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April 14, 2022 | International, Naval

Austal USA opens steel line ‘at a critical time,’ says Navy official

Flexibility of cutting-edge facility leaves company poised for growth, leaders say

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  • La France souhaite donner un nouvel élan à ses coopérations industrielles de défense avec l’Allemagne

    July 5, 2021 | International, Aerospace, Naval, Land, C4ISR, Security

    La France souhaite donner un nouvel élan à ses coopérations industrielles de défense avec l’Allemagne

    La ministre des Armées, Florence Parly, est revenue sur le programme franco-allemand d'avion de patrouille maritime (Maritime Airborne Warfare System) à l'occasion d'une rencontre avec l'association des journalistes de défense (AJD) qui s'est tenue à Paris le 2 juillet. Le 23 juin, le Bundestag a voté en faveur de l'acquisition de cinq avions de patrouille maritime Boeing P-8A Poséidon pour un montant évalué à 1,77 milliard de dollars comprenant le soutien et les équipements associés. La ministre des Armées reconnaît ainsi une divergence d'opinion « sur le fait de satisfaire un besoin intermédiaire » de la part de l'Allemagne. Cependant, selon elle, « il est trop tôt pour dire ce qui va se passer (...) ; je mets toute mon énergie pour faire en sorte que les choses aboutissent ». S'agissant du drone MALE européen, Florence Parly se montre confiante : « nous avons calé les différents éléments du contrat. J'espère que ce contrat pourra être mis en vigueur dès que les derniers sujets de financement évoqués par certains de nos partenaires auront été définitivement résolus ». L'Usine Nouvelle, 5 juillet

  • Why defense firms need to get systematic about M&A — big and small

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

    Why defense firms need to get systematic about M&A — big and small

    By: Eric Chewning and Frank Coleman III After years of growth, defense budgets will likely flatten (or decline). In such a financial environment, the U.S. Department of Defense will consider trade-offs between funding modernization, sustaining legacy equipment and preserving force structure. These hard choices will be informed by the DoD's strategic acquisition priorities, which will likely continue to reflect the need for innovation around leading-edge capabilities in areas like space, C5ISR, long-range precision fires, unmanned vehicles and artificial intelligence. To support these evolving mission requirements, the defense industry will need to ensure the industrial base is able to deliver technological advantage. This requires attracting world-class talent as well as the necessary financial capital to operate global industrial enterprises. Attracting these resources requires continued value creation through growth and return on invested capital improvements. But in a down budget environment, where is this growth to come from? While many will think organic growth is the best value-creating option (and often is), the answer also lies in augmenting a classic portfolio strategy with a systematic approach to transactions. Mergers and acquisitions are a proven growth accelerant for defense companies, and have generated superior shareholder returns and greater resilience for companies that have pursued it systematically. At first glance, this may simply seem like an obvious description of recent history. The aerospace and defense sector, after all, has seen rapid consolidation in the last five years, with deals worth $358 billion struck between 2015 and 2019, three times the total between 2010 and 2014. The problem for defense companies looking for more of the same is that this wave of consolidation now appears to have run its course. The combined market value of the top five defense hardware players is now more than four times that of the next five; so even as further mega-deals are theoretically possible, they will be increasingly difficult to execute, underscoring the value of programmatic M&A. Distinct from selective or organic deal-making approaches, programmatic M&A involves a company conducting two or more small or midsized deals per year, with an aggregate value greater than 15 percent of its market capitalization over five years, that align with their overall corporate strategy (which is hopefully linked to the “fast streams” of growth in the budget (see exhibit below)). These deals get choreographed around a specific business case, such as scaling or integrating vital digital capabilities, and are rooted in a disciplined appraisal of transactions. In the defense industry, programmatic M&A should be deployed against a strategy supported by the customer's need for innovation, lower costs and better mission outcomes for the war fighter. Our analysis shows that over the last decade, few defense companies took a programmatic approach to M&A. Those who did outperformed their peers in total shareholder returns by 10.4 percent. M&A was also an important key to resilience during the last defense spending downturn in 2007-2011: The top quintile of outperforming companies, as well as optimizing cash and flexing capex, used it as an opportunity to grow less cyclical parts of the business and build digital capabilities. Defense companies may be deterred by the current market environment, featuring stretched valuations, competition from institutional capital and a squeeze on mid-tier players. They may be cautious about the challenge of integrating smaller nondefense acquisitions into company processes and culture — a process that is easier to get wrong than right to be sure. The very complexity of these circumstances creates opportunities for bold players to differentiate themselves from their peers, align their strategies with national defense priorities and add significant value for shareholders. When done well, programmatic M&A can form a central pillar of their growth strategy. With a proactive approach to deal sourcing, holistic diligence, and in-house execution and integration expertise, companies can establish M&A as a critical capability and avoid the risks of reactive, one-off projects. In the challenging environment that confronts the defense industry today, those who act boldly will succeed in creating enduring businesses that can adapt to the evolving needs of the national defense. Eric Chewning and Frank Coleman III are partners at McKinsey and Company. Chewning previously served as chief of staff in the Office of the Secretary of Defense, and before that as the Pentagon's industrial chief.

