Lockheed Martin Completes Delivery of 17 CC-130J Super Hercules Aircraft to Canada — Press Release

MARIETTA, Ga., May 8, 2012 /PRNewswire/ — The Royal Canadian Air Force formally accepted the 17th Lockheed Martin [NYSE: LMT] CC-130J Super Hercules in ceremonies here today, completing the order placed in December 2007. The aircraft will be flown to Canadian Forces Base Trenton later this week.

The original contract called for all 17 aircraft to be delivered by the end of 2012. The first CC-130J was accepted in June 2010 and today’s acceptance demonstrates the success of the program and the completion of deliveries ahead of schedule.

“The delivery of the final CC-130J Hercules to the RCAF represents a significant milestone in the history of the RCAF,” said Lt. Col. Colin Keiver, Commanding Officer, 436 (T) Squadron. “The aircraft has already proven its worth around the world in places like Afghanistan and Libya, as well as here at home in Canada. Our partners at Lockheed Martin have delivered us an aircraft that more than lives up to the motto of 436 Squadron, Onus Portamus or ‘We Carry the Load.’”

“The C‑130 Hercules has acquired many nicknames and affectionate titles over the years, but it is in Canada that the aircraft has earned a name that I think summarizes the true meaning of this aircraft – Workhorse,” said George Shultz, Lockheed Martin vice president and general manager, C-130 Programs. “Today recognizes another great chapter in Canadian airlift history and in the continuation and expansion of the long and strong relationships with our industrial partners in Canada.”

To date, Lockheed Martin has delivered more than $350 million in Industrial and Regional Benefits (IRB) to Canadian industry as a result of the Government of Canada’s procurement of the CC-130J aircraft and In-Service Support.

Headquartered in Bethesda, Md., Lockheed Martin is a global security and aerospace company that employs about 123,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The Corporation’s net sales for 2011 were $46.5 billion.

For additional information, visit our website: http://www.lockheedmartin.com

More F-35 Work for Lockheed Martin

The Pentagon awarded Lockheed Martin (LMT), the prime contractor for the F-35 Joint Strike Fighter, another $237 million of work on the advanced aircraft program. This contract action is to add to the fourth low rate production batch some changes that have been developed over recent times. The F-35 program is very concurrent with testing and development ongoing while production is as well.

This means situations like this where aircraft already delivered or on the production line will be retrofitted with changes that have come out of the test program or experience flying the system. This concurrency is one of the reasons the program has suffered cost and schedule problems. At the same time it allows Lockheed to deliver aircraft to support training and testing and ultimately deployment.

Originally the contracts for production had been cost plus where the government was responsible for any increases in cost related to changing requirements or specifications. The most recent production one due to pressure to control cost has a cap above which Lockheed will be responsible for any additional costs.

Despite the fact that their line workers remain on strike for what is now approaching three weeks the company continues to work on the aircraft.

The F-35 program continues to be the most expensive defense acquisition program in history and recent moves to stretch out deliveries by several years will only add to that total cost.

UTC Names Mick Maurer as President, Sikorsky Aircraft; Jeffrey P. Pino to Retire — Press Release

HARTFORD, Conn., May 7, 2012 /PRNewswire/ — United Technologies Corp. (NYSE: UTX) today announced the appointment of Mick Maurer as President of its Sikorsky Aircraft Corp. subsidiary, effective July 1. Maurer will report to UTC Chairman & Chief Executive Louis Chenevert, succeeding Jeffrey P. Pino, who will retire July 1. To ensure a seamless succession, Pino and Maurer will collaborate closely during the next two months, after which Pino will serve as a consultant to Sikorsky.

Maurer joined UTC in 1989 at the corporation’s Otis Elevator Co. unit, where he worked in positions of increasing responsibility until 2000, when he joined Sikorsky as Vice President, Enterprise Planning & Development. Most recently, Maurer served as President of the Sikorsky Military Systems unit, responsible for U.S. and International Military program and product line management, customer relationships and military aircraft delivery. He is a graduate of the U.S. Naval Academy and holds a master’s degree in engineering from Johns Hopkins University and a Master of Business Administration degree from Stanford University.

“I am confident that under Mick’s leadership, Sikorsky will continue to deliver unmatched value to customers and UTC shareholders,” Chenevert said. “Mick is exceptionally well qualified to lead Sikorsky, given his demonstrated leadership capabilities, strong customer relationships and deep industry knowledge.”

