Filed under: Boeing, Business Line, Companies, D'Assault, development program, IT, logistics
In the past India had tended to buy weapons either from the Soviet Union, Great Britain or domestic sources. There laws on offsets and working with Indian companies limited opportunities for U.S. defense contractors to bid or win work.
In the last several years this has changed as India has turned to Western suppliers. They loosened the laws on offsets and expanded the number of corporations that could team with outside entities to make it possible for a more diverse group of contractors to bid. This led to Boeing (BA) winning contracts for transports as well as maritime patrol aircraft. France’s Dassault Rafael was selected for the new fighter program as well.
India continues to have a whole host of different requirements to modernize its military including one for advanced, programmable radios. One U.S. company that is interested in this contract is Rockwell Collins (ROC). Rockwell is a U.S. manufacturer of aircraft avionics, components and also provides software and other services to the U.S. military and commercial market. They have had a facility in India since 2008. The current focus of there efforts there is utilizing local engineering capability to aid in software development.
They exhibited 2 different solutions at a recent DEFCOM India 2012 show.
Rockwell also just announced that they will team with India conglomerate Tata to bid on this contract. Using an Indian partner will aid in having their bid accepted.
With the expected decline in the U.S. and European defense markets with the budgetary problems needing to be solved overseas contracts will become more of a focus for all defense contractors no matter what the size. Asia is considered the primary market to make up some of the lost business. It will attract more companies like Rockwell in the future.
Filed under: Boeing, Business Line, Companies, Contract Additions, Contract Awards, Department of Defense, development program, Events, Federal Budget Process, Lockheed Martin, Military Aviation, Raytheon, Restructuring, Services, U.S. Army
With the expected reductions in U.S. planned defense spending there have been different discussions and rumors of programs being cancelled or ended. One of these is the new Joint Air to Ground Missile (JAGM) which is a replacement for the Hellfire and Maverick missiles. These are launched from a variety of helicopters and fixed wing aircraft and had an original mission of destroying enemy armor. Over the last several years different warheads have been developed to attack personnel and buildings.
The JAGM itself was a new program that replaced the earlier Joint Common Missile (JCM) which was cancelled itself a few years ago. The JCM was being developed by Lockheed Martin (LMT). They and a team of Raytheon (RTN) and Boeing (BA) were competing for the JAGM contract.
The Army had demonstrations of the two competing design and last summer received bids for the next phase of the program which was to be Engineering, Manufacturing and Development (EMD). One of the two designs would have been selected to enter this phase and then move on into production. Those proposals were received in June.
The production contract would be worth several billion dollars due to the amount of missiles that needed to be procured.
Now it is being reported that rather then moving out with this phase or cancelling the program the Army will continue to pay for a small amount of continued development and risk reduction. Available R&D funds would be used for this program. This would allow further refinement of the concept and designs and allow a decision to enter the EMD phase at a later date.
Those contracts would be awarded at the end of this summer.
The U.S. is going to be facing a number of situations like this. If there need to be severe cuts to investment programs it makes sense to cancel whole ones before they enter production. This saves the most money. It also means that the technology developed is still available for use if needed. It also continues to support some of the industrial base that might go away if whole sale cuts were made.
Filed under: Business Line, Companies, Congress, Contract Additions, Department of Defense, development program, Events, Federal Budget Process, Lockheed Martin, Military Aviation, production program, Restructuring, Services
The Department of Defense reported that the first three production contracts for the new F-35 Joint Strike Fighter (JSF) may end up costing more then originally planned. Depending on the scenario and the estimates they could be up to 15 percent higher.
Because of the agreements negotiated with the prime contractor, Lockheed Martin (LMT), these cost increases will be shared between the company and government. Lockheed, though, will still earn some of their fee on the production.
The Joint Strike Fighter program has seen steady delays and cost increases over the last several years. This led to last year the Defense Department withholding several hundred million in fee to Lockheed as well as restructuring the contracts to transfer more risk to the contractor. This is why some of the cost overruns will have to be absorbed by them rather then just the government.
The first production batches are normally higher then when steady state production is reached as they have to reflect higher amounts of non-recurring engineering as well as the production ramp up. They also have to adjust to potential delays due to issues identified in testing. Ideally once these years are completed the costs level off and the larger scale production saves the government money in the long run.
