Back to news

May 1, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

Defense industry shutdowns trend upward, but Lord is monitoring cash flow

By: Aaron Mehta

WASHINGTON — The Pentagon's top acquisition official sees positive signs for the defense-industrial base, but remains concerned that enough cash may not be flowing to the smallest, most vulnerable companies in order to keep them open in the wake of the coronavirus pandemic.

Out of 10,509 defense-related companies tracked by the Defense Contract Management Agency, 93 are currently closed — a number that has improved by 13 since April 20, according to Ellen Lord, undersecretary of defense for acquisition and sustainment.

Notably, the number of companies that have closed and reopened jumped by 73 since April 20 — “the first time we have seen reopening numbers larger than the number of closures” since the crisis began, Lord told reporters Thursday.

Of the 11,413 companies tracked by the Defense Logistics Agency, 437 are closed, with 237 having closed and reopened. That's an improvement of almost 100 companies from the April 20 numbers.

Lord credited a mix of factors for the improved numbers, including some states appearing to have reached their estimated peak in coronavirus cases and thus opening themselves up again; “really good proactive actions” by companies to create a hygienic space for work; and shared experiences from other companies who have found ways to keep working despite the pandemic

However, Lord still expects the pandemic to impact major defense programs. On April 20, she warned that top programs could face an approximate three-month impact. She reiterated that timetable Thursday but stressed she is largely looking at a “slowdown” rather than a “delay” in major programs.

“What we are seeing as a result of illness or inability to travel: We see efficiency issues. So we are not physically able to get contractors sometimes overseas to conduct inspections,” Lord explained. “So we have somewhat of a slowdown in our ability to accomplish tasks. We are finding workarounds for that, versus just saying we're delaying doing something. We do not look at delaying things; we are looking at working through the issues, which sometimes cannot be executed with the same efficiency we previously had.”

“We think we're learning how to work in this new environment and get back up to rate, if you will, in areas where we didn't, but right now that is our best estimate and we are working, obviously, to minimize impacts,” she added.

The Pentagon has pushed out $3 billion in increased cash flow under its coronavirus-related progress payment plan, which increased upfront payment to contractors from 80 percent of cost to 90 percent for large businesses, and from 90 percent to 95 percent for small businesses.

The goal for department officials: getting cash into the hands of prime contractors, who can then quickly provide funds to their subcontractors and other small businesses, who Lord has consistently identified as the most vulnerable parts of the defense-industrial base.

In both her April 20 press appearance and Thursday's event, Lord praised Lockheed Martin for publicly committing to give early payments to subcontractors in order to keep them open. On March 27, the company announced it would push $50 million down toward small companies most at risk; that has since increased to $450 million.

But, Lord acknowledged, other companies have not been as open with where those Pentagon relief funds are going.

That's something she'd like to see change.

“I believe that the major primes are flowing down, they've committed. But I always like to trust, yet verify,” Lord said. “So I encourage all of those companies to be as transparent and forthcoming as they can be because we have a responsibility to the taxpayer, as well as the mid-tiers and the small companies, to make sure actions we take at the prime level do go down all the way through the chain.”

When asked if she believes the primes are being transparent with her office about where their cash is going, Lord said, “I believe they are,” but added: “I need to rely on CEOs of major primes to come forth with that data.”

https://www.defensenews.com/industry/2020/04/30/defense-industry-shutdowns-trend-upward-but-lord-watching-cash-flow/

On the same subject

  • US Navy secretary points to foreign shipyards’ practices to fix delays

    April 9, 2024 | International, Naval

    US Navy secretary points to foreign shipyards’ practices to fix delays

    The U.S. Navy also released a road map partly aimed at improving ship construction and repair yards.

  • Iridium's first-quarter results surpass expectations

    May 2, 2022 | International, Aerospace

    Iridium's first-quarter results surpass expectations

    The satellite phone company posted revenue of $168.2 million in the period.