Pino is completing a career in aerospace that spans nearly four decades. He is a retired Master Army Aviator and served in the U.S. Army for 26 years in the active duty, Guard and Reserve components. Prior to joining Sikorsky in 2002, he spent 17 years with Textron’s Bell Helicopter unit.

Pino became Sikorsky’s president in 2006 after previously serving as the company’s Senior Vice President for corporate strategy, marketing and commercial programs. During his years at Sikorsky, the company achieved significant growth, increased productivity and expanded margins, while continuing to invest in game-changing technology.

“Jeff Pino has done a remarkable job leading Sikorsky,” Chenevert said. “Under his leadership, Sikorsky has become more competitive while doubling its production rates to become the world’s largest helicopter manufacturer, and has expanded into new markets with the S-70i international version of the iconic BLACK HAWK helicopter.

“Jeff has positioned Sikorsky well for the future, overseeing the successful development of the CH-53K heavy-lift helicopter and Sikorsky’s X2 technology, which was recognized with the 2010 Collier Trophy and is now being incorporated into the S-97 RAIDER,” Chenevert said. “We congratulate Jeff on an outstanding career and wish him all the best in retirement.”

United Technologies Corp., based in Hartford, Connecticut, is a diversified company providing high technology products and services to the building and aerospace industries. For more information, visit www.utc.com.

Congress, Defense Budget and Contractors — Seeking Alpha

Here is an exclusive article I wrote for Seeking Alpha on Congressional changes to the defense budget and how they will aid contractors.

Australia to Stretch Out F-35 Deliveries

One of the key components of the F-35 Joint Strike Fighter (JSF) program was the early participation by U.S. allied countries. Unlike traditional Foreign Military Sales (FMS) these countries provided some of the development costs and committed early to buy the the aircraft rather then wait for the establishment of production and get it after the aircraft entered U.S. service. These included Great Britain, Australia, Canada and The Netherlands.

These countries planned to buy different amounts of the three types of the F-35. Britain to operate from their new carriers and replace the Harrier Jump Jet, Canada to retire their CF-18 fleet and the other two to upgrade from the aging F-16. In fact the F-35 would be similar to the F-16 program with parts and components made by the buying countries. Norway, Japan and Israel have also decided to buy the F-35 over other potential aircraft.

The F-35 has seen serious delays and cost growth due to testing and development issues. It is currently in Low Rate Initial Production (LRIP) as well as continuing testing. The U.S. in their latest budget proposal have decided to stretch production out to save money in the near term. Australia has now decided to do the same thing.

That country’s budget plans now call for delays of accepting the majority of their aircraft to mirror current U.S. plans. The goal is to save over $1.6 billion in the next few eyars. The first two Australian aircraft are in production and should be delivered in 2014-15 to start training but their first squadron will not stand up now for a few years after that.

The problem with stretching out production buys is that while it does save money in the near term the same number of systems will have to be bought over a longer time. Due to inflation alone as well as the loss of production efficiencies the average price per aircraft will increase causing the whole program to get more expensive. One potential problem that may arise is that the total number to be bought will be reduced.

Canada is also re-considering their F-35 buy due to issues with how the contract was awarded last year. These decisions will be a blow to Lockheed Martin (LMT) as they reduce near term revenue and earnings.

Lockheed Martin Delivers Final, Historic F-22 Raptor To U.S. Air Force

MARIETTA, Ga., May 2, 2012 /PRNewswire/ — Lockheed Martin [NYSE: LMT] leadership delivered today the 195th and last F-22 Raptor to U.S. Air Force leadership in a ceremony at the Lockheed Martin Aeronautics site here. With this delivery, the U.S. Air Force now possesses the world’s only 5th generation stealth fighter aircraft fleet in the world.

“There is no longer any nation that wishes us ill or any adversary who wishes us harm that has any doubt that their actions will have consequences – that they will be held to account and that our response will be undeterred,” said Robert J. Stevens, Lockheed Martin’s chairman and CEO. “The very existence of this airplane – your airplane – has altered the strategic landscape forever.”

A host of distinguished officials participated in this monumental event, including senior leaders from Lockheed Martin and the U.S. Air Force; local, state and national elected officials; and Lockheed Martin employees who helped build the F-22 Raptor fleet.

This final Raptor joins a U.S. Air Force fleet of 187 operational F-22s and will join other F-22s in the Air Force’s 3rd Wing at Joint Base Elmendorf-Richardson, Alaska. In all, Lockheed Martin delivered 195 F-22s to the Air Force beginning in 1997, with eight Raptors used as test aircraft.

