01 December 2018
Teal Group recently updated its ground-based air defense radar programs, including BMDS systems, as well as a few airborne ISR systems. The financial value of these programs is great – with several multi-billion programs (and much still uncontracted).
One of the largest future programs, despite being a legacy system, is Raytheon’s radars for the Patriot air defense missile system. Teal Group forecasts Patriot radar and C4I funding of between $900 million and $1.2 billion annually throughout our forecast period.
The AN/MPQ-53 was the primary engagement radar system of the original Patriot system. The AN/MPQ-65 is an upgraded version to support the PAC-3 missile, with a new transmitter with double the power. Patriot is a ground-based mobile medium- to long-range air defense missile system manufactured by Raytheon (and Northrop Grumman) for the US Army and export customers. Development of Patriot as an anti-tactical missile system (ATM) also continued under the PAC-3 program, with earlier systems having served in this role in Operation Iraqi Freedom (OIF).
Japan and Germany have been involved in license production of the system, and the system has been sold to the Netherlands, Germany, Italy, Israel, Turkey, Saudi Arabia, Qatar, and other nations. In April 2015, the Polish government chose a new, upgraded Patriot radar for its Wisla air defense missile requirement, in what could lead to worldwide upgrades for other Patriot users.
When including the most recent letters of offer, to Romania and Sweden in 2017 and 2018, this will bring the number of international Patriot customers to 15. The US Army acquired about 104 MPQ-53 radars, with about 140 additional export radars produced as of early 2016.
Increased interest in ballistic missile defenses, especially in Asia and now the Middle East, indicates a significant potential market for PAC-3 systems and the MPQ-53/65 and follow-on radars: sales have picked up significantly in the past few years.
Patriot represents one of the most sophisticated air defense systems ever fielded, with the MPQ-53 the first phased-array air defense engagement system in the world, and the latest MPQ-65 rivaling the earlier planned next-generation MEADS Radar in capability. Patriot and Stinger have been the two big US Army success stories in air defense. Although there was considerable public debate about the Patriot’s actual effectiveness in Desert Storm against Iraqi Scud missiles, the fact that an anti-aircraft missile had any success at all against a substantially more challenging threat in an area defense role for which it was never intended said quite a bit about the growth potential and capability of the system.
US Army procurement funding for Patriot ended in 1992 but was revived when the PAC-3 came on-line. Modification funding for Patriot has remained steady to accommodate PIPs being developed, including improvements to the MPQ-53 and MPQ-65 (for PAC-3).
Although the MDA’s anti-missile efforts have at times taken substantial cuts from Congress, Patriot has fared well in these debates since the PAC-3 represents a cost-effective enhancement to a proven existing system rather than an expensive new effort such as MEADS. Even ifMEADS had continued (it was cancelled after FY13), it would have been decades before it could fully replace Patriot.
In March 2014, the US FY15 DoD budget included a variety of new Patriot program starts and significant enhancements in the RDT&E and mod programs; Patriot PIP RDT&E funding doubled, and these additional projects and funding have continued.
For several years, Raytheon has been advocating a comprehensive Patriot Radar upgrade with commercial-off-the-shelf components. Raytheon has also offered more comprehensive upgrade packages including an AESA radar package with 360° coverage, which was originally chosen by Poland in April 2015 for its Wisla/Tarcza Polska (Vistula/Polish Shield) air defense missile requirement. This all-new radar system, along with Northrop Grumman’s new Integrated Air and Missile Defense (IAMD) Battle Command System (BCS), are major reasons for Poland’s much more expensive Patriot contract compared to other recent acquisitions (though now Poland is holding off on the new GaN AESA antenna, and the US Army may pay for this development instead...).
As we will discuss below, totally new radar and C4I systems now seem to be in the cards for the US Army: LTAMD and AIAMD.
Other International Systems
Outside the US, information on international sales of MPQ-53/65 radars and radar upgrades had been scarce until the last few years, when Raytheon began a major push to sell Patriot to non-NATO nations. Substantial radar upgrade contracts to Kuwait and Taiwan were announced, followed by new-system sales to Taiwan, the UAE, and others.
Export potential for Patriot remains, and the few years leading up to 2018 have resulted in several major new sales. The most significant sale in recent years was the long delayed sale to the UAE valued at $9 billion starting in 2009, as well as Taiwan’s acquisition of the PAC-3. Kuwait agreed to the acquisition of PAC-3 in late 2013 and Qatar signed a major $11 billion deal in July 2014. Saudi Arabia also signed a large contract for new generation fire units and had a letter of offer for PAC-3. Korea had a letter of offer for PAC-3, and as mentioned above Poland announced its selection of a new-generation Patriot radar for its air defense program.
