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Washington to supply 14,000 TOW missiles to the Saudi National Guard

April 24, 2014 by · Comment
Filed under: FMS, Raytheon, Saudi Arabia, Syndicated Industry News 

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Washington to supply 14,000 TOW missiles to the Saudi National Guard

April 24, 2014 by · Comment
Filed under: FMS, Raytheon, Saudi Arabia, Syndicated Industry News 

We've Moved! Update your Reader Now.

This feed has moved to: http://feeds.feedblitz.com/feedburner/defenseupdate

Update your reader now with this changed subscription address to get your latest updates from us.

F-35 Joint Strike Fighter (JSF) Foreign Intrigues Continue

The F-35 “Lightning II” Joint Strike Fighter (JSF) will be used not only by the U.S. military to replace its aging F-16, A/V-8, F/A-18 and A-10 aircraft but also by many other NATO countries and allies. It is being purchased as a F-16 replacement by many of these and like the successful F-16 program will have manufacturing and parts co-share agreements with different international partners.

The delays and cost increases to the program have been well documented and these have caused some early planned users to question the financial sense of continuing the program. Many of these countries, though, have already contributed through development funds as well as already had their aerospace contractors sign contracts and agreements with Lockheed Martin (LMT) to produce parts for the aircraft which continues in its Low Rate Initial Production (LRIP).

Canada, the Netherlands and Australia have had and continue to have debates about their purchase of the advanced aircraft rather then existing systems like the F/A-18, Eurofighter, Rafael, SAAB Gripens and Russian alternatives. In Canada they are reviewing the whole cost analysis that had led to the decision to continue the purchase which could technically end it and look at other aircraft. That leads to editorials and articles like this one, “The Case for the Super Hornet As The RCAF’s New Fighter” from Canada or analysis in Australia such as this: “Politics first as white paper fails on big issues”.

At the same time the U.S. has been successful in adding Foreign Military Sales (FMS) of the aircraft most notably to Israel and Japan. There has also been interested expressed by other U.S. allies like the U.A.E.

The commitment of the foreign partners is somewhat critical to the whole program as a reduction in buy quantity will have a ripple effect on the whole program. Less purchased in total and annually will cause a cost increase for each aircraft and the whole program. The F-35 PEO, Lt Gen Bogdan, identified this risk in Congressional testimony in April. If somebody drops out the price the others pay will go up putting more pressure on their budgets and perhaps cause them to drop out too. This would then become a spiral causing issues for the U.S. and all of the other nations involved in the program.

Despite the issues with the aircraft over the last decade the U.S. remains committed to the program. Over 100 are on order and there is discussion to award a new 2 year production contract this summer for a further 60-70. Training is underway for both aircrew and maintainers of the U.S.A.F., Navy, Marines and allies. The big questions remain though about completing development, how many will be built, and who ultimately will operate the aircraft.

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Lockheed Wins Two Training Contracts

With Sequestration affecting the U.S. defense budget that still does not mean contracts for new programs are not being awarded. In fact with the extension of the Continuing Resolution and the passing of a full year’s funding — not budget — the Services may now award some work that was on hold pending a decision in that matter.

Lockheed Martin (LMT) in the last 30 days received contracts for 2 new training systems. One from the U.S. Army and the other from an international customer, the Royal Saudi Air Force. Foreign Military Sales (FMS) and Direct Commercial Sales (DCS) are not affected by sequestration.

The first, Saudi, contract is worth up to $253 million and is for systems to support the Kingdom’s Boeing (BA) F-15SA fighters. The contract will provide maintenance and pilot training support by 2020. In the current day services are investing millions in computer and simulation based training devices to aid in operating and maintaining complex weapon systems.

The second one for the U.S. Army is for a command and control simulator to aid in training U.S. and allied country leadership in the conduct of military operations. That could be worth up to $146 million. The Joint Land Component Constructive Training Capability (JLCCTC) system builds off of an earlier simulator, WARSIM, that has been successfully used since 2012 for group leader training.

The advantages of computer based training is that it reduces overall costs and personnel required. They also collect data that may be reviewed and analyzed to support teaching and further training. Lockheed’s Orlando unit does a great deal of work in this area as do several other contractors like Cubic and L-3 Communications.

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General Dynamics Wins 2 FMS Vehicle Contracts

As the U.S. Defense Department looks to the potential start of sequestration and the cuts required by that budget device it made an effort at the start of Fiscal Year 2013 to award as many contract and production options as it could. This means that future large contract awards may be limited as the year goes on. This may limit the potential contract actions remaining for U.S. defense contractors.