F-22s are assigned to seven U.S. bases. Flight testing takes place at Edwards AFB, Calif. Operational tactics development continues at Nellis AFB, Nev. Pilot training takes place at Tyndall AFB, Fla. Operational F-22 aircraft are assigned to Joint Base Langley-Eustis, Va.; Joint Base Elmendorf-Richardson, Alaska; Holloman AFB, N. M.; and Joint Base Pearl Harbor-Hickam, Hawaii.

The F-22 Raptor is the world’s only operational 5th generation fighter, making it an unmatched national security asset. The Raptor is designed to defeat denied-access threats, enable joint and coalition operations in contested areas, and globally promote deterrence and security. For more information on the F-22, visit www.lockheedmartin.com/products/f22/.

Headquartered in Bethesda, Md., Lockheed Martin is a global security and aerospace company that employs about 123,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The Corporation’s net sales for 2011 were $46.5 billion.

For additional information, visit our website: www.lockheedmartin.com

Congress Continues Push Back on Defense Spending Proposals

The House Armed Services Committee (HASC) continues their mark up of the 2013 defense budget proposed by the Obama administration and continues their push back on proposed cuts to programs. As part of a plan to reduce defense spending by almost $500 billion over the next 5 year defense plan certain programs were ended or reduced. Congress as it often is does not like some of these reductions and is adding them back into the budget.

The HASC is just one of four different committees in both parts of Congress that can rewrite the budget. After the markups are complete the House and Senate vote their own versions of the bill and a Conference Committee irons out the final version that goes to the President. There is no guarantee that any changes made by any of the committees will stick but it is clear that there are a lot in Congress not willing to reduce spending the way that is being proposed.

Earlier we wrote of how they added back in a submarine the Navy had delayed until 2018. Now the committee is changing some proposals with other systems.

These include the retirement of several Northrop Grumman (NOC) Global Hawk strategic Unmanned Aerial Vehicles (UAV). The Air Force had proposed mothballing the Block 30 version of the system and continuing to use the manned U-2/TR-1 aircraft instead. They also would not buy more of that block. The bill the HASC is writing would prevent the retirement before 2014.

The committee has also reduced or eliminated some of the troop cuts and increased co-pays and fee for TRICARE, the military medical plan. Another area they are exploring is increasing funding for some of the Army’s vehicle programs which was cut.

These reductions and the troop cuts are based on the fact that the U.S. is withdrawing from Afghanistan and the Obama administration is predicting less deployments and action in the near future.

This is just the first round of mark ups and the ending bill will be some sort of compromise where some cuts are kept and others aren’t. It does show though that there are many in Congress not ready for large reductions in defense spending and investment.

Telephonics to Make Radars for Navy Helicopters

The Navy recently awarded Lockheed Martin (LMT) a contract to provide avionics and instruments for their Sikorsky, part of United Technologies (UTX), made MH-60 Sea Hawk helicopters. Lockheed in turn has awarded Telephonics a contract to build a radar for the aircraft.

The AN/APS-153 radar performs surface search functions to locate and identify submarine periscopes. The total value of the contract for 160 radars is about $330 million.

The MH-60R is designed to perform a variety of missions and be based on carriers, destroyers and other U.S. and Allied ships. It replaces the previously used SH-60, SH-2 and SH-3 helicopters previously used for ship based Anti-Submarine Warfare (ASW).

The contract also illustrates how expensive not only the base aircraft is but also the sub-systems hat go into it. Capability and performance is expensive.

Lockheed Martin Earnings — Seeking Alpha

This is an exclusive article I wrote for Seeking Alpha about Lockheed Martin’s latest quarterly earnings and the rest of 2012.

More V-22 Engines for Rolls-Royce

Following the second operational crash of a V-22 during exercises in Morocco there was the usual hand wringing about the safety of the V-22 Osprey tilt-rotor made by Boeing (BA) and Bell, part of Textron (TXT). Even so the program continues with planned expanded deployment and new missions including support of Presidential movement operations.

It has been reported that as part of the planned reductions in spending starting next year that V-22 quantities will be reduced. The total purchased should remain the same but it will be spread over more years. The next five year multiyear production contract is still being negotiated as the current one ends.

