January 31, 2020 | International, Aerospace, Naval, Land, C4ISR, Security
By: Jill Aitoro
SIMI VALLEY, Calif. — Private investors are not yet lining up to back defense startups, but they are paying close attention.
Two factors have created an opening that could lure venture capitalists to defense investments: first, a few select venture-backed technology startups are gaining traction; and second, there's been a strategic shift in approach to weapons development from the U.S. Department of Defense, focusing more on information warfare and, as such, software.
In the words of Mike Madsen, director of strategic engagement at the Pentagon's commercial tech hub, Defense Innovation Unit: "We're at a significant inflection point right now that will be visible through the lens of history.”
Nonetheless, for the tech startups, it's been slow going, as discussed during a Defense News roundtable in California. For the second year, leadership from DoD and the tech community came together to discuss the state of the Pentagon's efforts to attract commercial startups — this time digging into the challenges and opportunities that come with investment in defense development.
“We went into this eyes wide open, knowing full well that to the venture community, the math doesn't make sense. Making the choice to contribute to the advancement of artificial intelligence for DoD represented for us more of a mission-driven objective,” said Ryan Tseng, founder of artificial intelligence startup Shield AI.
But early on, “we were fortunate to get the backing of Andreessen Horowitz, a top-tier venture fund. They're certainly leaning in, in terms of their thinking about defense technology — believing that despite the history, there might be a way to find an opening to create companies that can become economically sustainable and make substantial mission impact.” Shield AI has raised $50 million in venture funding since 2015, with more rounds expected.
Indeed, a few key Silicon Valley investors have emerged as the exceptions to the rule, putting dollars toward defense startups. In addition to Andreessen Horowitz, which counts both Shield AI and defense tech darling Anduril in its portfolio, there's General Catalyst, which also invested in Anduril, as well as AI startup Vannevar Labs.
And then of course there's Founders Fund. Led by famed Silicon investors Peter Thiel, Ken Howery and Brian Singerman, among others, the venture firm was an early investor in Anduril, as well as mobile mesh networking platform goTenna. Founders Fund placed big bets on Palantir Technologies and SpaceX in the early days, which paid off in a big way.
Some of the early successes of these startups have “done an excellent job of making investors greedy,” said Katherine Boyle, an investor with General Catalyst. “There's a growing group who are interested in this sector right now, and they've looked at the success of these companies and [are] saying: ‘OK, let's learn about it.' ”
Take Anduril: The defense tech startup — co-founded by Oculus founder Palmer Luckey and Founders Fund partner Trae Stephens — has raised more than $200 million and hit so-called unicorn status in 2019, reaching a valuation of more than $1 billion. As the successes piled up, so did the venture capital funding. According to Fortune magazine, those investors included Founders Fund, 8VC, General Catalyst, XYZ Ventures, Spark Capital, Rise of the Rest, Andreessen Horowitz, and SV Angel.
“I started my career at Allen & Company investment banking. Herbert Allen, who's in his 80s, always said: ‘Hey, you should run into an industry where people are running away,' ” said John Tenet, a partner with 8VC as well as a co-founder and vice chairman of defense startup Epirus.
“There's so much innovation occurring, where the government can be the best and biggest customer. And there are people who really want to solve hard problems. It's just figuring out where the synergies lie, what the ‘one plus one equals three' scenario will be.”
Also attracting the attention of Silicon Valley investors is the growing emphasis by the Pentagon not only on systems over platforms, but software over hardware. Boyle described the shift as the “macro tailwind” that often drives innovation in a sector. Similar revolutions happened in industrials and automotive markets — both of which are also massive, global and slow-moving.
That emphasis on tech, combined with some recent hard lessons, also provides a glimmer of hope that the typical hurdles associated with defense investments — lengthy procurement cycles and dominance by traditional manufacturers, for example — could be overcome.
Consider U.S. Code 2377, which requires that commercially available items be considered first in procurement efforts, said Anduril's Stephens. He also noted court decisions in lawsuits filed by SpaceX and Palantir, which ultimately validated claims that defense agencies had not properly ensured a level playing field for major competitions.
