August 17, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

Arms trade momentum: Globalization and US defense spending drive defense industry growth

5:00 AM

WASHINGTON ― Defense revenues of the top 100 defense companies in the world climbed for a fourth straight year, pushed upward by U.S. defense spending growth combined with strong foreign military sales.

Fiscal 2019 defense revenues recorded in Defense News' Top 100 list totaled $524 billion, up about 7 percent from $488 billion in fiscal 2018, according to numbers compiled by Defense News as part of the annual Top 100 list.

“The single most striking thing about these data is the year-over-year growth, the median of which is 7 percent,” said Atlantic Council Senior Fellow Steven Grundman. “For an industry generally regarded as mature, revenue growth that runs at two times global GDP is downright sporty.”

The defense industry remained top heavy, as the top 10 firms accounted for 50 percent of total defense revenue on this year's list, and the top 25 companies accounted for about 75 percent of the total.

Geographically, U.S. firms made up seven of the top 10, and 10 of the top 25. The combined defense revenue of the 41 U.S. firms in the Top 100 list comprised more than half of the total defense revenue.

China this year had five firms in the top 15 companies versus six last year. Eight Chinese firms made the Top 100 list this year, with a combined $95 billion in defense revenue for FY19 ― which is $11.7 billion shy of the list's total for Europe and Turkey.

The Aviation Industry Corporation of China, which appeared with other Chinese firms for the first time last year, fell from No. 5 to No. 6, though its defense revenue grew by a percentage point over last year. China South Industries Group Corporation fell from No. 11 to No. 18, as its revenue declined 26 percent, from about $12 billion to around $9 billion.

China is unquestionably a defense giant in the Asia-Pacific region, dwarfing its nine neighbors (excluding Russia) on the list. Their 2019 defense revenues totaled $21 billion.

The combined revenues of the Chinese firms marks the country as the rising superpower it's billed to be in political and strategic circles, said Daniel Gouré, a senior vice president with the Lexington Institute.

“For all the discussions we have been having over the last weeks and months about China as a potential threat and challenges, they are building all kinds of blue-water ship classes that mirror the U.S. Navy,” he said. “For a country that was once thought of as a continental or near-shore power, it's amazing the stuff they're building, and its reflected in these companies.”

From Europe and Turkey, a NATO ally, there were 35 firms across the list. The combined defense revenue there comprised roughly 20 percent of the Top 100 total. Seven Turkish firms made the list, with FNSS Savunma Sistemleri A.S., and Havelsan A.S. joining the list at No. 98 and No. 99 respectively.

For Russia, some past participants declined to provide data this year for unknown reasons. The two that participated made it into the list: Almaz-Antey placed 17th, with $9.2 billion in defense revenue for 2019, and Tactical Missiles Corporation JSC placed 35th, with $3.5 billion in defense revenue.

The annual Defense News Top 100 list relies for the most part on self-reporting from companies, many of whom provide estimates rather than definitive data for their defense percentages. That means that while the list is the industry standard, the numbers come with some variance.

Heritage firms dominate

Lockheed Martin was a lock for No. 1, for the 21st year in a row, with defense revenue that represents nearly 11 percent of the total. Its defense revenue jumped 12 percent between FY18 and FY19, from $51 billion to $57 billion ― with Boeing trailing at No. 2 at $34 billion in defense revenue for FY19.

Within the top five, General Dynamics climbed back from No. 6 last year, passing both Raytheon and Northrop Grumman.

Northrop fell from No. 3 to No. 4, likely based on a full-year accounting of its acquisition of Orbital ATK in 2017, said analyst Roman Schweizer, managing director of Cowen and Company.

GD led Northrop by $912 million in defense revenue, with Raytheon (5th place) trailing Northrop by $1.2 billion in defense revenue.

Ten companies increased their defense revenue by $1 billion or more, and Lockheed Martin led the pack with a $6 billion boost.

The merger between L3 Technologies (18th place last year) and Harris Corp. (26th place last year) saw a new entry, L3Harris Technologies, take the No. 9 spot, with $13.9 billion in defense revenue ― just ahead of United Technologies Corp., which acquired Rockwell Collins in 2018 and whose merger with Raytheon should be reflected in next year's list.

At the same time, the data doesn't support the argument that the defense industry is growing progressively more concentrated, according to Grundman.