The problem faced by the JSF program and its customers is that as these costs increase they may cause reduction in the buy numbers each year and increase the schedule for the program. This means the aircraft may enter service later originally planned.
Because the JSF is now the key program for the United States the cost increases will be absorbed throughout the budget. The schedule slip may be difficult but will have to be accepted. There really is no alternative.
Filed under: Syndicated Industry News
Filed under: Airbus, Boeing, Business Line, Companies, Congress, Contract Awards, Countries, Department of Defense, development program, EADS, Events, Federal Budget Process, KC-X, L-3, Lockheed Martin, logistics, Malaysia, Military Aviation, Proposal, Restructuring, Services, South Africa, U.S. Air Force, U.S. Army
The European defense conglomerate EADS (EADS:P) has been working for several years to develop the A400M “Grizzly” transport aircraft. This advanced turboprop transport falls in between the two Western standard aerial transports Lockheed Martin’s (LMT) C-130J and Boeing’s (BA) C-17 in terms of size and capacity. EADS is also advertising its ability to fly from short, unimproved airfields when compared to the two U.S. Air Force basic aircraft. In this way the A400M is more like traditional Soviet transports where this capability was emphasized over other characteristics. EADS would like to sell the A400M to the U.S. military as well as other foriegn customers to help with the total cost of the program and perhaps even make a profit.
The problem they face is that the United States has invested over the last twenty years in a fleet of C-17 and C-130 to augment their heavy lift C-5 which is about to be upgraded. There is little requirement for a new transport even if it is offers advantages over the current aircraft. In fact the U.S. believes it has too many C-17 due to Congress’ adding buys over the Air Force’s acquisition objective for the last several years. It looks like the 2011 budget will not contain any more C-17 aircraft when it is finally completed. This means that EADS is looking for an uphill climb to sell the aircraft in the U.S. just from a requirement stand point.
The A400M has had a troubled development history ending up being two years late and much more expensive then planned. EADS has renegotiated the contract it had with its European customers to try and adjust for these issues. The problem they face is that to try and make the money up they will need to sell much more then originally planned. This means they must look for overseas customers in a crowded market. Only two countries had planned to place Foreign Military Sales (FMS) orders for the aircraft: Malaysia and South Africa. South Africa canceled theirs due to the cost increases. While the domestic customers state commitment to the program they also could readjust their quantities putting even more cost pressure on the aircraft program.
Unfortunately the delays in the A400M means it missed some potential orders that it might have been able to bid on if the original schedule had been met. The demands of fighting in Afghanistan have increased the need for tactical transports like the A400M but the C-130J has been able to win a great deal of contracts that the A400M might have. Lockheed has a hot production line in steady state that provides availability and cost stability. The A400M was several years in the future with some unknowns when it came to cost.
Another problem that EADS must face is the U.S. political opposition to buying non-domestic aircraft. While they are bidding on the KC-X against Boeing there is a lot of criticism of the Air Force for even allowing their bid. Partly this is due to concerns about “U.S. jobs” and just the normal chauvinism present in any large arms deal. Due to declining industrial base issues the U.S. has to consider an EADS bid if they want any competition on the KC-X. The transport market is a little more diverse and EADS could face competition from more then one U.S. manufacturer making it hard to make the KC-X argument for any new airlift mission.
Another cautionary tale for the A400M is the U.S Army’s planned Joint Cargo Aircraft (JCA) program. The Army originally wanted to purchase an aircraft smaller then a C-130 to provide lift in Iraq and Afghanistan between bases. As the name implies it became a shared program with the Air Force partly because they buy fixed wing aircraft and the Army has a very limited fleet of tactical transports and ISR assets. The program ended up purchasing the C-27 Spartan an Italian made aircraft through a contract with L-3 Communications (LLL). In the 2010 budget reforms the program was transferred to Air Force management and the plans to buy aircraft significantly scaled back. The JCA faced issues as it didn’t fit with the Air Force plans even if the Army wanted it. The A400M will face the same issues.
Once the A400M enters service it may prove to be a very capable, effective aircraft. Unfortunately to break into the U.S. market it may be too late as the defense budget declines and the C-5, C-17 and C-130 fleet soldiers on.
