Today in the Department of Defense, Friday, March 19, 2010

Today in the Department of Defense, Friday, March 19, 2010
March 18, 2010

Secretary of Defense Robert M. Gates and Deputy Secretary of Defense William J. Lynn have no public or media events on their schedules.

Under Secretary of Defense Comptroller Robert F. Hale and Deputy Under Secretary of Defense Installations and Environment Dorothy Robyn testify at a hearing of the House Appropriations Committee on budget overview at 10 a.m. EDT in room H-143, The Capitol.

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Today in the Department of Defense, Friday, March 12, 2010

Today in the Department of Defense, Friday, March 12, 2010
March 11, 2010

Secretary of Defense Robert M. Gates and Deputy Secretary of Defense William J. Lynn have no public or media events on their schedules.

Under Secretary of Defense for Acquisition, Technology and Logistics Ashton Carter will conduct a press briefing at 11 a.m. EST in the DoD Briefing Room.

A National Capital Region flyover of Arlington National Cemetery occurs at 3:05 p.m. EST with four A-10s.

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House Armed Services Committee: Skelton Statement on New KC-X Tanker Request for Proposal

February 24, 2010 by Jeffrey Bradford · Comment
Filed under: Syndicated Industry News 
House Armed Services Committee: Skelton Statement on New KC-X Tanker Request for Proposal
House Armed Services Committee
For Immediate Release: February 24, 2010

Skelton Statement on New KC-X Tanker Request for Proposal

Washington, D.C. – House Armed Services Committee Chairman Ike Skelton (D-Mo.) released the statement below following a briefing from Deputy Secretary of Defense Bill Lynn on the new KC-X Tanker request for proposal:

“The Air Force has made a strong case for recapitalizing our nation’s aging airborne tanker inventory, and I support this requirement. The tanker replacement process has gone on for eight years, and we need to move forward this year to award a contract to provide our service members with the tools that they need to succeed in today’s conflicts.

“The Department of Defense has worked diligently to set the stage for a fair and open competition for the KC-X Tanker contract, and I hope the process moves quickly to provide the best tanker for our Air Force.”

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Defense Department Willing To Do KC-X With Only Boeing Bid

February 4, 2010 by Matthew Potter · Comment
Filed under: BNET 
Secretary of Defense Gates made the rather astonishing statement that only one bid would be acceptable for the KC-X contract. This will make it...

England joins CACI board of directors

August 19, 2009 by admin · Comment
Filed under: Syndicated Industry News 

ARLINGTON, Va., Aug. 19 (UPI) -- CACI International has appointed a former U.S. deputy secretary of defense to join its board of directors in a move to add new support for its federal arena.

Orbital Earnings Take A Hit

Due to some restructuring of its work due to the Obama Administration’s efforts to reorient defense spending Orbital Sciences Corporation reported a downturn in revenue and operating income in its most recent quarterly results. The company saw a missile defense contract ended and some delays in satellite work leading it to reduce its estimates for the full year.

Of the major defense companies reporting so far results have been mixed. Some have seen better quarters then others. The effects of the major changes planned by Obama and Secretary of Defense Gates may take some months to have effect. The large programs they have ended will still be paying termination costs to the companies as they figure out what fees are needed and what work will be paid for. There are also chances that new contracts will be awarded in the next year or so.

Several programs will be continued in another form it may take two or three years for the next iteration to start. The Army’s Future Combat System (FCS) contract with Boeing and SAIC ended but the technology and work has been inserted into a new program. The contracts for the new program have not been fully awarded, so Boeing and SAIC may end of with revenue from that effort. In the end despite the cancellation the companies may not end up losing much revenue.

House Moves To Keep VH-71 Increment One Alive

The various defense appropriations and authorization bills are working their way through the House and Senate. Many items have been included not requested by the Obama Administration or Secretary of Defense Robert Gates. This really is not surprising as Gates attempted to cut a lot very quickly. He spared no service cutting Air Force F-22 and C-17 aircraft, Navy VH-71 and destroyers, and Army vehicle and missile defense systems. Congress has pushed back on certain programs.

One that they are trying to keep alive is the VH-71 helicopter for use in transporting the President. This program has not only been unfunded in the President’s 2010 budget but Lockheed Martin has been told to stop work. The company and the Pentagon are negotiating termination costs.

The House Appropriation Defense sub-committee, though, included almost half a billion dollars to try and utilize the Increment One aircraft already procured. The program was structured with two increments of aircraft, the first being basic ones to be used to support testing and development. A larger buy in five or so years would have all the required equipment. To date the U.S. has invested about $3 billion in the program. The House wants to see if some use could be derived of the aircraft already delivered.

