The Ministry of Defense Procurement and Production Directorate (PPD) has selected Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) as the chief contractor for construction of its computer centers. Market sources estimated the investment in the centers at NIS 600 million. IAI's subcontractors in the venture are TSG, IAI's subsidiary, and US company Leidos, formerly a division in weapons manufacturer Lockheed Martin.
TSG, formerly the military division in Ness Technologies, was acquired in 2014 for $50 million in equal shares by IAI and Formula Systems Ltd. (Nasdaq: FORTY; TASE: FORT). The group headed by IAI will lead a program in the coming years in which dozens of computer centers used by all IDF units will be consolidated into three large centers, two of which will be in the south. With the construction of the new centers, the group will also operate and maintain them for 10 years, with an option for extension for several additional years.
Six Israel and international groups competed over the past year for the franchise to build the centers, including Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), Rafael Advanced Defense Systems Ltd., Motorola, the Bynet group, Bezeq International Ltd., ECI Telecom Ltd., IBM, and EMC.
The Ministry of Defense has made it clear in the past that because of the sensitivity and complexity of the venture, it would allow only Israeli companies to take part in the tender, and the Israeli companies would be allowed to use foreign companies as subcontractors. "Together with a series of procurement actions related to computing that we recently completed, with the selection of the chief computing contractor, the IDF will be able to perform important computing tasks in the coming years, including in the technological-operational aspect and in carrying out the national project of moving IDF camps to the Negev," PPD head Col. (res.) Avi Dadon said today.
Published by Globes [online], Israel Business News - www.globes-online.com - on June 26, 2017
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