Army To Stop Buying AM General’s HUMVEE Vehicles
Filed under: AM General, Business Line, Companies, Events, Federal Budget Process, Services, U.S. Army, logistics, production program
In their 2011 budget request the Army reports that 2011 will be the last year of procurement for the ubiquitous AM General HUMVEE light truck. This four wheeled vehicle replace the venerable Jeep in U.S. military service in 1984. The HUMVEE will still be available for purchase by other U.S. services and for sales overseas but the Army states it has met its Acquisition Objective. There will also be contracts to maintain the existing fleet of vehicles.
The Army though does provide about half the market for the vehicle so the loss will be a blow to AM General. There is a new program in development called the Joint Light Tactical Vehicle (JLTV) that will when complete start replacing the HUMVEE. The U.S. is also investing in thousands of new trucks. Losses in Iraq and Afghanistan have been substantial but one of the reasons HUMVEE production is ending is recently there have been less damaged or destroyed then estimated.
M&A Activity In Defense To Grow?
It had been expected that Merger & Acquisition (M&A) activity would have increased over the last two years in the defense industry....Health IT Attracting Defense Contractors As Harris Buys Into It
Harris Corporation a well known defense contractor who primarily makes radios is moving into the health care IT business through acquisition of...BAE Continues To Build Armor Kits For Military Vehicles
Filed under: BAE Systems, Business Line, Companies, Contract Awards, Events, Services, U.S. Army, logistics, production program
Yesterday it was announced that BAE Systems won two different contracts to build armor kits for U.S. military vehicles. Due to the IED and mine threat in Iraq and Afghanistan the Army and Marines primarily have been developing extra armor and weapons for their different vehicles to maximize crew protection. BAE’s two contracts support the HIMARS mobile artillery as well as one for MRAP vehicles.
BAE Systems through its acquisition of Armor Holdings a few years ago made it well placed to get into this market. If the U.S. does begin winding down its operations in Iraq and Afghanistan though there will be little demand for further armor kits of these types and that market might dry up.
BAE Systems Leads To Pentagon Complaints On Protests
At a recent press availability Ashton Carter the Defense Department's lead acquisition official stated he did not want to see "frivolous" protests...Safran completes majority stake purchase
PARIS, Sept. 8 (UPI) -- Paris-based high-technology defense contractor Safran announced it has completed its acquisition of a majority stake in GE Homeland Protection.
GD completes acquisition of Axsys
FAIRFAX, Va., Sept. 3 (UPI) -- U.S. company General Dynamics has completed its acquisition of electro-optical and infrared sensor systems developer Axsys Technologies Inc.
LM completes acquisition of Gyrocam
BETHESDA, Md., Sept. 1 (UPI) -- U.S. defense contractor Lockheed Martin announced it has completed its acquisition of surveillance technologies developer Gyrocam Systems.
Land Munition Solutions 2009 — Management – Affordability – Precision
Filed under: Business Line, Events, Industry Analysis, Press Releases, Trade Shows and Events, logistics, production program, training
Land Munition Solutions 2009 — Management – Affordability – Precision
In an age of Counter Insurgent operations and rapid technological change, land based munitions and their requirements must be continually reviewed for both their relevance and reliability. Whether it is the way we manage them at home, the method of their delivery to theatre and to training establishments or their eventual use; effective land munition solutions are critical for greater efficiencies throughout their entire life cycle including their development, testing and fielding in operational theatres.
Many nations face challenges in their ability to manage their ammunition effectively including the types, age, amount and quality of their current stocks. This conference will look at what efficiencies can be made and what effect this has on keeping munitions safe, relevant and ready for distribution and use by the warfighter. At this conference you will learn:
• What effect have current operations had on our munitions acquisition and management strategy?
• What skills must we keep updated for an effective industrial base?
• What are the urgent operational requirements and what is affordable?
• What are we doing to make munitions safer for their handlers?
• How is the target set changing in operational theatres?
• What future solutions will increase lethality yet reduce collateral damage?