Several other export possibilities remain, some of them quite significant. The cancellation of MEADS may help Patriot export since some nations that may have been wavering in hopes of acquiring MEADS at a later date may opt for Patriot instead. India is a potential client, though India’s procurement process remains mired in bureaucratic delays and corruption. Other PAC-3 sales are possible with the leading candidates being Israel and Oman.
Germany decided to proceed with acquisition of MEADS in the summer of 2015, and this will involve acquisition of the PAC-3 MSE. It is not clear if this will be purchase of US missiles or local manufacture.
LTAMDS & AIAMD
In 2017, the Army initiated the new [Future] Lower Tier Air & Missile Defense Sensor (LTAMDS) radar program for the Patriot system (which we as include as a “Future” program because it is still 4 years from EMD, but has massive planned funding...). Four contracts were awarded in October 2017 for the technology maturation and risk reduction (TMRR) phase, to Raytheon, Lockheed Martin, Northrop Grumman, and Technovative Applications. The TMRR will conclude in 3QFY22 with a Milestone B decision. An engineering and manufacturing development (EMD) contract is expected to be issued at the end of this process around the spring-summer of 2022.
The LTAMD capability will provide the required sensing capabilities in the lower tier portion of the ballistic missile defense battlespace. The acquisition program will competitively select the sensor/radar set (RS) to replace the baseline MPQ-65A Patriot radar set due to threat changes and the growing obsolescence and high Operational & Support (O&S) cost of the existing RS. The LTAMD capability will address critical capability gaps, modernize technology, reduce O&S costs, mitigate obsolescence, and increase reliability and maintainability. The LTAMD capability will increase sensor/radar performance to maximize the inherent PAC-3 Missile Segment Enhanced (MSE) Interceptor capabilities to engage threats.
The slightly earlier Army Integrated Air and Missile Defense (AIAMD) program will integrate many AMD sensors and weapons with the Army IAMD Battle Command System (IBCS), allowing transformation to a network-centric system-of-systems capability, enabling extended range and non-line-of-sight engagements to include joint kill chain engagements across the full spectrum of aerial threats, providing fire control quality data to the most appropriate weapon and mitigating the coverage gaps and single points of failure that have plagued AMD defense design in the past.
According to Army budget documents in 2015, fielding the IBCS was the Army Air Defense Artillery user’s number one priority. Funding in FY16 was to provide for EMD Developmental Test phase activities, with a MS C decision scheduled for 4QFY16. Initial Operational Capability (IOC) was planned for FY18. But by early 2018, the AIAMD was still a top Army acquisition objective, but planned IOC had slipped considerably to FY22.
In April 2015, the Polish government chose a new, upgraded Patriot radar for its Wisla air defense missile requirement, in what was expected to be a $5-7 billion program that would lead to worldwide upgrades for other Patriot users (and a large Polish share in development and production of these new upgrades). Following a couple of years of conflict with Raytheon over costs, in November 2017 Poland opted instead for a reduced procurement of new Patriot systems, without the new GaN AESA antenna program. But costs had still risen, to $10.5 billion.
Instead, in 2017 the US Army initiated a new long-term plan for the Lower Tier Air & Missile Defense Sensor (LTAMDS) radar program for its Patriot systems, with EMD expected to begin in mid-2022.
Whatever happens in Poland, increased interest in ballistic missile defenses, especially in Asia, as well as new buys by European nations such as Romania and Sweden to counter a resurgent Russia, indicates a continuing strong potential market for PAC-3 systems and the MPQ-65 and follow-on radars. Patriot radar sales have picked up substantially in the past few years.
Our forecasts below include the US [Future] LTAMDS as well as speculative forecast lines for US and international upgrades and new international Patriot radars. All these forecasts are highly speculative, but we have included the Polish buy as going ahead, and both new production systems and much development funding for revitalized Patriot radars and systems.
On the other hand, Teal Group forecasts a considerable delay to fielding the complex, new AIAMD network system, and probably the LTAMDS as well, if it becomes a production program at all in the next decade.
Teal Group forecasts Patriot radar and C4I funding of between $900 million and $1.2 billion annually throughout our forecast period. One of the largest ground radar programs out there, and with most of this funding still uncontracted.