Press Release — Statement on US Refueling Tanker Program Announcement

Statement on US Refueling Tanker Program Announcement

WASHINGTON, March 9 /PRNewswire-USNewswire/ — The European Commission notes yesterday’s decision by Northrop Grumman / EADS not to submit a bid to the US Department of Defense for the US Air Force’s aerial refueling tanker contract.

“It is highly regrettable that a major potential supplier would feel unable to bid for a contract of this type. Open procurement markets guarantee better competition and better value for money for the taxpayer,” stated EU Trade Commissioner Karel De Gucht.

In February 2008, Northrop Grumman / EADS was selected and awarded the contract to provide aerial refueling tankers for the US Air Force in a fair and transparent competition. This was a positive sign for free and open competition across the Atlantic. This also seemed to indicate that successful bids are possible when European industry teams up with US industry and they are allowed to compete fairly. This award was subsequently cancelled at the end of 2008.

In December 2009, Northrop Grumman / EADS expressed serious concerns to the Department of Defense and the US Air Force on the proposed acquisition criteria for the contract.

The European Commission would be extremely concerned if it were to emerge that the terms of tender were such as to inhibit open competition for the contract.

The US defense trade balance with the EU has traditionally been significantly in the US’ favor. In 2008 the US exported $5 billion and imported only $2.2 billion worth of defense material, in line with a historic ratio of double exports to imports.

The Commission will be following further developments in this case very closely.

Source: Delegation of the European Union to the United States

Editorial: Lightning Strike – F-35 program project head replacement: Part II

February 2, 2010 by Jeffrey Bradford · Comment
Filed under: Editorial, Syndicated Industry News 
Looking at the history of leadership of the JSF PEO yields the insight that four USAF officers have led the project versus two US Navy and 2 USMC Generals. This would suggest the odds are pretty high that the USAF will be next in the cockpit for the largest defense acquisition program in the Pentagon.

In addition the successor may well be thinking of his next role as the average 'life expectancy' of the JSF PEO is around 24 months - by service USAF (27 months), USN (24 months), USMC (19 months).

MajGen David R. Heinz, USMC (April 2009 - February 2010) = 10 months

Maj Gen Charles R. Davis, USAF (July 2006 - April 2009) = 33 months

RADM Steven L. Enewold, USN (June 2004 - July 2006) = 25 months

Maj Gen John L. Hudson, USAF (October 2001 - June 2004) = 32 months

Maj Gen Michael A. Hough, USMC (May 1999 - October 2001) = 29 months

Maj Gen Leslie F. Kenne, USAF (August 1997 - May 1999) = 21 months

RADM Craig E. Steidle, USN (August 1995 - August 1997) = 24 months

Maj Gen George K. Muellner, USAF (November 1993 - August 1995) = 21 months

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Editorial: Lightning Strike – F-35 program project head replacement

The latest news from Washington amid the announcement of a record budget deficit for the United States is the decision of Secretary of Defense Gates to remove the current head of the F-35 program, a US Marine Corps General and replace him with a three star (***) General of more senior rank (no comment as yet as to which service).

The outcome of this personnel move is more telling than would appear on the service, especially for international participants who are pinning their hopes on the STOVL variant of the aircraft, such as the Royal Navy, who akin to the USMC have a need for replacements for the Harrier STOVL aircraft.

A USAF successor will likely take his role as a mandate to cut extraneous costs rapidly (and thereby variants) to bring the project under a greater apparent measure of control to dispel some of the political heat the program and DoD will be taking at a time of national austerity. A USN successor will likely sacrifice the VSTOL variant in order to protect the USN variant of the program. A USMC successor to the role of program head is about as unlikely as you can image - plus the Corp is likely more focused on securing upgrades to its amphibious assault capabilities and more Osprey aircraft.

Procurement politics being what they are, the F-35 program is the highest spending and therefore the largest target for;

a) congressional oversight
b) political opponents to the President
c) inter-service rivalries seeking to protect 'pet' projects at the expense of others
d) industrial rivalries seeking to attract increasingly scarce procurement dollars at the expense of others.

