UK defence company Cobham has won what may become its largest contract to date, to supply communications equipment to the US Army, easing fears of recent months of a more protectionist tone in US procurement policy.
The contract to supply communications equipment for US Army trucks and tanks is said to be valued at $2.4bn over the next 10 years.
The cancellation of a number of high-profile international programmes by the US Army, such as the presidential helicopter replacement, had sparked fears among many European companies that US Army procurement is becoming more protectionist in the awarding of contracts. Despite a tightening US defence budget, the deal suggests that foreign companies can still access the US defence market.
Cobham is to work with its US partner of 15 years, Northrop Grumman, to provide its Vis-X system – an internet protocol-based intercom for tanks and trucks. Cobham and Northrop will continue to supply the older VIC-3 system to support the 85,000 vehicles in which it is already installed.
The contract announcement comes as the controversial competition for the US’s ageing fleet of air tankers is about to restart between Northrop Grumman and its European partner EADS and their US rival Boeing.
The $35bn competition to build about 180 new refuelling aircraft for the US Air Force had already been won by the EADS/Northrop team before Boeing successfully challenged and overturned the win.
In the earlier contest, which was declared null, awarding the contract to a joint venture with a European company was perceived by some as taking US jobs abroad. Both Boeing and the EADS/Northrop partnership propose to manufacture part of their aircraft in the US and part of it abroad.
It is estimated that the EADS/ Northrop proposal to build a modified version of the Airbus A330 will create about 50,000 jobs throughout the US and that US components would make up 60% of the aircraft. Boeing’s proposal for the previous competition involved building a modified version of its 767 model, with 15% of the work to be done abroad.
Fears of protectionism were demonstrated in a report issued by the World Trade Organization in July which found a global increase in protectionism among governments despite high-profile pledges at the G-20 summit and other forums to resist protectionism.