MRAP-ATV Fallout Leads To Navistar Layoffs

July 13, 2009 by Matthew Potter · Comment
Filed under: Business Line, Companies, Contract Awards, Department of Defense, Events, Mississippi, Navistar, Restructuring, Services, production program 

Oshkosh won the MRAP-ATV contract for a new vehicle for use in Afghanistan. One of the losing bidders was Navistar who had sold several thousand MRAP vehicles for use in Iraq to the U.S. Department of Defense.

Now with the fact that they did not win the contract to build the new vehicles for use in Afghanistan the company has announced layoffs at their Mississippi plant. This illustrates one of the problems with defense contracting. If you don’t continue to win contracts to provide systems or services you will eventually wither. Defense acquisition is normally for a certain number of units or for a period of time that will end. Companies win or lose contracts and that leads to contractions or expansions in work forces.

Tags: , , , , , , , , , , , , , , , ,

FCS Cancellation Fallout

July 6, 2009 by Matthew Potter · Comment
Filed under: Boeing, Business Line, Companies, Congress, Events, Federal Budget Process, IT, Restructuring, SAIC, Services, U.S. Army, development program, logistics, production program 

The cancellation of the current Future Combat Systems (FCS) development contract was one of the cornerstones of the Obama Administrations 2010 defense budget. The program of new vehicles, unmanned aerial and ground systems, and the data links connecting them was estimated at over $160 billion. The Army still has a requirement for a upgrade to their combat brigades currently using the Eighties produced M1/M2 vehicles and the Styker Interim system. As such a new program was set up to replace FCS almost immediately after the contract with Boeing and SAIC was canceled.

Now the Army is concerned that the money planned for in the budget may not be available for this new program. At a minimum some of it will be needed to pay the termination fees related to the various contracts ended prematurely. They were ended at the convenience of the government so the contractors are entitled to payment for whatever work they had done and what it takes to close out the contracts. If the money doesn’t remain in the FCS line then the Army will be forced to fund it from other programs.

Congress in their mark up of the 2010 budget cut most of the money budgeted for this as they felt there were sufficient current funds to cover this. This may be a little too much penny save pound foolish. The Army knows fairly well what is needed and probably budgeted appropriately. The cost to other parts of the Army including the new modernization program may be quite high.

Tags: , , , , , , , , , , , , , ,

Australia To Expand And Restructure Military

May 4, 2009 by Matthew Potter · 1 Comment
Filed under: Australia, Business Line, Countries, Events, Military Aviation, Restructuring, development program, production program 

The current government of Australia under Prime Minister Rudd has announced major plans to restructure the country’s military for the Twenty-First Century. A white paper describing the proposed changes was released late last week. The focus will be on expanding the ground forces, re-equipping the Navy and general modernization.

The government is also looking at this increased investment in the military as a sort of stimulus for the Australian economy during the current downturn in the world’s finances. As much of the work possible will be done in Australia and for the Navy especially there are plans for significant new construction of submarines and ships.

The core of the plan is to add twelve new submarines and new destroyers and multi-role patrol craft. There will also be new helicopters for the Navy to replace the SH-2 fiasco. The Air Force modernization will be built around 100 F-35 Joint Strike Fighters (JSF). The ground forces will see a slight growth with new vehicles.

The way this is structured shows that Australia is looking at defending themselves with the submarines and aircraft. The ground forces will allow intervention in regional conflicts if necessary. The submarines as well will provide the core offensive capability if required. The White Paper makes it clear that China will be the dominant Asian power for the next several years and Australia must adjust their capabilities for this.

While Australia has spent more since 9/11 and used their forces in Afghanistan the major modernization programs were carried over from the Nineties. This is the first stop and relook at the country’s needs and rebaseline of capabilities.

Tags: , , , , , , , , , , , , , , , , , , ,

>