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April 6, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

Daily Memo: Emergency Funding For Suppliers, Aftermarket Providers

Sean Broderick

The Coronavirus Aid, Relief, and Economic Security (CARES) Act sets up several new programs and adjusts some existing ones—each aimed at pumping much-needed cash into specific sized organizations or industry sectors.

Large portions of the U.S. commercial aviation industry got specific carve-outs in the $2 trillion economic relief package enacted March 27. While these loans and grants will help air carriers and other key industry players offset some financial strife caused by the COVID-19 outbreak, most suppliers will be looking elsewhere for money.

Thankfully, CARES gives even the smallest companies options.

Topping the list is the Paycheck Protection Program (PPP), a $349 billion pot of money designed to enable the U.S. Small Business Administration (SBA) to provide “expeditious” relief to eligible businesses, an interim final rule published late April 2 said. PPP provides SBA-guaranteed loans equal to up to 2.5 times monthly payroll costs, with a $10 million cap, that businesses can use to keep the lights on for two months. Eligible expenses include payroll, health care benefits, rent and utility payments, as well as some interest expenses. The loans come with a 1% interest rate, maximum two-year terms, and require no collateral or personal guarantees. But they will be forgiven if 75% or more of the funds are used to cover payroll.

Among the PPP's wrinkles: only the first $100,000 in an employee's salary can be counted when calculating payroll expenses. Contractors are eligible to apply for their own relief, so their costs can't be counted at all. Also ineligible for counting in the payroll expenses: salaries of employees that live outside the U.S.

Businesses can only apply for one PPP loan, so the SBA advises applying for the maximum eligible amount.

Determining eligibility is straightforward: a business must find its North American Industry Classification System (NAICS) code, check the maximum employee size for its business category, and compare it to its staff size. While the general small-business benchmark is 500 or fewer employees, aerospace has many exceptions. The threshold for aircraft engine and engine parts manufacturing/maintenance (NAICS code 336412) is 1,500 employees. For aeronautical instruments manufacturing (334511), it's 1,250. If your business falls into multiple codes, the one that generates the most work determines your NAICS code. SBA has an online tool that walks through the process at www.sba.gov/size-standards.

The PPP application window opened on April 3. The program's sheer size—SBA's cornerstone 7(a) loan program issued about $20 billion in loans in all of 2019—and its first-come, first-served basis triggered a massive, front-loaded surge of applications. The interim final rule contained key guidance that banks needed to service the program, which meant not all lenders were ready to start processing applications right away. But the situation was improving hourly throughout the day April 3 as more lenders came onboard.

Another SBA program that CARES leans on is the Economic Injury Disaster Loan (EIDL). Capped at $2 million with a 3.75% interest rate, EIDLs can be used for a wider variety of expenses than the PPP. Unlike the PPP, however, they are not eligible for forgiveness.

CARES also gives the U.S. Treasury Department the authority to make special loan allowances for medium-sized businesses, generally those that are too large for an SBA program and have up to 10,000 employees. Among the caveats: maintaining or restoring 90% of its equivalent workforce as of Feb. 1, 2020 within four months of the official U.S. declaration that the COVID-19 public health emergency is over. Further guidance from Treasury, including basics such as how to apply, are in the works.

Some suppliers are eligible to apply for shares of the aviation-specific funds set aside in CARES. FAA-certificated repair stations are mentioned as being eligible for some of the $29 billion in CARES loans, specifically from the $25 billion pot allocated for passenger airlines. But the law says they should exhaust other available CARES funding options first.

There is another pot of $17 billion in loans set aside for companies critical to national security. Neither the law nor Treasury defines the term, however, so eligibility remains unclear. If Treasury looks to the U.S. Department of Homeland Security's Critical Infrastructure guidance, aircraft and engine supply-chains would qualify, as would repair stations.

Payroll grants for suppliers are murkier. CARES language has a $3 billion set-aside for contractors that both work for airlines and are on-airport. Many maintenance providers would seem to fit here, though Treasury will have the final say.

Industry trade associations and legal experts working the issue are learning more by the hour. Their one common piece of advice for businesses: consult with an attorney or tax expert, determine what your business qualifies for, and weigh your options. Many businesses will qualify for multiple programs that cannot be mixed, creating an either/or choice that comes down to the various strings attached to each.

https://aviationweek.com/air-transport/aircraft-propulsion/daily-memo-emergency-funding-suppliers-aftermarket-providers

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  • Will commercial and military launch programs ever be truly complementary?

    April 29, 2020 | International, Aerospace

    Will commercial and military launch programs ever be truly complementary?

