War on Terrorism Spawns Arsenal of Defense Products by Larry Luxner Airborne lasers, Hellfire, Global Hawks, JSAFs, JSOW-Bs, JDAMs, SLAMs, Avengers and Raptors. It sounds like alphabet soup or the names of motorcycle gangs to most Americansóbut to those in the defense industry, these high-tech acronyms and weapons systems translate into big bucks. Thatís especially true for companies whose products dovetail with the Bush administrationís war on terrorism. "One of the major changes since 9/11 is the performance of U.S. forces in Afghanistan, which has highlighted the effectiveness of networking weapons systems that range from sensors to bombs and missiles," said Lee Ewing, editor of Aviation Weekís Aerospace Daily and Homeland Security & Defense. "For the U.S. defense industry, the major procurement tied to the aftermath of the war has been for more bombs and missiles that have proven effective in Afghanistan and also for unmanned aerial vehicles such as the Global Hawk and the Predator," Ewing said. Randy Belote is a spokesman for Northrop Grumman, which produces the Global Hawk aircraft. "Itís an unmanned surveillance and reconnaissance platform that has a number of sensors allowing it to provide surveillance on large areas of land," he said. "Thereís been a great deal of interest in Global Hawk, both in Europe and the Far East." Belote said that the aircraft costs $30 million each and is manufactured in California. Northrop Grumman, whose Electronic Systems Sector is based in Baltimore, Md., also makes the B-2 "Stealth" bomber, which has been a mainstay of the companyís business for 10 years. "Weíre in a unique position. Northrop Grumman recognized the need over a decade ago to reposition itself for systems that would respond to modern threatsópeacekeeping on the left, global conflict on the right, with terrorism in the center," Belote said. "These systems would provide enhanced surveillance, reconnaissance and intelligence gathering so that commanders could better understand what was happening on the battlefield." According to Belote, about 10 percent of Northrop Grummanís sales are overseas, with the biggest clients being in the Middle East and the Far East. Belote declined to name specific countries or elaborate further. He did say that the company, which employs 100,000 people in 44 states and 25 countries, would become the nationís No. 2 defense contractor if it succeeds in acquiring TRW Inc. for $6.7 billion. On May 6, the two companies signed a confidentiality agreement that will allow Northrop Grumman to look at TRWís books. Northrop Grumman has offered to exchange each share of TRW stock with its own stock at $53, but company officials hint they may sweeten the offer after conducting due diligence. Harris Belman, vice president of homeland security at BAE Systems in Arlington, Va., said his company sells $4 billion a year to the North American market, though only a small part of that has to do with homeland security and the domestic war on terrorism. "Homeland security is very new," he said. "I donít think anybody has made hundreds of millions of dollars on homeland security because the money thatís been allocated at the deferral level hasnít seen its way to the market yet." Even so, noted Belman, "Iíd say the market is four to five times what it was before Sept. 11. Today, itís primarily the U.S. market, but it will be an overseas market too. For instance, Japan has shown interest in our chemical detectors." These detectors, which cost around $10,000 apiece, can be installed in everything from airports to subway systems. BAEís primary customer for the devices is the Pentagon. "Weíre very big in sensor technology, everything from infrared sensors to chemical detectors. Most of what weíve done has been developed for the military, and weíre looking to move that into the civil-commercial arena because the technology is there." Yet another company benefiting from the war on terrorism is Raytheon Co., which reported sales of about $16.8 billion last year. About 23 percent of Raytheonís business is international, said company spokesman Dave Shea, noting that Australia, Saudi Arabia and the United Kingdom are among its best foreign customers. "We make a number of the missile systems used in Afghanistan, including the Paveway series of laser-guided bombs. The Tomahawk cruise missiles, which Raytheon builds in Arizona, have also received some increased funding, so weíre converting older Tomahawks to new ones equipped with Global Positioning Satellite units." The company could suffer a setback, however. The Air Force reportedly wants to cancel its purchase of more than 3,000 of the B variant of the Raytheon Joint Standoff Weapon (JSOW-B) because of technical problems and cost overruns. According to Aerospace Daily, an Armed Services Committee report acknowledges the Air Forceís intentions and adds $16.2 million to the Bush administrationís budget request to fund an extended-range version of Lockheed Martinís Wind Corrected Munitions Dispenser (WCMD) as an alternative to the JSOW-B. The weapon is designed to be used against tanks and other heavily armored vehicles. On the domestic front, Raytheon has partnered with Northrop Grumman to bid on a $1 billion federal government contract to install explosive detection systems at the countryís 429 airports by yearís end. It is also marketing its First Responders vehicle to state governments. Shea said that "this vehicle is designed to solve communications problems among various jurisdictions, enabling one jurisdiction to talk to another through satellite communications and wide-area networks." Also helping U.S. forces with communications is Spacelink International, a $25 million company based in Washington, D.C. In February 2001, Spacelink became one of the prime contractors on a contract valued at $2.1 billion with the Defense Information Systems Agency (DISA), an agency that falls under the jurisdiction of the Department of Defense. "This contract was installing earth terminals in the Balkans in support of existing DoD networks and providing satellite bandwidth in Southwest Asia," said Caryn Swenson, Spacelinkís director of business development. Although Spacelink does not contract with foreign countries, it does negotiate host-nation agreements with such countries as Saudi Arabia, Germany and Nigeria, on behalf of its customer, the U.S. government. Under a separate contract, it installs AT&T calling centers in the Balkans, so U.S. troops can call their families. It also provides the communications links for cyber-cafÈs, so those troops can enjoy Internet access. Robert Baugniet is senior manager of corporate communications at Gulfstream Aerospace Corp., a wholly owned subsidiary of General Dynamics. "Since Sept. 11, on the commercial side, interest in our product remains very high, but decision-making has been prolonged somewhat," Baugniet said, "whereas on the military side, interest remains high, and thereís been no delay in the decision-making process." Baugniet, who declined to reveal dollar figures, said that since 1960, governments have used Gulfstream jets for a variety of purposes. These include VIP transport, maritime reconnaissance, drug interdiction, electronic surveillance, medical evacuation, and the movement of time-sensitive parts and materials. Because the jets fly at altitudes of 45,000 to 55,000 feetówell above commercial jet trafficóthe Gulfstream jets are also useful for conducting atmospheric research. The company, which is based in Savannah, Ga., recently won a $1.6 billion contract to provide 20 jets to the U.S. Air Force over a 10-year period. Baugniet said more than 140 Gulfstream aircraft have been sold to governments around the world, including those to Israel, Norway and Japan. Larry Luxner is a contributing writer to The Washington Diplomat.