Even so the Pentagon went ahead and place orders for engines to support delivery of over 100 more aircraft with Rolls Royce (RR). The almost $600 million contract for 268 engines will have one base and four options years. The base contract will be for 70 engines.

The company has delivered over 500 engines for the V-22 program.

The V-22 offers unique capabilities compared to traditional rotary wing aviation assets. It has served in Iraq and Afghanistan with no combat losses although an Air Force one crashed in Afghanistan and now a Marine one has crashed as well. It is planned to replace Navy logistics aircraft as well as serve more with the Marines and Air Force Special Operations.

Boeing and Bell are obviously looking for new missions and customers for the aircraft. Certainly there may be pressure as the Pentagon reduces its budget to cut the number of V-22 to buy as they are expensive to buy and operate. The more that are sold, though, drives down the price for every customer.

Air Force Will Attempt Second Contest for Light Air Support Aircraft

Following up on its decision to cancel the initial contract to Sierra Nevada and Brazil’s Embraer for the initial order of Light Air Support (LAS) aircraft for use by the Afghan military the U.S. Air Force now plans a new contest. The contract was protested by Hawker Beechcraft whose T-6 based proposal was removed from the competition. After the start of an investigation into the source selection which continues the service’s leadership decided to end the first attempt and begin again.

The Air Force investigation found that there was not sufficient justification for the decisions to remove Hawker and award the $300 million contract to Sierra Nevada. This company teamed with Embraer which would see their Tucano based system assembled in Florida.

Now it is expected that an amended Request for Proposals will be issued in the near future allowing the two companies to compete again.

If the program goes as planned it could be worth up to $1 billion in orders.

With the new proposal process it is hoped that a decision will be made next year.

Hawker is struggling and may face bankruptcy in the near future and the LAS win would be a major boon for the company. Brazil is looking at buying a new fighter and Boeing’s (BA) F/A-18 is one of the major contenders and a win for Embraer is believed to be helpful for that contest.

The Air Force has struggled over the last decade with awarding new contracts. There was the long running KC-X tanker program which took three attempts to award finally to Boeing. The new combat rescue helicopter, CSAR-X, went through two iterations but is now currently on hold. The cornerstone of the new Air Force, Lockheed’s (LMT) Joint Strike Fighter, is facing cost and schedule problems. The Light Air Support program seems to continue that trend.

Canadian F-35 Controversy Continues

The fall out from the controversial decision by the Canadian government to commit to the F-35 Joint Strike Fighter without conducting a competition continues. The execution of the contract with Lockheed Martin (LMT) and the U.S. has been placed on hold as a new group outside the traditional defense procurement organization re-examines the contracting process.

The latest fall out from the Auditor report released earlier this year is that the Government underestimated the total cost of the program by $10 billion. Rather then then fixed costs being in the $15 billion range they are actually close to $25 billion. This is because ten years of operational costs (training, personnel, fuel, etc) were not included in the original estimate.

With the current issues it is not inconceivable that Canada could re-start their procurement process. This may lead to a new competition for the contract to replace the current CF-18 fighters that could include multiple competitors like the Eurofighter Typhoon, the Dassault Rafale and American aircraft like Boeing’s (BA) F/A-18.

The loss of 65 aircraft to the F-35 program is a small part of its over 2,000 planned deliveries but the loss of Canada’s participation would be a blow to the whole concept of the program with its shared development, production and operational cost. If Canada reconsiders then other nations who have hinted they could might follow. This could include Japan and the Netherlands both of whom have questions about the cost increases and schedule delays facing the program as a whole.

Joint Air to Ground Missile (JAGM) to Remain in Development

With the expected reductions in U.S. planned defense spending there have been different discussions and rumors of programs being cancelled or ended. One of these is the new Joint Air to Ground Missile (JAGM) which is a replacement for the Hellfire and Maverick missiles. These are launched from a variety of helicopters and fixed wing aircraft and had an original mission of destroying enemy armor. Over the last several years different warheads have been developed to attack personnel and buildings.

The JAGM itself was a new program that replaced the earlier Joint Common Missile (JCM) which was cancelled itself a few years ago. The JCM was being developed by Lockheed Martin (LMT). They and a team of Raytheon (RTN) and Boeing (BA) were competing for the JAGM contract.

The Army had demonstrations of the two competing design and last summer received bids for the next phase of the program which was to be Engineering, Manufacturing and Development (EMD). One of the two designs would have been selected to enter this phase and then move on into production. Those proposals were received in June.