At the same time some budget decisions have already been made due to the drawing down of the Afghanistan commitment and the end of Iraq fighting. This has included decisions by the Army to not utilize General Dynamics (GD) tank manufacturing plan in Lima, OH due to their requirements being met.

General Dynamics like most other major contractors is trying to expand their already quite large foreign orders to make up for some of these cuts, real or potential.

In this vein the company was just awarded 2 Foreign Military Sales (FMS) contracts for U.S. allies. These are for M1 tanks to Saudi Arabia and Light Armored Vehicles (LAV) for Colombia.

The Saudi contract is for a further 69 of the M1A2S version of the Abrams tank. This contract is worth a little over $130 million and is for a tank specifically equipped to Saudi needs.

Colombia ordered 24 LAV III wheeled armored vehicles for just over $65 million. The LAV III have the latest in double hull armor for defense against IED and mines.

If the sequestration cuts are implemented then there will be more pressure to win these types of contract in an increasingly competitive markets. If not the U.S. may not be able to maintain manufacturing capability slowly built up over the last decade.

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South Korea Interested in Global Hawk

It is being reported that South Korea has requested to purchase 4 of Northrop Grumman’s (NOC) long range, strategic Unmanned Aerial Vehicle (UAV), the Global Hawk. With supporting parts, services and other items the contract is estimated at around $1.2 billion. Congress will have to approve the sale.

The Global Hawk conducts long range surveillance and intelligence data collection missions. It is currently used by the U.S. Air Force and will also support European and U.S. Navy missions. The Global Hawk has been in service since the early part of this century and has flown thousands of hours of missions in support of Iraq and Afghanistan. The system has consistently been upgraded with new sensors and other equipment over time.

In their original 2013 budget the Obama Administration had proposed reducing the number of Global Hawks that they planned to buy as well as retire some others. Congress fought this proposal questioning the rationale of continuing to use manned U-2/TR-1 aircraft for these missions.

This contract will follow on to a European order for 5 and the annual buys by the U.S. Air Force and Navy to support their programs.

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Despite End of C-17 Production Boeing Still Generating Revenue

The C-17 has been the standard strategic transport for the U.S. Air Force for the last two days. Flying alongside the much smaller C-5 fleet it has flown thousands of missions carrying cargo and passengers in support of Iraq and Afghanistan. Congress and the Air Force decided to end production for the Air Force a few years ago although there are still some open Foreign Military Sales (FMS) cases and hopefully a few more remaining. Even so the C-17 will remain in U.S. service for several more years.

Despite the lack of production orders Boeing (BA) is still able to generate revenue from the platform through maintenance, retrofit and service contracts with the American defense department. They were just awarded a ten year contract for software, hardware and weapon system upgrades worth almost $900 million.

In most cases these days the military rarely buys full data rights to a weapon system due to the prohibitive costs involved. This means that many times the OEM receives the bulk of the support and sustainment contracts. In the end these can easily dwarf the value of the production contract.

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Saudi Arabia to Upgrade C-130 Fleet

The U.S. Defense Department informed Congress this week that they intend to sell to Saudi Arabia 25 C-130J and KC-130 aircraft. The aircraft are made by Lockheed Martin (LMT) outside Atlanta. If Congress does not object in 30 days, which they most likely will not, then the contract will begin. Estimate of the value including spares, support and other services is almost $7 billion.

It represents the largest C-130 Foreign Military Sale (FMS) contract in value.

The C-130J is the latest version of the venerable propeller driven transport which has been in use since the Fifties. Several hundred of the model are now in service with the U.S. Air Force, Marine Corps and many different nations around the world. The fighting in Iraq and Afghanistan which due to the vehicle threat emphasized tactical transport with aircraft like the C-130 and rotary wing assets drove some of the sales in the last 10 years.

Saudi Arabia already operates 50 older versions of the aircraft so this contract represents a significant upgrade to that capability.

With the potential for less domestic contracts U.S. contractors will be looking overseas for more sales.

Photo from kingair42′s flickr photostream.

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Reports of 2 Deals for AH-64D Apaches

There are reports that 2 Asian nations have decided to purchase Boeing’s (BA) AH-64D Apache attack helicopters. These advanced aircraft are in use with the U.S. Army and several allied nations such as Great Britain, the Netherlands, Israel and others. They have seen extensive use in Afghanistan and Iraq. The U.S. is currently buying AH-64D Block III versions of the helicopter.

