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Raytheon Awarded Phalanx Performance Based Logistics Contract Valued at Nearly $170 Million

LOUISVILLE, Ky., Feb. 28, 2007 /PRNewswire/ -- Raytheon Company (NYSE: RTN) has been awarded a five-year, $169.9 million Performance Based Logistics contract to manage the spare parts for the U.S. Navy's Phalanx Close-In Weapon System.

More than 1,100 part numbers amounting to more than 30,000 individual Phalanx parts are warehoused in Louisville where, for a firm-fixed-price, Raytheon, in partnership with United Parcel Service Supply Chain Solutions, guarantees delivery of spares to drop points within an agreed-to time frame.

"Reducing the operational support costs of the fleet is essential to our commitment to the Navy's vision of acquisition reform and reduction of infrastructure," said Frank Wyatt, vice president for Raytheon's Naval Weapon Systems in Tucson, Ariz. "The Phalanx logistics contract success story aptly demonstrates how an aggressively implemented Mission Support strategy can breathe new life into a mature weapons system. This agreement is being used throughout Raytheon as an example of what we can do to support our customers."

Key elements to the success of the Phalanx support contract are engineering, distribution, depot operations and logistics management. The distribution and management functions allow for worldwide delivery using the best commercial carrier available, while maintaining process control through in-transit tracking. This process also allows for retail and wholesale spares modeling, spares procurement and, perhaps most importantly, inventory management. The provisions and benefits of the contract apply to both the U. S. Navy and the 24 international navies that have Phalanx in their inventories.

"The partnership with United Parcel Service, developed through the previous Phalanx logistics contract, has greatly improved inventory accuracy," said Wyatt. "Currently, Phalanx inventory accuracy stands at 99.9 percent resulting in a substantial increase in supply availability and a reduced wait time for the sailors responsible for maintaining the Phalanx systems. Future cost savings and improved responsiveness can be anticipated by reducing parts demands through engineering redesign of selected high-demand, high-cost parts."

Raytheon Company, with 2006 sales of $20.3 billion, is an industry leader in defense and government electronics, space, information technology, technical services, and business and special mission aircraft. With headquarters in Waltham, Mass., Raytheon employs more than 80,000 people worldwide.

Note to editors:

Phalanx is a rapid-fire, computer-controlled radar and 20-mm Gatling-gun system. The Block 1B, the most advanced system, provides unequalled capabilities in near-shore, littoral environments. It contains a fully integrated radar-infrared surveillance and tracking sensor suite, which provides for automatic or manual acquisition and track of enemy threats. This capability coupled with the firepower of the six optimized gun barrels guarantees protection of crews and their ships against an increased number of threats. More than 895 Phalanx systems have been built and deployed in the navies of 22 nations.

John Eagles
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