Photo from Ronnie Macdonald’s Flickr photostream.
Filed under: Business Line, California, Companies, Department of Defense, Earnings, Esterling Defense Technologies, Events, logistics, production program, Services, States, U.S. Army, U.S. Marine Corps
Because of demand for certain items it can sometimes be easy for one company to dominate the production of it and control a large portion of the defense market for their product. With the contraction of the U.S. industrial base this has been happening more often with the U.S. military. Esterline Defense Technologies (ESL) is a good example of that with their combustible cartridge case and other products for artillery ordnance.
The U.S. military has used a lot of shells, bombs and rockets over the last nine years. Many of these use an advance case that consumes itself by burning up when it is fired. Esterline is the major supplier of this technology to ammunition manufacturers for the U.S. military. In the last several years it has earned over $300 million from these contracts. Manufactured at their facility east of Los Angeles the company also manufactures other specialty items for a broad variety of commercial and government applications.
Because their are certain things that only a military or government buys — such as large caliber artillery rounds — it allows one company to be able to dominate the market. The government is also willing to keep one supplier as long as the product meets requirements and is at a fair price. There are times when another contractor may be able to come in and seize part or all of the market if the original supplier gets too expensive. If the government buys the data rights to the product which is not always a given they do also have the ability to transfer the production to another contractor. The movement of the FMTV truck contract from Armor Holdings in Texas to Oshkosh (OSK) in Wisconsin last year is a good example of that.
With the fighting in Afghanistan to continue for the foreseeable future and the need of the U.S. to replenish and maintain their stocks of ammunition Esterling is well positioned to keep producing their combustible materials and finding a ready market.
Photo from The U.S. Army flickr photostream.
Filed under: Business Line, Companies, Contract Awards, Department of Defense, development program, Events, MDA, Military Aviation, missile defense, Northrop Grumman Corp., Raytheon, Services, U.S. Army
The U.S. military over the last several years has been investing in different types of airships to support air and missile defense. These are not like the old ones that were used to traverse long distances and conduct reconnaissance, but their mission is more similar to the observation balloons used in the Civil War and World War I. The difference is that they do not carry human observers but radar and other sensor systems.
This investment is continuing with the award of a contract to Northrop Grumman (NOC) to develop new battlefield surveillance systems for the Missile Defense Agency (MDA). The contract has a value of over $500 million for three Long Endurance Multi-Intelligence Vehicle (LEMV).
Filed under: AVI BioPharma, Business Line, Contract Awards, development program, DTRA, Events, medicine, S&T, Services, States, Washington
The United States Defense Threat Reduction Agency (DTRA) awarded AVI BioPharma a contract to work on a drug to counter the Junin virus. There are concerns that this virus could be weaponized and used as a biological agent. The contract is worth over $11 million.
The contract is part of a program to develop measures to protect U.S. troops and civilians from Junin, Ebola and the Marburg viruses. AVI BioPharma Inc. is a company based in Washington state that is working on drugs based on RNA. They are also working on treatments for “muscular dystrophy and for the treatment of cardiovascular restenosis” as well as various viruses like Junin.
Obviously over the last several years the U.S. Government is concerned with treating populations as well as their military and civil servants fro these kind of diseases. Not only are their operations in parts of the world where these are more common Ebola and other blood diseases are a threat for use as a WMD. There will probably be many other contracts for this kind of work awarded over the next few decades.
Japan’s defense industrial base is facing severe declines due to lack of spending on the military over the last several years. The United States…
Filed under: Business Line, Companies, Contract Awards, Countries, development program, Events, Federal Budget Process, Florida, Israel, Japan, Military Aviation, missile defense, Northrop Grumman Corp., production program, Services, States, U.S. Navy
The Navy’s new carrier based radar search and surveillance plane the E-2D had a successful Milestone C Low Rate Production Decision. The aircraft is an incremental upgrade to the existing E-2C. The Advanced Hawkeye program has made steady progress over the last several years and the production decision is a major advance for it and any defense acquisition program.
The company and its team has been awarded contract worth about $430 million to deliver the first four aircraft. The development aircraft had first flown back in late 2007. There has also been discussion of selling the aircraft to selected overseas customers. Right now the E-2C is used by Israel, Egypt, Japan and Singapore among others.
