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Beechcraft Corp. to Protest Again on the US Air Force Decision to Award LAS Contract to Embraer

AT-6-Aerial300Beechcraft Corporation today announced that it will formally protest to the U.S. Government Accountability Office (GAO) the U.S. Air Force’s (USAF) recent award of the Light Air Support contract to its Brazilian competitor, Embraer. “We simply don’t understand how the Air Force can justify spending over 40 percent more – over $125 million more – for what we consider to be less capable aircraft,” Bill Boisture, CEO, Beechcraft said.

More Defense Layoffs in Orlando Area

The U.S. defense industry is a complex group of companies large and small that constantly win and lose contracts. This leads to turn over in hiring and firing as sometimes work moves across the country as the Department of Defense seeks the best supplier at the best price. Most defense contracts have fixed times of five years or less which means contractors must plan to recompete their work and winning the same contract adds some consistency to their business.

The U.S. military also often buys a fixed amount of a system. This means that contracts providing logistical and maintenance support for an aircraft, helicopter or vehicle are often more valuable in the long run then actually making the system. This work too does not have to be done by the OEM but also can be awarded to another company or government depot. What all this means is that one company could be hiring people to work on a new contract while another will be laying them off due to the lost work.

With the potential for budget cuts in the future the situation of losing work and workers may become more common. The Orlando, FL area has already seen Northrop Grumman (NOC) make some strategic workforce decisions which led to shedding employees. Now one of their smaller defense contractors, DSE Fuzing LLC, has decided to end operations in that area which has led to the loss of over 100 jobs.

DSE makes fuzes for different weapon systems. They have opened a new factory in South Carolina and plan to consolidate operations there. As with all of these moves the goal is to reduce costs and increase revenue and profit. The company made clear that they are expecting future reductions in business from the military and this is part of the equation in their move.

DSE made news last year when some of the detonators it was making proved faulty and an employee was injured. This led to a fine and audit that found issues with its production practices. The company says that those issues have been resolved.

The company has been making military munitions in Orlando since after World War II when it was originally part of Martin Marietta. It has been sold and transferred a few times since.

If predicted trends in defense spending continue then there will be more stories like this as companies seek out the best place to do business in terms of cost. Unfortunately this means that other parts of the U.S. will face a negative economic effect as the work ends or moves.

Photo from Official U.S. Navy Imagery’s flickr photostream.

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Despite Record Defense Spending Layoffs Starting to Mount

The Obama Administration submitted its 2012 budget to Congress yesterday and it contains a record request for defense funding. This includes over a $100 billion to conduct operations in Afghanistan and Iraq while continuing the investment in new equipment to improve capabilities against other threats. Despite this and due to the cyclical nature of defense programs and spending several companies, large and small, announced recently a restructuring of their workforces.  As the U.S. defense budget adjusts to fiscal reality and requirement changes more companies may be in this situation.

Defense acquisition programs tend to be built in large quantities over a span of several years as the military attempts to field its needs quickly. This can lead to a requirement for a contractor to ramp up facilities, staff and production very quickly and then just as quickly cut it back as the U.S. military meets its requirements. It behooves a contractor to identify other customers or programs that it may support to try and maintain a steady production line and workforce. This is not always possible and the history of the Mine Resistant Ambush Protected (MRAP) vehicle production in America illustrates this as several companies invested in large plants that are now running at a much lower capacity as the U.S. has met its needs for the MRAP.

Recent layoff announcements include:

  • Amherst Systems of New York, which is a subsidy of Northrop Grumman (NOC), the engineering and manufacturing company provides systems to support electronic systems and test ranges.  They will be laying off over one hundred people or almost twenty percent of their workforce due to “a drop in orders”.
  • Northrop Grumman itself is eliminating 150 jobs at its Laser Systems facility in Florida.  The company had won a contract to produce laser rangefinders and designators.  Again the reduction is related to a future lack of work.
  • BAE Systems (BAE:LSE) is letting go about 50 people at a plant in Pennsylvania that makes MRAP vehicles.  The U.S. has shifted to one supplier, Oshkosh (OSK), for its new MRAP and relies on others to support and repair the existing fleet mainly purchased in 2005-2009.  Companies will now have to look for other countries to invest in MRAP to maintain their production and right now that is not happening.