“The top-quartile of firms account for exactly three-quarters of the revenue both in 2018 and 2019,” he said. “Looking back at the data for 2013, the top quartile took 73 percent of the revenue, but that's not appreciably less than last year.”

Still, despite the Pentagon's push to work with nontraditional suppliers, the top of this year's list, and the list overall, is almost like the automotive sector, it's so dominated by familiar names, said Byron Callan, an analyst with Capital Alpha Partners.

“The interesting thing is just the relative stability of this,” Callan said. “For all of DoD's emphasis to get new entrants into the sector, and reach out to innovative suppliers, you just don't see it. When you compare it to the technology sector, we're all using things made by companies that weren't even household names 10 years ago. ... Where is the Tesla [of the defense sector]?”

It's not out of the question that the list changes over the next five years, if the U.S. Department of Defense and foreign militaries make good on their promises to boost innovation, Callan said.

For all the DoD's discussion of the growing role of software, artificial intelligence and machine learning, there's no company known for those things on the list, Gouré observed.

Beyond General Dynamics, which completed its acquisition of IT services giant CSRA in 2018, “AI, software, IT aren't there because they're still subcontractors,” Gouré said. “Microsoft and Amazon Web Services, they aren't anywhere on the list.”

That's not to say there isn't massive spending on all of the above, but it remains a subcomponent within companies, and therefore not captured on the list, Gouré said.

“If we keep saying it's the kill chain, the network matters and the country with the best AI will win, are we not investing enough, are we doing the right thing?” Gouré wondered. “There are more questions than answers.”

(Booz Allen Hamilton, No. 26 this year, did win an $800 million Pentagon artificial intelligence contract. But as that occurred in May 2020, it will likely impact future lists.)

For now, the large, multiplatform firms dominate and should continue to do so, even if government defense spending declines, Gouré said. “These guys are showing it's good to have a finger in many pies.”

Furthermore, the data tend to contradict the conventional wisdom that defense is an industry of mostly large-scale, pure-play firms, according to Grundman.

“In fact, the median [defense] revenue of the top 100 is only $2 billion. And on average, only slightly more than half each firm's revenue ... derives from defense sales,” he said.

Flat-budget future?

The consensus among analysts is that government defense spending will level off amid the coronavirus pandemic, and its effects as well as the result of the upcoming U.S. presidential election in November will be reflected in future lists.

“Successful years of investment spending growth appears to be ending, but outlays are still growing due to the surge in spending over the last three years. But they are starting to taper significantly after this year,” Schweizer said.

Schweizer sees foreign spending softening, at least in the short term due to COVID-19, but he predicts defense budgets, backlogs, outlays and foreign military sales will hold together for at least 12-18 months to help defense firms weather the unprecedented damage visiting the commercial aerospace sector.

The biggest risk is the U.S. budget trajectory, which is likely to be flat, at best, or decline in mid-single digits, at worst, over the next five years, Schweitzer added. He anticipates a drop of 3-5 percent, but with the Pentagon's eye on Russia and China, the department will likely make trade-offs to protect core modernization areas.

As global growth rates slow, future lists may see some familiar companies grow leaner.

“These companies are going to figure out what their growth businesses are so they can shrink to grow,” Callan said. “They all say they're well positioned [for slower defense spending], but what the hell does that mean? They can't all be right.”

Other notable moves included Reston, Virginia-based engineering and construction company Bechtel, which fell to No. 47 from No. 31 last year; the firm's defense revenue declined 39 percent, from $3.7 billion to $2.3 billion.

In France, Safran's defense revenue jumped from $1.6 billion in FY18 to $4.4 billion in FY19, bumping it from No. 56 to No. 28. However, the company told Defense News that it attributes the large rise to a difference in calculation for this year's list. Since 2015, the data from Safran were made up of Safran Electronics & Defense activities. This year, the firm changed its approach by adding the military activities of the group's other subsidiaries.

Also in France, Dassault nearly doubled its revenue from $2.9 billion in FY18 to $5.7 billion in FY19 ― jumping from No. 38 to No. 22.

Japan's Mitsubishi Heavy Industries vaulted back onto the list to No. 21, with $6.6 billion in defense revenue. However, it's worth noting that defense revenue numbers reflect awards made by the Japanese Ministry of Defense, which leads to more year-over-year volatility among Japanese firms.

