End of MH-60R Seahawk and AN/APS-153 Radar Procurement could see Telephonics Acquired and End Competitive U.S. Radar Market

In March 2019 in the US Navy’s FY20 budget, the MH-60R Seahawk Multi-Mission Maritime Helicopter was stated to be the primary ASW (Anti-Submarine Warfare) sensor in the Carrier Strike Group. But despite its crucial importance, production for the US Navy will be ending soon, and some electronics suppliers face an uncertain future. There may soon be no companies left outside the “Big Three” of Raytheon, Northrop, and Lockheed to maintain a competitive military radar market.

The Telephonics AN/APS-147 is a light-weight airborne multi-mode inverse synthetic aperture radar (ISAR), originally developed for the SH-60R remanufacture program (now the new-build MH-60R Seahawk). The APS-147 beat out the Texas Instruments (now Raytheon) AN/APS-137(V) ISAR. More than 350 systems might ultimately be built for the US Navy and foreign sales, with a $318 million contract for the first 139 radars finally awarded in September 2007.

In June 2008, Lockheed Martin won a five-year, $144 million SDD contract for the Advanced Radar Periscope Detection and Discrimination (ARPDD) upgrade (with development and production subcontracts to Telephonics). In January 2011, a $33.6 million contract marked the transition from SDD to production, with IOC planned for 2013. In February 2015, final plans called for 149 MH-60Rs to be retrofit with ARPDD, in addition to 125 new-build helicopters.

The AN/APS-153 is the designation for the new version of the APS-147 with ARPDD – incorporating automatic radar periscope detection and discrimination capability, ISAR imaging, and a fully integrated Identification Friend or Foe interrogator capability.

In November 2014, Lockheed Martin delivered the 200th fully-equipped MH-60R “Romeo” helicopter to the US Navy. In mid-2015, MH-60Rs with the APS-147/153 were also in production for Australia (24) and Denmark (9), with 14 radars approved in May 2015 for Saudi Arabia (contracted in December 2015).

In June 2017, Telephonics was awarded a $37 million multi-year, ID/IQ production contract for APS-153(V)1 radar retrofit kits with ARPDD (Phase Three, year two).

But despite the recent international sales, contracted APS-147/153 production is now essentially done, with the final production radars likely to be completed in 2019. We do forecast minor additional production, but the end of Telephonics’ core program for the US Navy will leave them with much less to maintain their surprising continuance of a seemingly healthy US radar market. Most other non-Northrop/Lockheed/Raytheon radar firms have dropped away in the past decade with no big US contracts. General Atomics holds on with Lynx (and in 2019 is actually stronger than ever with major USAF Reaper upgrades funded), mostly because they try hard not to let anyone else put a different radar on their Reaper!

There may soon be no one left outside the “Big Three” to maintain a competitive military radar market. Radar (and other sensor) costs have skyrocketed in the past decade, and we expect the next generation of medium-sized SAR/ISAR radars to be considerably more expensive to the US government and taxpayer. See, for example, the Teal Group Evaluation in our AN/APG-68(V) & APG-83 SABR & Future F-16 AESA report, of the apparent deal to eliminate competition for future fighter radar AESA upgrades. Remember the earlier-promised $1 million per aircraft F-16 AESA upgrade? With real competitions gone, F-16 and F/A-18 AESA upgrade costs have already skyrocketed (those F-16 antenna-only upgrades now seem to cost more than $4 million…).

Future international sales possibilities for Telephonics include Qatar and South Korea, which have both come close to buying the MH-60R, and a few other opportunities such as for Taiwan and Malaysia. But production numbers will likely be very limited for any of these sales – future APS-147/153 production will likely be worth just a thin trickle of funding.

On the other hand, there will be substantial continuing upgrade & support funding for another decade or two for the front line APS-147/153, not quite in the JSTARS league in terms of value – but between $50-100 million annually is not bad.

But Teal Group believes it may not be Telephonics doing the upgrades. After production ends (which has been worth close to $200 million per year), Telephonics may become ripe for acquisition or divestment from their parent Griffon Corp. Acquisition would give Raytheon back the naval ISAR dominance they lost when the MH-60R radar went to Telephonics. Alternately, acquisition by Northrop Grumman would strengthen their position in the future maritime radar market, joining their MFAS radar on the MQ-4C Triton BAMS UAV, currently only entering production. Less likely is Lockheed Martin, but as systems integrator for the MH-60R they would also have an interest, and Teal Group suspects they already have a big stake in the classified UAV radar market today.