Filed under: BAE Systems, Business Line, Companies, Contract Awards, Events, logistics, Pennsylvia, production program, Services, States, Texas, U.S. Army
In the 1980’s the U.S. Army upgraded their heavy units with the M1 Abrams tank and M2/M3 Bradley Infantry Fighting Vehicles (IFV). These vehicles have been upgraded over the last twenty-five years and saw service in Desert Storm as well as the invasion and stabilization operations in Iraq. There has been no new production of them for several years and since 2001 the Army has spent a great deal of money to keep the vehicles up and running.
BAE Systems was awarded a contract to repair and upgrade another 600 M2 vehicles. This contract is worth about $600 million over its full life. This is enough to equip about twelve battalions. Normally when the vehicles go through this process they are completely rebuilt and also receive any current upgrades available. At the end of the process basically a brand new vehicle is delivered back to the Army.
Work on this contract will be done in Texas and Pennsylvania. BAE Systems has been doing the bulk of this kind of work on the M2 for the last several years. The vehicles were originally made by FMC a company that has long since been merged and bought out of existence.
Filed under: Boeing, Business Line, Companies, Contract Awards, Countries, D'Assault, EADS, Events, India, Lockheed Martin, MiG, Military Aviation, production program, Proposal, SAAB
Update — Flight International is reporting that India says it has not ruled out any competitor in the program.
The Indian Air Force is looking to purchase an advanced fighter to add to their inventory. Six foreign companies had submitted bids for the 126 aircraft order. Now word comes that the French proposed Dassault Rafale was eliminated from the competition. The Indianexpress.com reports that publicly it was stated the aircraft did not meet certain “qualitative” requirements. It was also said that the proposal submitted showed the aircraft did not meet some of the technical requirements for the program. This means that the contest will continue with Boeing, Lockheed Martin, SAAB, MiG and Eurofighter participation for now.
The deal is one of several that India is proceeding with in an attempt to upgrade the technical capability of their armed forces. In the past the country had tended to buy from Russia or England. India has also spent the last several years developing an indigenous arms industry. Although lately they have turned to outside sources to include Israel and the U.S. for advanced weapons.
Currently there are several nations looking at buying advanced fighters. The Rafale has not been bid for many as most of the competition has been between the F/A-18G, SAAB Gripen, F-35 JSF and the Eurofighter Typhoon. The Indian contract is certainly one of the largest percolating.
Filed under: Business Line, commercial aviation, Companies, Contract Awards, development program, Events, Raytheon, Services
The Department of Transportation awarded Raytheon a contract to develop a system to track airline flights in flight. The AP reports that the goal of this system is to better utilize available air space as more and more aircraft fly commercially. No value for the contract was given. Raytheon has been making air traffic control radars for military and civil applications for years and this work seems to be an extension of that. The U.S. government has been investing over the last several years in new systems for installation at airfields for air traffic control. One of the goals of this new contract is to integrate a variety of existing surveillance and tracking systems. The amount of aircraft flying in the U.S. air space has grown considerably over the last few decades and some busier airports have issues with fitting in all of the planned flights.
Filed under: Contract Awards, production program, Proposal, U.S. Army
Slowly over the last several years, FN, the Belgian small arms manufacturer has been expanding its US operations. They have developed several NATO standard weapons that have been adopted by the US military – such as the M249 SAW and the M240 LMG. Now, according to this article, they plan to bid on the next M4 contract. The M4, and Colt, have had issues since 9/11. There are many complaints about the weapon and its jamming in dusty environments. The US Special Forces have adopted a separate weapon, the SCAR, and have also looked at 6.8 mm rifles. There have also been issues with how the US Army has managed the contracts for the M4. It will make for an interesting contract process next year.
Filed under: development program, DRS Technologies, Federal Budget Process, IT, logistics, production program, SETA
These three articles illustrate how the US defense budget as it has grown over the last several years effects localities economically. This one and this one discuss how Western Pennsylvania relies on the budget to support local industry. This article about Hawaii shows the effect of the Pacific Missile Range Facility on the island of Kaua’i. Although tourism is the major economy on that island the conduct of AEGIS missile defense tests certainly adds money to the local economy. Read more