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US: Federal government to start a summer spree of contracts

by Christopher BoweFinancial Times
May 27th, 2004

The US government is expected to open a summer spree of lucrative
defence and security contracts today, when it names the finalists
for a $14bn ship procurement.

Tomorrow a decision is expected from the department of Homeland
Security on a complex programme to track overseas visitors.

The special forces-oriented littoral combat ship (LCS) and the $2bn
virtual border US-Visit programme are the first of several contracts
to be finalised, potentially worth up to $38bn. At least eight
contracts could be decided by the autumn.

Early next week a decision is expected on a $3.5bn multi-mission
maritime surveillance aircraft (MMA). In addition, Lockheed Martin
is the leader in the contest to build the $2bn new anti-tank missile
called the compact kinetic energy missile, or CKEM.

The contracts feature increased support for intelligence and
homeland security, moves to common weapons systems, and new military
hardware for fast, global deployments.

However, the projected value of some contracts could fall victim to
budget cuts as concerns about the US deficit and costs of war

The US-Visit project seeks to create a network of databases to form
a "virtual border" where US officials can track visitors before they
enter, verify identities at the border, and better track what
happens to people once inside the country. The programme could
utilise biometric sensors, finger-printing, and other technologies
to check some of the estimated 300m annual foreign visitors.

The three finalists to build the system are Accenture, a
consultancy; Computer Sciences, a government technology and
outsourcing group; and Lockheed Martin, the world's largest defence
group. The contract's value to the winner is $2bn, but could mean
much more overall spending with subcontractors and suppliers.

The LCS faces more uncertainty. Plans for the combat ship include
covering special forces operations, spy missions and fighting quiet

Political pressures could affect the project, such as how many ships
will be built in the next decade. "There is still a question mark in
people's minds about whether it can survive potential budget cuts,"
said Eric Hugel, analyst at Stephens Inc.

General Dynamics, Lockheed Martin and Raytheon are in the running
for the LCS contract.

The MMA aircraft is a replacement for the Navy's P-3. The $3.5bn
project is contested by Boeing and its 737, and Lockheed and a newer
version of its P-3.

Other contract awards include the $1.2bn third and fourth phase of
the joint tactical radio: a futuristic, pan-military radio system.

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