The production contract would be worth several billion dollars due to the amount of missiles that needed to be procured.

Now it is being reported that rather then moving out with this phase or cancelling the program the Army will continue to pay for a small amount of continued development and risk reduction. Available R&D funds would be used for this program. This would allow further refinement of the concept and designs and allow a decision to enter the EMD phase at a later date.

Those contracts would be awarded at the end of this summer.

The U.S. is going to be facing a number of situations like this. If there need to be severe cuts to investment programs it makes sense to cancel whole ones before they enter production. This saves the most money. It also means that the technology developed is still available for use if needed. It also continues to support some of the industrial base that might go away if whole sale cuts were made.

Lockheed Martin to Supply Navy Helicopter Cockpits

The U.S Navy’s standard helicopter is versions of the Army’s UH-60 Black Hawk made by Sikorsky, part of United Technologies (UTX). They operate the MH-60R and MH-60S for different missions including anti-submarine warfare, surveillance, cargo and passenger transfer as well as attack. While the MH-60 and SH-60 are similar to the UH-60 the Navy installs its own unique equipment and electronics.

This includes a digital cockpit made by Lockheed Martin (LMT) for both models of helicopter. As such this week the Navy signed a contract with Lockheed to provide over 200 cockpits and other mission equipment for their MH-60 aircraft. The total value of the contract for 224 sets is just over $1 billion.

Military aircraft are expensive and this contract illustrates one of the reasons why. The cost of the avionics, radios and other systems is quite substantial. Add this to the cost of the airframe, engines, defensive systems and weapons the total become quite high.

This contract is a multi-year one which allows the Navy to place orders across 5 years rather then the normal one year contract. The Black Hawk one is as well. This is normally done with mature systems in full rate production and allows better use of economies of scale and a static supplier base.

Hamilton Sundstrand A400M Propeller System Certified by European Aviation Safety Agency — Press Release

WINDSOR LOCKS, Conn., April 5, 2012 /PRNewswire/ — The European Aviation Safety Agency granted to Ratier-Figeac, a Hamilton Sundstrand Corporation subsidiary, the FH385/386 propeller system type certificate for the Airbus A400M Military Transport Aircraft on Mar. 22, marking a major milestone in the A400M’s eight-bladed propeller program. Hamilton Sundstrand is a subsidiary of United Technologies Corporation (NYSE: UTX).

The A400M features a 17.5 ft. diameter propeller system that is all-new, and features eight, all-composite blades. This advanced design propeller system is the largest all-composite propeller in production.

“Hamilton Sundstrand is pleased to celebrate this important certification milestone with Airbus,” said Tom Saxe, vice president and general manager, Actuation & Propeller Systems, Hamilton Sundstrand. “Both design and manufacturing innovations have been essential to our production of this advanced propeller system.”

Driven by an 11,000-horsepower engine, Hamilton Sundstrand’s FH385/386 handles twice the power of any existing in-service propeller and offers a thrust efficiency peak close to 90 percent at high cruise speeds. Each wing features a pair of clockwise and counter-clockwise rotating propellers, which enhance overall aircraft stability and control, and further contribute to overall operating efficiency.

In addition to the propeller system, Hamilton Sundstrand and its subsidiaries supply the A400M’s Secondary Electrical Power Distribution Center (SEPDC), Auxiliary Power Unit (APU), Ram Air Turbine (RAT) emergency power system, Trimmable Horizontal Stabilizer Actuator (THSA), and the Throttle Control Assembly (TCA).

With 2011 sales of $6.2 billion, Hamilton Sundstrand is headquartered in Windsor Locks, Conn. Among the world’s largest suppliers of technologically advanced aerospace and industrial products, the company designs, manufactures and services aerospace systems and provides integrated system solutions for commercial, regional, corporate and military aircraft. It also is a major supplier for international space programs.

United Technologies Corp., based in Hartford, Conn., is a diversified company that provides high-technology products and services to the aerospace and building industries.

Canada’s F-35 Contracting Process Criticized

The Government of Canada’s Auditor General released a report this past week looking at how the country came to the decision to invest in Lockheed Martin’s (LMT) F-35 Joint Strike Fighter. The aircraft as with many other U.S. allies will be used to replace older American aircraft, in this case the CF-18 variant of Boeing’s (BA) F/A-18 fighter.

The report made clear that in the eyes of the Audit the government failed to provide legislators correct or sufficient cost and schedule information to support the decision. The decision made in the summer of 2010 will see Canada by up to 65 of the advance fighters. The estimated costs for acquisition will be about $10 billion and another $15-16 billion on maintenance and modernization.

