BAE Systems Inc.

BAE Systems Inc. (formerly BAE Systems North America) is an American subsidiary of British multinational defense, security, and aerospace company BAE Systems plc. The American subsidiary operates under a Special Security Agreement which allows it to work on some of the most sensitive United States defense programs despite its foreign ownership. It is incorporated in Delaware. It employs approximately 35,000 workers within U.S. borders and several thousand more in Israel, South Africa, Sweden and the United Kingdom. Major business lines of BAE Systems Inc. include electronic warfare, sensing and communications equipment; armored vehicles, artillery systems; naval guns and naval ship repair; and cybersecurity and intelligence services.

Generating annual sales nearing $13.6 billion, BAE Systems Inc. contributes almost half of the parent company's global revenues and is typically ranked among the Pentagon's top-10 suppliers. It operates under a Special Security Agreement with a separate board of directors from the London-based parent to assure the protection of sensitive information concerning the U.S. programs in which it is engaged. Because it consists largely of legacy American enterprises, BAE Systems Inc. has more involvement in such programs than any other foreign-owned company.

BAE Systems Inc. is led by president and chief executive officer Tom Arseneault, and is headquartered in Falls Church, Virginia. It maintains operating locations in 38 states, with especially large concentrations in the Northeastern and Southeastern regions of the U.S. The enterprise holds over 2,000 patents and is a dominant player in many of the markets it addresses. For example, it builds the electronic-warfare systems for the tri-service F-35 fighter; it produces all of the vehicles in U.S. Army's Armored Brigade Combat Teams except the Abrams tank; and it is the biggest provider of ship repair services to the US Navy.

The company was created on November 30, 1999 through the merging of Marconi Electronic Systems (MES) and British Aerospace (BAe) to form BAE Systems. Their respective subsidiaries in the USA, Marconi North America and British Aerospace North America, were similarly merged to form BAE Systems North America.

BAE Systems' 2003 Annual Report stated "in recent years BAE Systems has undergone a... transformation from a UK-based aircraft manufacturer to a broadly-based systems business. Through this transformation the company has achieved a more balanced portfolio and geographic spread."

BAE Systems North America was renamed BAE Systems Inc. in 2005 following a major reorganization of BAE Systems plc as a result of the SELEX Sistemi Integrati and United Defense Industries transactions.

BAE has described the rationale for expansion in the US; "[it] is by far the largest defense market with spend running close to twice that of the Western European nations combined. Importantly, US investment in research and development is significantly higher than in Western Europe." When Dick Olver was appointed Chairman in July 2004 he ordered a review of the company's businesses which ruled out further European acquisitions or joint ventures and confirmed a "strategic bias" for expansion and investment in the U.S.

In 1999, the most significant part of the newly created BAE Systems North America was Tracor, which was acquired after its sale to the company's subsidiary, Marconi North America, in 1998. These two companies generated $2.5 billion in sales to the US Department of Defense in the same year. Since 1999, almost all of BAE Systems' growth has been concentrated in the U.S. BAE Systems North America has grown to the point where its sales to the U.S. Department of Defense have surpassed those of its parent to the UK Ministry of Defence. BAE Systems is now by far the largest foreign investor in the US defense industry. With BAE's comprehensive military agreement with the US government and the political and military ties that exist between the US and the UK, BAE Systems has faced little opposition to acquisitions of important US defense contractors. In April 2000, BAE purchased Lockheed Martin Control Systems (LMCS), a manufacturer of electronic controls for aircraft, space vehicles and the transportation industry for US$510 million. LMCS was renamed BAE Systems Platform Solutions. In November 2000 BAE Systems purchased Lockheed Martin Aerospace Electronic Systems, a defense systems company which encompassed Sanders, Fairchild Systems and Lockheed Martin Space Electronics & Communications. Following an internal reorganization the division became BAE Systems Electronics & Integrated Solutions (E&IS). This acquisition was described by John Hamre, CEO of the Center for Strategic and International Studies and former Deputy Secretary of Defense, as "precedent setting" given the advanced and classified nature of many of that company's products.