As the Pentagon relies more heavily on UAVs, UAV makers benefit

Unmanned U.S. aircraft have not only transformed the battlefields in Iraq and Afghanistan, but now are altering the defense-industry landscape, as well.

The White House’s defense-budget request for fiscal 2010 includes approximately $3.5 billion for unmanned aerial vehicles. As demand grows, the Pentagon increasingly is relying on smaller suppliers that have developed the relatively inexpensive and effective weapons systems.

Wall Street Journal’s Augustus Cole writes that companies such as General Atomics Aeronautical Systems Inc., the maker of Predator drones, hope to hold their edge over established, deep-pocketed contractors in what has become one of the military’s most critical technologies.

They also hope to become more established within the defense industry as Defense Secretary Robert Gates pushes the Pentagon and contractors to furnish troops with better intelligence and real-time surveillance.

UAVs are smaller and have less-extensive electronics systems than piloted military aircraft and do not require as much fuel, big runways or major logistics support. UAV pilots also do not require as much training as fighter jocks. This lowers purchase and operating costs, as well as the risk to personnel. But for many missions, such as keeping enemy aircraft at bay, today’s UAVs still are no match for a manned fighter.

Cole writes that in Afghanistan, unmanned aerial vehicles routinely provide high-quality images that were previously available only from satellites or highflying spy planes. Demand has increased in particular for General Atomics’ biggest armed UAVs that not only can track targets, but can attack them as well.

According to Pentagon documents, about $1.3 billion in the 2010 budget is intended to buy the Predator’s better-armed successors, the Reaper and the Sky Warrior. That is enough to purchase 60 of the General Atomics aircraft for the Air Force and the Army.

By contrast, the Pentagon is seeking $10.43 billion to buy 30 of the military’s next-generation F-35 Lightning II fighter jet, which is still in development under a program led by Lockheed Martin Corp.

The largest defense contractors mostly have struggled to produce comparable combat-ready UAV technology and have turned to partnerships with and acquisitions of smaller companies.

The UAV industry, which has not undergone the consolidation that has occurred in the mainstream defense industry, “is like the aeronautical industry around World War II,” said Steven Sliwa, the president and chief executive of Insitu, a maker of unmanned aircraft that Boeing Co. acquired last year.

Lockheed Martin, the Pentagon’s biggest contractor by sales, recently tapped General Atomics to supply the