While the current fleet of VH-2 and VH-60 aircraft have served the President well they are somewhat dated. The VH-71 would have more modern survivability and communications equipment with greater range and lift. The strenuous requirements are what led to the programs cost and schedule growth. There will be more to come on this issue to say the least.

Lockheed Plans Further Job Cuts Due To VH-71 Ending

Lockheed Martin had already cut over one hundred jobs at their Upstate New York facility in Owego. This was mainly due to the decision by Obama and Secretary of Defense Gates to end the VH-71 New Presidential Transport helicopter program. Even though the aircraft was made in Italy Lockheed did all the modifications and integration in Owego.

Despite a great deal of argument and pressure to keep the program going in some form or another the contract was recently terminated. Lockheed is now saying that another seven hundred and fifty people may lose their jobs. Right now they are looking for people to voluntarily leave or retire with a promise of severance. The plan is to begin the layoffs in July based on how many people agree to leave voluntarily.

One of the arguments against ending this and other production programs is that they will just add to the joblessness during the current recession. Of course the defense budget is not really a jobs program and that is fairly poor reasoning to continue spending billions of dollars on a system that does not meet requirements. It is still possible that Congress will pass some form of spending that will keep pieces of the program alive in the 2010 defense budget but that will not be finished until the Fall.

Northrop Tries To Save Kinetic Energy Interceptor

Update — On June 10th the Missile Defense Agency (MDA) terminated the Kinetic Energy Interceptor (KEI) for the convenience of the government. This meant that all of Northrop’s lobbying to continue the program to at least conducting the first key test in the program was wasted.

Moving quickly like he has on the FCS and VH-71 programs the Secretary of Defense Robert Gates had another stop work order issued for a program recommended for cancellation in the 2010 budget. MDA told Northrop Grumman to halt the KEI program. This $4 billion contract had only recently been issued and the first test flight of the propulsion system was planned for later this year.

Congress has shown a great deal of support for this program recently and the decision to end it was not well received. There was some concern expressed that the program had not been given a chance to demonstrate its capability. The total missile defense budget saw almost a twenty percent cut with this and the Ground Based Mid-Course system making up the bulk of that money. The plan is to focus on the Navy’s system as well as shorter ranged Army ones.

Northrop has proposed that even with the termination of the program they will still be able to meet schedule and complete the booster test. This may be an attempt to sway Congressional and Administration support for continuing the program beyond 30 September 2009. If they really can meet this test schedule and the history of missile defense programs is not in their favor due to the complexities of the tests and technology then it might help them carry the program over.

A Northrop Grumman video on the program is below which is kind of amusing as it is done as a fake newscast:

Navy Continues Laser Investment

The U.S. Navy continues its investments into free electron lasers by awarding Raytheon a $150 million contract to develop a system for them. This follows a similar contract given to Boeing in April. While lasers seem science fiction when it comes to using them as weapons there has been significant research done on several applications.

The most advanced in the U.S. was the Airborne Laser (ABL) system for missile defense made by Boeing. This program was recently canceled by Secretary of Defense Gates. All of the U.S. services have made efforts to build weaponized systems. The Navy makes the most sense as a ship is able to carry the large amount of chemicals needed for that type of laser as well as provide plenty of power.

There should be many more contracts like these in the future.

TSAT Contract Latest To Be Ended

Secretary of Defense Gates announced that in the FY10 budget plenty of different programs would be ended. Unlike previous administrations who decide to de-fund a contract in next year’s budget but let the current year play out Gates has aggressively ended the contracts. The latest one announced was the U.S. Air Force’s Transformational Satellite Communications System (TSAT).

When the budget plans were announced in April the plan was to end this system and begin development of two new separate systems for the same mission. The TSAT like most military satellite and space programs had suffered delays and cost problems. They were not insurmountable but as time goes by the Pentagon often looks at different or new requirements that the older planned systems may not meet.

So following in the footsteps of the VH-71, Future Combat Systems (FCS) and the Kinetic Energy Interceptor (KEI) programs the TSAT contracts were terminated for convenience today. There were two separate contracts — one with Lockheed Martin for mission operations systems and one with Booz Allen Hamilton for systems engineering.

One idea of doing this so fast is to prevent Congress from keeping the program alive through continuing funding despite the Pentagon’s request. Without an active contract it will be hard to do this in the next year. More to come on all of these various moves as the budget makes its progress.

JSF Second Engine Fighting For Its Life

One of the programs cut by Secretary of Defense Gates’ in his proposed budget is the second source for the F-35 engine. This has been a controversial program since its inception. Now with the plan to end the program Rolls Royce and General Electric are arguing it is cheaper and more sensible to continue the program.

The Air Force and Navy have always been ambivalent about the program but Congress has kept it funded. The fact that Congress cuts aircraft production to find the funding has raised the hackles of some people. Now that the Defense Department has decided to end the program the contractors, and their allies in Congress, are arguing that most of the planned money has been spent and the program should at least complete development.