The three Israeli companies on this year's list — Elbit Systems, Israel Aerospace Industries and Rafael Advanced Defense Systems — moved up in the ranking. The sole South American company on the lsit, Embraer, also moved up, from No. 84 to No. 79.

Meanwhile, the only non-U.S. North American company on this year's list — Canada's CAE — dropped four spots to No. 74, but its defense revenue grew by a percentage point.

https://www.defensenews.com/top-100/2020/08/17/arms-trade-momentum-globalization-and-us-defense-spending-drive-defense-industry-growth

On the same subject

September 15, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

Contract Awards by US Department of Defense - September 14, 2020
DEFENSE LOGISTICS AGENCY JL Kaya,* Miami, Florida (SPE1C1-20-D-1317, $323,030,400); Unifire,** Spokane, Washington (SPE1C1-20-D-1346, $209,200,000); Coulmed Products Group,*** Springfield Township, New Jersey (SPE1C1-20-D-1320, $152,671,212); Maddox Defense,** San Diego, California (SPE1C1-20-D-1318, $88,595,200); Health Supply US,*** North Hollywood, California (SPE1C1-20-D-1332, $68,205,564); Health Supply US,*** North Hollywood, California (SPE1C1-20-D-1336, $65,411,316); Unifire,** Spokane, Washington (SPE1C1-20-D-1340, $39,580,013); The Dow Chemical Co., Midland, Michigan (SPE1C1-20-D-1333, $31,359,600); Health Supply US,*** North Hollywood, California (SPE1C1-20-D-1323, $28,132,080); Unifire,** Spokane, Washington (SPE1C1-20-D-1345, $28,048,235); Unifire,** Spokane, Washington (SPE1C1-20-D-1344, $25,416,963); The Dow Chemical Co., Midland, Michigan (SPE1C1-20-D-1337, $23,294,900); Marena Group,** Lawrenceville, Georgia (SPE1C1-20-D-1321, $22,529,664); Wise Manufacturing,*** Old Hickory, Tennessee (SPE1C1-20-D-1339, $20,216,250); The Dow Chemical Co., Midland, Michigan (SPE1C1-20-D-1338, $11,730,000); Unifire,** Spokane, Washington (SPE1C1-20-D-1342, $11,726,208); Unifire,** Spokane, Washington (SPE1C1-20-D-1341, $10,348,416); and Health Supply US,*** North Hollywood, California (SPE1C1-20-D-1326, $8,411,508), have each been awarded a firm-fixed-price, indefinite-quantity contract under solicitation SPE1C1-20-R-0138 for disposable isolation gowns. These were competitive acquisitions with 129 offers received. These are one-year contracts with no option periods. Locations of performance are Florida, California, New York, New Jersey, Georgia, Michigan, North Carolina, Tennessee, Washington, Massachusetts and Texas, with a Sept. 30, 2021, ordering period end date. Using customer is Health and Human Services. Type of appropriation is fiscal 2020 Defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania. ARMY Rockwell Collins Inc., Cedar Rapids, Iowa, was awarded a $103,577,044 firm-fixed-price contract to acquire avionics support services and incidental materials for the UH-60M Black Hawk multifunction display avionics suite for UH-60M mission design series and variant helicopters. Bids were solicited via the internet with one received. Work locations and funding will be determined with each order, with an estimated completion date of Sept. 15, 2025. U.S. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity (W58RGZ-20-F-0535). Science and Engineering Services LLC, Huntsville, Alabama, was awarded a $22,177,444 hybrid (cost-no-fee, cost-plus-fixed-fee, firm-fixed-price) contract for the procurement of Afghanistan contractor logistics support services for the Afghanistan National Security Forces. Bids were solicited via the internet with one received. Work will be performed in Khandahar, Kabul, Shorab and Mezar-i-Sharif, Afghanistan; and Huntsville, Alabama, with an estimated completion date of Sept. 30, 2021. Fiscal 2019 Foreign Military Sales (Afghanistan) funds in the amount of $22,177,444 were obligated at the time of the award. U.S. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity (W58RGZ-20-C-0032). World Wide Technology, St. Louis, Missouri, was awarded an $11,710,362 firm-fixed-price contract for laptops, desktops, Cisco Voice over Internet Protocol phones, switches, software licenses and similar items. Bids were solicited via the internet with three received. Work locations and funding will be determined with each order, with an estimated completion date of Jan. 18, 2021. U.S. Army 408th Contracting Support Brigade, Camp Arifjan, Kuwait, is the contracting activity (W52P1J-16-D-0016). (Awarded Sept. 11, 2020) The American Council on Teaching, White Plains, New York, was awarded a $10,825,025 modification (P00005) to contract W9124N-16-D-0001 for oral proficiency interviews for the Defense Language Institute's Foreign Language Center. Work locations and funding will be determined with each order, with an estimated completion date of Sept. 16, 2021. U.S. Army Field Directorate Office, Fort Eustis, Virginia, is the contracting activity. IQVIA Government Solutions Inc., Falls Church, Virginia, was awarded a $7,759,363 fixed-price-incentive contract to provide commercial