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BAE, Boeing to Challenge Lockheed on F-16 Work

by Brendan McGarry on June 14, 2013

F-16 upgrades

Lockheed Martin Corp., the world’s largest defense contractor, is expected to square off against BAE Systems Plc and Boeing Co. on competitions to upgrade foreign fleets of F-16 fighter jets.

Lockheed, the Bethesda, Md.-based contractor that makes the aircraft, had a lock on the work until last year, when London-based BAE successfully challenged it on a deal to refurbish more than 130 of South Korea’s jets. Chicago-based Boeing has also expressed an interest in the business.

Contractors are increasingly looking at opportunities to upgrade F-16s as defense budgets decline in the U.S. and Europe, threatening funding for the production of new aircraft.

“Most of our F-16 customers recognize and enjoy the benefit of the economies of scale that the F-16 program brings, as well as the interoperability benefits between the air forces around the world,” Mark Johnson, a Lockheed spokesman, said in an e-mail.

Like other popular U.S. military aircraft, the F-16 won’t be on display at the upcoming Paris Air Show due budget cutbacks in Washington, D.C.

More than 4,500 of the fourth-generation fighter aircraft, known in the U.S. as the Fighting Falcon, have been built since production began in the mid-1970s. General Dynamics Corp. initially manufactured the planes before selling its aircraft unit to Lockheed in the 1990s.

About half of those jets were purchased by the U.S. military. The rest were bought by more than two dozen countries, including Israel, Turkey, Taiwan, Iraq and Pakistan.

Lockheed has already upgraded more than 1,000 of the aircraft. A couple months after it lost the South Korea decision, the company was awarded a $1.85 billion contract from the U.S. Air Force to upgrade more than 140 of Taiwan’s F-16s with new radar, global positioning and electronic warfare systems.

In the U.S., Lockheed is the main contractor on a $2.8 billion Air Force program to upgrade about 350 of the single-engine fighters’ airframes and avionics systems. The multi-year effort slated for certain Block 40 and Block 50 versions is designed to keep the aircraft viable after 2025 in part because of delays to the F-35 Joint Strike Fighter, the Pentagon’s most expensive weapons acquisition program.

The Air Force effort is the basis for all F-16 upgrades within the Defense Department’s so-called Foreign Military Sales program, Johnson said.

In a foreign military sale, the U.S. buys weapons or equipment on behalf of a foreign government. Countries approved to participate in the program may obtain military hardware or services by using their own funding or money provided through U.S.-sponsored assistance programs, according to the Pentagon’s Defense Security Cooperation Agency, which announces the deals.

“Many countries will follow the USAF lead for the upgrade of the F-16 aircraft,” Johnson said. “Doing so yields significant benefits for the country as well as the USAF as they partner in the development of the upgrade program.”

The avionics enhancements include an active electronically scanned array radar, which boosts the plane’s ability to destroy enemy air defenses; a higher-resolution display unit; single-point access for electronic warfare control; and an integrated broadcast system for intelligence feeds, according to Pentagon budget documents.

Lockheed’s aeronautics unit, which accounted for about a third of the company’s overall 2012 revenue of $47.2 billion, is conducting a competition between Waltham, Mass.-based Raytheon Co. and Falls Church, Va.-based Northrop Grumman Corp. to supply the new radar, Johnson said.

Boeing has contracts with the U.S. military to modify retired F-16 aircraft into unmanned aerial targets for training exercises. BAE also performs some of the work, which involves the installation of electronic control equipment. Spokesmen for the two companies didn’t respond to requests seeking comment.

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{ 32 comments… read them below or add one }

Anonymous June 14, 2013 at 1:48 pm

"the company was awarded a $1.85 billion contract from the U.S. Air Force to upgrade more than 140 of Taiwan’s F-16s"

LOL. My tax money to spend on Taiwan's jets. Man, sure would be nice if that money was spent on America instead.

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Big-Dean June 14, 2013 at 1:58 pm

no worries anonymous, that $1.85 billion will only buy us a couple of F-35s so we might as well give it away to our allies

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Josh June 14, 2013 at 2:29 pm

Stupidity is the worlds biggest enemy. You should help fix that.

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Patrick June 14, 2013 at 3:19 pm

"In a foreign military sale, the U.S. buys weapons or equipment on behalf of a foreign government."

It helps if you keep reading before forming asinine opinions.

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@varnal1 June 17, 2013 at 2:40 am

Should take your own advice! __Countries approved to participate in the program may obtain military hardware or services by using their own funding or money provided through U.S.-sponsored assistance programs,[translates to tax dollars] according to the Pentagon’s Defense Security Cooperation Agency, which announces the deals. _ _ – Purchased by the USAF is to control resale of weapons to people we would not like to have them possessed by, unless a country is wealthy enough like Saudi a Arabia who purchase their own weapons – small nations like Taiwan are given FMS (tax dollars) sponsored assistance programs. _

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Blue June 14, 2013 at 9:27 pm

Taiwan is paying for the upgrade. The quote is misleading – it's still Taiwan that is paying the bill for that one.

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@varnal1 June 17, 2013 at 2:43 am

Through FMS, which is still tax dollars. FMS is tax dollars – not repayable by the foreign government, but given by our government for their cooperation by giving them money to purchase, upgrade, or maintain weapons.

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Guest June 17, 2013 at 10:18 am

Accorfing to the DSCA website FMS Sales can be " conducted using host nation funds, donor funds or FMF". Meaning our tax dollars or their funds.