Now it seems that India will be adding them to their inventory. The plan is to purchase 22 aircraft with weapons and other support. Total contract value could be as high as $1.4 billion. India had also been looking at the Russian Mil-28 helicopter. India has recently been looking to more Western sources and already has purchase Boeing P-8 and C-17 aircraft. The deal will include offsets allowing for Boeing purchases and investment in India.

It is also being reported that Indonesia will move out and buy 8 AH-64D. There are less details on this proposal available. Indonesia was looking at using a domestically produced aircraft for this mission but it now seems the Apache is a preferred option.

The U.S. military has invested billions in rotary wing platforms over the last decade as they have been a critical force multiplier. The plans to reduce their spending over the next decade will make contracts like this more important to the bottom line of defense contractors.

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F-35 JSF News Roundup

The F-35 Joint Strike Fighter (JSF) is the largest defense acquisition program ever and it continues despite the budget uncertainty in the United States. If sequestration is implemented the program will most likely see across the board reductions in funding. This could lead to reduced production numbers and delays in the test and development program. The JSF while it is in low rate production is still facing concurrency as it moves toward a final design. The program is led by Lockheed Martin (LMT).

Some recent stories about the program include:

The new test plan for the program was reviewed by DoD leadership and did not win approval. There are major concerns with the pace of development for the new helmet the pilot wears that provides data directly to them rather then relying on their instruments.

Lockheed received a contract from the U.S. Navy worth over $200 million to begin implementing Israeli specific modifications to support that country’s buy of the aircraft.

In another move related to the foreign sales of the program Canada has hired KPMG to analyze the cost basis used by the government to award their contract for 65 F-35 to replace existing CF-18 fighters.

Despite all of this news the program continues with training, testing and development as Lockheed steadily delivers aircraft from the first 4 production batches. They also continue to work with the Government on the next buy.

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More Apache Block III Contracts Awarded

Boeing (BA) has received two contracts for continued work on the AH-64D Apache Block III for the U.S. Army. These include a production option as well as one for Foreign Military Sales (FMS) support. The two contracts combined are worth over $600 million.

The Apache is the U.S.’s most advanced attack helicopter. Boeing will not only manufacture new ones but upgrade existing older models. Apaches have seen heavy use in Iraq and Afghanistan where with there 30mm cannon and Hellfire missiles they have often provided fire support and precision strike. The Apache was originally designed to replace the AH-1 Cobra to kill Soviet tanks in Western Europe.

Boeing was also recently announced as the winner of a large FMS contract to provide Apaches to India. The Apache has been used by many U.S. allies such as the U.K., Netherlands, U.A.E., Israel and Egypt.

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BAE to Upgrade South Korean F-16 Fighters

The defense industry is becoming more competitive internationally. As the U.S. and European governments begin to spend less on their domestic military the large defense contractors will compete more for deals with foreign customers. The recent award to BAE Systems (BAE:LSE) of a contract by South Korea for fighter upgrades illustrates this.

South Korea operates over 130 Lockheed Martin (LMT) F-16 fighters. The F-16 was sold to many U.S. allies and like the current F-35 program was designed to share production among those buying it. Parts were made across the globe and the aircraft was assembled in different places such as South Korea and the Netherlands. This not only increased the investment by those involved but also lowered risk and allowed greater production in a shorter time.

This also meant that those countries assembling the aircraft did not necessarily have to rely on the U.S. or Lockheed for components or support once the F-16 were delivered.

The contract which could be worth over a $1 billion will have BAE install new electronics into the aircraft. Most of the work will be done in America even though it is a U.K. company.

Interestingly this contract is not a direct sale to South Korea but was done through the U.S. Foreign Military Sales (FMS) program. This allows foreign customers to utilize U.S. contracts to purchase hardware and support rather then negotiating their own contract.

BAE is already working on existing U.S. and Turkish F-16.

Normally one would have expected this type of contract to go to the OEM for the aircraft but the fact that BAE is doing the work shows the U.S. owns some of the necessary technical data and one hopes competition is lowering the cost of the effort.

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FMS of Apache to Persian Gulf States to Grow

The United States has over the last decades sold billions to the various Gulf States to counter threats first from Iraq and now Iran. This has included increasingly sophisticated systems such as the PATRIOT and THAAD missile defense systems, C-17 transports and large amounts of helicopters. One aircraft that has proven popular is the AH-64D Apache attack helicopter made by Boeing (BA).