off-the-shelf software components and related support services for a bi-directional, secure mobile health communication system in support of the Telemedicine and Advanced Technology Research Center. Bids were solicited via the internet with two received. Work locations and funding will be determined with each order, with an estimated completion date of Sept. 23, 2025. U.S. Army Medical Research Acquisition Activity, Fort Detrick, Maryland, is the contracting activity (W81XWH-20-D-0063). NAVY Leidos Inc., Reston, Virginia, was awarded an $82,164,896 cost-plus-fixed-fee, indeﬁnite-delivery/indeﬁnite-quantity contract. This contract provides research and development support services for the Operational Readiness Directorate at the Naval Health Research Center, San Diego, California. Work will be performed primarily in San Diego, California (80%), but may include additional work locations in Bridgeport, California (1%); Camp Pendleton, California (1%); La Posta, California (1%); Twenty-nine Palms, California (1%); Groton, Connecticut (1%); Washington, D.C. (1%); Orlando, Florida (1%); St. Petersburg, Florida (1%); Pearl Harbor, Hawaii (1%); Baltimore, Maryland (1%); Bethesda, Maryland (1%); Boston, Massachusetts (1%); Minneapolis, Minnesota (1%); Camp Lejeune, North Carolina (1%); Fort Bragg, North Carolina (1%); Arlington, Virginia (1%); Norfolk, Virginia (1%); Quantico, Virginia (1%); Fort Lewis, Washington (1%); and Keyport, Washington (1%). No funds will be obligated at the time of award and work is expected to be completed by September 2026. The initial task order for $4,968,119 for the base period of performance will be awarded with fiscal 2019 Defense Health Program (DHP) funding of $444,310, which will expire at the end of the current fiscal year; fiscal 2020 Navy research, development, testing and evaluation of $851,955 which will not expire at the end of the current fiscal year; and fiscal 2020 one-year DHP operations and maintenance funding of $2,137,975 which will expire at the end of the current ﬁscal year. The balance of the task orders will be incrementally funded and the total aggregate value of the initial task order for the base period and one option year, if exercised, is $10,002,412. This contract was competitively procured via the beta.SAM.gov website, with four proposals received. The Naval Medical Logistics Command, Fort Detrick, Maryland, is the contracting activity (N62645-20-D-5020). (Awarded Sept. 10, 2020) Vectrus Systems Corp., Colorado Springs, Colorado, is awarded a $43,414,416 indefinite-delivery/indefinite-quantity contract for base operations support services at Naval Station Guantanamo Bay. The maximum dollar value including the base period and four option years is $196,130,562. The work to be performed provides for base operations support services to include family housing, facility management, facility investment, custodial, pest control, integrated solid waste management, other (swimming pools), grounds maintenance and landscaping, utilities management, electrical, wastewater, water and base support vehicles and equipment. Work will be performed in Guantanamo Bay, Cuba, and is expected to be completed by December 2021. No funds will be obligated at time of award. Fiscal 2021 operations and maintenance (O&M) (Navy); fiscal 2021 Defense Health Program; fiscal 2021 O&M (Army); and fiscal 2021 O&M (Defense agencies) contract funds in the amount of $35,022,444 for recurring work will be obligated on individual task orders issued during the base period. This contract was competitively procured via the beta.SAM.gov website with two proposals received. Naval Facilities Engineering Command Southeast, Jacksonville, Florida, is the contracting activity (N69450-20-D-0071). Lockheed Martin Corp., Lockheed Martin Aeronautics Co., Fort Worth, Texas, is awarded a $20,480,000 undefinitized contract modification (P00062) to previously awarded cost-plus-fixed-fee contract N00019-16-C-000) for additional labor in support of depot maintenance activities associated with the completion of the government of Australia's first Joint Strike Fighter aircraft induction. Work will be performed in Williamtown, Australia (95%); and Fort Worth, Texas (5%), and is expected to be completed in July 2021. Non-Department of Defense participant funds in the amount of $10,240,000 will be obligated at time of award, none of which will expire at the end of the current fiscal year. The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity. Leidos Inc., Reston, Virginia, was awarded an $18,412,543 cost-plus-fixed-fee task order through One Acquisition Solution for Integrated Services (OASIS). This contract provides research and development support services for the Behavioral Epidemiology Assessment Research at the Naval Health Research Center, San Diego, California. Work will be performed in San Diego, California, and is expected to be completed by September 2025. The task order is initially being awarded