AAI unit gets 2 Pentagon contracts $750,000 award goes to division in running for $1.275 billion pact

ESI is one of 3 finalists

Navy also gives firm $7.6 million to move test equipment to Md.

February 11, 1997|By Greg Schneider | Greg Schneider,SUN STAFF

A subsidiary of Hunt Valley's AAI Corp. has won a pair of defense contracts that the peace-battered company hopes will lead to better times.

The Navy awarded $7.6 million to AAI's Engineering and Maintenance Services Inc. subsidiary to move equipment to the Patuxent River Naval Air Station from a testing operation being shut down in New Jersey.

And the Air Force selected the subsidiary, known as ESI, as one of three teams to compete for a potentially enormous contract ZTC managing depot operations at McClellan Air Force Base near Sacramento, Calif.

That project could be worth up to $250 million a year for five years for the team that wins the job in January. By comparison, AAI's total annual revenues are about $170 million.

"The potential here is tremendous," said Paul Guse, an AAI spokesman.

AAI's partners in the effort include Tracor Flight Systems Inc. of Texas and GEC-Marconi Avionics Inc. of Georgia. The team has won a $750,000 contract to study the operations at McClellan for the next seven months and put together a management plan.

They will compete for the work against a team led by Boeing Co. of Seattle -- the world's biggest aerospace company, whose pending merger with McDonnell Douglas would give it a work force of 200,000 employees, or about 200 times the size of AAI's force of 1,000.

"It is a formidable opponent," said AAI's John Merry, the corporate vice president designated to head the McClellan effort.

Another company seeking the work, PSI Repair Services Inc. of Detroit, was eliminated.

AAI and Boeing are competing with an Air Force team from Ogden Air Logistics Center at Hill Air Force Base in Utah.

McClellan is one of two Air Force depots that the Base Realignment and Closure Commission recommended closing. The other depot is in San Antonio.

A depot is responsible for periodic maintenance of particular aircraft. At McClellan, workers care for A-10 attack jets and KC-135 tankers. The two companies and the Air Force team are bidding to take over management of the maintenance operations.

The Clinton administration elected to privatize the base's operations to preserve about 2,200 jobs that would have been cut if the base closed. It allowed an Air Force team to bid on the work in its search for the cheapest way to perform the maintenance.

The $7.6 million contract that AAI won yesterday for moving equipment to Patuxent River is stems from military downsizing and privatization.

The Navy is consolidating its propulsion testing program by transferring equipment from the Naval Air Warfare Center in Trenton, N.J., and opted to hire a private company to handle the move.

The ESI subsidiary of AAI has performed such work before.

Merry, the AAI vice president, said privatization is beginning to offer a wealth of new opportunities for the company. AAI employed 3,500 workers in Hunt Valley just 10 years ago, but has seen its payroll shrink to less than a third of that as defense spending shrank with the end of the Cold War.

Shares in United Industrial Corp., AAI's New York-based parent company, fell 12.5 cents yesterday to close at $7.25.

Pub Date: 2/11/97

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