Land Munition Solutions will enable delegates to meet with those at the forefront of munitions development; top level technical, procurement and operational military personnel.
The format of the event – roundtable discussions, extended Q&A time, panel sessions and networking opportunities – will encourage participants to share knowledge and experience.
EADS Sells More A330 Tankers To Saudi Arabia
Filed under: Australia, Boeing, Business Line, Companies, Congress, Contract Additions, Countries, Department of Defense, EADS, England, Events, Japan, Military Aviation, Northrop Grumman Corp., Services, U.S. Air Force, UAE, United States, commercial aviation, development program, logistics, production program
EADS announced today that Saudi Arabia had doubled their order for aerial tankers by buying three more A330 MRT aircraft. This means that the Kingdom will now have six of the advanced tankers. They along with the U.K., Australia and the U.A.E. have ordered the aircraft. As part of the buy of the new aircraft Saudi Arabia has ordered logistic and parts support for the tankers although no contract value was announced.
The big contract for military refueling aircraft is the new tanker for the United States Air Force (USAF). EADS and Northorp Grumman had won the contract for the KC-X last year only to see it overturned on a Boeing protest. Now the new Obama Administration and the USAF will try again with a completely new RFP. That contract would be for over one hundred aircraft and would dwarf previous orders. There is still discussion of possibly splitting the contract between the two suppliers with a goal of maximizing the number of aircraft delivered in a short time. The USAF and Defense Department are against that as the two aircraft would require their own substantial support tail of parts, maintenance and training which would be quite expensive.
The A330 is a bigger aircraft then the 767 proposed by Boeing last time but requires larger airfields and more gas to fly a comparable mission. The bigger aircraft can carry more fuel for other aircraft so there has to be a balance struck there. It is definitely conceivable that the loser of the next contract will protest anyway so there may be further delays to the acquisition of the greatly needed capability.
U.S. And India’s Weapon Buying Relationship Moves Forward
Filed under: Boeing, Business Line, Companies, Contract Awards, Countries, Events, India, Military Aviation, Proposal, development program, production program
As part of her diplomatic mission to India Secretary of State Hillary Clinton discussed a new agreement between the countries that will facilitate sales of U.S. weapons. This “end user monitoring” will make it possible for the U.S. to make sure that the Indian government does not sell its technology to a third party or misuse it for their economic gain. This type of agreement is fairly common among countries and allows sales to be made with some confidence.
India has embarked on a major upgrade to its military through acquisition of foriegn sourced weapons. This is a change from the past when the South Asian country tried to develop its own advanced weapons and relied on the U.K. and Russia. The decision to buy American, European and advanced Israeli technology allows India to leap forward in capability. As part of these contracts significant offsets are required of the selling companies through investment in the Indian economy.
Despite Gates’ Proposed Reforms New Satellites to go Forward
Filed under: Business Line, Congress, Department of Defense, Events, Federal Budget Process, NGIA, Proposal, Satellites, Services, U.S. Air Force, development program, space
As Federal Computer Week writes the Obama administration has decided to go ahead and begin development of a new spy satellite. In the past these black space programs have been heavily criticized for not only cost and schedule growth but the fact that due to their secret nature that there is no public oversight. Part of the impetus for this system is the recent North Korean missile launch. For monitoring programs like this and the Iranian nuclear one satellites are the most efficient way of doing so. This system will also utilize commercial imagery systems that are available. Of interest an earlier attempt at upgrading the U.S. capability, the Future Imagery Architecture project, was not successful. Perhaps this program will be able to demonstrate that Secretary Gates has been able to reform some aspects of acquisition at the Pentagon.