Stories like this may accelerate in the near future as companies figure out what will be needed by the Defense Department in a time of reducing budgets.  At the same time there are other defense contractors who need to hire people to support their new work or programs.  Many times, though, the new company is not located near places where the layoffs are happening so that transferring people may not be so easy.

The history of the U.S. defense budget has been cycles of rapid, large expenditures followed by years of smaller budgets.  The U.S. may be entering a period of extended decline in defense spending with a negative effect on the defense contracting industry.

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U.S. Light Support Aircraft Contract Heating Up

The United States is discussing again buying a light, heavily armed aircraft to perform close support and homeland security missions. This would most likely be a turboprop powered rather then a jet and is similar to some aircraft operated by South American nations. This is a traditional aircraft role but one the U.S. really hasn’t invested in in Decades.

Since this is one of the few new aircraft that the U.S. Air Force and other services are pursuing it is attracting a great deal of attention. Two companies are bidding on the work although others such as Air Tractor have shown interest.

Hawker Beechcraft (OCX:C) is bidding their AT-6 aircraft. This company makes agricultural aircraft as well as executive transport and light civil aircraft. If they do win the contract it will aid the company in keeping its Kansas production and support facility at Salina going.

The Brazilian company Embraer which has made a range of aircraft for this mission for years is submitting their Super Tucano aircraft. Argentina and Brazil and other nations have operated these aircraft for over thirty years. Embraer is looking at establishing a production facility in Jacksonville, FL to support the contract.

Because this is an aircraft that really hasn’t been made in the U.S. since the North American OV-10 Bronco there resides some expertise overseas. The U.S. defense market despite its potential to see limited growth over the next decade is still attractive to foreign defense contractors. The U.S. has also shown willingness due to industrial base and competition issues to purchase non-U.S. designed and developed equipment.

Whichever aircraft the U.S. does buy will aid it in selling to overseas customers as it will have equipment that make it easier to integrate with U.S. communication systems as well as support from the U.S. government in funding and maintenance.

This competition may end up being one more example of that.

Photo from Jerry Gunner’s flickr photostream.

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U.S.A.F. Contracts with Space Florida for Launch Support

The State of Florida charted an entity called Space Florida to help grow their support to the space and aerospace industry using it to manage existing facilities located at Cape Canaveral and other sites. Set up in 2006 it combined three previous organizations related to space development and research into one. Space Florida operates a facility to assemble rockets and support launches at the Kennedy Space Center. This is part of a readjustment to the reorganization of NASA priorities that will see the last flight of the Space Shuttle in the near future.

As part of their work the U.S. Air Force issued Space Florida an ID/IQ contract to support launches of Orbital Sciences (OSC) Minotaur launch vehicles. This contract has a value of up to $48 million if all options are exercised. As with all ID/IQ contracts there is no guarantee that any work may be issued or ordered.

The Minotaur is a combination of existing ICBM rocket motors and other hardware used by the Air Force to launch small-to-medium payloads into orbit. It also is used to support testing and may carry targets and other systems. So far there have been eighteen launches of the system with thirty-one payloads placed in orbit.

The U.S. is moving to try and generate more commercial programs to provide access to space. The focus is on small companies developing new technologies or providing support services like this rather then relying on the large Defense and NASA infrastructure. This is not happening without pain as there will be significant job losses as the Florida economy adjusts to the end of the Space Shuttle with no near term U.S. replacement for heavy lift launch capability.

NASA had been developing the Ares and Orion systems to replace the Space Shuttle and support the International Space Station (ISS) as well as plan for longer missions in space but the Obama Administration restructured the program severely. This included ending work on most of the program and shifting funds to commercial companies trying to develop launch vehicles such as SpaceX.

It is too early to tell how well this strategy will work but right now the U.S. will soon be dependent on Russian systems to carry crew and supplies to the ISS until it develops the replacement for the Space Shuttle.

