So it’s not that much off of our small UAS and it’s improving. We have several activities and strategies on improving that one of which of course of course is volume and lowering the cost inputs and allowing us to actually get more efficient in production, which we are making significant improvements and our team has managed that really well. The second thing is also in terms of improving the cost in terms of the Block 20 product. Switchblade Block 20 and the next-generation systems are actually easier to manufacturer, has less labor content and much more automation in terms of its manufacturing capability. So we’ve got several activities, which many of them have already paid some dividend. And they’ll continue to pay dividend going forward as well.
Pete Skibitski: Okay. That’s a great color. I appreciate it. Just one more from me. I just want to understand, guys, in terms of this big Switchblade, IDIQ, that’s coming down the pike, how will that product sort of and how that meets Army requirements? How would that differ from the LASSO contract for the Army, assuming you win, LASSO at some point, I don’t know what the timeframe is on that. But it seems like similar products, so I don’t know if LASSO is deemed as a mid-to long-term replacement for the, Switchblade IDIQ or what’s the right way to think about that?
Wahid Nawabi: Sure, Pete. So let me add some comments or color to this thing. Historically, U.S. Army has been the main contracting office for procuring Switchblades for U.S. DoD as well as for our allies and that remains still the case right now for the most part. And if you used to have a large contract that we bought under for multiple years, and since the demand has gone up so much higher, that contract has reached its ceiling. So now, the U.S. government basically buy these on individual UCAS or undefinitized contract action items — actions, which is laborious for both the government as well as for us. What they have started to do is to actually initiate another very large multi-year sole-source IDIQ contract for all Switchblade both for U.S. DoD as well as our allies.
So the LASSO contract and some of the other ones, until the large multi-year contract is in place will still be executed and awarded to us based on these UCAS but long term what we want is a larger contract vehicle that allows the U.S. government to buy for many customers, many opportunities and funding sources and fulfill those much easier. So we’re very pleased that the U.S. Army and U.S. DoD has taken that initiative. We’re actively working that it’s going to take some while because of the CR situation as well as with the bandwidth of U.S. DoD in terms of contracting resources, but we feel very good. We’ve already turned in our proposals. We’re negotiating the rate structures. And I think it’s going to be more of a matter of when versus if.
And when that goes into effect, then it actually allows a lot more volume to go through and a lot more procurement to happen much faster and from the timing. And so we’re looking forward to that, it will be very, very positive for us and for our customers.
Pete Skibitski: Okay. Thanks so much, guys.
Wahid Nawabi: Thank you.
Kevin McDonnell: Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Louie DiPalma from William Blair. Your question, please.
Louie DiPalma: Wahid, Kevin and Jonah, good afternoon.
Wahid Nawabi: Good afternoon, Louie.
Jonah Teeter-Balin: Good afternoon, Louie.
Kevin McDonnell: Good afternoon.
Louie DiPalma: I’m following up on several of the recent questions. You mentioned the Army announcing that they awarded AeroVironment 100 LASSO systems. Is — are those 100 systems already in backlog? And what’s the general expected timeline for the LASSO program in terms of Phase 1 and subsequent phases?
Wahid Nawabi: Sure. So Louie that particular contract award has two very positive aspects to it and that’s why I highlighted it. Number one, it is the first initial tranche of the LASSO program record potentially, which puts us in a very, very good position. So eventually as you know these programs will be completed, but to be already selected on the first phase and have product go into the U.S. Army for testing and fielding is very, very positive. Secondly that order is not in our backlog. So while our Switchblade and Loitering Munitions business backlog is pretty healthy, we — many of these opportunities that I mentioned on the — on my comments is not reflected on our current backlog. All of these opportunities are additional orders and contracts that we expect to book in the next six to 12 months.
And in fact that demand continues to increase rather than decrease in terms of its space as well as the topline. So our pipeline and our portfolio looks very robust for Switchblade both 300 and 600. And domestically, we’ve got several programs, internationally we’ve got lots of countries. And we’re also working on many other platforms to integrate Switchblade onto such as Humvees, the Abrams, and [indiscernible] et cetera, et cetera. So, all in all, we’ve got a lot more upside on our Switchblade product lines over the next six months — six to 12 months in terms of orders.
Louie DiPalma: Great. And I think you and Kevin both mentioned that the second half of the year should be heavy in terms of both Switchblade 300 and Switchblade 600. And will Switchblade 600s also be shipped to those five international customers in the second half or some of those five international customers?
Wahid Nawabi: The answer is yes, Louie. Many of those international customers, I can’t specifically name any of them because of the respect and confidentiality for customers. But vast majority, if not all of those customers desire and have requested both Switchblade 300 and 600. And same is true for the supplemental budget that is in front of Congress for Ukraine, the $100 billion plus budget item, the supplemental package that’s in front of Congress that is for Israel, Ukraine and potentially Taiwan. There are line item dollars for both Switchblade 300 and 600 for those three countries. And so, we feel pretty strong that long term since Switchblade 600 is a fairly newer product in terms of its life in the market is going to be equally as large of a product and revenue generator for us as a 300. And obviously the selling price of the 600 is significantly higher, because it’s a much bigger Loitering Munition.