This is in use with countries like Saudi Arabia, Israel, Egypt, the U.A.E. and others. Now it is being reported that Qatar has made a request for up to 24 of the helicopters. The deal if fully executed would be worth about $3 billion. This includes not only the new aircraft but also spares, support equipment, training and weaponry.

Qatar has also proposed buying Black Hawk helicopters from the U.S. made by United Technology’s (UTX) Sikorsky Aircraft Corporation.

The addition of the Apache increases commonality with the U.S. military as well as providing significant capability for the Qatar military. These aircraft have seen heavy use in Iraq and Afghanistan providing fire support for ground troops as well as carrying out strike missions.

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FCPA Security Case Ends In A Fiasco

Two years ago at the SHOT Show where civil, security and military small arms manufacturers display their wares the FBI ran a major sting leading to the arrest of 22 individuals for attempted bribery of a foreign official in order to gain a contract. It was one of the biggest cases in terms of numbers of persons and companies involving the Foreign Corrupt Practices Act (FCPA).

The FCPA is designed to prevent U.S. and foreign companies, too, from being involved in bribes or other illegal means to gain work from overseas customers. If a company does business in the U.S. or with the U.S. government it may be targeted under this act. Recently large companies have been charged under this law including the Dutch giant Siemens, BAE Systems as well as oil support company KBR.

This case involved a fake representative of an African country negotiating for equipment for a police force that would require some payments to people to make the deal go through. Different companies were involved and various people charged.

Now after two years of failing to convict anybody in the first two trails the FBI and Justice Department have given up. Rather then attempt to retry the cases they have decided to drop charges against the remaining defendants. Whether they will attempt to retry the first two trials remain to be seen.

The first ended in an acquittal and the second in a mistrial as the jury could not make a decision. This was primarily due to the fact that the prime witness for the prosecution was considered unreliable as well as details of communications between him and the FBI agents involved in the case portrayed them negatively. The jury also felt that at no time was it made clear to the defendants that the payments demanded were bribes.

The FCPA is an important tool and the U.S. has worked hard to end the practice of defense contractors paying officials in other countries for contracts. That does not mean it does not still happen and there remain cases in the U.S. of government officials taking bribes. Other nations have had a harder time but overall the defense industry is a lot less corrupt then it was thirty years ago.

These cases illustrate that the government has to be very careful how it approaches these situations and the way they prepare their case.

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Israel Chooses Italian Jet for New Trainer

Update – The Israeli Government stated that one of the main reasons they chose the M346 over South Korea’s T-50 Golden Eagle was that it provided better compatibility with the F-35 Joint Strike Fighter that Israel is buying. The T-50 was supposedly not in line with “international standards”. This gives hope to Alenia Aermacchi that other countries buying the F-35 might consider the M346.

The hard fought battle between Italy and South Korea over the new Israeli trainer came to a close yesterday with Israel choosing the Alenia Aermacchi M-346 advanced jet training aircraft. The contract could have a value of a $1 billion in the end. South Korea had offered their T-50 Golden Eagle indigenous developed jet.

Both countries had been going back and forth with Israel trying to develop offset deals that would be the most attractive to the Middle Eastern state. In the end Italy’s was more valuable to Israel although now they face South Korean anger and the potential for some lost businesses.

It has been reported that beyond the offset issue the Israeli evaluators had favored the Finmeccania product over the Korean aircraft.

Offsets have always been a struggle with defense contracting with some countries demanding a great deal like Canada and this Israeli deal while others have had to cut back as India has done to attract more bids from large Western countries. In the case of Israel and Italy, and even South Korea, there should be no shortages of systems that the countries would like to buy.

Israel makes radars, tankers, UAV’s, missile systems as well as ground combat vehicles and other weapons that all could be considered by Italy. South Korea was hoping to buy tankers and other aircraft from Israel but now these deals may not happen or even be considered.

Photo from Ronnie McDonald’s flickr photostream

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Army Orders More CH-47 from Boeing

The U.S. Army and other services have made heavy investments in their rotary wing forces over the last decade. Due to the terrain and the situation in Iraq and Afghanistan heavy use of helicopters were required to provide fire support and logistics transportation. This meant that not only was the existing fleet of aircraft being heavily used but more were needed as well as new systems.

The U.S. Army cancelled the RAH-66 Comanche program in 2004. This was an advanced scout attack helicopter. They utilized the funds to build new programs such as the UH-60M, UH-72A and CH-47F aircraft. The Marines and Air Force also made a heavy investment in the V-22 OSprey tilt rotor aircraft.