The US Air Force has, akin to the F-16 debate of the late 1970s/1980s has disdain for a High-Low fighter mix. The F-15/F-16 was a bitter battle and the F-22/F-35 is likely to be no less so.

Furthermore another implication of the budget has been to confirm reduction of engine suppliers from two to one. A classic procurement study noted that when the number of engine suppliers falls to one, historically costs rise and therefore unit costs increase and likely as the story unfolds numbers will be cut to meet the budget.

For Overseas partners this can only be bad news, especially when the exchange rate has fallen from a position only 18 months ago where $2 equally only 1 GBP.

The Royal Navy has sought to trim the CVF program as a similarly over-exposed program with few friends in the procurement sphere. Only Labour Party ship-building politics keep the project afloat (pardon the pun). One of the two ships has already been re-tasked as an amphibious assault carrier and the plans for the two vessels always had them 'equipped for, but not with steam catapults' - in case a VSTOL successor was not possible.

BAE Systems stands in the wings, likely with plans for a navalised Eurofighter Typhoon - which would force the Royal Navy to rapidly re-aquire skills in fast jet carrier aviation not used since the end of HMS Ark Royal and HMS Eagle in the early 1970s. A political fix given the UK investment could be a second hand buy of F-18 Hornets - not the state-of-the-art but a solid and well developed naval combat aircraft - the British purchase of F-4 Phantoms would mean this is not a precident setting purchase - and it could be justified to the Treasury as being quite parsimonious in the greater scale of things.

However if the choice becomes fast jet or 'no-jet' naval aviation I am sure the service will stand ready.

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Herley Industries, Inc. Subsidiary, Micro Systems, Inc. Receives $16M Contract to Supply Avionics — Press Release

Herley Industries, Inc. Subsidiary, Micro Systems, Inc. Receives $16M Contract to Supply Avionics

LANCASTER, Pa., Dec. 29 /PRNewswire-FirstCall/ — Herley Industries, Inc. (NASDAQ:HRLY) today announced that it has received a multi-year option contract with a potential value of $16M from Composite Engineering, Inc. (CEi) of Sacramento, CA for its avionics suite for the Air Force Sub-scale Aerial Target (AFSAT), also designated as the BQM-167A. Products to be provided under the contract include Command and Control Transponders, Identification Friend or Foe (IFF) Transponders, Power Distribution Assemblies, Electro-Explosive Devices, and Integrated Flight Controllers. The contract encompasses a planned production span of 5 years and is the second such award on the US Air Force target program. Award of the option contract was followed by firm delivery orders for the sixth and seventh years of production that together are valued at approximately $6.4M.

Wayne Armstrong, Micro Systems’ President commented, “We are enthusiastic about continuing our relationship with CEi on this important program as we enter the sixth year of production. Our partnership with CEi on this and other key programs has been a mutually beneficial one that we expect to continue for many years.”

Herley Industries, Inc. is a leader in the design, development and manufacture of microwave technology solutions for the defense, aerospace and medical industries worldwide. Based in Lancaster, PA, Herley has eight manufacturing locations and approximately 985 employees. Additional information about the company can be found on the Internet at www.herley.com

For information at Herley contact:
Peg Guzzetti
Tel: (717) 735-8117
Investor Relations
www.herley.com

Safe Harbor Statement – Except for the historical information contained herein, this release may contain forward-looking statements. Such statements are inherently subject to risks and uncertainties. Forward-looking statements involve various important assumptions, risks, uncertainties and other factors which could cause our actual results to differ materially from those expressed in such forward-looking statements. Forward-looking statements in this discussion can be identified by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “plan,” “intend,” “may,” “should,” “we look forward” or the negative of these terms or similar expressions. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance or achievement. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors including but not limited to, competitive factors and pricing pressures, changes in legal and regulatory requirements, cancellation or deferral of customer orders, technological change or difficulties, difficulties in the timely development of new products, difficulties in manufacturing, commercialization and trade difficulties and current economic conditions, including the potential for significant changes in US defense spending under the new Administration which could affect future funding of programs and allocations within the budget to various programs as well as the factors set forth in this report and in our public filings with the Securities and Exchange Commission.

