The Weekly Wire: Week of 7/20/15

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Brazil

The Brazilian ministry of Defense recently announced that BAE Systems Combat Vehicles, of York, PA won a $54.6m contract to upgrade the Brazilian Army’s venerable fleet of M113 armored vehicles.  This deal will likely extend the same work that BAE did in a previous $131m contract to bring 150 M113’s up to the M113A2MK1 designation.  Brazil has made a considerable effort to upgrade and modernize its land forces, investing in both its M113’s and M109’s, while at the same time expanding its capabilities with the VBR-MR (8×8), VBTP-MR (6X6), and VBTP-LR (4×4).  Leveraging its considerably advanced industrial capabilities, Brazil has made a point of developing its own defense offerings.  Brazilian modernization efforts have been able to keep a strong pace with other developed nations, largely due to their ability to competitively produce both subsystems and entire platforms.

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South Korea

On July 14, the Defense Security Cooperation Agency (DSCA) cleared a $2.5 billion foreign military sales (FMS) package of F-16 upgrades for South Korea, via Lockheed Martin. This represents South Korea’s second attempt at upgrading its fleet of 134 KF-16C/D fighter aircraft. The first attempt ended acrimoniously in November, 2014, when the ROK government terminated a $1 billion contract it awarded to BAE Systems, balking at a $750 million (70%) increase in costs that Seoul claimed were not part of the original agreement. The original agreement represented the first time a country did not select the original manufacturers of the F-16, Lockheed Martin Corp., for upgrades to the long-serving fighter aircraft – and a significant victory for BAE Systems in breaking into the aviation upgrades market. The current package requested by the ROK government –likely to be awarded back to Lockheed Martin – feature upgrades of the avionics systems as well as a fresh supply of munitions and active electronically scanned array (AESA) radars. Somewhat surprisingly, the DSCA announcement includes a $2.5 billion price tag – noticeably higher than the revised price of the original contract – but including significant offset requirements which likely explain the increase in cost.

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