Now Reports That EADS May Bid After All
Filed under: Boeing, Congress, EADS, KC-X, KC-X Tanker News, Northrop Grumman Corp., Syndicated Industry News
There is a rumor that the Pentagon may delay the deadline for submission of a proposal for the KC-X to accommodate either a solo bid or another partnership. This contradicts what was reported yesterday that EADS-NA CEO Sean O’Keefe said the company wouldn’t bid without Northrop Grumman (NOC). It will be seriously difficult for the company to bid by itself. It would need to find another U.S. company to work with.
This might be second thoughts by DoD as they realize how difficult doing a single bid contract award will be. This is not a sole source contract but right now it would only receive one qualified offer.
Reports That Northrop Won’t Bid
Filed under: Boeing, Congress, EADS, KC-X, KC-X Tanker News, Northrop Grumman Corp., Proposal, Syndicated Industry News
It is being reported that Northrop Grumman (NOC) will not submit a proposal in response to the new KC-X RFP released at the end of last month. Supposedly the announcement will be made after the markets close. Northrop had written to the DoD in December saying they most likely would not without changes in the RFP to make it fairer to the Airbus 330 based aircraft.
There is no word on whether EADS will find another partner or bid by themselves for the $35 billion contract.
Defense Department Awards Further RFID Contract
Filed under: Business Line, Contract Awards, Department of Defense, Events, IT, Intermec, Services, USCG, logistics, production program
Continuing their investment in Radio Frequency Identification (RFID) the United States’ Defense Department awarded an Indefinite Quantity/Indefinite Delivery (ID/IQ) contract for RFID equipment. Intermec, Inc. was one of the winners. If all options on the contract are awarded it could be for nine years with a value up to $418 million.
Intermec has been making equipment for the electronic tracking of goods for over twenty years and has received significant contracts from DoD in the past. RFID has made it easier and more efficient to track and ship materiel by providing quick means to identify cargo and route it. Under the Automatic Identification Technology (AIT) – IV contract not only DoD entities but the U.S. Coast Guard, NATO and other allies as well as foreign countries may purchase this technology. Intermec like with all ID/IQ contracts is not necessarily guaranteed any work from it depending on how the U.S. wants to exercise the contract.
Fixed Price for DDG-1000
Filed under: Business Line, Companies, Congress, Contract Awards, Department of Defense, Events, General Dynamics, Maine, Northrop Grumman Corp., Restructuring, Services, States, U.S. Navy, production program
As part of the reforms announced by Secretary Gates’ a few weeks ago one was to end the DDG-1000 program at three ships and restart the DDG-51 production line. General Dynamics will build the last two as the first is under construction by Northrop Grumman. Northrop will get the DDG-51 work to make up for the cancellation. The New York Times is reporting that GD agreed to a fixed price contract for hulls numbers two and three.
Normally fixed price contracts are used for when full rate production gets underway. The first few batches of a product are made as part of the cost plus development contract. This spreads the risk to the Government. Obama has said he wants more fixed price contracts to save money on defense programs that tend to go over schedule and cost. Of course a lot of that is due to issues with requirements or testing or just making the thing that add time and money.
DoD uses two ways to look at unit cost when it comes to managing a program. One is the total of all procurement and R&D funding spread over the quantity of the items being bought. Another just takes the total procurement cost and divides that by the quantity. As you build more of an item the R&D is spread over more units slowly lowering that cost. If things begin to require more procurement then that cost goes up. Slowing down a program and buying the same quantity over a longer time effectively increases total program costs greatly. There is always some fixed cost applied each year if you build one, ten or a hundred of an item. The more years it takes the more those fixed costs add up.
With this program it may be OK to use a FFP contract as the costs are more known and fixed. If there are issues GD will be taking a risk as they might not get back all the money it takes them to build the ships. This is why Cost Plus contracts are used for development and ironing out production. In this case it will be an interesting experiment to see if it works out for the Government and the contractor.