with fiscal 2019 Defense Health Program (DHP) Navy research, development, testing and evaluation funding in the amount of $213,632 with fiscal 2019 enhanced DHP funding of $70,066; and fiscal 2020 DHP operations and maintenance funding of $5,000, all of which will expire at the end of the current ﬁscal year. The balance of the task order will be incrementally funded through the base period and four option years and have a total value of $18,412,543, if all option periods are exercised. This contract was competitively procured via General Services Administration OASIS Pool 4 and only one proposal was received. The Naval Medical Logistics Command, Fort Detrick, Maryland, is the contracting activity (N62645-20-F-0286). (Awarded Sept. 11, 2020) Aptim Federal Services LLC, Alexandria, Virginia, is awarded an $18,163,824 firm-fixed-price task order (N62478-20-F-4295) under a multiple award construction contract for repair to military petroleum storage tank Red Hill Tank 14. The work to be performed provides for the additional repairs on Red Hill Tank 14 as identified by the contractor's comprehensive out-of-service internal integrity inspection and suitability for service evaluation inspection report. Work will be performed at Joint Base Pearl Harbor-Hickam, Hawaii, and is expected to be completed by June 2023. Fiscal 2016 working capital (Navy) contract funds in the amount of $18,163,824 are obligated on this award and will not expire at the end of the current fiscal year. One proposal was received for this task order. Naval Facilities Engineering Command, Hawaii Joint Base Pearl Harbor-Hickam, Hawaii, is the contracting activity (N39430-20-D-2225). Bell Boeing Joint Program Office, Amarillo, Texas, is awarded a $16,401,341 cost-plus-fixed-fee, firm-fixed-price modification (P00008) against previously issued order N00019-18-F-1645 under basic ordering agreement N00019-17-G-0002. This modification procures 24 additional MV-22 integrated aircraft survivability equipment A-Kits. Additionally, this modification provides additional non-recurring engineering support to integrate the control indicator unit replacement into the existing Department of Navy large aircraft infrared countermeasures system for integrated aircraft survivability equipment and the MV-22 Large Aircraft Infrared Countermeasures system processor replacement retrofit installation package. Work will be performed in Philadelphia, Pennsylvania (85%); and Mesa, Arizona (15%), and is expected to be completed by April 2024. Fiscal 2020 aircraft procurement (Navy) funds in the amount of $16,401,341 will be obligated at time of award, none of which will expire at the end of the current fiscal year. The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity. Vigor Marine LLC, Portland, Oregon, is awarded a $12,243,575 firm-fixed-price contract for a 45-calendar day shipyard availability for the regular overhaul and dry-docking of USNS Richard Byrd (T-AKE 4). Work will be performed in Portland, Oregon, and is expected to be completed by Dec. 9, 2020. The maximum dollar value, including base period and four option years is $12,243,575. Fiscal 2021 working capital funds in the amount of $11,863,708 are being obligated at the time of the award, none of which will not expire at the end of the current fiscal year. This contract was competitively procured with one company soliciting via the Federal Business Opportunities website and two offers received. The Military Sealift Command, Norfolk, Virginia, is the contracting activity (N32205-20-C-4086). Lockheed Martin Rotary Mission Systems, Orlando, Florida, is awarded a $10,621,061 modification (P00044) to previously awarded cost-plus-fixed-fee contract N68335-17-C-0253 to provide retrofit kits for the production and delivery of 137 low rate initial production electronic Consolidated Automated Support Systems (eCASS) to the upgraded full rate production eCASS station baseline; 137 J18/J19 general purpose interface upgrade kits; and six fire wire/fiber channel ancillary kits. Work will be performed in Orlando, Florida, and is expected to be completed by December 2021. Fiscal 2018 aircraft procurement (Navy) funds in the amount of $2,583,663; fiscal 2019 aircraft procurement (Navy) funds in the amount of $3,185,267; and fiscal 2020 aircraft procurement (Navy) funds in the amount of $4,852,131 will be obligated at time of award, $2,583,663 of which will expire at the end of the current fiscal year. The Naval Air Warfare Center Aircraft Division, Lakehurst, New Jersey, is the contracting activity. Gomez Research Associates Inc.,** Huntsville, Alabama, is awarded a $10,000,000 modification to previously awarded cost-plus-fixed-fee contract N00174-19-C-0021 to exercise Option Year One for continued support for counter improvised explosive devices and unmanned aerial system technology. This option exercise will enable the government to use and build upon the Small Business Innovation Research Phase I