September 12, 2024 | International, Land
April 27, 2020 | International, Aerospace, Naval, Land, C4ISR, Security
COVID cash crunch still hurting small defense firms
By: Joe Gould
WASHINGTON ― Cash flow for small defense contractors is continuing to suffer under the coronavirus pandemic, according to a survey by the National Defense Industrial Association.
The survey echoes warnings from the Pentagon that these firms, part of a vast network of suppliers that makes up the defense-industrial base, are especially vulnerable. The Pentagon this week announced it will make $3 billion in new “progress payments" to increase cash flow to prime contractors, expecting the money would then trickle down.
Of the NDIA survey respondents:
- 67 percent of companies with less than $1 million in annual revenue have seen a cash-flow disruption.
- 60 percent said the crisis has interfered with their cash flow.
- 60 percent expect to have long-term financial and cash-flow issues stemming from the crisis.
- 66 percent said accelerated payments from the Defense Department or prime contractors would be the most helpful step toward business recovery.
L3Harris Technologies said this week it will issue more than $100 million in payments to its small suppliers. Lockheed Martin announced Friday it executed $256 million in accelerated payment toward its $450 million goal.
Both of these promised followed the Pentagon's announcement this month that it will boost progress payment rates from 80 percent to 90 percent for large companies, and to 95 percent for small businesses.
The payments are made to contractors, usually on a monthly basis, for costs incurred and work performed under a contract; a 90 percent rate means that if $1 million in expenses are submitted on the program, the Defense Department will reimburse $900,000.
Sixty-six percent of the respondents also said it would help them to receive flexibility on the performance of their contracts.
Seventy-two percent expected to avoid overruns on their firm fixed-price contracts as a result of disruptions caused by COVID-19.
On Thursday, acquisitions officials with the Army said they expect costs to rise, and in response will guard against program slips and closely watch vulnerable lower-tier companies with less slack in their workforces. Pentagon officials anticipate workforce and supply chain issues will yield a three-month delay across the majority of its Major Defense Acquisition Program portfolio.
“The supply chain does have some challenges, and that's probably where the vast majority of any slips would occur that are tied to individual companies,” said Bruce Jette, the Army's acquisition chief. “These companies are small, and if one person gets COVID in the company, the next thing you know you've lost 14 days with the company because everybody that didn't get it is in quarantine.”
As of April 10, 769 small businesses responded to the NDIA survey. The number of companies expecting cash-flow disruptions was slightly lower last month, when 458 small businesses responded.
Factoring into cash-flow problems, according to the NDIA, are cuts to billable hours, delayed payments from prime contractors and government customers, a lack of telework options or schedule flexibility in contracts, and shelter-in-place orders that prevent employees from working.
Beyond revenue expectations, meeting contract obligations and access to capital are where small businesses are taking the biggest hits during the pandemic. Other areas of difficulty were workforce availability, access to secure facilities, contracting officers accessibility, clear information from the Defense Department, confidence in the supply chain, and stock and cost of materials.
The technology and services sectors reported more disturbances from the crisis than the manufacturing sector, NDIA noted. And businesses with fewer than 50 employees are feeling the brunt harder than businesses with more than 500 employees.
Defense Contract Management Agency data this week showed that 106 out of 10,509 primary Pentagon contractors are closed, and 68 companies closed and then reopened. Of 11,413 subcontractors, 427 were closed, with 147 having closed and reopened.
https://www.defensenews.com/2020/04/24/covid-cash-crunch-still-hurting-small-defense-firms/
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January 27, 2021 | International, Land
Newest Bradley fielding delayed as Army works to fix battery problem
By: Jen Judson WASHINGTON — The Army is testing a solution to address overheating and toxic gas production in the newest version of the Bradley Infantry Fighting Vehicle's turret battery, but its release has been delayed by almost a year, the service's program office told Defense News. The problem was discovered during the Army Test and Evaluation Command-run Full Operational Test and Evaluation at Fort Hood, Texas, where the Bradley A4 batteries were hooked directly into test equipment placing additional strain on them. The Bradley A4 design features a new charger but not new batteries. The new charger did not come with a voltage regulator, which caused the older batteries to overheat and produce the toxic gas during testing. The command suspended the maneuver portion of the test due to safety concerns related to the batteries overheating in all six test articles, according to a report recently released from the Director of Operational Test and Evaluation. “All six test article turret batteries overheated and discharged toxic fumes into the turret and crew compartment,” the report states. “This is a safety hazard to soldiers. The program manager was present during test and observed the turret battery issue. He supported the recommendation to suspend the remaining maneuver missions.” According to the program office, the service is partnered with several vendors that developed Bradley A4 — BAE Systems is the prime contractor — to design and test a solution after determining the problem during the testing process. The program office now expects to receive a materiel release by January 2022 with field maintenance new equipment training and operator new equipment training beginning at the same time. The original materiel release decision was expected in third quarter of fiscal 2021, the DOT&E report stated. The first Armored Brigade Combat Team is scheduled to get its new Bradley A4s in September 2022, the Bradley program office said. The Bradley A4 is an engineering change proposal program that brings in new suspension and track upgrades and upgrades the electrical system and power train to restore lost mobility and integrate new technologies. The current Bradley, for example, struggled to take on the power needed to run an active protection system. The Bradley won't receive an APS system until A4 is up and running. The Army reduced its Bradley modifications further in its FY21 budget request after cutting future upgrades beyond its A4 variant in FY20. The service is working to replace the Bradley down the road with an Optionally Manned Fighting Vehicle program. But the Bradley and its fire support vehicle will remain in ABCT formations until the 2050s. The FY21 appropriations bill slashed the Bradley program by $161 million due to production delays. https://www.defensenews.com/land/2021/01/25/newest-bradley-fielding-delayed-as-army-works-to-fix-battery-problem/
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November 20, 2024 | International, Land
US Army fires Precision Strike Missile in salvo shot for first time
The Army and Lockheed Martin head into soldier user testing next month following qualification testing including the double shot from a HIMARS launcher.