VH-71 Suffers Cost Breach and Connecticut is Lobbying
Filed under: Business Line, Companies, Congress, Connecticut, Contract Awards, Department of Defense, Events, Federal Budget Process, Lockheed Martin, Military Aviation, Proposal, Restructuring, Services, Sikorsky, States, U.S. Navy, UTC, commercial aviation, development program, production program
The Connecticut Post reports that the VH-71 new Presidential helicopter program suffered a “Nunn-McCurdy” cost breach. There are two levels of this breach and the higher one, a 25% increase, requires the Secretary of Defense to certify the program is still required for the U.S. national defense. The fine Senators and Congressmen from Connecticut have pricked up their ears at this development and want to meet with DoD to discuss canceling the program and giving it to Sikorsky. The contract with Lockheed Martin has seen considerable cost growth due to requirements creep since the contract was awarded. This has required wholesale changes to the EH-101 platform selected. Hence the great increase in cost and schedule for the program. Of course the DoD will have to weigh the savings if another vendor proposes something cheaper with the time required to restart the program. With a new administration it is conceivable that the contract could be canceled and started over, like ARH, but it probably won’t happen.
DoD Buys Counter IED Training from Allen-Vanguard
Filed under: Allen Vanguard, Canada, Companies, Contract Awards, Countries, Department of Defense, Events, IT, logistics, production program
The Canadian company, Allen Vanguard, was awarded a contract for counter IED jamming equipment training according to the Canadian Press. The US DoD gave the firm a $7.5 million U.S. and three year contract for this support. U.S casualties in Iraq over the last few years were primarily from IED and the U.S military invested in a variety of counter measures. These included MRAP vehicles, jammers and more basic defenses like using UAV to identify and attack crews planting them. If the current situation in Iraq continues there will most likely be a winding down of such efforts.
Boeing and Machinists End Strike
Filed under: Boeing, Military Aviation, commercial aviation, production program
The Machinist Union ratified the new contract with Boeing yesterday. Excite News reports that the contract which settled an 8 week strike was approved by almost three quarters of the union members. The strike had slowed production of Boeing’s civil aircraft and there is no report of when full production rates will be re-achieved. Boeing has suffered lately with delays to their newest aircraft, the 787 Dreamliner. It also still continues to sell significant numbers of 737 and 777 aircraft. The largest military contract that Boeing desires is the KC-X tanker which would purchase 767 aircraft for that role, the contract remains in stasis as DoD waits for the next administration.
US Department of Defense contracts for dentists
Filed under: Contract Awards, Department of Defense, logistics, medicine
The DoD awarded United Concordia Companies, Inc. a five year contract worth over $600 M contract to provide dental care for active duty US military members. The contract provides special dental services to US military who have access to a dental clinic on their base, or general services to those who do not. The contract also requires the company to track the dental health of the members to make sure that they meet deployment requirements. The US Military has over the last thirty years moved to out sourcing a great deal of their medical care for retirees, dependents and members due to the growth in requirements and cost.
See a press release at MarketWatch.com.
Defense contract requirements to be loosened
Filed under: Commentary, Congress, Federal Budget Process, IT, Military Aviation, SETA, U.S. Army, development program, logistics, production program
One of the issues that faces any company trying to do business with the US DoD is that the personnel requirements are usually pretty stiff. This is especially true for SETA type work. The military is usually looking to hire experienced people with clearances. This is why you find so many retired military and federal workers as contractors. Getting a clearance has become an issue as the Federal government has been bogged down for years trying to clear people. The easiest way to get one is to join the military; or work for the government. These requirements also make it harder when you are trying to hire someone. Now, the Army in Huntsville has recognized these factors and is making efforts to change them. They are trying to relax the experience and degree requirements to allow newer hires out of college; they are also making it easier to hire interns to get them clearances and experience before they graduate.
See the Huntsville Times for the story.