Of course if the engine did go into production and was used to power some of the JSF aircraft to be used by America and its allies the amount of revenue available to GE and Rolls Royce as well as Pratt & Whitney who make the primary engine would be quite substantial. The second source providers say that the bulk of the $3.5 billion allocated to the program has been spent so rather then terminating the program at some cost just complete it.

As with all of these programs recommended for termination it will be Congress who will have the last say in the budget. But since Gates moved quickly to halt the contracts for FCS and VH-71 it wouldn’t surprise me to see a stop work order on this one as well.

Obama’s Budget Hits Orbital Hard

Orbital Sciences stock took a pounding last week as one of its major programs was proposed to be canceled by Obama and Secretary of Defense Gates. Missile defense programs along with the F-22 and FCS wheeled vehicles took the biggest in the budget. If the budget moves forward with the planned ending of major programs other companies may see their stock affected.

The upside though is that if the restructuring of the budget goes forward it will provide opportunities for other companies. There will also be new programs eventually as the need for some of these — like the VH-71 — are still there. The next big contract that seems will be awarded is the KC-X tanker replacement some time next year. A new competition will be held between EADS and Boeing. Currently it looks like the award won’t be split as some had hoped for.

U.S. Department of Defense Still Not Sold on Split Tanker Buy

Responding to growing pressure from Congress and some in industry to the idea of splitting the KC-X tanker procurement between Boeing and EADS Secretary of Defense Gates said that the idea would be bad policy. The Hill reports that any cost savings from more rapid production would be offset by the increased logistical tail of having two separate systems. In this day and age when the quantities of equipment purchased is minimal the U.S. cannot afford a dual source for one mission. While some have said that this proposal would more rapidly field capability a split fleet would require two supply chains, training networks and support networks. More will be found out when the Obama administration releases its FY10 budget proposal in the near future.

VH-71 Suffers Cost Breach and Connecticut is Lobbying

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.

KC-X Competition to Restart Soon

Secretary of Defense Gates testified today to Congress as he continues his role with the new Obama administration. Reuters reports that Gates said the KC-X tanker competition would restart this spring with an expected award date in the first or second quarter of Fiscal Year 2010. If you remember the original contract was awarded to a team of Northrop Grumman and EADS but Boeing protested and the GAO upheld it. The original plan to conduct a recompete in late 2008 was postponed with a decision to wait for a new administration. One key change is that DoD will handle the proposal and source selection instead of the U.S. Air Force.

We’re still in, says EADS

Denying a report in a German magazine, reported here, EADS restates that they will remain competitors for the KC-45 contract. Secretary of Defense Gates recommended postponing the reopening of the KC-45 bid process until next year when a new administration will be in power. EADS was reported as not wanting to participate in future contract proposals if the current one was delayed. The company is now saying that that is not the case.

See CNNMoney.com for that story.

Gates gives up

The Secretary of Defense today canceled the KC-45 re-proposal. He decided that there was not enough time to do this before the end of President Bush’s second term. The announcement was made via a press release this afternoon. Secretary Gates stated that ““It has now become clear that the solicitation and award process cannot be accomplished by January,” he said. “Thus, I believe that rather than hand the next administration an incomplete and possibly contested process, we should cleanly defer this procurement to the next team.”

This decision ends temporarily a seven year saga that started with Boeing being given a lease for 767 tankers, through a proper competition that was thrown out by the GAO, and what was expected to be a quick recompete starting this month.

See the actual release at DefenseLink.mil.

Representative Asks For Tanker Bid Delay

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.

SecDef says KC-45 meddling by Congress may provoke retaliation

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.

Air Force to award GPS III satellite contract

The GPS III satellite had a successful DAB recently which allowed Mr. Young, the Assistant Secretary of Defense for Acquisition, Technology and Logistics (OSD(AT&L) to allow the contract award. See an article here. As part of this authorization, though, he directed that the requirements be frozen as to what was presented at the DAB. The contract could be worth $1.8 B, and will go to either Boeing or Lockheed Martin. The award could come early next week.

OSD expresses concern over protests

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

US law prevents Australia from acquiring F-22

Australia has expressed an interest in procuring F-22 Raptor aircraft. Currently they are planning on buying JSF ultimately. Currently US law prevents the export of the F-22. In this article from News.com.au, the US Secretary of Defense, Robert Gates, expresses the sentiment that Australia would be good stewards of the F-22 if they received them. Obviously the law is to prevent the transfer of what is considered the best technology that the US has, but there are certain allies in the past that have been able to share it. As previously discussed technical transfer laws have become very restrictive and have affected US programs.

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