Photo by Nick Davis of the launch of Space Shuttle Discovery.

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First F-15C With Boeing’s AESA Radar Declared Operational

Boeing (BA), the U.S. Air Force and Florida Air National Guard displayed the first operational F-15C with a new Active Electronically Scanned Array (AESA) radar. The aircraft was shown at the Jacksonville Air Guard facility.

Boeing is operating under a contract to upgrade twenty-four F-15C aircraft for both the U.S.A.F. and the ANG with the new radar. AESA provides better performance and reliability due in part to the elimination of the mechanical scanning parts. Boeing also provides support and sustainment to the F-15 fleet in use with the American military.

The Air Defense of the United States has assumed a greater role since 9/11 and the ANG provides the primary capability. It operates F-15 and F-16 fighters but these aging aircarft will begin to be retired soon. The long term plan is to replace a significant number of them with F-35 JSF now that F-22 production is being ended at 180 odd by the Obama Administration.

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Photo Of Most Recent Space Shuttle Launch

Our associate, Nick Franklin, took this photo of the launch of Space Shuttle Discovery this week. More of his work may be found at this flickr photostream, here.

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Sypris To Sell Communications Equipment To U.S. Military

Sypris Solutions won a contract worth about $200 million to provide keying equipment for radios to the U.S. military. The five year contract will provide key loaders that are used to put cryptographic material into radios “keying” them to receive and transmit. Modern digital communication equipment are present in vehicles, ships, aircraft and man packed radios and most require some level of encryption or frequency keying in order to make them usable on networks.

Sypris will design and fabricate the equipment at their facility in Tampa, FL. The goal is to have a system that is cheaper, lighter and easier-to-use then existing equipment.

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Industry-Leading Linux-Based Cluster Computing Company Rebrands, Relaunches as Sabalcore Computing, Inc. — Press Release

Industry-Leading Linux-Based Cluster Computing Company Rebrands, Relaunches as Sabalcore Computing, Inc.

ORLANDO, Fla., — Tsunamic Technologies, Inc. is rebranding itself and relaunching as Sabalcore Computing, Inc.

Located in East Orange County, the company, which provides Linux-based cluster computing power to large-scale users such as the U.S. Naval Air Systems Command, secured the Sabalcore.com web domain and recently relaunched itself as Sabalcore, Inc.

Sabalcore’s cluster computing networks link hundreds of Linux-based computers to provide enormous online computing power to large-scale users at a fraction of the cost of in-house solutions, explained John Van Workum, president and chief executive officer.

“We chose to rename our company to more accurately reflect the Company’s current growth, mission and vision for future growth and to clearly communicate our commitment to our customers. The name ‘Sabalcore’ is derived from the CPU ‘core’ found in modern processors and the ‘Sabal’ Palm tree which is indigenous to Florida and is remarkably steadfast, resistant to fire, floods, cold, high winds and drought. By aligning our corporate name with our core business offering, we are communicating to the investment community and customers the Company’s ongoing focus of quality service and performance,” Van Workum explained.

Recently, Sabalcore won a major contract from the U.S. Naval Air Warfare Center Weapons Division (NAWCWD) Geophysics Branch at China Lake, located in the northeast of California’s Mojave Desert, to provide computing time that powers weather modeling and analysis in support of the Navy’s global battlefield operations.

“Sabalcore’s cluster computing networks were specifically designed to provide the enormous volume of computing power such complex calculations require,” Van Workum said.

Sabalcore’s high performance computing networks have played a key role in weather prediction, computer aided engineering, oil exploration, market analysis, genomics, helping communities predict the spread of infectious diseases, and modeling the benefits and effects of experimental pharmaceuticals.

Sabalcore Computing Inc. is a client company of the University of Central Florida’s Business Incubation Program in the Central Florida Research Park in east Orlando.