Cobham Enables Airbus A330 Air-to-Air Refuelling Flight Demonstrations — Press Release

Cobham Enables Airbus A330 Air-to-Air Refuelling Flight Demonstrations

WIMBORNE, United Kingdom – Cobham air-to-air refuelling pods have successfully demonstrated the ability to transfer fuel from the Airbus Military A330 Multi Role Tanker Transport (MRTT) to Spanish Air Force F-18s with a series of “probe-to-drogue” contacts during recent flight trials.

The 905E refuelling pods, built by Cobham Mission Equipment at Wimborne, UK, represent the Company’s latest generation Aerial Refuelling System, which is the first and only hose & drogue system in the world to employ a dual redundant hose response system — a major contributor to world leading mission availability. During a series of contacts conducted during November 2009, the refuelling system transferred fuel to receiver aircraft and demonstrated effective hose response throughout the trials.

“These ‘wet contact’ flight trials are a major milestone in the development of the A330 MRTT’s tanker capability,” said Iain Gibson, vice president of Cobham Mission Equipment. “This achievement reinforces Cobham’s expertise and position as the world leader in delivering air refuelling solutions to meet the strategic and tactical tanker requirements of air forces around the globe.”

The Royal Australian Air Force A330MRTT platform used for these flight tests is similar in configuration to the solution that Northrop Grumman intends to propose to the US Air Force in response to the KC-X Tanker requirement. The A330 MRTT with 905E pods has also been selected for the UK MoD FSTA programme, the Saudi Arabia Air Force and the United Arab Emirates Air Force.

About Cobham:

Cobham’s products and services have been at the heart of sophisticated military and civil systems for 75 years, keeping people safe, improving communications, and enhancing the capability of land, sea, air and space platforms. The Company has four divisions employing more than 12,000 people on five continents, with customers and partners in over 100 countries and annual revenue of more than £1.4bn / $2.1 billion.

Cobham Mission Equipment is the world market leader for air-to-air Refuelling, providing fourth generation ‘nose to tail’ solutions from the cockpit of the donor aircraft to the tail of the receiver platform. To date, more than 1,000 systems have been delivered for buddy-buddy refuelling and for tactical and strategic tanking for fixed and rotary wing aircraft, with expertise now extended into the development of autonomous UAV to UAV refuelling.

Contacts:

Greg Caires
Julian Wais
Media Relations
Investor Relations

+1 703 414 5319
+44 (0) 1202 857998

greg.caires@cobham.com
julian.wais@cobham.com

Cobham Enables F-35B Aerial Refueling — Press Release

cobham oneCobham Enables F-35B Aerial Refueling

ARLINGTON, Virginia – Cobham – the market leader in aerial refueling products and technologies – enabled the recently completed aerial refueling tests of the F-35B, the short-take-off-and-vertical-landing (STOVL) variant of the Joint Strike Fighter destined for the US Marine Corps, Royal Air Force and Royal Navy, and the Italian Air Force and Navy. During these tests, fuel was transferred from a KC-130 tanker equipped with Cobham aerial refueling pods, to an F-35 equipped with a Cobham aerial refueling probe.

Cobham Mission Equipment will provide the robust, light-weight, high-fuel rate probe to each F-35B and F-35C (carrier variant) via Parker Aerospace, the aircraft’s lead fuel system designer and supplier. The retractable, 5.5 foot-long aluminum alloy probe is located on the right side of the forward fuselage. Cobham was selected to provide the probe in 2002, and qualified probes are now in production.

The US Navy and Marine Corps are scheduled to buy approximately 680 F-35Bs and F-35Cs, while the United Kingdom is expected to buy approximately 138 F-35Bs. Cobham also makes aerial refuelling probes for the Harrier jump jet, the Gripen multi-role fighter, and the V-22 Osprey tiltrotor aircraft.

Beyond probes, Cobham is also the market leader in aerial refuelling pods. There are today more than 150 US Marine Corps KC-130s and US Air Force C-130 tanker tankers equipped with various models of Cobham pods. In addition, Cobham aerial refueling pods also equip strategic tankers such as the KC-10s and KC-135s used by the USAF, and the A330 for Australia, Saudi Arabia, the United Arab Emirates, and the United Kingdom.

