Monday, February 20, 2006

Joint US / Israeli Short Range Missile Defense Tende

Boeing and The Israel Aircraft Industries Ltd. announced that they would make joint bid for the Ministry of Defense tender for short range ballistic missile defense (SRMBD) systems. Also bidding for the tender will be consortium comprising the US company Raytheon (NYSE: RTN) and the Israeli Armament Development Authority . Sources in Israel value the multi year tender at $50-100 million. The issue behind the current tender was the urgent need to find a solution to the Kassam rockets, which have now begun to emerge as a key threat due to the ability of Palestinian terror groups to threaten strategic infrastructure targets in Ashkelon with improved models of the rocket. These could, if smuggled into, or manufactured by groups based in the West Bank, threaten key installations in the heart of Israel.
According to Israeli sources, the fact that two leading US companies have joined forces with local Israeli industries in an effort to find a solution to the Kassam rocket, is indicative of the common efforts of the Ministry of Defense in Tel Aviv and the Department of Defense in Washington, to counteract the threat posed by the rockets. ”It is inconceivable that companies such as Boeing or Raytheon that have such strong links with the Pentagon would sign comprehensive joint venture agreements with Israeli companies, without first obtaining the green light from the secretary of defense,” said a expert source on defense relations between the two countries. Of the $133 million allocated by the US Congress to the Arrow anti ballistic Missile project for the coming fiscal year, $10 million will be earmarked for technological R&D activities focusing on counteracting the short range missile threat. Most of the funding will be used to assess the competing offers made by the two consortiums. The Ministry of Defense is to conduct a ‘feasibility’ study on each of the proposals, with a view to determining which of the two is a viable proposition. The IAI/Boeing bid is based on the longstanding cooperation between the two companies on the development and manufacturing of the Arrow missile project. Sources believe that engineers from both companies will try to incorporate two capabilities in their design: early detection of Kassams following launch and high altitude interception. Development of the first capability will be based on the existing “Green Pine” radar system, which is used with the Arrow. It is also believed that the Rafael/Raytheon proposal will reportedly use technologies currently fitted in Rafael’s air-to-air missile technology. Israeli sources predicted that should one of the two current offers win the tender, part of the manufacturing process will be undertaken at the US partner’s plants, as is the arrangement for the Arrow Missile manufacturing procedures. Last year IAI outsourced component manufacturing operations worth $70 million to Boeing, with the completed kits shipped to the IAI facility at Sde Yaacov for assembly. Such an arrangement enables Israel to use US military aid to finance the manufacturing of the Arrow and will also fund future development and manufacturing of missile defense systems.