Terminals for America's nuclear forces. These ASNTs, as they're called, are intended to ensure "secure, survivable multi-path communication" between America's civilian government authorities and Air Force command posts and bomber and tanker crews carrying the nation's airborne nuclear deterrent.

Opportunities on the horizon
So much for the contracts that everyone knows about. Now, let's move on to two contracts that may not yet be incorporated into defense contractors' stock prices.

On Wednesday, while most of us were distracted by the presents under the tree (or busy picking up wrapping paper scattered all 'round the tree afterwards), The New York Times broke the story that America is planning to sell Iraq dozens of new "drone" aircraft. The drones in question -- ScanEagles from Boeing and Ravens from AeroVironment -- are intended to bolster Iraq's ability to keep track of al-Qaeda fighters infiltrating Iraq from Syria, and wreaking havoc upon Iraq's security forces and civilian population alike.

The contracts in question (assuming they're signed) would be more significant to AeroVironment to Boeing. The 10 ScanEagles Iraq supposedly wants to buy will only contribute about $1 million to Boeing's annual $85.1 billion revenue stream. In contrast, AV's presumed contract would be both larger in size ($3 million) and more significant relative to the company's much smaller $210 million in annual revenues.

Of course, neither contract has been officially announced. To the contrary, AV at least is refusing to either confirm or deny that Iraq has ordered its drones. As such, few investors are factoring AV's contract into their valuations for the stock. Very few people know about it -- except that now, you do.

"Fly! Be Free!" AeroVironment's Raven. Source: Wikimedia Commons.

Thanks for all the great stock tips, Pentagon!
You don't always have to look far to find good investments. Sometimes, profiting from our increasingly global economy can be as easy as investing in your own backyard -- and the Pentagon's helpful habit of publishing all its contracts daily as they're awarded certainly makes that easier. 

Want to find more "easy to understand" investments? Read The Motley Fool's free report "3 American Companies Set to Dominate the World" shows you how. Click here to get instant access to one free copy.

The article Defense News Roundup: Army Goes Helicopter Shopping, Iraq Joins Drones Craze originally appeared on

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