Kratos Receives $877 Million Indefinite-Delivery/Indefinite-Quantity, Multiple Award Sounding Rocket Program-4 Contract Award

Rhea-AI Summary

Kratos Defense & Security Solutions, Inc. secures an $877 million contract for the Sounding Rocket Program-4. The nine-year contract aims to provide suborbital launch services and launch support services, with an expected completion date of November 15, 2029.

Insights

Defense Industry Analyst

The announcement of Kratos Defense & Security Solutions Inc.'s receipt of a significant contract for the Sounding Rocket Program-4 is a substantial development within the defense sector. This contract, with its potential value of up to $877 million, reflects the growing demand for suborbital launch services, which are crucial for a variety of defense-related applications, including missile defense system testing and hypersonic weapon development.

From an industry perspective, this multi-award contract highlights Kratos' competitive positioning in the market for rocket launch systems. The nine-year ordering period also provides a long-term revenue stream, which is beneficial for financial stability and strategic planning. The contract's structure, including cost-plus-incentive-fee and firm-fixed-price components, suggests a balanced approach to risk-sharing between the government and Kratos, which is typical in complex defense contracts to incentivize performance and control costs.

Investors and stakeholders should note that the successful competitive bid against two other offers underscores Kratos' technical expertise and cost competitiveness. The performance locations, including both contractor facilities and various government launch sites, indicate the logistical and operational capabilities required to fulfill the contract's demands.

Aerospace Engineer

The technical aspects of the Sounding Rocket Program-4 are of particular interest. Sounding rockets are used to conduct scientific experiments and test new technologies in near-space environments. Kratos' involvement in suborbital missions supports the development of advanced defense capabilities, such as hypersonic technology and ballistic missile defense systems. These technologies are critical for national security, given the increasing emphasis on hypersonic research and the need for reliable missile defense.

Furthermore, the contract's focus on a variety of mission requirements suggests a need for adaptable and versatile launch solutions. Kratos' expertise in affordable rocket launch systems positions them as a key player in addressing the evolving challenges in defense technology. The ability to perform work at a multitude of government launch sites also indicates the importance of geographic flexibility and the technical capability to support a wide range of launch conditions and mission parameters.

Market Research Analyst

Examining the broader market implications, this contract may influence Kratos' market share and competitive dynamics within the aerospace and defense industry. The sizeable ceiling of the contract could signal to investors and competitors alike that Kratos is securing its place as a leader in the niche of suborbital launch services. The aerospace and defense industry is known for long sales cycles and high barriers to entry, so a contract of this magnitude could deter new entrants and solidify Kratos' market position.

Moreover, the long-term nature of the contract could potentially insulate Kratos from market volatility and provide a steady source of income that can be reinvested into research and development, further enhancing their technological edge. As the industry continues to advance with a focus on innovation, Kratos' ability to secure such contracts could be indicative of its commitment to maintaining a technological lead, which is crucial for long-term success in this sector.

^{Credit: NASA}
A Kratos Terrier Terrier Oriole sounding rocket lifts off on March 3, 2021 from the Wallops Flight Facility in Virginia

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/2194626f-98a6-4702-b83f-15e6b1d0d09a.

SAN DIEGO, Feb. 12, 2024 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a Technology Company in Defense, National Security and Global Markets, announced today that its Kratos Space & Missile Defense Systems Inc., business unit has received a multiple-award, indefinite-delivery/indefinite-quantity, cost-plus-incentive-fee, cost-plus-fixed-fee, and firm-fixed-price contract with a combined maximum ceiling of $877 million with a nine-year ordering period for Sounding Rocket Program-4. This contract provides suborbital launch services and launch support services necessary to accomplish the Rocket Systems Launch Program’s suborbital mission. The primary locations of performance of the work will be at the contractor facilities and a variety of government launch sites, depending on mission requirements, and is expected to be completed by November 15, 2029. This contract was a competitive acquisition, and three offers were received. Space Systems Command, Kirtland Air Force Base, New Mexico, is the contracting activity.

Kratos Space & Missile Defense Systems is a leading provider of affordable rocket launch systems for ballistic missile target, ballistic missile defense, sub orbital, hypersonic and other missions.

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low cost future manufacturing which is a value add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter UAS, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 25, 2022, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.

Kratos Press Contact:
Yolanda White
858-812-7302 Direct

Kratos Investor Information:
877-934-4687
investor@kratosdefense.com

FAQ

What contract did Kratos Defense & Security Solutions, Inc. secure?

Kratos Defense & Security Solutions, Inc. secured a multiple-award contract for the Sounding Rocket Program-4.

What is the total value of the contract?

The contract has a combined maximum ceiling of $877 million.

What is the ordering period for the contract?

The contract has a nine-year ordering period and is expected to be completed by November 15, 2029.

What services will be provided under the contract?

The contract aims to provide suborbital launch services and launch support services for the Rocket Systems Launch Program's suborbital mission.

Who awarded the contract to Kratos Defense & Security Solutions, Inc.?

The contract was awarded by the Space Systems Command, Kirtland Air Force Base, New Mexico.