Filed under: Business Line, Companies, Contract Awards, Department of Defense, Events, General Dynamics, Maine, production program, Services, States, U.S. Army
The U.S. military even though the fighting is winding down in Afghanistan still needs to invest in new equipment to replace older weapons. Demand will be going down after 2014 when the last troops return and so without sequestration contractors will see reduced orders for their products.
The M2 50 caliber machine gun has been in use with the U.S. and its allies since before World War II. It is mounted on aircraft, vehicles and used from tripods carried by Soldiers. There have been tens of thousands of them made and even though a new design was recently developed it is still manufactured by General Dynamics (GD). The original weapon was made by Browning and has gone through a series of owners since originally delivered.
GD just received yet another contract for these weapons to be manufactured at their Maine plant. The almost $30 million contract will be for 12,000 of the systems.
As the defense budget begins its decline next year and the military adjusts to new requirements the demand for weapons like these will most likely decline as well. Less will be used in combat meaning existing ones will last longer. There may be more work refurbishing existing weapons then buying new ones.
Filed under: Business Line, Companies, Congress, Contract Additions, Contract Awards, Department of Defense, development program, Events, Federal Budget Process, General Dynamics, Maine, missile defense, northrop grumman, Northrop Grumman Corp., production program, Restructuring, Services, States, U.S. Navy
The U.S.Navy had originally planned to begin mass production of the DDG-1000 class in the early part of this century. The new ship would begin to replace the AEGIS cruisers and destroyers built since the late Seventies. The DDG-1000 would offer a more stealthy design, new power plant and improved radar over the existing DDG-51 Arleigh Burke class.
The first of the new Zumwalt class of destroyers was built at General Dynamics’ (GD) shipyard in Maine operated by their subsidiary BIW. The Obama Administration due to budget issues and cost and schedule growth for the new ship decided to end production after the second was built. Congress in 2008 disagreed and added DDG-1003 to the budget. All three would be built at BIW.
Instead of entering series production of the new class the Navy would continue to order the substantially cheaper DDG-51 ships built not only at BIW but also at what is now Huntington Ingalls Industries (HII) at their yard in Pascagoula, MS. HII used to be part of Northrop Grumman (NOC) but they spun off their ship building arm into a separate company earlier this year. The Navy planned to continue competitive production of the new destroyers as in the past between the two companies.
Unfortunately for BIW the Navy and GD have yet to be able to negotiate a price and award the contract for DDG-1002 and 1003. This is delaying start of production of the two new ships and causing concern at BIW and in Maine that it may make it hard for them to compete for the new DDG-51 production that would follow the completion of the DDG-1000 ships.
Reportedly the two sides are quite far apart on the actual price for the two ships. The first cost almost $2 billion and these two due to the fact that they are follow on should be cheaper but the truncated production of only two more in the class will cause prices to rise due to the limited requirements for sub-contractors and suppliers.
There are also starting to be concerns that the latest planned “Flight III” of the Arleigh Burkes may not be large enough to carry all of the equipment the Navy desires. This includes a new radar, Air and Missile Defense Radar (AMDR), under development to support the missile defense mission of the ships. This might mean the need for a new destroyer or continued production of the DDG-1000 although that is well in the future.
The Navy faces a challenging ship building situation over the next several years. New ships have proven to be very expensive and the budget may be limited due to the U.S. financial situation. This may limit what can be built among the planned classes of aircraft carriers, destroyers, Littoral Combat Ships (LCS), amphibious warfare and support ships. The need for the Navy to get the best price possible for the DDG-1002 and 1003 is affecting the contract negotiations and may ultimately the whole destroyer program in the near term.
Filed under: Business Line, Companies, Contract Additions, Contract Awards, Department of Defense, Events, Federal Budget Process, General Dynamics, Maine, production program, Services, States, U.S. Army
The U.S. Department of Defense has developed and bought many different weapon systems over the last seventy years. Some of these are high tech aircraft like the F-22 or the SR-71. They also include communication satellites at over a billion dollars a piece. Some weapons though are so well designed and effective that they remain in production and service for years. That is the situation with the venerable Browning M2 fifty caliber machine gun.
This weapon has served through World War II, Korea, Vietnam, the Cold War, Desert Storm and the fighting since 9/11. It has been used mounted on a tripod, vehicles, aircraft and ships. While the Army has developed a new system there are still tens of thousands of the weapons in use by the U.S. and across the world. General Dynamics (GD) is now the manufacturer for the weapon and have steadily received contracts for new guns, repair and parts.
The latest is a $73 million one to produce new weapons and modify existing systems. The majority of their work will be done at the GD facility in Saco, ME.
Some weapons are just so effective that there is no need to improve upon them or replace them. The M2 certainly falls into that category.
Photo courtesy of Casualty flickr photostream.
