US Air Force looks to replace C-130E aircraft
Filed under: Federal Budget Process, Lockheed Martin, Military Aviation, Proposal, U.S. Air Force, U.S. Marine Corps, production program
The US Air Force has begun talks with Lockheed Martin on executing a multi-year procurement contract for C-130J aircraft. These would replace the Air Forces and other Service’s current inventory of C-130E Hercules. The contract could be for up to 110 aircraft and have a value over time of $6 B. Multi-year procurements must be authorized by Congress and they are typically done for aircraft and other large systems in order to save money over time.
For more see The Guardian’s Business Feed.
Representative Asks For Tanker Bid Delay
Filed under: Contract Awards, EADS, Military Aviation, Pratt & Whitney, U.S. Air Force
U.S. Rep. Joseph D. Courtney, from Connecticut, has written to Secretary of Defense Robert Gates to ask him to delay the renewed bidding for the $35 billion aerial refueling tanker contract. “It is important to get this decision right,” Courtney said, because it is “one of the most critical components of our national security.” Courtney is particularly concerned that there be adequate time for the RFP “to be vetted by the competitors and evaluated by Congress.”
The Pentagon is committed to a quick timetable, but Courtney argues that such an “unnecessarily aggressive timeline for a final decision, will once again tilt the outcome” in favor of EADS. Courtney is very interested in the process, because the Boeing tanker’s engines would be made by East Hartford-based Pratt & Whitney.
More details on Courtney’s letter can be found at Hartford Business.
ARH in jeopardy
Filed under: Bell, Congress, Department of Defense, Federal Budget Process, Military Aviation, Restructuring, U.S. Army, development program
The soaring costs of the ARH program have caused a Nunn-McCurdy Cost Breach. See a story here. The 40% increase in unit cost has caused the Army and DoD to rethink, again, proceeding with the contract. Nunn-McCurdy cost breaches were established in the 80’s as part of the overall reform of Congressional monitoring of programs. Read more
BAE grows in the US
Filed under: Acquisitions, Arizona, BAE Systems, Contract Additions, Contract Awards, Federal Budget Process, Military Aviation, development program, logistics, production program
This article discusses the effect BAE has had on Phoenix, AZ. It also illustrates how the non-US company has grown through the acquisitions of US companies and has gained more and more US defene business. In Phoenix alone the number of BAE employees has tripled in the last five years or so, and the company has been buying facilities and companies. The article also shows how some in Congress feel a British company is better than a joint German and French, making it easier for BAE to continue to gain work in the US.
Boeing’s protest sustained by the GAO
Filed under: Boeing, Contract Awards, EADS, GAO, Military Aviation, Northrop Grumman Corp., Protest, U.S. Air Force, commercial aviation, development program, logistics, production program
The GAO ruled today in Boeing’s favor on the KC-45 protest. They decided that the Air Force failed to properly apply its source selection criteria and did not calculate some of Boeing’s costs correctly. See a story here. The GAO recommended that the competition be reopened. This is what happened with the CSAR-X contract, ironically enough won by Boeing but now back in source selection. The Air Force is not required to follow the GAO’s recommendation, but if it does not Boeing is sure to go to the Court of Appeals and Congress could make it very difficult for the Air Force to execute the contract.
GAO to decide KC-45 protest soon
Filed under: Boeing, Congress, Contract Awards, EADS, Federal Budget Process, GAO, Military Aviation, Northrop Grumman Corp., Protest, U.S. Air Force, commercial aviation, logistics, production program
This article is a good summary of the KC-45 contract. The GAO is supposed to rule on Boeing’s protest within the next two weeks. One would have to bet that they will disallow the protest. There is a chance though, that somehow the Air Force screwed up in how they applied the criteria. Then the process would be reopened again, like the CSAR-X. The article also raises the issue of the US Presidential election. John McCain was the key person that got Boeing in trouble over the attempted lease deal five years ago, and Senator Obama represents the state where Boeing now has its headquarters. Congress has also held off weighing in while the protest wound its course. It is best to think that this is not over yet.