USAF Wireless Communication Program Behind Schedule and Over Cost
Filed under: Business Line, Companies, Events, General Dynamics, IT, Restructuring, U.S. Air Force
It is not just large development and procurement programs that have schedule and cost problems. The DoD Inspector General recently reviewed an Air Force contract to update and expand the wireless communication capabilities on its facilities. Federal Computer Week reports that the contract is behind schedule and over cost. General Dynamics is the prime contractor on the project. As part of any contract or acquisition the government has to do a cost estimate and review the one and schedule provided by the bidder. Many times the schedule and cost turn out to be unrealistic or inaccurate. Part of that is every program is different and historical examples help but do not necessarily provide insight into the actual program. Other reasons are that the assumptions involved are overly optimistic or unrealistic. This is just a “small” contract worth about $140 million, so on bigger ones the missed estimates just get magnified even more.
SupplyCore Wins HUMVEE Parts Contract
Filed under: Business Line, Contract Awards, SupplyCore, U.S. Army, logistics
SupplyCore a company that has a history of supporting the Defense Logistics Agency (DLA) was one of the companies awarded a contract to manage and provide parts for a variety of U.S. Army vehicles. The Rockford Register Star reports that the contract could have a value of over $4 billion for all companies involved as it provide parts for the ubiquitous HUMVEE as well as trucks and the M2 Bradley. SupplyCore had recently purchased the Manufacturing Alliance of the Rock River Valley to be able to provide parts for military vehicles. This acquisition has seemed to pay off with this contract win.
US Government takes a step to allow DRS purchase by Finmeccanica
Filed under: Acquisitions, DRS Technologies, Finemeccanica, IT, Italy
The US Government’s Committee on Foreign Investment approved the planned acquisition of DRS Technologies by Italian company Finmeccanica. The deal is worth over $5 B and is structured as a stock purchase at $81 or so a share. DRS traded today at just over $80. DRS had long been rumored as an attractive takeover target, and the purchase by a European company again highlights their desire to get into the US Defense market.
See a short article at NJ.com.
Cross posted at BNET.
Local paper touts defense industry as a way to cushion downturn in US economy
Filed under: BAE Systems, Congress, Federal Budget Process, logistics, production program
The Scranton Times-Tribune has an article discussing how the recent issues with the US economy will have less effect in their area due to the many defense contractors. They mostly support Tobyhanna Army Depot and provide services and products to the Army. The article discusses in detail the BAE expansion in the area where they make armor and gear for soldiers. BAE acquired the US company Armor Holdings last year and the plant is part of that acquisition. While the majority of these contracts are for things the US military needs, it is another example of the Defense budget being used by Congress as job programs. Members of Congress brag about how many dollars they bring back to their districts; and how their re-election is critical to maintain this type of work.
See the article for more.
Renewed helicopters for India
Filed under: HAL, India, Military Aviation, Proposal, development program, production program
India has decided to put out an RFP for light helicopters after all the back-and-forth. See an article here. As previously discussed the planned acquisition was canceled, then planned again, and now it will be for a reduced number than the last attempt. Now rather then going with a 100% foreign buy the contract will be split between a non-Indian company and HAL. One positive of this is that they plan to limit the tech transfer, requirements that recently have been seen as onerous, to only those for the support of the aircraft.
UAVs ordered by Special Operations
Filed under: Contract Awards, Heckler Koch, Military Aviation, US SOC, production program
The US Special Operations Command awarded a contract to buy small UAVs. See an article here. AeroVironment will provide their small Puma AE to the command. This illustrates that the USSOCOM is a separate entity within the DoD and can do its own acquisition. In the past they would have to rely on the main services to procure their equipment, but they now have their own development and procurement funds. The most recent key split between USSOCOM and the Army was the decision to go with a different rifle then the M4/M16. The Special Ops guys bout HK’s SCAR. For more on that see this.
Marines buy more radios
Filed under: Contract Awards, Harris Corporation, U.S. Marine Corps, U.S. Navy, production program
The US Navy awarded a contract to Harris Electronics to purchase tactical radios for the USMC. See an article here. The AN/PRC-117 radio order is worth about $118 M. Earlier the company had been awarded a $350 M contract for the radio. Harris has been eyed as an acquisition for a while, as reported here.