“These types of things are now at least in recent memory for Congress, and so they have some awareness of the issues that are being faced,” Stephens said. “It's much easier now to walk into a congressional office and say, ‘Here's the problem that we're facing' or ‘Here's the policy changes that we would need.' There are also enough bodies like DIU, like In-Q-Tel, like AFWERX, like the Defense Innovation Board, like the [Defense Science Board] — places where you can go to express the need for change. And oftentimes you do see that language coming into the [National Defense Authorization Act]. It's part of a longer-term cultural battle for sure.”
For now, all these factors contribute to the majority of skeptical investors' decisions to watch the investments with interest — even if they still take a wait-and-see approach. And that places a lot of pressure on the companies that are, in a sense, the proof of concept for a new portfolio segment.
“My fear is that if this generation of companies doesn't figure [it] out, if they don't knock down the doors and if there aren't a few successes, we're going to have 20, 30 years of just no investor looking around the table and saying we need to work for the Department of Defense,” Boyle said. “If there aren't some success stories coming out of this generation of companies, it's going to be very hard to look our partners in the eye and say: ‘We should keep investing in defense because look at how well things have turned out.'”
September 22, 2021 | International, Land
The goal is to field the core system as rapidly as possible, as the global supply chain for critical subsystems like cables and connectors remains backlogged across sectors since the start of the pandemic.
April 9, 2020 | International, Land
President Trump has authorized only 34 states to receive federal funding and benefits for their Guard troops. While all of them get paid -- many out of rapidly depleting state coffers -- most aren't yet getting full health coverage. By SYDNEY J. FREEDBERG JR WASHINGTON: Legal arcana and the narrow wording of President Trump's orders are complicating the mobilization of National Guard troops to combat the COVID-19 coronavirus. The Pentagon, the White House, and the states are working urgently to increase the number of troops with federal funding and full benefits, said Gen. Joseph Lengyel, the four-star chief of the National Guard Bureau, in a phone briefing with reporters this afternoon. Part of the problem is that President Trump has not actually authorized federal funding and benefits for every state. Only 34 states and three territories are currently covered by his call-up orders, with 16 states and the District of Columbia still ineligible. (The full list is at the end of this article). Indeed, it's not clear that all states have even requested federal support for their Guard troops, especially in rural areas where the spread of the virus has been slower and suspicion of the federal government can be high. Even once the president authorizes a given state, FEMA must still approve each request for funding. Finally, until yesterday, President Trump's orders only permitted Guard troops to operate under federal orders for up to 30 days – one day too short to qualify for federal health coverage and other benefits. So how many servicemembers are affected? 28,400 personnel from both the Army and Air National Guard have been called up to help with the pandemic, Lengyel reported, a figure that's now rising by more than 1,000 troops every day. However, more than 13,000 of those troops are currently mobilized under state legal authorities, at their states' expense. While their pay in this status is usually consistent with federal payscales — some states are less generous – their benefits are typically limited to basic workers' compensation. Worse, whatever they get may not be sustainable since state coffers are being rapidly depleted by the crisis. Not quite 11,000 are currently mobilized under Title 32, Section 502(f), which allows state governors to retain command-and-control of their Guard in local emergencies but provides federal funding – a number that is “growing rapidly,” Lengyel said. But even among Guard troops on those federal Title 32 orders, it appears that most don't yet enjoy the same benefits as members of the regular active-duty military and reserve working alongside them. In particular, most Guard troops aren't getting the Basic Allowance for Housing (BAH), which helps troops on duty far from home pay for lodging if the military can't provide it, and they don't get access to the military's nationwide healthcare network, Tricare. (Guard troops can go to military hospitals for free, but few of the