L-3 Communications announced this week that its Vertex subsidiary has been awarded an indefinite-delivery contract valued at $569 million by the U.S. Navy. Vertex, which has teamed with The Boeing Company for this project, will provide logistics services and maintenance materials in support of T-45A and T-45C trainer aircraft.

Work under this contract is now underway and includes four option years, extending its period of performance through September 2013. Vertex has been providing T-45 logistics support to the Navy for the past five years.

“We are proud our team has been selected to continue this mission-critical work, and we remain committed to delivering the highest level of quality and performance excellence”, said Ed Boyington, L-3 Vertex president.

Mr. Boyington added that under this contract, Vertex will service 71 T-45A and 108 T-45C aircraft based at Naval Air Stations in Meridian, Miss., Kingville, Texas, and Pensacola, Fla.

Boeing will manage the supply chain in support of the contract. “We are pleased to be working with L-3 to provide support for this important training aircraft,” said Jim O’Neill, Boeing Integrated Defense Systems vice president and general manager of Integrated Logistics. “This team will provide maximum readiness at an affordable cost for the U.S. Navy on the T-45.”

L-3 Vertex Aerospace, a subsidiary of the L-3 Integrated Systems Group, provides aviation, aerospace technical services and ground systems primarily to government customers. The company has over 11,000 employees working from 300 locations worldwide.

Image Courtesy of Volvo Aero Services

Volvo Aero Services and Boeing have extended a marketing and distribution partnership agreement, originally established in 1999, for an additional 10 years. Within the agreement, Volvo Aero Services will continue to provide multiple asset management services to support the distribution of quality aircraft parts for a wide range of Boeing aircraft models. In addition, Volvo Aero Services has been awarded the rights to manufacture and distribute Boeing proprietary parts.

The program, managed from the jointly established facility in Kent, Washington, covers the distribution of excess parts for in production and out of production Boeing and legacy McDonald Douglas aircraft.

“The extension of our contractual relationship with Volvo Aero further ensures that our customers will continue to receive the best, long-term parts support for their Boeing fleet,” said Dale Wikinson, vice president of Material Management. “They have proven to be an effective business partner that provides quality support.”

“The extension of our contract with Boeing is a testament to the success of our existing relationship”, says Claes Malmros, President and CEO of Volvo Aero Services. “We are extremely proud of our relationship and what has been created with Boeing over the last 10 years. We are looking forward to the continued success of our partnership.”

Volvo Aero Services Corporation, a subsidiary of Volvo Aero Corporation, is a leading provider of aftermarket services in the aviation industry. As the wholly-owned subsidiary of AB Volvo, Volvo Aero Corporation had 2007 revenues of $1.2 billion and employs over 3,200 people worldwide. Volvo Aero Services Corporation has a wide range of services based on its competence in asset management, logistics and leasing of aircraft engines as well as engine and aircraft components. The company is also the exclusive distributor of select material for Hamilton Sundstrand, Honeywell and The Boeing Company.

In the highly competitive landscape of large-scale defense contracts, one of the keys to continued innovation and technology growth are healthy bidding wars.  However, once a bidding battle has been completed, it should not have to be performed once again due to one company’s dissatisfaction with their loss.  Although it appears to be the what is occurring in the current Pentagon Tanker Competition.

Photo Courtesy of WSJ

The Wall Street Journal reported that the bidding war, for the pentagon’s highly sought after $40 billion dollar tanker contract, has been temporarily called off due to the political entanglements involved in the situation.  This is despite the fact that Northrop Grumman Corp. had already been declared the winner over Boeing this past February.  Boeing’s domestic domination has caused a slowdown in the competitive marketplace and it is clear that the next US Presidential regime will not be forced to make the decision between the two companies.

So does this decision give Boeing a legitimate chance at winning back this contract?  Most likely not.  And there are two main reasons:

1. Boeing currently does not have a plane large enough to fulfill the Air Force’s request.  And with the current Boeing labor dispute (coverage), the company will certainly be meeting with delays for all new projects, especially its new 787.  Conversely, Northrop Grumman has already satisfied the Pentagon’s demand due to the fact that they won the original contract at the end of this past Winter.
2. If the new President is Sen. John McCain, Boeing will find itself on an uphill slope considering that McCain has previously blocked contracts from the aerospace firm that he believed were won ‘too easily’.

Austin Cole from the WSJ says this about the situation,

“Although the decision gives Boeing a chance at a fresh start, the company will face the prospect that one of its key critics, Sen. John McCain, could potentially be the next president when the matter is decided. Five years ago, the Republican senator helped scuttle an original plan to lease a fleet of tankers from Boeing because the contract was not competitively bid. His office played a key role in opening up the competition to Northrop Grumman and its partner, European Aeronautic Defence & Space Co.”

So despite the fact that Boeing has been given a second chance to win this contract, Northrop Grumman still appears to be the most likely company to win this bidding war, and rightfully so.