Defense Procurement News

The story out of Canada is that the contract to buy 28 H-92 aircraft from SAC is sliding to the right. There are also rumors of cost increases. The Canadian government is threatening to cancel the contract if delays and cost increases are true. Normally for a contract like this to buy an established system starts experiencing slips or cost growth there are usually requirement changes or the contractor didn’t really provide what the customer desired. There is no word yet on what has happened. It may be that Sikorsky was just a little aggressive in their schedule.

In response to this GAO report a while back Congress had some hearings to bash DoD acquisition programs. The article is here. The title is a little unfair in that “wastes” is a strong word. Few programs are terminated or canceled outright and those that do usually have some technology spill over. Developing, testing and producing major weapon and IT systems is hard. The system often does underestimate time and costs at the beginning, but it takes only one failed test to blow a schedule and millions of dollars. This is especially true of missile systems where your test assets are expensive enough and get expended in the test. Software development is often much more complicated and costly then originally thought, even though DoD has several decades of experience in this kind of matters. That doesn’t mean there is not room for improvement, but the only way to severely reduce time and money is to allow only incremental steps in capability. It is the never ending paradigm of weapon acquisition.

Six companies submitted bids for India’s new fighter acquisition. See a story here. As expected both Boeing and Lockheed submitted bids as well as MiG, SAAB, Aerospatiale and the Eurofighter Typhoon. This goal is to narrow the competition to two or three of the proposals and then choose a winner with first aircraft due in 2011.  This means that SAAB has bid on this and the Norwegian buy in less then a week.

Lockheed Martin and SAAB submitted bids for Norway’s new fighter. See the article here. Either the F-35 JSF or the Gripen will replace the existing force of F-16 aircraft. It will be one of the largest contracts Norway has awarded due to the expense of the aircraft. A decision will not be made until the end of the calendar year.

At the bottom of this article about the leak of a US Air Force meeting that determined Boeing is not likely to win the protest former DoD Acquisition Head Jacques Gansler is described as saying overturning the KC-45 award on purely political grounds would be a disaster. I would have to agree. Not only does it set a terrible precedent for future contracts, but it would dissuade European companies from bidding on future work. Due to the integration and consolidation in the defense industry future contracts will only see more bids by non-US companies. EADS, BAE, Augusta Westland and so on provide in many cases the only competition for some hardware, and it gets even more difficult with the mingling of these companies and their American subsidiaries.

The Defense Information Systems Agency (DISA) awarded their omnibus contract. See the story here. 12 companies qualified for the up to $12 B contract. The contract is a 5 year plus 5 option years. By qualifying for this type of contract Federal agencies, primarily related to DoD, can buy services, hardware and software from the various companies.

Australia had being going back and forth on wanting the F-22 instead of the JSF. China, I am sure, has a lot to do with this. According to this story, the decision has been made to go with the F-35. America has a law preventing the export of the F-22, but Australia had asked for it anyway. There was some desire from the USAF to sell it, as every FMS sale lowers the price and the Air Force would like some more. The only way that is going to happen is to get it cheaper. So it will have to be seen if any sales overseas are made. Certainly Australia and the UK would be the prime customers for the F-22.

Raytheon posted a solid quarter with profits rising 15%. See the press release here. Much of this was due to the work on PATRIOT and other missile systems, including significant foreign orders. This means that the first two large defense contractors to report, Boeing and Raytheon, have done very well recently. This should continue as long as the defense budgets remain large which can be expected for at least the next two years.

Despite losing the KC-45 contract, and as we previously discussed here, Boeing announced solid earnings and projections this week. See the story here. Of course the key to all of this is the 787 Dreamliner. This civil aircraft once it begins deliveries will be the key to Boeing’s performance over the next several years.

There has been rumors that EADS would move to acquire a North American company soon, with CAE being the most talked about. EADS did buy a company, PlantCML, that manufactures communications systems primarily for emergency services. It does have some ties with their existing products, but primarily EADS will use PlantCML to market their products in the US. Previously PlantCML had been owned by a investment company.

Boeing was awarded a $3.8 M contract by DARPA to begin development of a ultra-high endurance unmanned aircraft. Boeing teamed with a British company, QinetiQ Ltd., for the program. The Vulture will be an aircraft that can loiter for years and carry a payload. It would then be activated when necessary. QinetiQ had been working on solar powered aircraft under other contracts that might have applications to this mission.

As reported yesterday the BAMS DAB was held. The Navy awarded the contract to Northrop Grumman for a version of the Global Hawk long range, large UAV. See a story here. Boeing and Lockheed Martin were the losing bidders. On top of the KC-45 contract this can be seen as a blow to Boeing by Northrop Grumman.   Read the rest of this entry »

As a recent GAO report highlighted the Department of Defense invests a great deal in Science, Engineering, Technical and Analysis (SETA) contracts. These contracts, and contractors, are most known as working with the military acquisition offices to provide necessary support. There are also SETA contracts with IT, testing, engineering, safety and pretty much any area that the DoD and Services are involved in. It is a large business employing thousands.

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According to this article the Navy had a successful DAB for the Broad Area Maritime Surveillance (BAMS) program. The system was approved to go into System Design and Development (SDD) phase and a prime contractor will be chosen to perform that work. Once that phase is completed then Low Rate Initial Production (LRIP) can start. The BAMS is for a unmanned surveillance aircraft to replace the P-3 Orion in some of its missions. The Navy is also pursuing the P-8 aircraft based on the Boeing 737 to replace the P-3 in its Anti-Submarine Warfare role. Boeing, Northrop Grumman and Lockheed Martin are bidders.

In this story Mr. Young, the Assistant Secretary of Defense of Acquisition, Technology and Logistics expresses concern over the recent amount of protests with large systems. Part of the story is letting Boeing know not to focus on the recent lost KC-45 award, but to look to future competitions. He also generally agreed with the recent GAO report that systems are over cost and behind schedule, but that is to be expected.   Read the rest of this entry »

The Malaysian government ordered from RaytheonThalesSystems an upgraded air defense surveillance and control system for the country. See the story here. The system will be based on a central command and control facility designed and built by Raytheon for the US and Canada. Thales will make a long range radar in France to provide surveillance and data to the command center. No details on the size of the contract were announced.

Among the many parts of the Future Combat System (FCS) is a variety of ground and air unmanned vehicles. iRobot won a $60 M contract from the Army to provide parts of these systems. See the press release here. FCS will have a variety of vehicles, weapon systems, C4I systems and some unmanned systems to provide reconnaissance and intelligence collection. The Army has had success in Iraq and Afghanistan with small systems providing tactical intelligence to units, so this incorporation in FCS is a continued evolution of that effort.