    By: Kirk Pysher In a few months, the U.S. Air Force will choose two of the four competing space companies to provide five years of launches in the National Security Space Launch (NSSL) program. One of the core objectives for this program is to increase affordability by leveraging the technologies and business models of the commercial launch industry. Is that a realistic expectation given the current commercial space market and historical precedents? Historically, the commercial launch market has seen significant variability. Launches of commercial communication satellite constellations began in the early 1970s with NASA serving as the launch provider. New launch providers began to emerge from the commercial world after the Commercial Space Launch Act of 1984 allowed the private sector to provide launch services. We then witnessed a remarkable growth in commercial space launches in the 1990s that peaked just before the turn of the century. Then, until about 2014, the commercial launch market stabilized at 20-25 commercial geostationary orbit satellites per year that were split essentially between three global launch suppliers. Since then, new entrants into the commercial launch market and pricing pressure from terrestrial-based communication systems have significantly impacted the viability of the commercial launch market, reducing profit margins and returns on investment across the board. The expected 20-25 commercial GEO missions is now in the range of 10-15 launches per year and is expected to remain at that level beyond the NSSL five-year period of performance. With new entrants into the commercial launch market, that 40-50 percent reduction in annual launch opportunities will now be competed among seven to eight global launch providers, putting further pressure on the viability of those launchers. Additionally, commercial launch revenue is also expected to decrease over that period by as much as 30 percent as satellite operators look to reduce their launch cost through shared launch, smaller spacecraft and reduced launch pricing. Given the projected commercial launch market and additional competition from new entrants, launch service providers will have difficultly building and maintaining viable commercial launch business plans, let alone having commercial launch-driven capital to invest in new technology. History has proven that no commercial launch service provider can succeed without having an anchor government customer. The commercial launch market simply has not been able to provide the stable, long-term demand needed to maintain affordable pricing, innovation and factory throughput for the Air Force to benefit from. History has also demonstrated that it is the Air Force with NSSL since 2003 that has provided the launch service providers with a stable number of launches. The defense and commercial launch markets have a fundamental difference. The former focuses strictly on satisfying national security mission requirements in space — needs that are driven by risk, strategy and geopolitical events regardless of vulnerabilities in commercial markets. The defense market began in the late 1950s with industry designing, developing and building launch vehicles for the U.S. government to place critical national security satellites into orbit. Early on, we saw a large number of launches in the beginning — peaking at more than 40 in 1966 — before activity levels decreased to level out by 1980. After more than 400 launches of defense-related satellites, the defense launch market finally settled into an average eight launches annually, whereas the commercial launch market is strictly tied to the ability of global satellite operators to close business plans and obtain institutional and/or private funding on new and replacement satellites. The global COVID-19 pandemic is a stark reminder of the vulnerability of all commercial markets. Airlines, aircraft manufacturers and commercial space companies are needing to seek tens of billions of dollars in government assistance; and private commercial space investors are also reassessing their risk postures, as is demonstrated by the recent OneWeb bankruptcy filing. Given the projected decline in commercial launch along with the historical precedents, there would be significant risk for the Air Force to expect to leverage benefit from commercial launch. In fact, I believe history has demonstrated that it is commercial launch that is able to leverage the benefits derived from the steady cadence of defense and civil government launches. The Air Force, in its role as anchor customer, needs to clearly understand commercial market dependencies and business cases of its key providers. With that understanding, the Air Force will mitigate any risk of critical national security missions being dependent on a finicky and fluctuating commercial market. Kirk Pysher is an aerospace executive with more than 20 years in the commercial launch market, serving most recently as the president of International Launch Services until October 2019. https://www.defensenews.com/opinion/commentary/2020/04/28/will-commercial-and-military-launch-programs-ever-be-truly-complementary/

  • EDGE Group and Shipbuilding Giant Fincantieri Launch Multi-Billion Euro Joint Venture

    February 21, 2024 | International, Land

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  • Contract Awards by US Department of Defense - December 09, 2020