and Phase II efforts awarded to Gomez Research Associates under Topic A13-058 by expanding on Gomez Research Associates' current research into buried improvised explosive devices/unmanned aerial system detection to determine how it can be made practical for use with present counter rocket, artillery, and mortar (C-RAM) systems. Work will be performed in Huntsville, Alabama (60%); Kiev, Ukraine (5%); Belgrade, Serbia (15%); and Sofia, Bulgaria (20%), and is expected to be completed by September 2021. Fiscal 2020 operations and maintenance (Army) in the amount of $10,000,000 will be obligated at time of award and will expire at the end of the current fiscal year. This contract was awarded on a sole-source basis in September 2019 in accordance with Federal Acquisition Regulation 6.302-5: Authorized or Required by Statute – 10 U.S. Code 2304 (c) (5). The Naval Surface Warfare Center, Indian Head Explosive Ordnance, Disposal Technology Division, Indian Head, Maryland, is the contracting activity. Lockheed Martin Rotary and Mission Systems, Manassas, Virginia, is awarded a $7,226,209 cost-plus-incentive-fee and cost only modification to previously awarded contract N00024-18-C-6258 to exercise options for engineering services and other direct costs in support of the Integrated Submarine Imaging System. Work will be performed in Manassas, Virginia (73%); Virginia Beach, Virginia (15%); Northampton, Massachusetts (6%); Fairfax, Virginia (3%); Arlington, Virginia (2%); and Newport, Rhode Island (1%), and is expected to be completed by September 2021. Fiscal 2018 (37%), 2019 (1%), and 2020 (3%) shipbuilding and conversion (Navy); fiscal 2020 research, development, test and evaluation (Navy) (37%); and fiscal 2019 other procurement (Navy) (22%) funding in the amount of $7,226,209 will be obligated at time of award and will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity. Raytheon Missile Systems, Tucson, Arizona, is awarded a $7,180,134 firm-fixed-price modification to exercise options under contract N00024-20-C-5400 for fiscal 2020 German Navy procurements of Rolling Airframe Missile (RAM) Block 2/2A components. The RAM Guided Missile Weapon System is co-developed and co-produced under an International Cooperative Program between the government of the U.S. and the government of the Federal Republic of Germany. Work will be performed in Rocket Center, West Virginia (63%); Williamsport, Pennsylvania (27%); Tucson, Arizona (7%); Ontario, Canada (1%); Joplin, Missouri (1%); and Mason, Ohio (1%), and is expected to be completed by June 2025. German cooperative funding in the amount of $7,180,134 will be obligated at the time of award and will not expire at the end of the current fiscal year. This contract was not competitively procured under the exception 10 U.S. Code 2304(c) (4), International Agreement. The Naval Sea Systems Command, Washington, D.C., is the contracting activity. DEFENSE ADVANCED RESEARCH PROJECTS AGENCY The Research Foundation for the State University of New York (SUNY), on behalf of SUNY Polytechnic Institute, Albany, New York, was awarded a $19,215,069 cost reimbursement (no fee) contract for a research project under the Lasers for Universal Microscale Optical Systems (LUMOS) program. The LUMOS program will enable efficient on-chip optical gain to highly capable integrated photonics platforms and enable complete photonics functionality on a single substrate for disruptive optical microsystems. Work will be performed in Albany, New York (48%); Santa Barbara, California (21%); Boston, Massachusetts (26%); and Greensboro, North Carolina (5%), with an expected complete date of September 2024. Fiscal 2020 research, development, test and evaluation funding in the amount of $3,756,278 is being obligated at time of award. This contract was a competitive acquisition under an open broad agency announcement and 29 offers were received. The Defense Advanced Research Projects Agency, Arlington, Virginia, is the contracting activity (HR0011-20-C-0142). AIR FORCE Lockheed Martin Space, Sunnyvale, California, has been awarded a $10,875,123 cost‐plus‐fixed‐fee modification (P00184) to contract FA8810‐13‐C‐0002 for Space Based Infrared System contractor logistics support for studies and modification projects. Work will be performed at Peterson Air Force Base; Buckley AFB; Greeley Air National Guard Station; and Boulder, all located in Colorado, and is expected to be completed by Sept. 15, 2021. Fiscal 2020 operations and maintenance funds in the amount of the full amount are being obligated at the time of award. Total cumulative face value of the contract is $1,828,554,298. Air Force Space and Missile Systems Center, Peterson AFB, Colorado, is the contracting activity. *Woman-owned small business ** Small business ***Small disadvantaged business https://www.defense.gov/Newsroom/Contracts/Contract/Article/2347324/source/GovDelivery/
June 3, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