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.
SecDef says KC-45 meddling by Congress may provoke retaliation
Filed under: Boeing, Contract Awards, EADS, GAO, Military Aviation, Northrop Grumman Corp., Protest, U.S. Air Force, logistics
According to this story during testimony about the FY09 Defense budget Secretary of Defense Gates warned that adding a requirement to contract awards for US jobs would only provoke retaliation by US allies in Europe and Asia. Currently Federal procurement law does not have increasing or protecting US jobs as a consideration for evaluating and awarding contracts. Congress can certainly add that to the law, and some have mooted they will, but it would come at a price. The US defense industry is now dependent on non-US companies for many parts and products. US allies are also dependent on US companies for a large amount of their systems as they do not have the capability to produce them. Any attempt by the US government to prevent foreign companies from competing could backfire and reduce the market for US companies. As we have stated here many times with the consilidation in the US industry in the Nineties it is hard to get decent competition for these kind of procurements. Only Boeing, EADS and Russian companies could have bid on it; McDonald Douglas is long gone, so Congress needed to expect this kind of situation.
M4 criticism continues
Filed under: Colt, Contract Awards, U.S. Army, U.S. Marine Corps, production program
It is not news that the Colt M4 carbine has received a lot of criticism for its performance in Iraq and Afghanistan. This article summarizes a great deal of it. It turns out that the M4, originally a shortened M16 for use by armor and air crew, does not do well in dusty environments. The Special Forces have moved to an HK product, called the SCAR. Many in Congress and the Army have lobbied for a the regular Army and USMC to buy the SCAR as well. The Army did work on a new rifle, the XM-8, that was canceled recently due to problems with the program. Because this is a key piece of equipment for the military expect to see more about this and further efforts to broaden the small arms inventory.
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, Congress, DRS Technologies, Finemeccanica, IT, Italy, augusta westland, 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.
Congress begins to debate KC-45 FY09 funding
Filed under: Boeing, Congress, Contract Awards, Department of Defense, EADS, Federal Budget Process, GAO, Northrop Grumman Corp., Protest, U.S. Air Force, commercial aviation, logistics
As part of the beginning of the mark-up of the FY09 President’s budget by the various House and Senate committees Congress is beginning to debate the future of the KC-45. According to this article, Congressman Young from Florida has suggested that the US Air Force split award the tanker contract. This would mean half goes to EADS, the winner, and half to Boeing. While this may be a politically judicious solution it has many impracticable aspects. First the cost increase to the total program would be significant as there would now be two sources of parts and two training systems set-up for the different aircraft. Second the Air Force would have to revisit the whole concept of basing and deployment as you would now have a mix of larger and smaller aircraft. The basis for the whole program is a capability requirement that feeds from larger OSD requirements to support the actual warfight. The split might mean more then the current planned buy would be necessary - another cost increase. The DoD and USAF are taking a position of waiting for the GAO ruling in about 40 days before anything is decided. Congress would be advised to do the same.
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
Congress states the obvious
Filed under: Congress, Department of Defense, Federal Budget Process, development program, production program
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.