One aircraft that has made a major contribution to the fighting is the large, cargo helicopter CH-47 Chinook. Not only has the U.S. Army increased its inventory of these aircraft but also many other countries have bought it to support their combat troops in Afghanistan. These have included the U.K., Canada and Australia. Due to the altitude and temperature conditions the CH-47 is the most capable aircraft for carrying large loads of supplies or troops.

The CH-47 is manufactured by Boeing (BA) at their plant in Pennsylvania and they just received yet another production contract for the aircraft. A further 14 were ordered with an value of around $370 million.

These aircraft will be used by the U.S., Australia and the U.A.E. continuing to demonstrate the FMS value of the CH-47.

The expected budget cuts will most likely slow down the investment in aviation by the Army but not end programs. The U.S. needs to either re-capatilize or replace systems that have seen a great deal of use in Iraq and Afghanistan. Even with smaller ground forces it makes sense to continue to increase aviation assets as it is easier to quickly build up infantry units then rotary winged ones.

The CH-47 due to its demonstrated capability will remain a core component of the U.S. Army’s aviation forces and will continue to see steady overseas sales.

Photo from The California’s National Guard Flickr photostream.

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F-35 Continued Production Lands P&W Engine Contract

The F-35 will continue production in FY12 and FY13. The Pentagon has gone ahead and ordered the FY12 buy from Lockheed Martin (LMT) for another 30 or so aircraft for the U.S. Air Force, Marines and Navy as well as various foreign partners. This contract was awarded in December. The full production buy follows the advance procurement purchase made last year to support the long lead items for the latest production batch of the advanced fighter. The future of the program may get more interesting depending on how big a cut the Pentagon needs to make in the FY13 and out. The F-35 Joint Strike Fighter is the biggest acquisition program in history if all parts of it are executed coming in at well over a trillion dollars for production and support over the program’s lifetime. In order to save funding cuts to this total investment might become easy.

As part of the F-35 production there has to be engines and now that the fight between the F-135 manufactured by Pratt & Whitney, part of United Technologies (UTX), and the alternate engine from General Electric (GE) and Rolls-Royce (RR:LSE) is over those orders need to go to Pratt.

This means that last week as part of the upcoming advanced procurement for future aircraft P&W received a contract worth almost $200 million to support the engine production for 37 F-35 for the U.S., Italy and Australia.

The F-35 despite the fact that the budget wars about to affect the Pentagon may seriously change the program has had a few good weeks. First, Japan decided to buy it to replace some of their F-15 aircraft. Turkey also decided to buy two of the aircraft from a potential order of 100.

The contracts could be worth billions to Lockheed Martin and its supporting contractors as well aid the U.S. by decreasing the price of their aircraft. Every F-35 sold to another country will help keep production quantities up and prices down.

Overall the F-35 forms the core of the U.S. plans to modernize its aircraft fleets. Cuts in its quantities will only mean a requirement for older aircraft to fly longer at greater cost or reduced capability for the United States. This means despite the potential for reductions in U.S. defense spending the F-35 will remain a large part of the budget for the next several years.

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Air Force Light Attack Contract Gets More Curious

Update – Last night Embraer confirmed receipt of the $355 million contract for twenty aircraft and their support.

It came out today as part of Hawker Beechcraft’s suit against the U.S. Air Force over their denied protest about their exclusion from the Light Attack aircraft competition that the contract has been awarded to the team of Sierra Nevada and Brazil’s Embraer. Hawker had submitted a version of their T-6 trainer for an aircraft initially to potentially be used by Afghanistan and the U.S.

The Air Force eliminated the proposal from consideration as not being technically responsive. Hawker protested to the Government Accountability Office ( GAO) but was denied by that agency. Hawker then sued as the next step in the protest process. That case is being expedited by the Federal Court responsible for these cases.

The notice of the award tothe only remaining bidder came without seemingly either public notice by the Defense Department or Congressional notification. This latest move will only further raise questions especially of those in Congress who support Hawker.

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U.S. Army Awards JMR Study Contracts

Currently the U.S. Army, Navy and many Allied nations rely on the Sikorsky, part of United Technologies (UTX), UH-60 Blackhawk helicopter for the medium lift mission. The Blackhawk entered service in the late Seventies as a replacement for the venerable UH-1 Huey aircraft. Since 9/11 it has been heavily used in Iraq and Afghanistan flying several hundred thousand flight hours.