    December 10, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

    Contract Awards by US Department of Defense - December 09, 2020

    ARMY Sikorksy Aircraft Corp., Stratford, Connecticut, was awarded a $507,036,949 modification (P00163) to contract W58RGZ-17-C-0009 for UH-60M HH-60M aircraft. Work will be performed in Stratford, Connecticut, with an estimated completion date of June 30, 2022. Fiscal 2021 aircraft procurement (Army) funds in the amount of $507,036,949 were obligated at the time of the award. The U.S. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity. Lockheed Martin Corp., Orlando, Florida, was awarded a $31,123,618 modification (P00036) to contract W58RGZ-16-C-0008 for sustainment of the Modernized Target Acquisition Designation Sight/Pilot Night Vision Sensor Performance Based Logistics program. Work will be performed in Orlando, Florida, with an estimated completion date of June 30, 2021. Fiscal 2021 Army working capital funds in the amount of $31,123,618 were obligated at the time of the award. The U.S. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity. Alliant Techsystems Operations LLC, Plymouth, Minnesota, was awarded a $12,045,421 modification (P00029) to contract W15QKN-15-C-0066 for 120mm Advanced Multipurpose XM1147 high explosive multi-purpose with tracer cartridges. Work will be performed in Plymouth, Minnesota; Rocket Center, West Virginia; Middletown, Iowa; Kingsport, Tennessee; Faribault, Minnesota; Forest Lake, Minnesota; Towanda, Pennsylvania; Cary, Illinois; Louisville, Kentucky; Falconer, New York; Clear Lake, South Dakota; Shafer, Minnesota; Green Bay, Wisconsin; Waunakee, Wisconsin; and Coachella, California, with an estimated completion date of Dec. 3, 2020. Fiscal 2020 other procurement (Army) funds; and 2019 and 2020 procurement of ammunition (Army) funds in the amount of $12,045,421 were obligated at the time of the award. The U.S. Army Contracting Command, Newark, New Jersey, is the contracting activity. NAVY Bell Boeing Joint Project Office, Amarillo, Texas, is awarded a $170,438,450 modification (P00035) against previously awarded, fixed-price-incentive-firm-target, cost-plus-fixed-fee contract N00019-17-C-0015. This modification adds scope for the production and delivery of one CMV-22B variation in quantity aircraft for the Navy and exercises options for V-22 Common Configuration Readiness and Modernization (CC-RAM) Lot 4 requirements. Additionally, this modification provides for planned maintenance interval inspections, repairs, shipping and storage containers and tooling in support of the V-22 CC-RAM program. Work will be performed in Ridley Park, Pennsylvania (91%); and Fort Worth, Texas (9%), and is expected to be completed in September 2024. Fiscal 2021 aircraft procurement (Navy) funds in the amount of $93,510,201; and fiscal 2021 operation and maintenance (Navy) funds in the amount of $766,800 will be obligated at the time of award, of which $766,800 will expire at the end of the current fiscal year. The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity. General Dynamic Electric Boat, Groton, Connecticut, is awarded a $49,808,303 cost-plus-fixed-fee modification to previously awarded contract N00024-18-C-4321 to exercise options for the New England Maintenance Manpower Initiative for non-nuclear maintenance on submarines based at Naval Submarine Support Facility, New London. Work will be performed in Groton, Connecticut, and is expected to be completed by December 2022. Fiscal 2021 operation and maintenance (Navy) funds in the amount of $10,050,000 will be obligated at time of award and will expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity. General Dynamics Mission Systems, Pittsfield, Massachusetts, is being awarded a $43,212,827 cost-plus-incentive-fee modification (P00001) for the fiscal 2020-2023 Columbia (US01) and Dreadnought Class development, production and installation requirement. Work will be performed in Pittsfield, Massachusetts (90%); United Kingdom (6%); Quonset Point, Rhode Island (3%); and Groton, Connecticut (1%). Work is expected to be completed Nov. 29, 2024. Fiscal 2021 shipbuilding and conversion (Navy) funds in the amount of $28,099,033; United Kingdom funds in the amount of $1,784,240; and fiscal 2021 research, development, test and evaluation (Navy) funds in the amount of $572,760 are being obligated on this award. Of this amount, no funds 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 (4) and was previously synopsized on the beta.sam.gov website. Strategic Systems Programs, Washington, D.C., is the contracting activity. Kratos Unmanned Aerial Systems Inc., Sacramento, California, is awarded a $38,691,360 contract modification (P00002) to previously awarded firm-fixed-price contract N00019-20-C-0075. This modification exercises an option to procure 48 BQM-177A subsonic aerial targets for the Navy as well as associated technical and administrative data in support of full rate production lot two deliveries. 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DEFENSE LOGISTICS AGENCY LC Industries Inc., Durham, North Carolina, has been awarded a maximum $98,775,719 firm-fixed-price, indefinite-quantity contract for light chemiluminescent and shield light chemiluminescent. This was a sole-source acquisition using justification 10 U.S. Code 2304 (c)(1), as stated in Federal Acquisition Regulation 6.302-1. This is a five-year contract with no option periods. Location of performance is North Carolina, with a Dec. 9, 2025, performance completion date. Using military services are Army, Navy, Air Force and Marine Corps. Type of appropriation is fiscal 2021 through 2026 defense working capital funds. The contracting activity is the Defense Logistics Agency Aviation, Richmond, Virginia (SPE4A6-21-D-0030). AIR FORCE McCallie Associates, Bellevue, Nebraska, has been awarded a $27,635,192 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for C-5M sustainment. This contract is for the delivery of technical data for organizational maintenance of the C-5M using a common source database. Work will be performed in Bellevue, Nebraska, and is expected to be completed June 9, 2025. This award is the result of a sole-source acquisition. Fiscal 2021 operation and maintenance funds in the amount of $7,613,295 are being obligated at the time of award. The Air Force Life Cycle Management Center, Robins Air Force Base, Georgia, is the contracting activity (FA8525-21-C-00001). *Small business https://www.defense.gov/Newsroom/Contracts/Contract/Article/2441580/source/GovDelivery/

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