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Contractors Benefiting from Spike in Foreign Military Sales

Contractors Benefiting from Spike in Foreign Military Sales - top government contractors - best government contracting event
Photo: navair.navy.mil
Contractors Benefiting from Spike in Foreign Military Sales - top government contractors - best government contracting event
Photo: navair.navy.mil

The U.S. government has been pursuing a large amount of foreign military sales deals recently. In the last few weeks alone, the government announced deals involving large contracting firms such as Raytheon, Boeing and Lockheed Martin.

Under the Arms Export Control Act, the U.S. sells defense services abroad when the president believes the sale will strengthen national security. The Defense Security Cooperation Agency calls the foreign military sales program a fundamental U.S. foreign policy tool.

On one deal, the U.S. will sell $29.4 billion in arms and support to Saudi Arabia, including 84 Boeing F-15 fighter jets, parts, munitions and support. Boeing will assemble the fighters, while General Electric will build the engines.

Raytheon, too, is benefiting from foreign sales to Saudi Arabia as DCSA recently announced the country would purchase Raytheon’s Patriot missile system for $120 million.

The sale was formally proposed to Congress on Dec. 22, 2011 and on DSCA’s website as required by law. The DCSA says the process for foreign sales may last for more than seven years. The process starts with the customer determining requirements for a product or service and ends with the customer receiving the final bill.

Congress and the president must approve all foreign military sales.

Saudi Arabia has previously received Raytheon products and services such as Hawk, the company’s medium-range air defense system. Taiwan has also purchased Raytheon products according to the company’s website.

In an article for Forbes, Loren Thompson writes that the U.S. strikes deals with partners such as Saudi Arabia to meet the U.S.’s “security needs indigenously rather than relying on an overstretched U.S. military.“ He says the U.S. benefits from foreign sales since they often stimulate domestic economic activity.

Thompson indicated that Saudi Arabia might also purchase Lockheed's sea-based Aegis air defense system.

Lockheed has also recently benefited from foreign sales with a U.S.-United Arab Emirates agreement. Under a $3.5 billion deal, the U.S. will sell Lockheed's Terminal High-Altitude Area Defense missile interceptor to the UAE. The company confirmed the deal Tuesday and indicated it will provide two THAAD weapon systems for a sale worth $1.96 billion.

However, Thompson writes Lockheed will also see sales in additional countries. Iraq has been allowed to purchase 36 single-engine Lockheed F-16s.

The U.S. is also improving Taiwan's capabilities and offering both Japan and South Korea advanced weapons, according to Thompson. Turkey is another country to recently purchase U.S. military supplies.

Japan recently selected the F-35 Joint Strike Fighter as its next-generation fighter aircraft. Israel is also scheduled to receive the F-35. The F-35 is being developed with partners including Northrop Grumman and BAE Systems.

Nearly 160 countries are eligible for deals like those with Saudi Arabia and the UAE. Thompson writes that contractors could see more business activity under current trends.

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