OSD expresses concern over protests
Filed under: Boeing, Contract Awards, Department of Defense, EADS, Federal Budget Process, Northrop Grumman Corp., Protest, U.S. Air Force, commercial aviation, development program, logistics
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 more
JSF costs levelling
Filed under: Federal Budget Process, Lockheed Martin, Military Aviation, U.S. Air Force, U.S. Navy, development program
On Monday the Pentagon released the annual Selected Acquisition Reports (SAR) this is a formalized report that goes to Congress that details the performance of Acquisition Category (ACAT) ID and IC programs. Congress and OSD can also add programs to the list that don’t meet the ACAT I categories. See the press release here. In a related move the USAF and Lockheed Martin released an audit of the JSF program that shows that cost growth is leveling off. See that story here. Read more
UK goes the lease route for their tankers
Filed under: Boeing, Contract Awards, EADS, England, Northrop Grumman Corp., commercial aviation, logistics
In kind of a switch from the US the UK decided to lease their new tankers from EADS. It also looks like full Contractor Logistics Support (CLS) will be utilized. This means that the contractor will be paid to do all of the maintenance on the aircraft. This has become more common in the US as well as it minimizes the up front costs to the government as they do not have to stock parts or train mechanics. Read more
An editorial on the KC-45
Filed under: Boeing, Contract Awards, EADS, GAO, Northrop Grumman Corp., Protest, U.S. Air Force, commercial aviation, logistics
The San Antonio Express-News points out that one of the goals of the DoD procurement process is to deliver the best value to the nation and the taxpayers. Money quote “All this would be well and good if they were talking about a job creations program or two kinds of widgets that were essentially the same. Instead, they’re talking about a system essential for the projection of American military power and a critical component of national security.” As the editorial points out Congress will criticize the services for wasting money, or as in here, not picking the right contractor.
US weapon system acquisition policy
When the US government orders a new development program for a weapon system there are a variety of steps that must be done to get to the point of awarding the contract. Congress through law and regulation strictly dictates how a system may be acquired. The process is supposed to be driven by requirements. The users specify the requirements and then the material developer gets a system that meets the requirements at a good price for the government. Read more
Political Fight Over KC-45 Contract Heating Up
The Financial Times reports that the political war over the KC-45 contract is intensifying. According to the article, Northrop Grumman is busy lining up lobbyists and support in Congress to fight Boeing’s protest of their contract award. Read more
Army reorganizes contracting, plans to keep speed up
If there is one thing that US DoD acquisition is it is slow. New systems take a long time to develop and field. The US military has had some success with “rapid fielding” of smaller systems since 9/11. Of course they have also been hammered by Congress and the media for skipping steps, poor contracting and just wasting taxpayers dollars. In many cases speed has required what seem wasteful steps. This article says that with the organizing of the new Army Contracting Command, set up to control some of the perceived abuses, that “rapid fielding” will still be the goal.
Army awards option for UH-60 aircraft
Filed under: Contract Awards, Sikorsky, U.S. Army, production program
The Hartford Courant announced that Sikorsky was awarded a contract option for 6 UH-60M and 2 HH-60. This is probably a FMS option, but no details were given. Usually the full years of aircraft are bought in the Fall after Congress passes the Defense Appropriation Bill. An incremental award during the Fiscal Year may be due to FMS or the receipt of supplemental funding. A key part of any defense procurement contract is that the more you buy in a year the cheaper they are, so it also might be to get the Army a price break.
Loren Thompson on why Boeing lost
Filed under: Boeing, Contract Awards, EADS, Northrop Grumman Corp., U.S. Air Force, commercial aviation, logistics
In this article in The Seattle Times, noted aerospace analyst Loren Thompson explains why Boeing lost to Northrop-Grumman and EADS. Basically, the 767 wasn’t competitive. Read more
CNNMoney.com roundup of KC-45 award
Filed under: Boeing, Contract Awards, EADS, Federal Budget Process, Northrop Grumman Corp., U.S. Air Force, commercial aviation, logistics
This article is a pretty good summary of the situation relative to the KC-45 tanker contract. The US Air Force and Congress have themselves to thank that Boeing did not get the contract. As I have previously stated, when you open a competition you might be surprised by the results. The consilidation in the US aerospace industry that has been going on since the 1990’s is also a factor. Industrial policy, like the article states, cannot and should not be part of an award such as this. If it is the services get criticized for sweet-heart deals that are bad for the taxpayer, re: the tanker lease.
USCG Deep Water problems lead to end of Bell UAS program
Bell was building a tilt-rotor Unmanned Aeriel System (UAS) for the USCG as part of the Deep Water modernization and upgrade program. The whole Deep Water program has been hit with problems and criticism from Congress to the point where the USCG is restructuring. As part of this they canceled the tilt-rotor UAS that Bell Helicopter was building for them based on V-22 technology. See a story here. Read more
