Boeing Co and Siemens AG's US unit won a government contract valued at US$508 million through Dec. 31 to install, maintain and train operators for explosive-detection machines in US airports.
The team of Boeing, the world's largest aerospace company, and Siemens, Germany's biggest manufacturer, beat out Lockheed Martin Corp, Raytheon Co and TRW Inc for the contract, Transportation Department spokesman Leonardo Alcivar said. The award has an optional five-year extension worth as much as US$1.37 billion, the agency said.
Lockheed Martin received a separate US$350 million contract to carry out a plan to replace private security workers with US government employees at 429 airports by Oct. 31 as part of an effort to improve security after the Sept. 11 attacks, Alcivar said. Boeing is trying to expand to other businesses because of a decline in its jetliner-making business.
"It's nice because it diversifies them away from the commercial aircraft side," said Richard Turgeon, director of research at Victory Capital Management, which has about US$70 billion in assets and owns Boeing shares. "It also lends weight to the fact that they are good at system integration."
The award for Boeing and Munich-based Siemens gives those companies responsibility for helping the government fulfill a congressional mandate to begin screening all 1 billion bags checked on airplanes annually by the end of the year.
The Lockheed contract, which could be raised to as much as US$490 million if more work is required, requires the company to reconfigure security checkpoints for carry-on bags and to improve technology to screen those bags.
Shares of Boeing, the No. 2 defense contractor, rose US$0.80 to US$42.76.
The Transportation department plans to install 1,100 pickup truck-size explosive-detection machines made by L-3 Communications Holdings Inc and InVision Technologies Inc. The machines cost about US$1 million each and use CT-scan technology to trigger alarms at indications of explosives in luggage. Boeing will also train the 21,500 federal workers who will operate the machines.
Boeing will be charged to work with the two manufacturers to try to lower the false-alarm rate in the machines, which InVision Chief Executive Officer Sergio Magistri said yesterday is about 25 percent.
Boeing also will be responsible for installing 4,800 to 6,000 trace detectors, which are desktop computer-sized devices that cost about US$40,000 each and can detect explosive traces as small as a billionth of a gram on clothes. The department plans to use the machines to check luggage and resolve false alarms from the larger machines.
Smiths Group Plc, Thermo Electron Corp and Ion Track Instruments make trace detectors.
The Boeing contract award will accelerate the process of airport surveys, electrical preparation and other planning.
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