The reports says that this cost estimate was not properly developed or reviewed and was not properly documented. Continued delays in the schedule for the aircraft which will be purchased in the thousands by the U.S., Canada, the U.K., Australia, Norway, Holland and other countries have already led the U.S. to delay production and caused large price increases. These would also have the potential to affect the price Canada will pay.

The government defended itself by stating that no formal contract has yet to be entered into for the aircraft leaving open either outright cancellation or re-negotiation. The Canadian military like others could look to existing platforms like the F/A-18 Super Hornet or Europe’s Eurofighter and Dassault Rafale.

The F-35 has proved controversial and the current price and schedule issues are not going away anytime soon. Canada like other planned buyers may be reviewing their commitments and plans.

Lockheed Martin Commemorates 4,500 F-16 Aircraft Deliveries — Press Release

FORT WORTH, Texas, April 3, 2012 /PRNewswire/ — Lockheed Martin (NYSE: LMT) commemorated the 4,500th F-16 Fighting Falcon delivery today with a ceremony for employees, customers, former executives and elected officials, including U.S. Rep. Kay Granger and Fort Worth Mayor Betsy Price.

The F-16 is recognized as the world’s most successful modern-day fighter. Since the F-16′s first production orders in 1975, it has been produced in partnership with five countries and has been selected as the front-line fighter for 26 nations. The 4,500th F-16 is an advanced Block 52 aircraft destined for Morocco.

“The F-16 is the world standard for evolutionary fighters today, and it will continue to secure the freedom of the United States and its allies in peace and combat for decades to come. This milestone demonstrates that Lockheed Martin has the finest aerospace workforce, and it is our privilege to serve air forces worldwide,” said Larry Lawson, executive vice president of Lockheed Martin’s Aeronautics business area.

The F-16 program has been characterized by unprecedented international cooperation among governments, air forces and aerospace industries. The current F-16 backlog includes aircraft production for Turkey, Morocco, Egypt, Oman and Iraq.

Headquartered in Bethesda, Md., Lockheed Martin is a global security and aerospace company that employs about 123,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The Corporation’s net sales for 2011 were $46.5 billion.

Please visit our websites:
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Update on Boeing’s (BA) Military Programs — Seeking Alpha

This is an exclusive post I wrote for Seeking Alpha on the current state of Boeing’s military aircraft programs.

U.K. Awards Contract to Raytheon to Replenish Libyan Action Ordnance

The recent NATO led air campaign against Muammaf Gaddafi’s Libya was very successful. Using their advanced aircraft such as Eurofighter Typhoons, Dassault Rafales and others the European nations were able to support ground action by the rebels and support the removal of the North African dictator.

Of course this required the expenditure of quite a bit of air delivered ordnance and now the users are looking at purchasing new equipment to replenish their stocks. One of the contracts awarded to do this was to Raytheon (RTN) by the U.K. Ministry of Defence. This almost $100 million contract is for Paveway IV GPS guided bomb kits.

The Paveway adds a guidance section and fins to a normal bomb usually of around 2,000 lbs. The original Paveway used laser guidance homing in on a reflection of a beam but later ones like the IV utilize GPS guidance where the bomb flies to a coordinate utilizing satellite navigation.

Much of the kit will be made by British companies and Raytheon expects to fulfill the bulk of the order in 7 months.

The U.S. used prodigious amounts of small arms ammunition, 30mm cannon rounds and missiles like the Hellfire in Iraq and Afghanistan. This required substantial contract orders for these which allowed companies like Alliant Techsystems (ATK), who make ammunition and pyrotechnics, a good business. Unfortunately for the industry now that fighting is ending there will be some final orders to replenish stocks as Britain is doing and then there will be much less annual production requirement to support training and the expected minimal use in reduced operations.

Annual Reports to Congress Detail JSF Cost Growth

Each year the Pentagon submits reports on their major programs to Congress. These are called the Selected Acquisition Reports (SAR) and detail program’s costs and schedules. The SAR reports give a good picture of where the bulk of U.S. investment funds are going.

This year they were dominated by the one for the F-35 Joint Strike Fighter (JSF) made by Lockheed Martin (LMT).