About Cobham:

Cobham’s products and services have been at the heart of sophisticated military and civil systems for more than 70 years, keeping people safe, improving communications, and enhancing the capability of land, sea, air and space platforms. The Company has four divisions employing more than 12,000 people on five continents, with customers and partners in over 100 countries and annual revenue of more than £1.4bn / US$2.1 billion.

Cobham Mission Equipment is the world market leader for air-to-air Refuelling, providing fourth generation ‘nose to tail’ solutions from the cockpit of the donor aircraft to the tail of the receiver platform. To date, more than 1,000 systems have been delivered for buddy-buddy refuelling and for tactical and strategic tanking for fixed and rotary wing aircraft, with expertise now extended into the development of autonomous UAV to UAV refuelling.

Contacts:

Greg Caires
Media Relations

Julian Wais
Investor Relations

+1 703 414 5319
+44 (0) 1202 857998

greg.caires@cobham.com
julian.wais@cobham.com

Harris to Develop Light Weight Communication Satellite System

The US Air Force awarded Harris Corporation a contract to study the development of a light weight (under 400 kilos) communications system that is capable of being deployed aboard satellites. The SunHearald.com website has the press release. The award is part of the Air Force’s Operationally Responsive Space Office (ORSO) programs. There was no value given for the award. Read more

With Cancellation of E-10 Air Force Moves to Modernize E-8

The US Air Force has been using the E-8 Joint Surveillance Target Attack Radar System (JSTARS) aircraft for almost thirty years. Originally the Air Force planned to supplement it with the new, E-10 Multi-Sensor Command and Control Aircraft (MC2A); but that program was canceled last year. The new sensor for that system was the Multi-Platform Radar Technology Insertion Program (MP RTIP) which also is to go on the Global Hawk long range UAV. As MarketWatch.com reports the Air Force is now moving to insert the MP RTIP sensor onto the E-8 airframe. A contract was awarded to Northrop Grumman to begin that process. Read more

USAF awards satellite support contract

The US Air Force awarded Northrop Grumman a contract worth over $200 M to support the DSP constellation of satellites. Northrop-Grumman will make sure the satellites are working and provide analysis of the data they collect. The company manufactured the infra-red sensors installed on them. DSP primary mission is to detect the launch of missiles and rockets. They have been used for over thirty years and will eventually be replaced by the SBIRS system.

See the press release at MarketWatch.com.

US Air Force sues Boeing over parts prices

September 6, 2008 by Matthew Potter · Comment
Filed under: Editorial 

The US Air Force and Government has launched a civil suit against Boeing over the pricing of B-1 bomber spare and replacement parts. The Air Force claims that in the contract Boeing charged prices as if the parts were being made by Boeing. Boeing then turned around a bought the parts from a cheaper sub-contractor. The price break was not passed on the the Air Force. The contract was awarded in the late Nineties.

See this article at Australia.to for more details.

SI International purchased by UK company

Serco, a large service provider from the UK with worldwide operations, announced that it had purchased the US defense contractor, SI International. The $400 M deal expands Serco into the US defense market and represents another broadening of their market base. This continues the trend of European companies buying US ones in order to reach the large DoD budget here. By buying a US company many of the technology transfer and security requirements that impact foreign companies doing business can be minimized. SI International has 4,500 employees and primarily supports the US Air Force, an area that Serco does not do much business with.

The Guardian has the story here.

Union and Boeing try to agree

Boeing is negotiating with the machinists union who make up the core of its workforce on both military and commercial aircraft. Today they sent their best and last offer. This includes the employees who will build the tanker for the US Air Force. So in the middle of trying to write and cost a proposal to the Air Force for a program that is seen as key to the company holding onto a market they are trying to prevent work stoppages. Strikes are the kind of thing that can kill a program’s schedule.

See Excite News for more.

Update: The union leaders have recommended rejection of the Boeing proposal and striking on 4 September. While this will have a large effect on civil aircraft production it won’t help Boeing get ready for the KC-45 if they win again.

See Bloomberg.com for a story on this mess.