coronavirus hotspots they've been called to are anywhere near a base). Some 349 Guard troops have tested positive for COVID-19, although many of those were infected in civilian life and aren't being called up. Why aren't all troops on federal orders already? And why aren't all the troops on federal orders getting full benefits? That has to do with the often-obscure laws governing the National Guard and the way President Trump has chosen to invoke them. First, Trump hasn't yet authorized federally funded Title 32 call-ups across the country. Instead, on March 22, he authorized them only for Washington State, California, and New York – the three initial hotspots – and then began adding states a few at a time in subsequent orders on March 28, March 30th, April 2nd and April 7th. “FEMA generally gives shorter duration mission assignments, normally two weeks,” Lengyel explained, since most domestic disasters take less than a month to resolve. “We in the National Bureau and the Department of Defense saw this [coronavirus] clearly is going to go into May and maybe beyond, [but] FEMA was restricted [in] writing the mission assignments to what was authorized in the presidential memorandum. “I don't want to speculate on why they chose 30 days, but the difference between 30 and 31 is significant,” the general said. “We recommended a longer period of time at the beginning.” The National Guard Association of the US, an influential independent advocacy groups for Guard units, members, and families, has been watching the situation intently and pressing for an expansion of the Title 32 orders. Consistency has been lacking, lamented John Goheen, NGAUS's chief spokesman: “It's really a patchwork as you look around the country, and states are going to interpret things differently. “Section 502(f) of Title 32 was never designed for this. As a result, we are seeing of lot of bureaucratic obstacles and inflexibility,” Goheen told me this afternoon. “Case in point is the limitation on the number of days. NGAUS will be looking to change the law in the future to provide more flexibility.” The last time Title 32 was used on such a scale was Hurricane Katrina, Goheen said “There were some concerns [after Katrina] about the Defense Department being reimbursed so the Defense Department's been reluctant to use it,” he said. However reluctant the Pentagon bureaucracy in general may be, Gen. Lengyel made clear he is trying to fix the situation. “We're authorized now to bring on up to 44,000 total members of the National Guard covered under ...Title 32 ... which gives them federal pay but state control, and now — because the [April 7th] memorandum allows them to be covered for up to 31 days — they will have full insurance and medical benefits,” he said. But troops who were authorized earlier on shorter orders will have to be switched to 31 days, and making sure all new call-ups are for 31, is an ongoing process, Lengyel acknowledged: “There was some sand in the gears on making sure that we had the cost figures right so that FEMA had the exact numbers.” Meanwhile, he said, his staff and the states have started planning for the annual hurricane season. “By hurricane season, which starts in June, obviously, we're hopeful this begins to lull,” he said, “[but] we in fact are looking at implications of what it might be like to do a hurricane response in a COVID environment.” His staff and the states Guard headquarters, he said, are conducting their planning by telephone and video-teleconference (VTC) instead of the usual in-person meetings. Below is the full list of which states President Trump authorized for federally-funded National Guard callups, by date: March 22, three states: California, New York, and Washington. March 28, five states and two territories: Florida, Louisiana, Maryland, Massachusetts, and New Jersey; Guam and Puerto Rico. March 30, three states: Connecticut, Illinois, and Michigan. April 2, 10 states, one territory: Georgia, Hawaii, Indiana, Missouri, New Hampshire, New Mexico, Ohio, Rhode Island, Tennessee, and Texas; US Virgin Islands. April 7, 13 states: Arizona, Colorado, Kentucky, Mississippi, Montana, Nevada, North Carolina, Oregon, Pennsylvania, South Carolina, Virginia, Wisconsin, and West Virginia. https://breakingdefense.com/2020/04/covid-19-federal-funds-benefits-lag-for-national-guard
November 24, 2020 | International, Aerospace, Naval, Land, C4ISR, Security
