Multi-million dollar Pentagon awards boost Arkansas’ defense sector

Arkansas’ fast-growing defense sector got another big boost this week after two global defense contractors with state ties won contract awards or extensions on work that will be completed at East Camden’s sprawling industrial munitions complex.

On Thursday, American Rheinmetall Munition Inc., based in Stafford, Va., was awarded a firm-fixed price contract worth $59.7 million firm to supply the U.S. Marine Corps with 2,135,026 high-velocity practice grenade holders, known as MK281 MOD 3 cartridges. According to contract specifications published each week by the U.S. Department of Defense, work will be performed in American Rheinmetall’s munitions factory in East Camden, Ark. with delivery expected to be complete by Sept. 25, 2022.

American Rheinmetall Munitions, Inc. (ARM) is the U.S. operating subsidiary of European defense giant Rheinmetall Waffe Munition GmbH, a publicly traded company in Düsseldorf, Germany that has nearly 24,000 employees across the globe and annual sales of more than $6.8 billion. Talk Business & Politics reached out to ARM officials in Camden, Virginia and at their global headquarters in Germany, but did not get a response.

According to the marketing information on the website of ARM’s U.S. subsidiary, the European defense contractors provides training and combat ammunition for all U.S. military forces, including combat grenades and smoke grenades for vehicle protection. The MK281 MOD 3 cartridge that will be manufactured in ARM’s East Camden plant uses a projectile containing a non-toxic “glow in the dark” chemical mixture that becomes visible upon impact at night and low-light conditions.

ARM’s contract to help the U.S. combat soldiers with their day- and nighttime training exercises is significant given that the U.S. Army and Marine Corps are already testing the three models of the next-generation joint light tactical vehicles (JLTV) that will be ready for action in 2019. According to the Navy officials, fielding for the JLTV will begin next spring with the Army purchasing 49,000 and the Marine Corps acquiring 9,091.

Two years ago, Lockheed Martin’s Camden manufacturing plant was the runner-up for the Department of Defense’s $30 billion defense contract, which will allow the U.S. Army and Marine Corps to replace the aging Humvee with the next-generation light, armored vehicle that can be controlled remotely, will house a laser weapon system and comes mounted with a 50-caliber machine gun.

The eventual winner, Wisconsin-based Oshkosh Corp., recently showcased the new JLTV models at the Quantico (Va.) Marine Corps base, which is also the U.S. Navy’s contracting agent for MK281 MOD 3 cartridges. The Marine Corps’ sole-source procurement contract calls for the Marine Corps to pay $11.4 million to ARM for the first delivery of the high velocity practice munitions for the first year of contract.

In addition to ARM’s new contract that will keep company’s Camden munitions plans humming with production for 2022, Raytheon Missile Systems’ plant at Highland Park industrial complex in Calhoun County will also get the lion’s share of production work for the Pentagon’s extended-range ballistic missile contract for the U.S. Navy.

RAYTHEON MISSILE CONTRACT MODIFIED BY NEARLY $400 MILLION
On Friday, the Naval Sea Systems Command in Washington, D.C., awarded Raytheon’s Missile unit in Tucson, Ariz., a $395.5 million modification of previously awarded contract to produce and deliver Standard Missile-6 all-up round missiles and spare parts. Raytheon was originally expected to begin delivery this year under the previous $235 million contract that will manufacture missiles that will be deployed on Aegis cruisers and destroyers to support U.S. Navy fleet operations.

According to contract specifications from the U.S. Department of Defense, 31% of the contract work would be done at Raytheon’s East Camden factory. The defense giant’s manufacturing operations in Tucson and Wolverhampton, England, will get 19% and 15% of the work, respectively. The remaining work will be spread across more than 15 plants that are part of Raytheon’s global footprint, which is forecast to produce annual sales of nearly $30 billion in 2018.

The U.S. Navy will pay out $484.4 million to Raytheon under the first year of the modified contract, which is expected to be completed by September 2022. When the first Standard Missile-6 contract award was announced in March 2016, U.S. Navy officials said the Raytheon missile systems were transforming the department’s anti-air warfare, sea-based terminal and anti-surface warfare defense, or so-called “tri-mission capabilities.”

“U.S. Navy commanders want both capability and flexibility to meet a wide variety of missions, and that’s exactly what SM-6 offers,” said Mike Campisi, Standard Missile-6 senior program director. “Its use is transforming defense.”

Besides ARM and Raytheon Missiles, the Highland Industrial Park in East Camden is also home to other major defense contractors such as Easterline Defense, General Dynamics, Aerojet Rocketdyne and Lockheed Martin. Smaller industrial and defense suppliers and manufacturing have sprung up to support the activities of these major defense contractors, James Lee Silliman, executive director of the Ouachita Partnership for Economic Development, told Talk Business & Politics.

In August, Sacramento, Calif.-based Aerojet Rocketdyne unveiled plans to expand the company’s solar-powered rocket motor manufacturing facility in East Camden. In a press event at the Governor’s Conference room at the State Capitol, Gov. Asa Hutchinson and Aerojet CEO and President Eileen Drake announced that the California defense contractor would invest more than $50 million to expand its sprawling south Arkansas armaments factory and hire 140 new workers over the next three years.

Talk Business & Politics also recently reported that Arkansas’ economy is also benefitting from offshoot contract work that is filtering into the state from Lockheed Martin’s mammoth $406 billion F-35 industrial project that is supporting jobs in 46 states. Lockheed Martin spokeswoman Brecke Boyd told Talk Business & Politics that the multi-state project now has five supplier locations in Arkansas that support nearly 400 direct and indirect jobs with a $33.9 million annual boost to the state’s fast-growing aerospace sector.

Altogether, the 5th generation Lightning II version of the stealth fighter program supports 1,600 suppliers across the globe, including more than 1,500 companies based in the U.S. and Puerto Rico. Lockheed Martin’s Camden operations also includes the production of the U.S. Army’s Patriot and Guided Multiple Launch rockets, the tactical missile systems that can intercept and shoot down incoming ballistic weapons.

According to the Arkansas Aerospace and Defense Alliance, the aerospace and defenses industry is the state’s number one export, generating more than $1.8 billion in annual revenues for the nearly 180 aviation and aerospace-related companies in the state.