Filed under: Business Line, Companies, Congress, Contract Awards, Department of Defense, development program, Events, Federal Budget Process, General Dynamics, Maine, missile defense, northrop grumman, Northrop Grumman Corp., production program, Restructuring, Services, States, U.S. Navy
Back at the turn of the century the U.S. Navy had major new ship programs underway to significantly modernize their fleet. These included a new aircraft carrier, CVX, a new cruiser, CGX, a new destroyer, DDG-21, and a small combatant, the Littoral Combat Ship (LCS). Since then due to budget constraints, technology difficulties and the effects of the operations in Iraq and Afghanistan the program has seen major changes. The cruiser was cancelled and the new DDG has morphed into the DDG-1000 Zumwalt program with only three of the new ships planned. To make up for this the Navy has continued buying DDG-51 destroyers that originally went into service twenty years ago.
The Navy had originally split the program between Northrop Grumman (NOC) and General Dynamics (GD). The current plan is for all three to be built at GD’s Maine yard with support from Northrop. The construction of the first one is in process and it should be completed in the 2012-2013 time frame.
In support of this the company and Navy are awarding numerous sub-contracts for the ships. For example, FieldServer Technologies, part of Sierra Monitor Corporation, has received a contract to build, install and integrate an automated fire detection and suppression system. No value for the contract was given. Fire is a major threat to any ship and this advanced system will aid the smaller-by-design crew in fighting them.
The program has faced challenges controlling cost growth but now seems to be on a steady path. Unfortunately due to budget pressures and technical issues only three of the advanced ships will be purchased. Th future fleet will consist of DDG-51, the three Zumwalts and thirty of forty LCS until a new small combatant program can be started.
Filed under: Business Line, Companies, Congress, Contract Awards, Department of Defense, Events, General Dynamics, Maine, Northrop Grumman Corp., production program, Restructuring, Services, States, U.S. Navy
As part of the reforms announced by Secretary Gates’ a few weeks ago one was to end the DDG-1000 program at three ships and restart the DDG-51 production line. General Dynamics will build the last two as the first is under construction by Northrop Grumman. Northrop will get the DDG-51 work to make up for the cancellation. The New York Times is reporting that GD agreed to a fixed price contract for hulls numbers two and three.
Normally fixed price contracts are used for when full rate production gets underway. The first few batches of a product are made as part of the cost plus development contract. This spreads the risk to the Government. Obama has said he wants more fixed price contracts to save money on defense programs that tend to go over schedule and cost. Of course a lot of that is due to issues with requirements or testing or just making the thing that add time and money.
DoD uses two ways to look at unit cost when it comes to managing a program. One is the total of all procurement and R&D funding spread over the quantity of the items being bought. Another just takes the total procurement cost and divides that by the quantity. As you build more of an item the R&D is spread over more units slowly lowering that cost. If things begin to require more procurement then that cost goes up. Slowing down a program and buying the same quantity over a longer time effectively increases total program costs greatly. There is always some fixed cost applied each year if you build one, ten or a hundred of an item. The more years it takes the more those fixed costs add up.
With this program it may be OK to use a FFP contract as the costs are more known and fixed. If there are issues GD will be taking a risk as they might not get back all the money it takes them to build the ships. This is why Cost Plus contracts are used for development and ironing out production. In this case it will be an interesting experiment to see if it works out for the Government and the contractor.
Filed under: Business Line, Companies, Contract Awards, General Dynamics, Maine, production program, Raytheon
Raytheon awarded a contract to General Dynamics for the Phalanx weapon system. This multi-barreled gun was developed to provide point defense of ships but has also been modified to protect U.S. bases in Iraq and Afghanistan from rockets and other indirect weapons. Forbes reports that GD will make the systems at their Saco, ME facility. The Counter Rocket and Mortar (C-RAM) system has proven effective in Iraq. www.Michaelyon-online.com has a video of the system in action.
Filed under: Contract Awards, Federal Budget Process, Konsberg, Maine, Norway, production program
In another example of the international integration of the US Defense Budget a Maine company received a sub-contract from Kongsberg Defense of Norway to fabricate parts for the Crew Remote Operating Weapon System (CROWS). Kongsberg had recently won a contract in the Spring to build a part of the system. Now because of this contract the company in Maine is able to expand and hire a few more workers. The overall effect of the several hundred billion the US spends each year on defense is vast, affecting companies from Maine to Iraq and Afghanistan.
For more see the article on WCSH6’s website.
Filed under: Congress, development program, Federal Budget Process, General Dynamics, Maine, Massachusetts, Northrop Grumman Corp., production program, Restructuring, U.S. Navy
Recently the US Navy announced that it was not going to continue the DDG-100 program. Two ships are under construction by Northrop-Grumman and General Dynamics. Not unexpectedly the Senators from the affected states, mainly Massachusetts and Maine, have protested. See an article here. The major recent the Navy cites is the continued cost growth of the program. The first two were projected at under $4 B each, but now the estimates are over $5.5 B. Other than the shipbuilders, Raytheon is the most affected company as it was building the combat system of sensors for the ship. The Navy intends to continue production of the DDG-51 class instead. Read more
Filed under: Contract Awards, General Dynamics, Maine, production program
Even Maine is getting in on the defense business as General Dynamics announced that they will be expanding a facility in Saco, ME to build machine guns for the US military. See the press release here. The contract was for $36 M, but not all the work will be done at that facility.