Arrests in Afghanistan contracting scandal

Two Air Force personnel and three Afghan nationals were arrested over charges that bribes were paid to win contracts for military construction in Afghanistan. Two of the Afghans also resided in the United States. Supposedly a bribe of $30,000 was paid to the US Air Force officials to win a $1 M construction contract in 2004. Another bribe was paid later to win a road contract. Several US military and civilian personnel have been arrested and charged with contract related corruption in Kuwait, Iraq and the United States. With the amount of money going to the efforts in Afghanistan and Iraq there is always a chance for such crime.

There is more at The Wall Street Journal’s MarketWatch.com site.

US Air Force looks to replace C-130E aircraft

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.

Boeing and KC-45 in turmoil

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.

Air Force awards omnibus support contract

The US Air Force awarded an omnibus maintenance contract. Northrop Grumman was one of the twelve companies that qualified for the contract. See the press release here. If all parts of the contract are executed the value could be as much as $10 B. Normally how these contracts work the government, here the Air Force’s depots, will issue task orders which the qualified companies may bid on. There is no guarantee that any work will be awarded or any company will get work.

Air Force buys sounding rockets

Alliant Techsystems was awarded a contract by the US Air Force to provide sounding rockets for it and NASA’s use. See a press release here. Sounding rockets tend to be small, single stage rockets that stay suborbital. They can be used to simulate targets for ballistic missile defense tests and experiments, and also support NASA activities and experiments. One common use before the Test Ban Treaty was to collect data from nuclear tests in the Pacific and the American West.

Air Force executes JASSM production option

Lockheed Martin was awarded a contract by the US Air Force for production of 111 Joint Air to Surface Standoff Missile (JASSM) and related services. The contract has a value of $107 M. See the press release here. The missiles will be produced at the company’s facility in Troy, AL. The JASSM has now had over a 1000 units ordered with a production goal of 4,000. For more on the system you can read Wikipedia here.

Air Force orders HC/MC-130 aircraft

The US Air Force placed a contract wit Lockheed Martin for six HC/MC-130J aircraft. This $470 M award was using the FY08 Advanced Procurement with the rest of the order being paid for in FY09. See a press release here. These aircraft will most likely support operations by US Special Forces Command, and are a variant of the C-130J that has been purchased by the USAF, Marines and foreign companies for the last few years.

USAF Secretary comments on protests

Secretary Wynne of the US Air Force discusses protests in this article. The gist is that the Air Force is accepting protests as a matter of course and is working to make the selection process more transparent in an attempt to limit them. The key quote is “”We’ve got so few suppliers that I’m not going to treat them badly because they protest. It’s their right,” Wynne told an aerospace industry group.” Read more

Congress begins to debate KC-45 FY09 funding

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.

UK goes the lease route for their tankers

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

Boeing gets next V-22 production option

The US Air Force and Navy gave Boeing and its team a contract for another 167 V-22 aircraft. See the story here. The contract is worth over $10 B and will also provide necessary support services. The V-22 is deployed to Iraq and conducting heavy lift cargo and personnel transport missions.

KC-45 post on Seeking Alpha

I submitted a small article for Seeking Alpha on the KC-45 as a component of the future profit of either Boeing or EADS. The post reads: “Boeing lost out to EADS for the new airforce tanker contract. The KC-45 will be a version of the Airbus 330 transport aircraft. Boeing had proposed a version of the 767 aircraft. Boeing predicted in their Current Market Outlook 2007 that 28,600 new aircarft will be required to meet the growth in the airline industry by 2026. One would assume Boeing and EADS would get a large portion of these aircraft. The US Air Force will probably order less than 400 aircraft. So the tanker contract will be a small componenet of future production for Boeing or EADS, and a small component of earnings.”

Britain expected to buy KC-30 aircraft as well

This short note at Forbes.com indicates that the UK government will buy KC-30 aircraft manufactured by EADS and with Rolls-Royce engines. This is a much smaller contract then the US Air Force one, but it builds on that success. I don’t know who else bid on this contract, but one would assume it had to be Boeing as there is nobody else. The contract will be worth $26 B dollars.

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