  • Why the British army tested robots in muddy fields

    January 14, 2019 | International, Land

    Why the British army tested robots in muddy fields

    By: Grant Turnbull Senior British army officers have signaled their intent to accelerate the fielding of several unmanned — and increasingly autonomous systems — following successful army trials at the end of 2018, but much like other forces around the world the United Kingdom faces challenges from how to modify archaic acquisition processes, to overcoming technical issues. In December, the British army concluded its landmark experimentation exercise known as Autonomous Warrior, in which the service evaluated more than 50 unmanned systems from industry over a month-long period in the south of England. The exercise, which put the robotic systems through grueling trials in muddy fields and a purpose-built facility for urban fighting, was the first attempt by the British army, as well as industry, to determine how the technology will work in a combat environment. Much like other forces around the world, the service hopes to use robots to carry out the dangerous, and often tedious, elements of combat. Over 200 troops — made up of infantry, marines, engineers, airmen as well as U.S. Army personnel — were equipped with a variety of robotic and autonomous systems with the aim of improving areas such as combat mass, soldier lethality and overall information gathering. For example, in one scenario, soldiers used robotic engineering vehicles to clear an obstacle, while a small quadcopter flew overhead to provide infrared imagery before armored infantry rolled in to take an enemy position. Robotic systems with varying levels of autonomy were a key part of the exercise, ranging from radar-equipped drones for detecting buried IEDs, to small two-wheeled robots that are thrown into buildings to search for enemy fighters. The head of the British army, Gen. Mark Carleton-Smith, has directed the Ministry of Defence (MoD) to speed up the fielding of technology used during the exercise. “His direction to me is very clear,” said Maj. Gen. Chris Tickell, director of capability for the British army. “He wants to see some of this kit in the hands of the field army in 12 to 18 months. “Success or failure will absolutely hinge on what happens after the experiment,” he added. “And that is about the exploitation and proving to industry that we are as good as our word and we are going to take some of these ideas and put them into the hands of the user.” For Tickell, an equipment budget of £22 billion ($28 billion) over the next decade will allow the MoD to purchase new unmanned technologies, but the “trick is to turn the ideas that you see here into tangible capability.” This may require the MoD “to adjust and even devise new acquisition processes to enable rapid acquisition”, said Trevor Taylor, an expert in defense acquisition at the Royal United Services Institute, a London-based think tank. “How will requirements, business cases, competitive tendering or ‘partnering,' testing and safety cases be addressed?” A related challenge continues to be the British army's lack of experience using unmanned and autonomous systems, with commanders using the Autonomous Warrior exercise to better understand capability enhancements as well as the inevitable shortfalls. The officer responsible for coordinating the exercise, Lt Col Nick Serle, told C4ISRNET that while the British army has worked with industry on new technologies it had not previously focused on robots and autonomous systems. “That's why this year we decided to spend a month on Salisbury Plain just focusing on robotics and autonomous systems,” Serle said. He also commands the British army's experimentation unit, known as the Infantry Trials and Development Unit. “This is a real opportunity to bring stuff into the field and really see if it does what industry thinks it's going to do, but also to see if military users will use it the way [industry] thinks they will use it,” Serle said. “There's no one single piece of kit that will solve all our problems, it's a combination of something in the air such as a surveillance asset, something on the ground, perhaps with a weapon on it or just doing logistics, but then it all links through an information system where you can pass that data and make better decisions to generate tempo.” An issue highlighted by Serle was an increasingly crowded radiofrequency spectrum, especially as several unmanned systems jostle for space to beam back high-resolution data from onboard sensors. “The problem is when they start cutting each other out, we are dealing with physics here, if we want to have great high definition video passing across the battlefield we need to trade somewhere else.” Taylor noted that not only will there be a need to ensure that the control systems do not interfere with each other, but also that army leaders “will have to be convinced that new systems are not simply too vulnerable to jamming and other disruptive techniques by an adversary.” A promising development from the exercise is the ability to optionally man a standard vehicle using applique kits that can be fitted within a few hours. Several examples were on display when we visited the exercise in December, including a remote-controlled Warrior infantry fighting vehicle and a lightweight MRZR tactical vehicle. As part of the experimentation, troops used the vehicles in unintended ways. One U.S. Army soldier noting that the MRZR had been a helpful surveillance tool because of its onboard camera. Squads were also keen to use the UGVs to help in entering buildings and also as modern-day pack horses to carry supplies or people. “What we have found is that when troops are using these [UGVs], naturally they just want to jump on the vehicle because it goes faster than they can, and you can move groups very quickly on them,” Serle said. He added that for safety reasons the soldiers were not allowed to hop on board during the exercise. “Optionally manned is good, but whether it needs to be optionally manned with a steering wheel and a seat I don't know, I think you could do it more like a Segway. But there's no doubt people want to get on them.” https://www.c4isrnet.com/unmanned/robotics/2019/01/11/why-the-british-army-tested-robots-in-muddy-fields/

All news