The Army is working on a long range replacement program for the Blackhawk called Joint Multi Role (JMR). This will be an aircraft that not only will take on the UH-60 missions but may also form the basis for a new attack or scout helicopter like the UH-1 did with the AH-1 Cobra.

As part of this program the Army went ahead and awarded contracts to four different companies to conduct long term research and design studies for the future JMR.

Interestingly enough one of the contracts was awarded to AVX Aircraft of Texas. This is a new company started by mainly former Bell employees that has produced an interesting concept for the Army’s new scout helicopter the Armed Aerial Scout (AAS).

The AAS is a follow on to the cancelled Armed Reconnaissance Helicopter (ARH) which had been started as the Bell ARH-70 Arapahoe to replace the OH-58D Kiowa Warrior but was cancelled in 2008 due to cost and schedule issues. AVX has come up with a plan to fit the OH-58 with two rotors and ducted fans that push it to increase speed, range and payload. Similar concepts could be used to meet the JMR requirements.

The other contracts went to the more traditional Boeing (BA), Sikorsky, and Bell, part of Textron (TXT). These all have current military aircraft flying and they may offer more traditional ideas for the new aircraft. Boeing does currently make the V-22 for the Marines and Air Force which could be used as a tilt rotor basis for a new medium lift system.

The JMR when it is ready for competition would be a major contract as it may be expected to last 30-40 years and see production quantities of several hundred. Also if it did enter U.S. service it might enjoy good Foreign Military Sales (FMS) similar to the Blackhawk which could mean billions in revenue for the ultimate provider of the aircraft.

Unfortunately in the current budget situation the program probably will not move fast and it might be several years for the new system to take shape. This means that the Army and other users will soldier on with the UH-60.

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VSE Corp. to Support U.S. Navy FMS Program

VSE Corporation (VSEC) is a large engineering company that provides support services to a variety of government and commercial customers although the Federal government remains their largest client. They perform a great deal of maintenance for aviation, ground vehicles and ships as well as technical analysis and support for IT, logistics planning and Research & Development efforts.

A program that they have executed for several years is to aid the U.S. Navy in preparing for turnover Foreign Military Sales (FMS) of former U.S. ships to their new owners. The U.S. will sell older ships that they no longer want to use as well as ones deliberately built for the overseas customer in U.S. yards. VSE works with the International Fleet Support Program managed by the Navy’s Sea Systems Command (NAVSEA).

The company was recently awarded a five year contract with a base value of about $277 million. If the four other option years are executed the contract will have a value of almost $1.5 billion. This contract will continue their engineering, maintenance and support for ships sold to overseas governments.

VSE will provide design, configuration management, field engineering, training and depot level repair among other services for the foreign customers. One key part of the contract is to make sure the ships are ready to be transferred something that VSE has done for over forty ships since 1995.

Contracts like this often do not make the headlines despite their large values as they are primarily service oriented rather then actually buying a system or manufacturing a product. The U.S. military awards large amounts of specific service contracts like this every year and their total value is in the tens of billions.

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More Defense Related Layoffs Announced

As the big defense contractors continue to restructure themselves and their workforces for what is expected to be a period of decline in spending more layoffs were announced this week. The pressure too from the U.S. and other governments to be more price conscious is also affecting decisions related to the size of overhead and support employees.

Many of the major U.S. corporations have already announced plans to reduce their overall number of employees including General Dynamics (GD), Boeing (BA) and Lockheed Martin (LMT). Despite all three having strong sales and many major programs they feel that it is best to begin creating a leaner overall structure.

Lockheed followed up its earlier announcement of eliminating 1,500 jobs in its Aeronautics unit which builds the F-35 Joint Strike Fighter and the C-130 transport with word that it has already cut 540 of them. This includes over 200 at its Georgia plant making the C-130 and F-22 fighter. This is about 2.5 percent of the workforce at that facility.

In a bigger move British defense giant, BAE Systems (BAE:LSE), said that it would plan on reducing its workforce by about 3,000 positions. Most of these would be related to aircraft production where the Eurofighter Typhoon is near the end of its production run. Most of the original European customers have ordered all of that aircraft that they plan to buy leaving it needing Foreign Military Sales (FMS) customers to keep the line going beyond the next decade.

The Typhoon is being considered by India and potentially Japan for their new fighter but it is one of many that is being bid and price pressure is very strong for these deals making it hard to predict a winner.

BAE Systems has enjoyed a strong decade as it has grown in the U.S. market as well as supplying a British military involved in Iraq and Afghanistan. Now the U.K. is trying to reduce its overall spending which will seriously affect its defense spending while the U.K. has left Iraq and will leave Afghanistan with the U.S. in the next few years. The U.S. defense budget will also be reduced limiting further growth in that market.

