Ceramic Industry News

Ceradyne Receives $2.37 Billion Body Armor Contract (posted 10/6/08)

Ceradyne, Inc. has received an indefinite delivery/indefinite quantity (ID/IQ) contract for both its XSAPI and ESAPI personal ceramic armor plates from the U.S. Army RDECOM, Aberdeen Proving Grounds, Md. The total amount of the contract is approximately $2.37 billion, and it covers a period of approximately five years. Simultaneously, Ceradyne received the first delivery order for first article testing (FAT), valued at $943,000 and scheduled for shipment by November 2008. This initial FAT order is for both XSAPI and ESAPI armor plates.

The ID/IQ contract is for both XSAPI and ESAPI armor plates (front and back). The U.S. Army can order one or both types of plates over the five-year life of the contract. The contract provides for a minimum of 500 sets per year to a maximum of 240,000 set per year. Ceradyne’s practice with all ID/IQ contracts is to record as backlog only the portion of the contract that has firm delivery orders issued against the total contract. In this particular case, Ceradyne initially will only book a delivery order for $943,000 for FAT plates.

“This ID/IQ contract is by far the largest body armor contract Ceradyne has ever received,” said David P. Reed, president of North American Operations. “We are very pleased to receive this contract and believe that the government’s decision was based in good part on the performance of our actual XSAPI and ESAPI plates, which were submitted in response to the Army’s original Request for Proposal, as well as our past performance in body armor procurements relating to both delivery and quality. We also believe that the company’s investment in our Lexington, Ky., and Irvine, Calif., manufacturing facilities will allow us to meet any quantity demand against this contract, including the potential maximum quantities.

“Ceradyne’s vertical integration strategy, from beginning with manmade raw materials, to ceramic fabrication, to armor assembly and final testing, allows us to control all quality aspects, as well as making our company’s product competitive. We strongly believe the XSAPI plate is especially required in the field to defeat next generation armor piercing projectiles and protect American fighting men and women’s lives. We expect that once the initial FAT plates are evaluated there will be a series of volume production delivery orders issued to us against the total $2.37 billion ID/IQ contract.

“This type of ID/IQ award gives the government a wide range of flexibility as to what it orders and in what timeframe it requires delivery. As I stated above, we believe the fielding of XSAPI is urgent. As we have done in the past, we will continue to announce delivery orders that are issued and provide longer range visibility as we receive it from the government.”

Additional information is available at www.ceradyne.com.

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