Business Briefs

AAII files lawsuit challenging KC-135 contract

Alabama Aircraft Industries, Inc. will file a lawsuit in the United States Court of Federal Claims challenging the Air Force's selection of Boeing for a $1.1 billion contract to maintain the fleet of KC-135 refueling tankers.

On Dec. 27, 2007, the Government Accountability Office sustained in part a protest filed by AAII.

The GAO found that last minute and unexplained changes in Boeing's proposed prices raised issues of price realism and proposal risk. On Feb. 1, the GAO again ruled in AAII's favor on these issues, denying the Air Force Request for Reconsideration.

Despite the GAO's two decisions, on June 13 the GAO denied AAII's request for further relief and the Air Force has decided to press forward with an award to Boeing. AAII's firm belief is that, if proposals were evaluated fully and reasonably, it would be selected due to its past contract performance, lower price and consistently higher quality in maintaining the KC-135 fleet. AAII has decided to pursue this matter in court because the Air Force failed to take appropriate corrective action in response to the GAO's decisions. AAII is asking the Court of Federal Claims to order the Air Force to conduct a full and proper evaluation and to ensure compliance with applicable law.

AAII notes that the Air Force's KC-135 PDM procurement has a long and questionable history and continues to be the subject of allegations of bias, conflicts of interest, and procurement integrity violations. Judicial review should provide a greater opportunity for thorough review of these issues than the limited administrative process at the GAO. AAII believes review by the Court of these, as well as other multiple issues contained within the Complaint, will provide compelling evidence that the current widespread concerns about the acquisition process and the award are valid.

"We believe that the Air Force's award of the KC-135 maintenance contract to Boeing is significantly flawed," said Ron Aramini, AAII president. "AAII intends to pursue its right to seek review by the Court with the hope and expectation that, following a full review, the Air Force's award will be overturned and a new competition ordered."

Marine Corps, Northrop team completes G/ATOR review

The U.S. Marine Corps' new Ground/Air Task Oriented Radar moved an important step closer to production with the successful conclusion of the formal Preliminary Design Review at Northrop Grumman's Electronic Systems sector headquarters.

G/ATOR is a highly mobile system intended to fully support the Marine Corps' expeditionary warfare requirements. The new multi-mission radar system will provide the Marines with enhanced capabilities to detect, track and provide target quality data to engage hostile aircraft, cruise missiles, unmanned air vehicles, and provide location of hostile rockets, mortars and artillery. Intended as a replacement for five existing Marine Corps radars, G/ATOR will also provide robust air traffic control capabilities to enhance the safety of Marine Corps air operations.

"You have approval to proceed to critical design," said John Burrow, Marine Corps Systems Command deputy commander for Systems Engineering, Integration, Architectures, and Technology at the conclusion of a comprehensive three-and-a-half day technical review.

The PDR involved an extensive U.S. government review and subsequent approval of the G/ATOR system and subsystem design for both hardware and software including a program management review of cost and schedule. The PDR was attended by more than 70 Marine Corps, Navy, Army, and other Department of Defense officials and civilian subject matter experts.

Northrop Grumman is the G/ATOR prime contractor under a $256 million contract competitively awarded by Marine Corps Systems Command. Key team members include Sensis Corporation, Syracuse, N.Y.; CEA Technologies, Inc., Canberra, Australia; Stanley/Techrizon, Lawton, Okla.; and Caterpillar Logistics, Morton, Ill.

Lockheed announces planned redemption

Lockheed Martin recently announced the planned redemption of all of the outstanding $1,000,000,000 in original aggregate principal amount of Floating Rate Convertible Senior Debentures due 2033 on Aug. 15, 2008.

Lockheed Martin will redeem the debentures at a redemption price equal to $1,000 per $1,000 in original principal amount of debentures.

In accordance with the terms of the indenture governing the debentures, the debentures may be converted at any time prior to 5 p.m., EDT, Aug. 14, 2008. Holders who want to convert debentures must satisfy the requirements for conversion in the indenture and the debentures. The conversion rate, as adjusted to June 26, 2008, is 13.7998 shares of common stock for each $1,000 in original principal amount of debentures. Under the terms of the indenture, Lockheed Martin is required to pay cash in lieu of common stock for the accreted principal amount of the debentures, which at all times up to the redemption date will be equal to the original principal amount of the debentures. The indenture provides that Lockheed Martin is entitled at its option to settle the remaining conversion obligations in cash, shares of Lockheed Martin common stock or a combination of cash and common stock. Lockheed Martin intends to satisfy its conversion obligations in excess of the accreted principal amount of the debentures entirely in shares of common stock, with any fractional share being paid in cash.

B/E Aerospace announces offering price

B/E Aerospace, Inc. has announced today the pricing of a public offering of $600 million aggregate principal amount of 8.5 percent senior notes due 2018.

The offering is being made under B/E Aerospace's existing shelf registration statement. The transaction is expected to close on July 1, 2008.

On June 9, 2008, B/E Aerospace announced that it had signed a definitive agreement with Honeywell International Inc. to acquire the assets of Honeywell's Consumables Solutions distribution business. B/E Aerospace intends to use the net proceeds (before expenses) from the offering of approximately $586.5 million, together with term loan borrowings under a new senior credit facility and an issuance of its common stock to Honeywell, and available cash, if necessary, to pay the purchase price for the acquisition, to repay borrowings under its existing senior credit facility and to pay related transaction fees and expenses.

Elbit acquires Israeli seismic sensor maker

Israeli defense electronics maker Elbit Systems Ltd. said June 30 it acquired Electro Optic Research and Development Company Ltd. from former shareholders, Technion Research & Development Foundation Ltd. and Bynet Electronics Ltd.

Financial terms weren't disclosed.

Israel-based Electro Optic develops acoustic and seismic sensors and systems for military and security applications. AP