This year the F-35 has been split into two programs to explain cost with the F135 engine made by Pratt & Whitney, part of United Technologies (UTX), being detailed separately. For this report the total price of the program which is for acquisition only the aircraft cost increased just over three percent to $331.8 billion. The majority of this increase was driven by plans to reduce production quantities in the near term causing a higher price.

The engine estimate increased almost ten percent to $63.9 billion because of an increase in the price of the initial sparing package for the system. The reduction in production quantities increased cost by just under a billion dollars.

The JSF has made some progress in testing and development. The initial low rate production contracts are delivering aircraft. The costs are going to increase in the short term due to the decision to stretch out production and reduce the near term quantities. This means a higher individual price for the aircraft.

Overall there was some increase to the total planned spending because the Pentagon is predicting higher inflation in the next several years. This causes annual growth in program’s budgets to reflect this growth.

Interestingly three programs were reported as having their planned production cut significantly. These are Raytheon’s (RTN) AIM-9X air-to-air missile, Boeing’s (BA) C-130 Aviation Modernization Program (AMP), and the Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System (JLENS) also made by Raytheon. JLENS is a tethered aerostat that provides sensors and data link capability to support air defense systems for the Army.

There is probably no near term solution to the JSF cost increase until steady state production is reached and quantities become economic. By then development will be almost complete and the design fairly mature. That though could be several years.

EUROFIGHTER: Five year support contract signed — Press Release

EUROFIGHTER: Five year support contract signed

Eurofighter Jagdflugzeug GmbH has today signed a major contract with NATO Eurofighter and Tornado Management Agency (NETMA) to support the fleet of Typhoon jets across the four Eurofighter core nations: Germany, Italy, Spain and the UK.

The five-year support contract is part of a new contract suite agreed with the nations which includes integrated mechanisms for continuing development work on the aircraft and will replace a number of legacy contracts whilst extending the terms for a longer period. The agreement demonstrates a commitment by all parties in achieving continued efficiencies on the programme; long-term support for the sustainability of aircraft covering all three production tranches and future enhancements and upgrades of the platform.

The new contract will focus on performance and affordability and will ensure a range of support services to the Typhoon users. The contract will also help to sustain European aerospace engineering, capability and jobs.

As part of the contract, Eurofighter’s partner companies: AleniaAermacchi in Italy, BAE Systems in the UK and Cassidian in Germany and Spain will work closely with the local MOD’s and Air Forces to improve the way it delivers a range of support services. This work will provide a strong basis for future support requirements including potential export opportunities.

The contract will help to sustain the thousands of jobs that are supported by the Eurofighter programme across a range of disciplines such as engineering, supply chain and project management and is further confirmation of the role of the Eurofighter programme as catalyst of high-tech aerospace European manufacturing, engineering and technological capabilities. Today, around 100,000 jobs are supported by the programme in the four core nations and the economic impact generated largely off-sets the investments made to develop and manufacture the aircraft.

Enzo Casolini, Eurofighter CEO, said: “This contract is important for the Eurofighter programme but also for the nations and the Air Forces. The contract’s goal is not only to deliver savings to the customer, but also guarantee a better management for the processes involved in the sustainability of the aircraft in-service. This can be considered a massive step in supporting the enhancements programme planned for Eurofighter, which is a fantastic, young platform with plenty of development capability still to be exploited”.

Today Eurofighter is the largest new generation fighter programme in the world with 559 aircraft under production contract, 321 aircraft delivered and in-service with 16 units in six air forces. Based on the number of aircraft in service and the number of customer air forces, this multi-role aircraft can be considered the best coalition fighter available on the market. Eurofighter made its combat debut during Libya operations in 2011 performing in both air-to-air and air-to-ground roles.

New Light Air Support Contest for Sierra Nevada and Hawker Beechcraft?

Late last year the U.S. Air Force awarded a contract to a team of Sierra Nevada and Brazil’s Embraer to provide light attack aircraft for use by the Afghan military. The contract also had the potential for further orders to support the U.S. military and other potential foreign customers. The only other company to submit a bid was Hawker Beechcraft.

The award was controversial as the Air Force eliminated Hawker’s bid for not being in the competitive range as well as denied their attempts to protest the decision. Hawker sued in Federal Court and it came out that the contract had already been awarded to Sierra Nevada. After reviewing the process the decision was made four weeks ago to cancel the contract and begin an investigation into the contracting process.

The Air Force has stated that the investigation will conclude next week and that it focused on documentation of the decision and not the actions of either contractor. Based on the data gathered so far the Air Force has decided to reinstate Hawker, allow new proposals and may conduct another evaluation. The service also may reserve the right to conduct a whole new competition with a new request for proposals and new bids.