  • Booz Allen Hamilton wins massive Pentagon artificial intelligence contract

    May 19, 2020 | International, C4ISR, Security

    Booz Allen Hamilton wins massive Pentagon artificial intelligence contract

    Andrew Eversden Booz Allen Hamilton won a five-year, $800 million task order to provide artificial intelligence services to the Department of Defense's Joint Artificial Intelligence Center (JAIC). Under the contract award, announced by the General Services Administration and the JAIC on May 18, Booz Allen Hamilton will provide a “wide mix of technical services and products” to support the JAIC, a DoD entity dedicated to advancing the use of artificial intelligence across the department. The contracting giant will provide the JAIC with “data labeling, data management, data conditioning, AI product development, and the transition of AI products into new and existing fielded programs,” according to the GSA news release. “The delivered AI products will leverage the power of DoD data to enable a transformational shift across the Department that will give the U.S. a definitive information advantage to prepare for future warfare operations,” the release said. The contract will support the JAIC's new joint warfighting mission initiative, launched earlier this year. The initiative includes “Joint All-Domain Command and Control; autonomous ground reconnaissance and surveillance; accelerated sensor-to-shooter timelines; operations center workflows; and deliberate and dynamic targeting solutions,” said JAIC spokesperson Arlo Abrahamson told C4ISRNET in January. The joint warfighting initiative is looking for "AI solutions that help manage information so humans can make decisions safely and quickly in battle,” Abrahamson said. The award to Booz Allen Hamilton will push that effort forward, Lt. Gen. Jack Shanahan, the center's director, said in a statement. “The Joint Warfighting mission initiative will provide the Joint Force with AI-enabled solutions vital to improving operational effectiveness in all domains. This contract will be an important element as the JAIC increasingly focuses on fielding AI-enabled capabilities that meet the needs of the warfighter and decision-makers at every level," Shanahan said. DoD CIO Dana Deasy told Defense News in December that the JAIC would embark on its first lethality project in 2020, which Abrahamson said would be part of the joint warfighting initiative. According to an April blog post from the JAIC, the initiative's first RFP released in March included the ethical principles DoD adopted this year, an effort to quell concern about how the Pentagon uses artificial intelligence. The award to Booz Allen Hamilton was made by the GSA through its Alliant 2 Government-wide Acquisition Contract, a vehicle designed to provide artificial intelligence services to the federal government. The GSA and JAIC have been partners since last September, when the pair announced that they were teaming up as part of the GSA's Centers of Excellence initiative, a program meant to accelerate modernization with agencies across government. “The CoE and the JAIC continue to learn from each other and identify lessons that can be shared broadly across the federal space,” said Anil Cheriyan, director of the GSA's Technology Transformation Services office, which administers the Centers of Excellence program. “It is important to work closely with our customers to acquire the best in digital adoption to meet their needs.”

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