ARH’s first try is cancelled
Filed under: Bell, Congress, Department of Defense, Federal Budget Process, Military Aviation, Restructuring, U.S. Army, commercial aviation, development program, production program
After the close of the stock market this evening the Department of Defense announced that they are canceling the Armed Reconnaissance Helicopter (ARH) contract with Bell. The ARH-70 was to be a replacement for the OH-58D Kiowa Warrior aircraft that has been in service for over twenty years. ARH was one of the programs created out of the end of the RAH-66 Comanche program. Bell had run into cost and schedule growth issues with the program, much of it probably due to an overly optimistic US Army estimate on the program. The program had suffered a Nunn-McCurdy cost breach and that required DoD to either certify to Congress on the necessity of the program, or cancel it. Now the Army will start over.
See The Wall Street Journal for more.
DoD awards RFID contract
Filed under: CDO, Contract Awards, DLA, Department of Defense, logistics, production program
The Defense Logistics Agency (DLA) for the DoD awarded an omnibus RFID contract to a team led by CDO. If all options are exercised the contract is worth over $75 M. The team of companies will provide Radio Frequency Identification Devices (RFID) for any US service or agency that would like to buy them through DLA. RFID is used mainly to track stores and equipment as they are moved from depot to the needed unit.
For more see the Dayton Daily News. An example as to how all defense contracts are local it is referred to as a “huge contract” by the paper.
Wearable power competition proceeds
Filed under: DARPA, Department of Defense, development program, logistics
The US Department of Defense said that 20 teams have qualified for the Wearable Power competition that will be carried out over the next four days. The $1 M prize will be awarded to the team that best meets the requirements of providing 20 watts of power per hour for 96 hours and weighs less then 4 kilograms. The twenty teams were chosen after a review of their concepts for safety and to see if they could be attached to a standard vest. DoD is trying to develop an alternative to all the AA batteries soldiers are forced to carry to work their advanced electronics.
See the press release at DefenseLink.mil.
Boeing and KC-45 in turmoil
Filed under: Boeing, Contract Awards, Department of Defense, EADS, GAO, Military Aviation, Northrop Grumman Corp., Proposal, Protest, U.S. Air Force, commercial aviation, logistics, production program
After meeting with DoD and the US Air Force to discuss the new tanker RFP due to the GAO upholding their protest, Boeing is now saying that without significantly more time to prepare a proposal they may have to drop out. The new schedule is for the Boeing and Northrop Grumman teams to submit by the end of October with a decision before the new calendar year. Boeing is saying that they may need to bid a larger aircraft then the KC-767 proposed last time due to the fuel capacity and range requirements. A variant of the 777 would have to be used. Boeing supposedly is asking for a more then 180 day delay in the submissions. EADS and Northrop Grumman will most likely submit a tweaked version of their original winning proposal.
For more see The Wichita Business Journal and WashingtonPost.com.
Boeing may refuse to bid on KC-45 recompete
Filed under: Boeing, Contract Awards, Department of Defense, EADS, Federal Budget Process, Military Aviation, Northrop Grumman Corp., Proposal, Protest, U.S. Air Force, commercial aviation, development program, logistics, production program
Rumors are swirling that Boeing may not bid on the new contract for the KC-45. See an article here. Supposedly Boeing is piqued that the new requirements supposedly favor Northrop Grumman and EADS and will not submit a bid. If there is only one bid it may require the whole process to start over again, of course if DoD and the Air Force change the requirements EADS could claim the same thing and the whole program will get stuck. Unfortunately DoD and the Air Force have to do the new process as GAO upheld the Boeing protest. More to come on this very complicated story.
DoD invests in automated medical diagnostic equipment
Filed under: CombiMatrix, Contract Awards, Department of Defense, IT, development program, logistics, medicine
CombiMatrix received a contract from DoD to continue development of hand-held diagnostic equipment for use in the field. See the press release here. The contract is worth over $900 K. DoD as well as other government agencies are evaluating products based on CombiMatrix’s systems to detect bacteriological and chemical systems. This contract builds upon those earlier efforts.
