October 1, 2018 | International, Aerospace

Boeing’s big month capped off with hat trick of new contracts

WASHINGTON — Boeing is the biggest aircraft manufacturer in the world, but the losses of the joint strike fighter program and Air Force's long range strike bomber still weigh heavily on the company's defense unit, and had prompted some in industry to wonder if the company's days of making cutting edge combat aircraft were numbered.

Conventional wisdom held that Boeing needed to win either the Navy's unmanned tanker drone or the Air Force's next-generation trainer aircraft contract to keep its St. Louis, Mo.-based facility building tactical aircraft into the 2030s. a contract for the Air Force's Huey replacement helicopter was seen as out of reach as the service had formerly expressed a preference for sole-sourcing Black Hawks.

But in a matter of weeks, Boeing racked up all three contracts, shocking the defense establishment.

First came the MQ-25 Stingray award for the Navy's unmanned tanker drone on Aug. 30. An initial $805 million contract covers the design, development, fabrication, test and delivery of four Stingray drones, but Navy acquisition boss James Geurts said the entire program could be worth up to $13 billion for 72 aircraft.

“It is a big win on a high-visibility competition/program and gives Boeing a franchise unmanned program,” wrote Roman Schweizer of Cowen Washington Research Group on Sept. 4.

Boeing defeated Lockheed Martin and General Atomics to win the program — and that victory allows Boeing to cement its own status as the Navy's premier manufacturer of fixed-wing aircraft.

“A Lockheed Martin win would have cemented its position as the builder of ‘next-gen' naval aviation platforms while Boeing would have been relegated to manufacturing fleet workhorses,” Schweizer said in his assessment of the award. “General Atomics would have a been a one-off, but we thought they would been a favorite for a low-cost, low-risk design.”

Then on Monday, Boeing won another big competition — this time worth up to $2.38 billion — for the Air Force's UH-1N replacement helicopter. Boeing and Leonardo were immediately obligated $375 million for the initial four MH-139 helicopters, which will be built at Leonardo's commercial AW-139 production plant in Philadelphia.

It was huge news for Leonardo, a large Italian defense contractor that had been attempting to break into the U.S. market with a major program for about a decade.

But for Boeing, it was still a relatively small aircraft procurement program, with Byron Callan, an analyst with Capital Alpha Partners, writing that there were probably few opportunities for Boeing-Leonardo to sell the MH-139 to other users in the U.S. military.

However, Boeing on Thursday won the major opportunity it had been seeking: the Air Force's T-X program. Boeing's clean sheet design beat out Lockheed and Leonardo to win a contract worth up to $9.2 billion.

It's likely the actual program will be worth considerably less — Boeing would be obligated a total of $9.2 billion over time if the Air Force decides to execute all options on the contract for 475 training jets, and the services' program of record sits at 350 jets.

But its importance to Boeing extends past the award's total contract value.

Winning T-X was “possibly critical” for Boeing's St. Louis plant and for its defense business to remain a competitive player in tactical aircraft design, said Callan.

“The MQ-25 win helps sustain production at that facility, which now builds F/A-18s and F-15s,” he wrote after the Sept. 27 announcement. “However, the F/A-18 and F-15 lines may end by the mid-2020s. T-X enables Boeing to keep that facility humming and therefore in the hunt for Penetrating Counter Air and other new military aircraft programs.”

Analysts like Callan and Schweizer had speculated that Boeing would bid very aggressively to try to win the contract, but the question was whether the company could possibly offer a new purpose-built design at a significantly lower price point than competitors Lockheed Martin and Leonardo, which both proposed aircraft designs already in production and use by foreign militaries.

It appears Boeing may have been able to do just that. Richard Aboulafia told Defense News in 2017 that the Lockheed and Leonardo trainers came with a price tag of about $25 million, although both companies were expected to bid lower than that to be competitive.

Meanwhile, Jim McAleese of McAleese & Associates pegged the unit cost of Boeing's T-X at an “eye-watering” $19 million, far below the Air Force's $45 million per plane expectation.

That low price “establishes an extremely high burden for disappointed offerors of Lockheed or Leonardo” to launch a successful protest with the Government Accountability Office, he stated in a Sept. 28 email, although Lockheed and Leonardo could potentially argue that the Air Force's cost and schedule risk assessments are too optimistic, given that Boeing offered a new airframe.

Callan also pointed out that the MQ-25 and T-X wins could be advantageous to Boeing's commercial business. In the past, the defense sector has developed new materials that have later been adapted for use by the airline industry. With Boeing acquiring autonomy-focused businesses like Liquid Robotics and Aurora while investing in startups through its HorizonX organization, it is possible advances in military unmanned tech could give way to autonomous commercial cargo planes or other future concepts.

https://www.defensenews.com/industry/2018/09/28/boeings-big-month-capped-off-with-hat-trick-of-new-contracts

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June 10, 2020 | International, Aerospace