Pentagon taps $688 million in coronavirus aid for defense industry
By: Joe Gould WASHINGTON ― The Pentagon plans to spend hundreds of millions of dollars in coronavirus relief funding to support vulnerable manufacturers of submarine torpedo tubes, aircraft engine parts and hardened microelectronics that were hit by closures or other effects of the COVID-19 pandemic. The $688 million defense-industrial base fund is just one category within the $10.5 billion the Department of Defense received from Congress' $2.1 trillion CARES Act package. The department submitted its 54-page spending plan to Congress on Friday amid pressure from lawmakers after DoD had spent only 23 percent of that money weeks after it was signed into law in late March. The Pentagon has thus far obligated $167 million of the $1 billion Congress granted under the Defense Production Act, a Korean War-era law that the president recently invoked, to have industry produce key items such as N95 respirator masks and swabs needed for coronavirus testing, ventilators and other items. Under the same law, the Pentagon's spending plan says it would use $688 million to address impacts to the defense-industrial base caused by COVID-19, "by directly offsetting financial distress in the DIB and providing investments to regions most severely impacted to sustain essential domestic industrial base capabilities and spur local job creation.” The plan calls for $171 million for the aircraft propulsion industrial base; $150 million for shipbuilding and submarine launch tubes; $150 million for the space launch industrial base; $80 million for the microelectronics base; $62 million for body armor suppliers; and $40 million for high-temperature materials used in hypersonic weapons. The priorities likely overlap with vulnerable industrial base areas previously identified by the Pentagon's assessment last year, said Wesley Hallman, the National Defense Industrial Association's senior vice president of strategy and policy . “It makes sense given what's going on now economically to ― under the [coronavirus aid] legislation ― reinforce some of the critical vulnerabilities that were identified in that report,” Hallman said. The Pentagon plans $171 million to sustain and preserve the aircraft propulsion industrial base, as many military aviation suppliers have been hard hit from the commercial side by coronavirus travel restrictions. Some would preserve an "essential workforce through support to sustained operations at key repair facility and stabilizing sub-vendors essential to a healthy propulsion industrial base,” according to the department. What that means is the DoD may have to absorb some of suppliers' overhead costs to keep vital suppliers in business, said Teal Group aviation analyst Richard Aboulafia. “Commercial aviation is in the worst crisis it's ever faced, and aviation propulsion aftermarket is the single part of the industry most hit by COVID-19,” Aboulafia said. “It could be [that] if there's a part like a combustor, DoD could be saying: ‘What do you need by way of guaranteed orders to keep that line open?' ” The department, which relies on a vulnerable network of suppliers for parts for the venerable TF33 engine, hopes to “support initiatives to certify and approve new parts sources for” the engine and “catalyze the sub-tier vendor base and mitigate risk of sub-tier vendors exiting the propulsion business.” Pratt & Whitney hasn't made the TF33 in more than 40 years, but it's still used by the B-52 bomber, and no replacement is due for years. The DoD also planned $150 million for the shipbuilding industrial base in areas such as castings, forgings and submarine launch equipment, as well as to support continuous production of essential components such as missile tubes. (Shipbuilding overall has contracted over the last decade, and there were only four suppliers with the capability to manufacture large, complex, single-pour aluminum and magnesium sand castings, according to the DoD's 2019 industrial capabilities report to Congress.) The CEO of Virginia-based military contractor BWXT, Rex Geveden, said on an earnings call last year that the company ― which makes missile tubes for the Columbia-class submarine ― was mulling an exit from the missile tube business. The Navy and its Naval Sea Systems Command, he said, were seeking more than one supplier, adding: “We're not interested in the future orders unless we do have a way to make money on these orders.” The DoD planned another $150 million to maintain a competitive space launch industrial base. DoD relies on a small pool of companies to launch satellites into orbit, but there are numerous companies of all sizes that support those launches, and the DoD has sought to reintroduce more competition over the enterprise in recent years. The department would also spend $80 million to support several critical suppliers of radiation-hardened microelectronics ― products vital to DoD but with limited commercial applications. The funding would “protect the domestic capacity to ensure radiation hardened microelectronics testing capability, and key subcompacts such as substrates and wafer, are available for DoD weapon systems," according to the spending plan. The $40 million would protect suppliers of high-temperature materials used in potentially game-changing hypersonic weapons. “An expanded, sustainable domestic production capability for hypersonic systems is essential to the Department achieving its modernization priorities,” the plan states. https://www.defensenews.com/congress/2020/06/02/688m-in-covid-aid-helping-defense-firms-per-dod-plan/
November 17, 2020 | International, Land