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
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.
It takes money to spend money
Filed under: Contract Awards, Department of Defense, SAIC, logistics
The Defense Finance and Accounting Service (DFAS) is the organization within DoD that actually pays the bills. Eventually every contract action will lead to DFAS sending money to the company doing the work. SAIC has won a contract to build software to train the DFAS employees on policies and regulations. See a story here.
Lockheed EVMS not up to snuff
Filed under: Contract Awards, Department of Defense, Lockheed Martin, Military Aviation, development program
This article in the UK’s Gaurdian newspaper says that DoD is unhappy with the accuracy of Lockheed Martin’s Earned Value Management System (EVMS). This may lead to reduced award fee to the contractor. Earned value is defined in this paper, here, as “It is an objective measurement of how much work has been ccomplished on a project. It compares the value of the work done with what was budgeted to do that work and what was actually spent to do it.” It is very important to managing Cost Plus contracts as the money paid to the contractor is based on their performance. Read more
Global Warming favors Boeing
Filed under: Boeing, Contract Awards, EADS, GAO, Military Aviation, Northrop Grumman Corp., Promotions, Protest, U.S. Air Force, commercial aviation, development program, logistics, production program
According to this article a Washington Democratic Congressman wants to introduce legislation that requires the DoD to evaluate the “green house gas” emissions when awarding defense contracts. If this had been done as part of the KC-45 award, then Boeing would have won as nominally the KC-767 emits less harmful gases then the larger A330. Read more
Romania to buy F-16’s
Filed under: Contract Awards, FMS, Lockheed Martin, production program
According to this article the US DoD has proposed selling 48 F-16 fighters to Romania. This would be one of the biggest FMS sales to a former Warsaw Pact nation. The addition of the F-16 would be a major upgrade to the capability of the country. The Czech Republic has looked at buying some Western equipment and there has been some purchases of companies like Poland’s PZL by Western countries. The movement into NATO of some of these countries will also accelerate these kind of purchases as there will need to be movement towards standardization.
UK like the US struggles to pay for current operations
Filed under: Department of Defense, England, Federal Budget Process, VT Group
The US DoD has had a habit over the last five years to raid the investment accounts to fund current operations. This means they take RDT&E and procurement funding and convert it to Operations & Maintenance for war efforts. This is not always a good practice as it can play havoc with development and production programs. Part of the problem is that the Congress does not always budget well funding these types of programs and not putting enough into O&M. Now it seems the UK has the same problem according to this article. The UK MOD has proposed taking funding from programs to meet the demands of current operations and fund the two new carriers the British are about to start building. In the long run this is not a good practice as you create bills that have to be met in the out years, or end up canceling programs.
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.
Decline in Federal spending may reduce business for contractors
Filed under: Congress, Department of Defense, Federal Budget Process, U.S. Dept. of Homeland Security
This article in FederalTimes.com states that due to cutbacks in spending in the President’s 2009 budget the Federal government will reduce what it spends on contractors a substantial percentage. This is not only in DoD but also in Homeland Security and the State Department as well. Part of this is budget cuts to the various programs but also the predicted removal of US troops from Iraq. Whether this will really pan out will have to be seen. The final 2009 budget won’t be out until October-December, and there also may be various supplementals to support the war in Iraq and Afghanistan. At some point the wars will be winding down and this will have a significant effect on Defense’s spending. Historically the US budget for these activities have gone from boom to bust very quickly.
DoD buys some vegetables
Filed under: Adams Brothers, Contract Awards, Department of Defense, logistics
In a contact that is an example of several things, Adams Brothers Produce of Montgomery, AL won a contract worth $7 M or so to provide fruits and vegetables. See the story here. This shows that DoD buys small things, big things, cheap and expensive things. It didn’t say if these were for the Defense Commissary Service, or to be served to troops. The other thing about this contract is that it is a small business set aside. That means only certain companies can bid on it. So in the name of social engineering, DoD may not always get the best value for its money.
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