* * *

For more information contact:

John D. Van Workum, President Sabalcore Computing, Inc. 877-492-8027; [email protected]

Carol Ann Dykes, Site Manager, UCF Business Incubator – Central Florida Research Park, 407-882-0211, [email protected]

Larry Vershel or Beth Payan, Larry Vershel Communications, 407-644-4142 or [email protected]

About the UCF Incubation Program:

Since its founding in 1999, the UCF Business Incubation Program has helped more than 130 emerging companies (including nearly 80 current clients) create over $500 million in annual revenue and more than 1600 new jobs with an average salary of $59,000. With six facilities across the Greater Orlando community, the Incubation Program is a collaboration in economic development between the University of Central Florida, Orange County, the City of Orlando, Seminole County, the City of Winter Springs, The City of Sanford, Lake County, the City of Leesburg, and the Florida High Tech Corridor Council. For more information, please visit www.incubator.ucf.edu.

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E-2D Program Moves Forward

The Navy’s new carrier based radar search and surveillance plane the E-2D had a successful Milestone C Low Rate Production Decision. The aircraft is an incremental upgrade to the existing E-2C. The Advanced Hawkeye program has made steady progress over the last several years and the production decision is a major advance for it and any defense acquisition program.

The company and its team has been awarded contract worth about $430 million to deliver the first four aircraft. The development aircraft had first flown back in late 2007. There has also been discussion of selling the aircraft to selected overseas customers. Right now the E-2C is used by Israel, Egypt, Japan and Singapore among others.

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EEI Named 2009 Subcontractor of the Year — Press Release

EEI Named 2009 Subcontractor of the Year

U.S. Small Business Administration Lauds Clearwater Company’s Achievements

Clearwater-The United States Small Business Administration has named EEI (www.eeimfg.com) of Clearwater, Florida its Small Business Subcontractor of the Year for 2009. The woman owned, small 8(a) disadvantaged business has been recognized for it excellence in its role as a vital subcontractor on federal government contracts associated with the Department of Defense.

EEI grew from a two-employee firm with $700,000 in gross sales annually to more than $7 million in revenues and 26 employees.

“I am very pleased that my company has been recognized for supporting the warfighter. For me and my team, our work is more than a job. It’s a patriotic passion to serve our country and the brave young men and women who serve in our military.” noted Sue Englander, President and Founder of EEI. The company is certified and registered ISO 9001:2008 company. EEI services a diverse and prestigious customer base, including Raytheon, Redstone Arsenal (ARMY), Fort Monmouth (ARMY), ATK Missile Systems Company, Bell Helicopter Textron, GE Avionics/UNISON,, L3, Northrop Grumman, Lockheed Martin and The company supplies products for instrumentation, aerospace/aviation, ground support, communications, and simulation. These products support flight critical, life support and emergency applications supporting the warfighter.

The award was presented as part of the US Small Business Administration’s Small Business Week in recognition of the nation’s outstanding small businesses. The events took in Washington, D.C. at the Mandarin Oriental Hotel.

Additional information concerning the ceremony and events surrounding Small Business Week may be found at www.sba.gov/sbw

SBA media contacts for National Small Business Week are Dennis Byrne (202-205-6567, [email protected]) and Cecelia Taylor (202-401-3059, [email protected]).

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U.S. Company Receives FAA Certification For Russian Tanker Aircraft

il76Tactical Air Defense Services announced that the FAA certified their Illyushin IL-78 “Midas” tanker aircraft for use in the United States. The IL-72 and IL-76 transports and the IL-78 tanker variant have served the Soviet and Russian military for years successfully.

Due to the world’s shortage of heavy lift transport aircraft various Russian companies have made a living out of leasing their Antanov and Illyushin aircraft to support non-American Western military in their deployments and operations. This includes moving troops and supplies to Iraq and Afghanistan. For modern ground operations this kind of support is critical and there are only so many C-17 and C-5 aircraft to go around.

It only make sense that this would spread to use in the United States. The company intends to use the aircraft to support training operations as well as firefighting. There are certainly opportunities for both missions as the U.S. Air Force tanker fleet is also stretched as it waits for the KC-X contract to get going again.

Photo from jamesdale10 Flickr stream.