Iron Dome batteries activated to fill cruise missile defense gap
By: Jen Judson WASHINGTON — The Army has activated two air defense artillery batteries at Fort Bliss, Texas, that will evaluate the Iron Dome system for possible integration into the Army's air-and missile defense architecture, according to a Nov. 13 statement from the service. The Iron Dome batteries will serve as an interim capability to fill a cruise missile defense gap. The change was mandated by Congress while the Army determines a long-term solution to combat such threats in addition to countering rockets, artillery, mortars and drones. The Army took receipt of the first Iron Dome battery in Israel in October. The Fort Bliss-based units are expected to receive one Iron Dome system in December followed by the second in January. To stand up the two batteries, the Army is converting a Terminal High Altitude Area Defense (THAAD) battery and realigning resources from the U.S. Army Air Defense Artillery School — which is a part of the Army's force realignment initiative — according to the statement. The move is expected to be complete by Nov. 16 and will result in 26 additional personnel at Fort Bliss. The Army chose Fort Bliss because of its proximity to White Sands Missile Range, New Mexico, where the systems will be tested and evaluated. The units will spend the next year training, testing and working with the systems to prepare Iron Dome for operation deployment by late 2021. Part of the effort, according to the statement, will include integration of Iron Dome into the Army's Integrated Battle Command System, which is the command-and-control element of the service's future Integrated Air and Missile Defense architecture. The IBCS system is expected to reach a production decision this month and will undergo an initial operational test and evaluation in 2021. Northrop Grumman is the prime contractor on the program. The Army plans to make a final stationing decision on where and how to employ the systems “through either a forward stationing decision and/or Dynamic Force Employment concept in response to contingency operations” when the batteries reach operational deployment capability, the statement notes. The service plans to hold a shoot-off to determine an enduring capability for its Indirect Fires Protection Capability Increment 2 system — designed to defend against C-RAM, UAS and cruise missile threats — in the spring of 2021. Elements of the Iron Dome system will be part of that shoot-off. Iron Dome has a long track record of operational success in Israel and is produced through a partnership with Israeli-based Rafael and Raytheon. Those companies are making plans to produce Iron Dome systems in the United States and are expected to pick a location for production by the end of the year. https://www.defensenews.com/land/2020/11/13/iron-dome-batteries-activated-to-fill-cruise-missile-defense-gap/

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