BAE is one of the largest employers in the U.K. and these job losses will be a blow to that country’s economy and well being. The announced cuts represent almost 10 percent of their workers in that country. Earlier this year BAE had already began to make smaller cuts related to specific programs. This large one seems to be an adjustment to what is perceived as plans for the British Government’s future spending proposals.

As defense budgets decline it won’t only be contractor positions eliminated but also civil service and military as well. A large amount of money goes to these types of jobs and the quickest way to save is to cut back there. At a time when the U.S. and European economies are still struggling with higher then normal unemployment these types of moves will not help but must occur if budgets are to be balanced.

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Boeing, US Navy Deliver Proposal to Equip Japan Air Self Defense Force with Advanced Super Hornets — Press Release

Boeing, US Navy Deliver Proposal to Equip Japan Air Self Defense Force with Advanced Super Hornets
- Super Hornets would include world’s most advanced air combat radar, designed-in stealth
- Japanese manufacturers could benefit from design and production opportunities

TOKYO, Sept. 25, 2011 /PRNewswire/ — Boeing (NYSE: BA) and the U.S. Navy have delivered a proposal to the government of Japan offering the advanced F/A-18E Super Hornet Block II to become the Japan Air Self Defense Force’s (JASDF) next premier fighter aircraft. The F/A-18E Block II is the United States’ newest operational and combat-proven fighter aircraft. Japan issued a Request for Proposal for its F-X fighter competition on April 13, with a deadline of Sept. 26.

“The Super Hornet is the world’s most advanced multirole fighter and its selection would provide the Japan Air Self Defense Force with new, unprecedented capability,” said Boeing Japan President Mike Denton. “The Super Hornet can provide the government of Japan with guaranteed pricing and a guaranteed delivery timeline, while equipping the JASDF with superior multirole capability for the defense of Japan.

“Having conducted business in Japan for more than 50 years, Boeing is excited about the extensive technical design and manufacturing opportunities the Super Hornet would bring to many areas of Japanese industry,” added Denton.

The advanced Super Hornet version offered to Japan is based on the F/A-18E/F model operated around the globe by the U.S. Navy. The Royal Australian Air Force is also procuring the aircraft and has taken delivery of 20 F/A-18Fs at its base in Amberley, Queensland. Four additional Super Hornets will be delivered to Australia this year.

“We believe the Super Hornet is an optimal solution for the operational requirements of the Japan Air Self Defense Force,” said Boeing Military Aircraft President Chris Chadwick. “While the competitor aircraft specialize in either air-to-air or air-to-ground operations, the Super Hornet is a true multirole fighter, with the proven operational capability to seamlessly conduct air dominance or precision strike missions across the combined air, ground, maritime and electronic battlespace.”

The Boeing Super Hornet is a multirole aircraft, able to perform virtually every mission in the tactical spectrum, including air superiority, day/night strike with precision-guided weapons, fighter escort, close air support, suppression of enemy air defenses, maritime strike, reconnaissance, forward air control and tanker missions. The Super Hornet Block II provides the most advanced strike fighter capability available. With date-certain deliveries, cost-certain production and proven combat capability, the Super Hornet is the low-risk, high-end multirole fighter solution for the United States and its global defense partners. Boeing has delivered more than 460 Super Hornets to the U.S. Navy and the Royal Australian Air Force. Every Super Hornet produced has been delivered ahead of schedule and on budget.

A unit of The Boeing Company, Boeing Defense, Space & Security (www.boeing.com/bds) is one of the world’s largest defense, space and security businesses specializing in innovative and capabilities-driven customer solutions, and the world’s largest and most versatile manufacturer of military aircraft. Headquartered in St. Louis, Boeing Defense, Space & Security is a $32 billion business with 64,000 employees worldwide. Follow us on Twitter: @BoeingDefense.

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Training Helicopters for Afghanistan from MD Begin Deliveries

Earlier this year the U.S. Army awarded MD Helicopters a contract to begin production of training helicopters for the Afghan military. The initial contract was for 6 aircraft but up to 54 could be purchased at a value of almost $200 million. The small aircraft would be used for initial pilot training. The Afghan military operates a mix of primarily Russian aircraft suited more to their experience.

The winning of this contract was quite a coup for MD Helicopters and its owner, Ms. Lynn Tilton, as it is the first major U.S. defense contract the company has had since she bought it in 2005.

