US weapons manufacturer Lockheed Martin is considering bidding in the plan being promoted by the Ministry of Defense for the construction of three new logistics centers for all IDF corps at a cost of NIS 15 billion. Sources inform "Globes" that Lockheed Martin's US headquarters has appointed a special team to monitor the procedure taking place in Israel for selecting a franchise holder to lead the difficult project. If Lockheed Martin makes a final decision to bid in this proceeding, it will have to join forces with an Israeli company, for which it will be a subcontractor. The Ministry of Defense is demanding that the franchise holder leading the venture be Israeli.
Defense market sources told "Globes" that despite the demand that the franchise holder leading the program be Israeli, the Ministry of Defense wants foreign companies to participate in it, so that they will bring know-how and new approaches in managing logistics centers.
In recent days, it was reported in the US that Lockheed Martin had won an $8 billion US army tender to build logistics centers.
Vacating areas in high-demand areas
Construction of the new centers is slated for completion by 2023. The new centers will replace 17 logistics centers located in a number of IDF camps and bases throughout Israel. According to the plan devised by the Ministry of Defense and the IDF, opening the new logistics centers will make it possible to close the existing centers and vacate at least 4,000 dunam (1,000 acres) of land, half of it in high-demand areas.
Two months ago, the Ministry of Defense began a pre-selection procedure in preparation for publishing the huge tender, scheduled for early 2018. For reasons of security, the Ministry of Defense is not revealing the locations of the three new logistics centers to be built under the plan. It is saying, however, that the three centers will be in northern, southern, and central Israel. The centers are designed to be advanced, with robots and innovative systems being used for most activity. This will streamline processes and avoid the use of hundreds of NCOs and civilian IDF employees currently working in the existing centers. According to past estimates by defense sources, the future centers will save 65% on storage space, make it possible to cut truck cargo traffic on Israel's roads by 30%, and save the IDF NIS 25 million annually in municipal property taxes that it currently pays to the local authorities in whose jurisdictions the old supply centers operate. Some of these old centers date back to before 1948.
Lockheed Martin's possible entry into this project reflects the intensification of the US weapons manufacturer's involvement in Israel. In recent years, Lockheed Martin has expanded its business in Israel, to a great extent due to the Stealth fighters deal, in which the Israeli air force is procuring 50 F-35s manufactured by Lockheed Martin. As part of these agreements, a number of Israeli defense companies are supplying Lockheed Martin with systems and components related to the F-35 program. The main companies in Israel benefiting from this program are Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1), which has developed a special production line for manufacturing 800 pairs of wings for these planes, and Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), which is responsible for supplying the pilots' helmets for the planes.
As of the end of 2016, it is believed that Lockheed Martin's agreements with the Israeli companies involved in the Stealth fighter program amounted to over $1 billion. The US manufacturer currently has 40 employees in Israel.
At the same time, the Israeli air force is also procuring Lockheed Martin-made advanced Hercules C-130 cargo planes, called Samsons in Israel. Eight of these planes have been delivered so far, and the ninth and last plane in the deal will be delivered next year. Lockheed Martin is currently trying to promote the sale of 25 of its new transport helicopters to replace the air force's old Yasur helicopters.
Published by Globes [online], Israel Business News - www.globes-online.com - on August 14, 2017
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