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Epirus, a venture-backed startup, inks deal with Northrop for counter-drone tech
By: Joe Gould WASHINGTON ― Epirus, a venture-backed startup offering a counter-drone capability, launched quietly enough two years ago, but it's making noise by bringing together key veterans of Microsoft, Northrop Grumman and Raytheon ― and by landing its first deal with a name-brand defense prime contractor. Epirus chief executive Leigh Madden was general manager for Microsoft's national security business before he joined the Hawthorne, Calif.,-based firm two months ago, and its chief financial officer, Ken Bedingfield, is a former chief financial officer at Northrop. The former chairman of Epirus is Joe Lonsdale, co-founder of the Silicon Valley data-analytics company Palantir Technologies. Epirus, this week, is expected to announce a previously undisclosed strategic supplier agreement with Northrop to provide exclusive access to Epirus' software-defined electromagnetic pulse system, called Leonidas. The dollar value of the deal isn't being disclosed. Northrop said Leonidas would augment its own kinetic and non-kinetic solutions to counter small drones. The Army recently selected Northrop's Forward Area Air Defense Command and Control software, or FAAD-C2, as the interim C2 system to counter small drones. (DoD's FY21 budget request included $18.7 million for counter-drone enhancements for the system.) “UAS threats are proliferating across the modern battlespace,” said Kenn Todorov, vice president and general manager of Northrop Grumman's Combat Systems and Mission Readiness division. “By integrating the Epirus EMP weapon system into our C-UAS portfolio, we continue maturing our robust, integrated, layered approach to addressing and defeating these evolving threats.” Many companies have jumped into the $2 billion counter-UAS market, anticipating a boom as commercial drones have grown cheaper and more commonplace, posing an asymmetric threat on the battlefield as well as a threat to airports, sports stadiums, government buildings and urban areas. So many companies are in the field the Pentagon has been working to streamline the number of systems available across the department. Epirus executives said the company's technology is unique because its use of solid-state commercial semiconductor technology makes it lighter and smaller ― and because it can have narrow effects or be “adjusted to sanitize a volume of terrain or sky, creating a forcefield effect.” The company's systems involve a combination of high-power microwave technology and, for enhanced targeting, artificial intelligence. Epirus Co-founder and Chief Technology Officer Bo Marr was a radio frequency engineer and technical lead on Raytheon's next-generation jammer program, under development by the U.S. Navy. Madden, a former U.S. Navy SEAL who spent eight years at Microsoft, and Bedingfield, who spent five years as Northrop's CFO, both said they joined Epirus because they were impressed by the technology and its potential. “Northrop and Microsoft are both multibillion-dollar defense businesses, and I think we bring a knowledge of how to operate around some of the larger opportunities and to make outsized impacts in the market,” Madden said. “We're taking that experience to a smaller, innovative company. I think that will allow us to really accelerate the pace of growth and have a more rapid and greater impact for our customers.” The Pentagon has attempted to shift toward working with smaller, more innovative companies to supplement its work with larger firms, which continue to dominate the marketplace. Flexible, non-traditional contact vehicles called “other transaction authorities” have grown more popular as the Pentagon has turned to Silicon Valley for cutting edge technologies. “One of the things that attracted me to come to Epirus is the ability to work in an agile enterprise that is trying to take some of the approaches of Silicon Valley and apply them to the defense world―to iterate quicker and to field faster, and to be able to respond to the urgent needs of the customer,” Bedingfield said. Bedingfield said the company is growing fast and generating revenue from working with customers on studies and technology demonstrations, but it's as yet unclear when it will begin to deliver products. The coronavirus pandemic has slowed its hiring, but the firm is looking to double in the next year, adding more than 50 employees in Hawthorne, and a planned office in Northern Virgina. Formed in 2018 and named after the magical bow of the Greek hero Theseus, Epirus was raising $17.8 million in new funding last November, according to its public filings. With Lonsdale and Marr, its co-founders include its previous CEO; current Vice Chairman John Tenet, from venture capitol firm 8VC; Chief Operating Officer Max Mednik, a Google veteran; UnitedHealthcare Chief Digital Officer Grant Verstandig is the current chairman. Palantir, which Lonsdale founded with billionaire Peter Thiel in 2005, appeared as an upstart when the Defense Department hadn't opened its arms as wide to Silicon Valley. Last year, Palantir beat Raytheon in a head-to-head competition to provide the Army a new version of its intelligence analysis system ― after a years long saga in which the Army rejected Palantir's offering and Palantir sued. In September, Epirus won a Small Business Innovation Research contract from the U.S. Air Force's Space and Missile Systems Center as part of its AFWERX technology accelerator. The contract was for the company's novel architecture for using commercial off-the-shelf field programmable gate arrays, which are semiconductor devices commonly used in electronic circuits, as ultra-wideband radio frequency transceivers. While traditional systems use large vacuum tubes, Madden said Leonidas is based in microchips and software. “We believe there is no other solution on the market that allows for fully software defined precision targeting at digital speeds, enabling both precision targeting as well as large-area, counter-swarm targeting of many drones at the same time,” he said. Northrop and Epirus are expected to announce their partnership this week. “We're not just solving today's swarm threat, we're also looking to the future to understand how asymmetric threats will evolve,” Marr said in a statement. “Epirus is an agile startup, Northrop Grumman has defense prime contractor resources, and through this partnership we intend to deliver the best technology to the warfighter as fast as possible.” https://www.defensenews.com/2020/07/20/epirus-venture-backed-startup-inks-deal-with-northrop-for-counter-drone-tech

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