AIR FORCE Northrop Grumman Systems Corp., Clearfield, Utah, has been awarded a $185,700,000 indefinite-delivery/indefinite-quantity contract for the A-10 Aircraft Structural Integrity Program Legacy VII. This contract provides for sustaining engineering services of A-10 aircraft. Work will be performed in Clearfield, Utah, and is expected to be completed Nov. 22, 2030. This award is the result of a sole-source acquisition. Fiscal 2021 operation and maintenance funds in the amount of $6,480,694 are being obligated at the time of award. The Air Force Life Cycle Management Center, Hill Air Force Base, Utah, is the contracting activity (FA8202-21-D-0001). L-3 Communications Vertex Aerospace LLC, Madison, Mississippi, has been awarded a $65,603,271 firm-fixed-price contract for contractor operated and maintained base supply of the Air Education and Training Command fleet of 178 T-1A Trainer aircraft. Work will be performed at Randolph Air Force Base, Texas; Laughlin AFB, Texas; Vance AFB, Oklahoma; Columbus AFB, Mississippi; and Pensacola Naval Air Station, Florida, and is expected to be completed Nov. 30, 2021. This award for Option Three is the result of a competitive acquisition and three offers were received. Fiscal 2021 operation and maintenance funds in the amount $17,946,903 are being obligated at the time of award. The Air Force Life Cycle Management Center, Tinker AFB, Oklahoma, is the contracting activity (FA8106-18-C-0001). Lockheed Martin Corp., King of Prussia, Pennsylvania, has been awarded a $34,939,734, cost-type modification (P00014) to contract FA8219-20-C-0001 for Mk21A technology maturation and risk reduction (TMRR) research and development for reentry vehicles (RVs). The contract modifies the TMRR prototype flight test plan, to now include preparations for a second flight test and development of two prototype RVs with telemetry capability in order to further mature technology. Work will be performed in King of Prussia, Pennsylvania, and is expected to be completed Oct. 21, 2022. Fiscal 2020 research, development, test and evaluation funds are being used with no funds being obligated at the time of award. Total cumulative face value of the contract is $151,943,606. The Air Force Nuclear War Center, Hill Air Force Base, Utah, is the contracting activity. AT2 LLC, Severn, Maryland, has been awarded a $15,751,876 firm-fixed-price modification (P00017) to contract FA4890-18-C-0008 for Air Combat Command and Air Force Global Strike Command Primary Training Ranges operation and maintenance (O&M) support services. This contract provides for O&M of range threat, scoring and feedback systems. Work will be performed at Dare County Range, North Carolina; Poinsett Range, South Carolina; Grand Bay Range, Georgia; Avon Park Range, Georgia; Snyder Range, Texas; Belle Fourche Range, South Dakota; Holloman Ranges, New Mexico; and Mountain Home Ranges, Idaho. Work is expected to be completed Dec. 31, 2021. Fiscal 2021 O&M funds in the amount of $15,044,766 are being obligated at the time of award. Headquarters Air Combat Command, Joint Base Langley‐Eustis, Virginia, is the contracting activity (FA4890‐18‐C‐0008). Lockheed Martin Corp., King of Prussia, Pennsylvania, has been awarded a $14,068,093 cost-plus-fixed-fee modification (P00022) to contract FA8620-14-C-4022 to develop, integrate and lab test detection, removal and characterization operations. Work will be performed in King of Prussia, Pennsylvania, and is expected to be completed Nov. 30, 2023. This contract was the result of a sole-source acquisition and one offer was received. Fiscal 2020 research, development, test and evaluation funds in the amount of $1,699,000 are being obligated at the time of award. The Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, Ohio, is the contracting activity. Lockheed Martin Aeronautics Co., Fort Worth, Texas, has been awarded a $9,326,062 cost-plus-fixed-fee contract for the Long Range Systems Division seeking to integrate the Navy Advanced Anti-Radiation Guided Missile-Extended Range (AARGM-ER) into the F-35. The AARGM-ER is a Navy weapon that will provide the F-35A advanced suppression of enemy air defenses/destruction of enemy air defenses capability. This contract includes one contract line item number and is the result of a sole-source acquisition. Fiscal 2020 research, development, test and evaluation funds in the full amount are being obligated at the time of award. The Air Force Life Cycle Management Center, Eglin Air Force Base, Florida, is the contracting activity (FA8682-21-C-2000). CORRECTION: The Nov. 13, 2020, announcement of a $9,703,375 contract modification awarded to Raytheon Missile Systems Co., Tucson, Arizona, included an incorrect modification number. The number of the modification to contract FA8675-20-C-0033 for Advanced Medium Range Air-to-Air Missile (AMRAAM) production baseline rocket motors is P00008, not P00007. NAVY AAR Government Services Inc., Wood Dale, Illinois, is awarded a $148,357,084 