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Blue June 17, 2013 at 2:43 pm

No, Taiwan does not receive FMS from the United States. The weapons that Taiwan purchases from the United States, Taiwan foots the bill for – not the American taxpayer.

It's not like how the US treats Israel.

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person with a brain June 17, 2013 at 4:41 pm

There is this thing called Geopolitics. The US is not in a bubble all by itself. We have interests all over the world and buying more crap for ourselves is not always the best way to achieve our goals.

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USS ENTERPRISE June 14, 2013 at 2:08 pm

Lockheed Martin, the worlds largest defense contractor. Fighting to upgrade an aircraft they make. lol.

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blight_ June 17, 2013 at 12:14 pm

Bear in mind that airlines don't always use Boeing or Airbus to do all their maintenance. They use third party contractors to do it to cut the cost, and the econoairlines sometimes encounter a spectacular failure when taken too far.

For example, ValuJet had a series of interesting failures that traced back to badly trained personnel and cheap contractors. So ValuJet is now AirTran.

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hibeam June 14, 2013 at 5:43 pm

Competition leads to higher performance at lower cost. This is why the teachers unions and government employees in general are so vehemently opposed to the concept.

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blight_ June 14, 2013 at 6:13 pm

And that's why we stood by and let the defense industry consolidate…

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RWB123 June 14, 2013 at 6:44 pm

Amen

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blight_ June 14, 2013 at 6:53 pm

Makes you wonder what would've happened if we'd "bailed out" Grumman, Martin-Marietta and McD instead of letting them merge into what are essentially megacorporations Northrop-Grumman, Lockheed-Martin, Boeing.

"Competition leads to higher performance at lower cost"; indeed.

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@varnal1 June 17, 2013 at 3:02 am

Limiting competition leads to stagnant products and lack of innovation, kinda of like where we are now! And prices that are now controlled by a smaller pool of manufacturers. McDonnell Douglas F/A -18 was originally Northrups YF-17, modified for the US Navy after losing the Lightweight Fighter competition to the F-16, those research dollars were not wasted and provided a terrific airframe for the Navy. Also, BAE is not American but British if anyone has forgotten. I have a problem with a foreign manufacturer supplying weapons to our military and there are way to many weapons with foreign hands on.

SJE June 15, 2013 at 3:00 pm

burn!

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@varnal1 June 17, 2013 at 2:45 am

That would work if it was for the best product – but our government goes with the "low bid" and we end up with a sub par product.

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blight_ June 17, 2013 at 10:44 am

Makes you wonder why we don't use NASA to evaluate the aeronautics half of things. If the defense department doesn't want to keep the people with the know-how on their payroll…

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Blue June 15, 2013 at 7:01 pm

Pardon my ignorance, but if the F-16 is a Lockheed Martin product, then how could Boeing possibly do a better job of upgrading a Lockheed product than Lockheed itself could?

Wouldn't Lockheed be the one that is ultimately the most familiar with its own product?

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tmb2 June 15, 2013 at 7:18 pm

Fair question. I'm guessing, but the upgrades probably involve parts common enough now that the other companies have access to the subcontractors who actually make them.

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blight_ June 15, 2013 at 10:39 pm

Boeing's product is the JHMCS, and the F-16 -> QF-16 drone conversions. From an older page (http://www.ainonline.com/aviation-news/ain-defense-perspective/2012-07-13/boeing-bae-systems-compete-f-16-upgrade-work)

"Competition in the F-16 upgrade market is heating up, with Boeing joining BAE Systems in challenging Lockheed Martin’s dominance as OEM. Boeing is touting the experience it gained recently in converting F-16s to unmanned drones for the U.S. Air Force. BAE Systems continues to emphasize its 270-aircraft upgrade for the U.S. National Guard, as a basis for securing international work."

And this was in 2012…

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USS ENTERPRISE June 16, 2013 at 10:32 pm

What about those QF-4 drones? Was that McDonald, or did Boeing manage to make a few of those as well?

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blight_ June 17, 2013 at 4:42 pm

From (http://www.af.mil/information/factsheets/factsheet.asp?id=13226)

QF-4 Modification Contractor: BAE Systems

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@varnal1 June 17, 2013 at 2:50 am

The upgrades are internal and therefore not necessary for the original manufacturer to take the lead. To change the mother board in a computer you don't need to necessarily change the exterior of the box.

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U.S.A June 16, 2013 at 5:56 pm

im really glad to see compition in our contractors. this leads to more hard work between the companies and better success for the military.

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USS ENTERPRISE June 16, 2013 at 10:33 pm

Written in 1967.

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blight_ June 17, 2013 at 4:43 pm

And if you lose, call your guys on Capitol Hill and drag out procurement a little longer…

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blight_ June 17, 2013 at 10:37 am

We supply the British with Apaches and Tridents. I guess they don't technically "supply" Harriers anymore, now that they are well out of production and not even the UK has them anymore. Of course, you can be "out of production" and still support a product…

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elizzar June 17, 2013 at 11:20 am

and of course blight_ we sold all our remaining harrier frames and spare parts to the us marines recently in any case, allowing the marines to carry on using their harrier flights without worry about f-35 delays. of course, we scrapped our entire harrier force in doing so, leaving us with no aircraft carriers / aircraft to fly from them until what 2022ish? grr!

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blight_ June 17, 2013 at 12:06 pm

elizzar, I thought the UK had already put the Harriers into storage because they couldn't afford them?

(Which is worrisome because can the UK afford the JSF-B's when they arrive?)

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