Various suitors view Harris for takeover
Filed under: Acquisitions, Harris Corporation, IT, production program
This article discusses the situation of Harris Corporation who makes radios for the US military and various civilian applications. There business has boomed over the last few years and their size and contracts have made them a target of the larger US and European defense contractors. Unfortunately the good performance of the company has driven the stock to an all time high making an acquisition very expensive. This is especially true of concerns that with the change in US administrations that there will be a falling off in the US Defense budget. Another concern is that Harris does work on several classified programs making it difficult for foreign companies, like EADS or BAE, to purchase them. Even if it wasn’t in such a time of Congress looking askance at these kinds of acquisitions, the security requirements might be too hard.
HASC to ask GAO to investigate protests
Filed under: Congress, Contract Awards, Editorial, Federal Budget Process, GAO, Protest
As part of their work on the defense budget the HASC is going to ask the GAO to investigate whether there are too many protests. See the story here. As we have previously discussed ad nauseum there is little disincentive for a losing contractor to protest. At the best they win, and the worst they lose but it takes little time and money to cut the necessary legal documents and fax them in. With the number of large contracts declining, and their worth growing, there will continue to be protests as the various contracts awarded. It has not just been for large development and procurement contracts, there have been protests of service ones as well. The GAO dismisses most of the protests as it takes a really big screw up by the acquisition and contract people to uphold them, but the delay the programs and cost the winner and the government time and money. Since the right to protest is pretty much part of Federal contract law it will be hard to change the number without changing that, unless the Congress wants to start punishing for frivolous protests. That is not common in American legal tradition, but we will see.
Finmeccanica follows through
Filed under: Acquisitions, Agusta Westland, Congress, DRS Technologies, Finemeccanica, IT, Italy, production program
Bump – Fresh off good financial reports for the quarter, EADS is now looking at DRS Technologies as well. See an article here. This makes it sound like DRS might be a good buy.
As rumored this weekend Finmeccanica bought DRS today. The deal is for around $5 B. See an article here. This is the biggest acquisition so far by an European company. DRS has been an attractive take over target for a few years, one of the reasons its stock was so high. If this deal can make it through the necessary regulatory and legal review it will be quite stunning. Prior to this BAE and EADS had been doing smaller acquisitions, under a $1B. In today’s political environment due to the KC-45 deal and it being an election year it should be interesting to see Congress’s reaction.
GPS III contract award expected by the 16th
Filed under: Boeing, Contract Awards, Lockheed Martin, Satellites, U.S. Air Force, space
According to this article the Air Force is expected to award the GPS III contract this week following a successful DAB a few weeks ago. Boeing and Lockheed Martin are in the running, and some are inevitably expecting a protest by the loser. Lockheed Martin won most of the GPS II work and Boeing did some of the original satellites. One hopes that the USAF acquisition people have their ducks in a row on this one as there last two major awards have been protested, and one, CSAR-X, successfully.
Looking to buy DRS
Filed under: Acquisitions, Finemeccanica, Italy, SETA, production program
This article discusses the idea that Finmeccanica, the Italian defense conglomerate, is looking at DRS Technology for an American acquisition. Like EADS and BAE the Italian company has been expanding its presence in the US. Its helicopter arm, Augusta Westland, won the VH-71 Presidential helicopter teamed with Lockheed Martin and is also trying to win the CSAR-X recompete post-protest. DRS which makes advanced sensors and electronics while providing SETA services has long been an attractive take over target. It’s stock though has done very well recently and for Finmeccanica to buy it would require a substantial investment. Read more
Nice idea that may prove hard to carry out
Filed under: Congress, Department of Defense, Federal Budget Process, development program, production program
According to this story DoD is going to try out an idea where acquisition programs are given a stable funding profile for several years. The idea is to see if the program will deliver quicker and cheaper if this is true. I assume by this they mean that the Services and OSD will be prevented from taking their money each year for higher priorities. This can be done in the outyears during the budget buildup. It can also be done in the execution year by reprogramming the money away. RDT&E programs can easily have problems executing their money due to program delays or engineering issues. This makes them prime targets to give up money for higher priorities every year. Read more
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