Raytheon/Aerojet Rocketdyne Ink Strategic Sourcing Contract

Raytheon Company (NYSE:RTN) has signed a new strategic sourcing agreement (“SSA”) with Aerojet Rocketdyne, a subsidiary of Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD) . The SSA is designed to assist the Pentagon in achieving the goals of its Better Buying Power 3.0 initiative.

Per the agreement, Aerojet Rocketdyne will supply propulsion systems and energetic products for Raytheon’s major weapon programs. The SSA also requires both the companies to mutually track affordability programs in the government sector through 2019.

According to Dr. Taylor W. Lawrence, President of Raytheon Missile Systems, this agreement marks an important step toward the formation of an association between industry partners. He added that taxpayers will be able to save significant amounts of money from the SSA, only if the industry and the U.S. government change traditional business procedures.

Eileen Drake, CEO and President of Aerojet Rocketdyne, stated: "This agreement expands our long-term relationship with Raytheon and is a direct result of our commitment to deliver quality products on schedule, while remaining firmly focused on affordability."

Raytheon and Aerojet Rocketdyne have collaborated on other projects in the past. One such project pertains to the U.S. Navy’s SM-3 Block IB missile system for throttling diver and attitude control system.

Based in Sacramento, CA, Aerojet Rocketdyne focuses on developing military, civil and commercial systems and components for the aerospace and defense industry. On the other hand, Raytheon is one of the largest aerospace and defense companies in the U.S. with a diversified line of military products.

Zacks Ranks & Key Picks

Both Raytheon and Aerojet Rocketdyne currently have a Zacks Rank #3 (Hold). Investors interested in the aerospace and defense equipment sector may consider BAE Systems (LON:BAES) plc BAESY and CAE Inc. (TO:CAE) . While BAE Systems sports a Zacks Rank #1 (Strong Buy), CAE carries a Zacks Rank #2 (Buy).

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