firm-fixed-price, indefinite-delivery/indefinite-quantity contract. This contract provides contractor logistics support required for operating and maintaining the C-40A aircraft, aircraft subsystems, appliances and support equipment, including depot-level, main operating base and supply support and commercial line maintenance. Work will be performed in Oklahoma City, Oklahoma (40%); Fort Worth, Texas (16.5%); Jacksonville, Florida (9%); North Island, California (9%); Oceana, Virginia (9%); Whidbey Island, Washington (9%); and Kaneohe Bay, Hawaii (7.5%), and is expected to be completed in December 2025. No funds will be obligated at the time of award. Funds will be obligated on individual orders as they are issued. This contract was competitively procured via electronic request for proposal; three offers were received. The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity (N00019-21-D-0004). Lockheed Martin Space, Titusville, Florida, is awarded a $108,778,290 cost-plus-incentive-fee and cost-plus-fixed-fee modification (P00002) to exercise options under previously awarded contract N00030-20-C-0100 for Trident II (D5) missile production and deployed systems support. Work will be performed in Denver, Colorado (25%); Cape Canaveral, Florida (23.5%); Borgo San Dalmazzo, Italy (12%); Sunnyvale, California (9.7%); Hoffman Estates, Illinois (4.3%); Titusville, Florida (3.4%); Melbourne, Florida (2.6%); Berlin, Connecticut (1.8%); Modesto, California (1.3%); Bangor, Washington (1.1%); Kings Bay, Georgia (1.1%); Clearwater, Florida (1%); and other various locations (less than 1% each, 13.2% total). Work is expected to be completed Sept. 30, 2025. Fiscal 2021 weapons procurement (Navy) funds in the amount of $94,943,006; fiscal 2021 other procurement (Navy) funds in the amount of $10,176,348; United Kingdom funds in the amount of $3,618,936; and fiscal 2021 operation and maintenance (Navy) funds in the amount of $40,000 are being obligated on this award, $40,000 of which will expire at the end of the current fiscal year. This contract is being awarded to the contractor on a sole-source basis under 10 U.S. Code 2304(c)(1) and was previously synopsized on the Federal Business Opportunities website. The Strategic Systems Programs, Washington, D.C., is the contracting activity. Lockheed Martin Corp., Rotary and Mission Systems, Orlando, Florida, is awarded a $9,574,093 modification (P00047) to previously awarded cost-plus-fixed-fee contract N68335-17-C-0253. This modification exercises an option to provide the second phase of interim contractor support for fleet Repair of Repairables (RoR), non-fleet RoR and installation RoR support for the Common Aviation Support Equipment program office. Work will be performed in Orlando, Florida, and is expected to be completed in March 2021. Fiscal 2021 aircraft procurement (Navy) funds in the amount of $2,335,259; and fiscal 2021 working capital (Navy) funds in the amount of $727,619 will be obligated at time of award, none 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. ARMY Carahsoft Technology Corp., Reston, Virginia, was awarded a $38,611,275 firm-fixed-price contract for a one-time license buy for SAP software. Bids were solicited via the internet with three received. Work will be performed in Reston, Virginia, with an estimated completion date of Nov. 30, 2021. Fiscal 2021 other procurement (Army); operation and maintenance (Army); and Army working capital funds in the amount of $38,611,275 were obligated at the time of the award. The U.S. Army Contracting Command, Rock Island Arsenal, Illinois, is the contracting activity (W52P1J-21-F-0042). Great Lakes Dredge & Dock LLC, Oakbrook Terrace, Illinois, was awarded a $15,844,050 firm-fixed-price contract for maintenance dredging. Bids were solicited via the internet with two received. Work will be performed in St. Mary's, Georgia, with an estimated completion date of June 5, 2021. Fiscal 2020 operation and maintenance (Defense) funds in the amount of $15,844,050 were obligated at the time of the award. The U.S. Army Corps of Engineers, Jacksonville, Florida, is the contracting activity (W912EP-21-C-0002). McCarthy HITT - Next NGA West JV, St. Louis, Missouri, was awarded an $8,982,180 modification (P00012) to contract W912DQ-19-C-7001 for a resident management system. Work will be performed in St. Louis, Missouri, with an estimated completion date of April 24, 2023. Fiscal 2020 military construction (Defense wide) funds in the amount of $8,982,180 were obligated at the time of the award. The U.S. Army Corps of Engineers, Kansas City, Missouri, is the contracting activity. *Small business https://www.defense.gov/Newsroom/Contracts/Contract/Article/2425497/source/GovDelivery/