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Unitech to be Purchased by Lockheed

Lockheed Martin has agreed to buy Unitech sometime this year.  Unitech is a smallish simulation producing company located in the Orlando area.  The Orlando Sentinel reports that a deal to buy the company was worked out recently. Unitech complements the work that Lockheed has done in the simulation area in Orlando for years. The company has earnings of around $140 million, and it is common in these types of deals for private companies to pay about one year’s earnings for it. Many smaller defense contractors grow from one or two contracts to a size of between one to two hundred million and are then bought by another company. Larger companies buy them to gain work or expertise in a discipline or area that they might not have.

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U.S. Awards Military Simulator Contract to Raydon

Raydon was awarded a contract worth over $45 million if all options are exercised to provide military vehicle simulation and training for the U.S. military. The Orlando Sentinel writes that the contract is a major coup for the smaller Raydon when compared to its competitors in the Orlando area like Lockheed Martin. While only 300 persons strong the company has demonstrated an ability to build and operate military vehicle simulators, and especially military convoy simulators used to train troops going to Iraq and Afghanistan. The main threat over the last few years to U.S. troops has been IED and attacks on vehicle convoys so the U.S. has invested heavily in training troops to counter these types of attacks. Simulators are only part of the solution as the U.S. has built whole networks of simulated Iraqi terrain at the U.S. training ranges.

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Australia Buys Support for Jet Engines from GE

The Jacksonville Business Journal writes that Australia has awarded a contract worth over $300 million to provide parts, maintenance and overhaul of the engines for their F/A-18 fleet to General Electric. GE has several other of this type of contract with the U.S. armed forces that utilize their engines in a variety of platforms. Even though the contract is with a foreign country the parts will be shipped to the U.S. for work in Jacksonville, FL and Lynn, MA.

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Florida Worries About the Defense Budget

This article in the OrlandoSentinal.com describes concerns that with the continued payout of money to save finance and other companies the US government may be forced to cut the defense budget. Concern surrounds the two big ticket fighter aircraft currently in production for the US military. The F-22 program is winding down unless Congress decides to extend the production beyond current planned numbers. There are also worries that the F-35 JSF program will be cut back or canceled. These programs provide a lot of work to Lockheed in the Orlando area. Read more

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Fighting takeover Point Blank wins contract

According to the South Florida Business Journal, Point Blank Solutions won a contract to provide tactical vests. The contract could be worth over $20 M. Point Blank Solutions has been supplying body armor to the US Armed Forces for several years. At the same time the company is trying to prevent being bought by a hedge fund. They turned down one offer for the company last year, but now it looks like the shareholders will be allowed to vote on the deal.

For more see the South Florida Business Journal article.

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The South celebrates the KC-45

As reported here in the Atlanta Journal Constitution, Northrop Grumman continues to point out that the KC-45 contract if it survives the Boeing protest will bring lots of jobs to the US. Especially to the South. Not only is the main plant going to be at Mobile, AL; but this article shows that parts and components will be made at various Northrop plants in Georgia. A lot of the work will also be accomplished in Florida. Read more

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Florida gains economically through DoD contracts

February 2, 2008 by · Comment
Filed under: Federal Budget Process, Florida 

The Bradenton Herald reports on the economic impact of DoD contracts for the Miami area, and Florida in general, here. Since 2003, DoD contracts have been growing by 9% a year. The state expects continued growth in this area. In 2007 there was $52 B of activity related to these contracts in the state. One impact that is not always noted is the high salaries that defense contractors make relative to other industries.

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Orlando Sentinal reports on local defense industry

The Orlando Sentinel writes an article about the posture of the local defense industry and how they are benefiting from the current high defense spending. See the article here. Lockheed Martin has a major presence in Orlando. Much of this started in World War II where Florida was used as a major aviation training base. Lockheed makes radars and missiles in their local plant. The Army’s Program Executive Office (Simulations, Training and Instrumentation) (PEO(STRI) is located in the Orlando area as well. This organization develops and buys simulators and training aids. With the continued focus on training with the aids of simulators that business may see continued growth as well.

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