The six initial aircraft were delivered this week several weeks ahead of schedule. At a ceremony at the company’s Mesa, AZ plant Army officials along with local and national government figures celebrated the acceptance of the systems.

The U.S. has managed the acquisition of weapons for the new Afghan government and military for almost ten years now. They have primarily focused on getting small arms and slowly building up more complex and heavier weapons. Rotary wing assets are key to the fighting in that country due to the roads and the spread out nature of the population. The U.S. and its allies have relied on a variety of their own and leased helicopters to conduct supply and support missions.

The U.S. has already procured several Mil-17 transport helicopters for use by the Afghans. This has raised some hackles in Congress who feel U.S. manufactured equipment should be the priority. The contract to MD Helicopters and one to Cessna for training fixed wing aircraft should mollify some of those critics.

As the U.S. begins its draw down from the area more investment will have to be made in systems like this to help the Afghans get ready to defend themselves. This is an opportunity for U.S. defense contractors to at least gain some of this work and help potentially offset any cuts due to the reductions in U.S. defense spending.

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U.A.E. Considering Reducing THAAD Buy?

In the last year the Gulf State United Arab Emirates (U.A.E.) announced that it was making two major purchases of U.S. missile and air defense equipment. First it was placing a large order with Raytheon (RTN) for PATRIOT PAC-3 systems which provide local defense against enemy aircraft and ballistic missiles. Second that it would be the first overseas buyer of the longer ranged THAAD system manufactured by Lockheed Martin (LMT). The deal for the Terminal High Altitude Area Defense (THAAD) equipment was estimated at close to $7 billion.

Now there are reports that the U.A.E. is considering reducing its total investment in THAAD. No absolute figures have been given but it may be a substantial reduction in what is being purchased and spent by the U.A.E. government. A reduction in this contract will not only affect Lockheed’s bottom line but also the price the U.S. will pay for its equipment as the lack of this contract will reduce quantities and raise the price for the U.S. Army.

With the expected pressure on the U.S. defense budget to save costs and reduce investments overseas sales like this will become more important to U.S. defense contractors especially of existing systems like THAAD. A cut back in spending by the Gulf States which in the last ten years have heavily invested in new equipment across the spectrum may have a major effect on U.S. and European defense contractors.

No reason was given for the consideration of the cut to the purchase but it may be that the U.A.E. after refinement has found that less THAAD systems may provide the necessary performance then originally thought or it could just be good old budget cutting.

If this becomes a trend it will be a serious issue for the world’s defense industry and not just the American one.

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Armoured Vehicles South Africa — Conference

Armoured Vehicles South Africa

22/08/2011 – 24/08/2011
Sheraton Hotel, Pretoria, South Africa

As part of Defence IQ’s Armoured Vehicles series, Armoured Vehicles South Africa, taking place 22nd-24th August 2011 at the Sheraton Hotel, Pretoria, will allow the world’s most authoritative armoured vehicle experts to gather in the home of survivability to learn from the South African Army, whilst sharing technology and expertise.

With the full support of Lieutenant General Shoke, Chief of the South African National Defence Force, Armoured Vehicles South Africa focuses on the three main South African procurement programmes – Hoefyster (for new Infantry Fighting Vehicles), Sepula (for new Armoured Personnel Carriers) and Aorta (for a new Main Battle Tank) – and gathers together international experts to discuss the key themes of survivability, turret accuracy and through life capability support.

View the full agenda at www.ArmouredVehiclesEvent.co.za

Key presentations include:

• Lieutenant General Solly Zacharia Shoke, Commander of the South African Army, delivering a keynote speech on the Future of the South African Army and the Capabilities Required for Peacekeeping and Partnership with Strategic Allies

• Mr Dawie Griesel, Acting General Manager Army Acquisition, ARMSCOR, who will explain the role of the organisation in relation to South African Army requirements

• Brigadier General Theodore D. Martin, Commandant, US Army Armour School, speaking on the Future of Armour for Survivability: Showcasing the Work of the US Army Armour School

• Lieutenant General Antonio Gucciardino, General Manager, Procurement Agency for Land Systems, Italian Army, on the Italian experience of enhancing vehicle survivability and the reality of providing combat equipment to the Army

• Lieutenant General Chander Prakash, Force Commander for the UN Stabilisation Mission in the Democratic Republic of Congo, discussing the importance of Armoured Vehicles in the MONUSCO Mission

For more information or to register visit: www.ArmouredVehiclesEvent.co.za

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