At the same time there are reports that Hawker may have to file for bankruptcy due to its current debt load. If that is true then the Light Air Support contract may be key to keeping the company viable.

The Air Force has struggled over the last decade with evaluating bids and awarding contracts for new aircraft. The KC-X aerial tanker took three tries before Boeing (BA) won it with a version of their 767 airliner over Europe’s EADS. The CSAR-X rescue helicopter had two different competitions with no satisfactory result and the program ended up being cancelled. This contract follows in a similar vein.

The review seems to indicate that the Air Force found enough issues with the source selection process to warrant a new competition. Hopefully this one when it is completed will be conducted in such a way to avoid protest and strife and the service can move out with buying the aircraft.

Northrop to Upgrade B-2 Bombers

In this age military aircraft have service life measured in decades. They gain this by constant upgrades and modernization efforts as well as through their maintenance programs. The B-2 bomber is no exception and provides a special capability to the U.S. Air Force even though there are only 20 of aircraft available.

With this in mind Northrop Grumman (NOC) was recently awarded a 10 year, $2 billion contract to provide upgrades to the aircraft’s communications systems. Because of the length of the contract this will provide for continued improvements to the aircraft’s systems.

Northrop is the original manufacturer of the B-2 back in the 1990′s and this contract illustrates how work and funds will continue to come to them after completion of manufacturing. Aircraft and other military systems need long term maintenance and upgrades and this work often goes to the OEM and can add up to billions over the years.

Despite F-35 Troubles Infrastructure Investments Continue

The F-35 Joint Strike Fighter (JSF) headed up by Lockheed Martin (LMT) is the largest defense acquisition program in history. It is facing a series of schedule delays and cost growth which is causing the Pentagon to buy less aircraft then originally planned and stretch out the deliveries. Many of the current customers are making noises about second thoughts due to these delays. Even so the program continues with test flights, production, development and the carrying out of other preparations.

This includes the issuance of a contract to build two hangers for the aircraft located at Marine Corps Air Station located in Yuma, AZ. This $70 million or more contract to Harper Construction will be for special buildings that are compliant with the F-35′s requirements. This includes special facilities to operate the logistics system being developed for the aircraft.

The Marines are currently planning on putting 6 squadrons of the aircraft at Yuma when fielding is complete and a further 6 squadrons at Mirimar MCAS near San Diego.

The F-35 like the F-22 Raptor fighter and B-2 bomber most likely utilizes construction materials to improve its “stealthiness”. This may mean it needs hangers adapted to the requirements for the maintenance and protection of those materials. This is probably why new ones must be built and old ones refurbished.

When the F-35 program is complete the U.S. will possess over two thousand of the advanced aircraft and allies another several hundred. That date right now is looking to be sometime in the 2030′s.

GAO Finds Billion Dollar Overrun on Initial F-35 Production

Testifying to Congress yesterday the Government Accountability Office (GAO) reported on cost growth and overruns of the F-35 Joint Strike Fighter (JSF). The JSF program headed by Lockheed Martin (LMT) suffered cost increases of a billion dollars on the first four production orders for the aircraft.

These buys are for 63 aircraft which means about an average of almost $16 million each. The F-35 is the largest acquisition program in the world and ultimately over 2,000 will be built for the U.S. and allies to replace the F-16, F/A-18 and A/V-8A aircraft.

The cost overruns will be shared by the government and Lockheed in about a 65-35 ratio.

The GAO stressed there have been some improvements in the program and its stability but expressed concerns that there is still too much concurrency in it with simultaneous production, development and testing. This could lead to changes to the aircraft as they are being built adding time and cost.

The F-35 has suffered from schedule delays as it works through the testing and development program. One of the reasons for this added time and cost is that there are three different versions of the aircraft. One has vertical takeoff ability, another short and the the third conventional. This is for use not only on aircraft carriers but also to replace the unique capabilities of the A/V-8 Harrier which can land and take off vertically.

With the expected decline in the defense budget further increases like this will not only stretch out the production timeline but also reduce available funds for other programs. The Air Force has to invest in new tankers and bomber aircraft as well as the JSF. The Navy could see it needing more funds for ship building and the Marines ground vehicle programs could suffer.

As with all defense programs as time goes by it will solve its issues but the Pentagon has to face the question as to at what cost.

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