Stakes Are High for BAE Systems in Upcoming Army Contract Award
The Army is expected to select a contractor next month to design and produce a new antimissile system for helicopters and fixed-wing aircraft. The estimated billion-dollar competition pits BAE Systems against archrival Northrop Grumman.
The companies are the military’s top providers of aircraft self-protection systems — BAE is the dominant Army supplier and Northrop Grumman has a large portion of the Navy and Air Force market — so the outcome of this competition could have far-reaching ramifications for the industry.
The upcoming award is for a laser antimissile system, called common infrared countermeasure, or CIRCM, to protect Army aircraft from shoulder-fired, heat-seeking missiles and other guided weapons. It will be installed in Army Black Hawk, Apache and Chinook helicopters, and small fixed-wing airplanes. It will replace an existing infrared countermeasure system, made by BAE Systems, that the Army bought six years ago for emergency combat deployments but now considers too heavy and too expensive.
There is no clear frontrunner in this tightly contested matchup, as both BAE Systems and Northrop Grumman have successfully tested prototypes at the culmination of a three-year development program that ended in March.
The Army on June 4 notified contractors that there will be no more proposal revisions and asked them to submit their best and final offers.
Chris Ager, who oversees BAE Systems’ infrared countermeasures business, said both companies are strong contenders, but wonders if the Army will consider the proposals strictly on technical merit or whether it will also weigh the industrial implications of its decisions.
“There’s only two of us that do directional infrared countermeasures,” he said in an interview. The constant competition over the years has created a “vibrant industrial base” that could be weakened as a result of the CIRCM award, Ager said. If BAE wins, Northrop Grumman would still have a substantial workload supplying infrared countermeasures to the Air Force and Navy for both helicopters and fixed-wing aircraft. If Northrop wins, Ager argued, the market may lose a competitor and become more consolidated.
“Competition does bring out some great innovation. A BAE win would maintain that,” said Ager. He cautioned that he has no knowledge of how the Army would factor industrial-base considerations in the selection process, if at all. “This could be an unintended consequence that has an impact on the industrial base.”
Ager said losing the CIRCM deal could result in the shutdown of specialized military-grade high-power laser production facilities. “Ours are not commercial systems modified for military use,” he said.
“If the government is not buying them, that base goes away.” Contract awards for highly specialized military technology like CIRCM raise key questions for decision makers, Ager added. “Do they want this type of laser capability in the DoD arsenal?”
CIRCM will be the lighter, less expensive replacement for the advanced threat infrared countermeasures (ATIRCM) system that BAE developed for the Army in 2008 on an accelerated schedule in the wake of rampant missile attacks against Army helicopters in war zones.
When an aircraft comes under attack, a warning system detects the incoming missile and communicates the missile’s position relative to the aircraft, cueing the ATIRCM jam head to the missile's location. ATIRCM then locates and tracks the incoming threat and emits a high-energy laser beam to thwart the missile’s infrared seeker, effectively blinding its guidance system and preventing it from homing in on the aircraft.
“The government is looking to the future so whatever systems they procure will be able to defeat current and emerging threats and stay ahead of those threats,” said Ager. Older aircraft missile-warning systems used flare dispensers to confuse the sensors of incoming missiles. Newer missile designs have more complex seekers that are able to defeat flares.
The Army wants to eventually produce CIRCM in large quantities so it can provide aircraft with 360-degree coverage. “They didn’t build enough ATIRCM for the entire Army fleet because of weight and cost,” Ager said. With the lighter replacement, the Army plans to install two lasers kits in each aircraft to get near spherical coverage. “That’s one of the big advantages of CIRCM,” he said.
Whoever is selected next month will receive a 26-month development contract for 21 systems, with options for low-rate production and the possibility of supplying additional CIRCM units to the Navy.
Full production would begin in 2019. The Army has budgeted about $1 billion over the next five years for the program, including contractor and government costs.
Defense industry consultant Loren Thompson said winning this contract is “crucially important” to BAE Systems and Northrop Grumman. “For the loser, living without the revenue from CIRCM will be a heavy blow,” Thompson wrote in Forbes.com. Both companies were stunned in 2013 by Raytheon’s upset victory in a competition to win the Navy’s next generation jammer program. “Losing both that program and CIRCM would be devastating,” he noted. The competitors seem closely matched, he said. “BAE Systems built the missile-warning system on Army helicopters that will alert CIRCM to attackers, and has 40 years of experience with infrared countermeasures. Northrop Grumman infrared countermeasure systems have been installed on dozens of different aircraft types.”
For the Army, there is growing urgency to deploy new methods to defeat heat-seeking missiles as other countries continue to develop more advanced weapons. “The Pentagon is gradually migrating from ‘expendables’ like flares and decoys to more active methods of defeating heat-seeking missiles, meaning lasers,” Thomson explained. “In addition to being more effective against most heat-seekers, lasers do not get used up in combat the way flares might be.”
One of the most dangerous threats to U.S. military helicopters flying in combat zones today are heat-seeking missiles, Thompson noted. “And the latest versions are equipped with seekers that can readily distinguish between real targets and simple countermeasures such as flares.”