DoD Pushes To Reverse FCC OK Of Ligado 5G Network

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  May 6, 2020 | International, Land

  Old Weapons Under Fire As COVID Debt Rises

  With defense budgets expected to be coming in flat under even best-case scenarios, the time for tough decisions might be coming. By PAUL MCLEARY WASHINGTON: The Pentagon may slash older weapons programs to buy new ones in coming years if the federal government's COVID-19 response takes a big bite out of budgets, Defense Secretary Mark Esper said today. Before the global pandemic slammed American society and ground the economy to a halt, Pentagon leaders were already looking at flat defense budgets and were casting about for fat to trim. But the trillions Congress and the Trump administration has pumped into the economy, which falls on top of an already exploding budget deficit, could make predictions of flat budgets look optimistic. Esper told reporters at the Pentagon he would target older programs: “We need to move away from the legacy, and we need to invest those dollars in the future. And we have a lot of legacy programs out there right now — I could pick dozens out from all branches of the services” that could be cut or curtailed. As Army Secretary in 2018, Esper's “Night Courts” saved the service some $33 billion through scrapping oler programs with an eye to pumping cash into new weapons programs. The Navy is undergoing a review that aims to shave $40 billion in the coming years, and the Marine Corps is aggressively getting rid of troops, tanks, helicopters, and — possibly — trimming the F-35 to make room for modernization investments. In particular, the massive modernization of the nuclear delivery systems will not be touched. Esper said “we're not going to risk the strategic deterrent we need to modernize,” if budgets trend downward, but acknowledged that cutting old weapons systems before their replacements were ready “would mean probably accepting some near term risk, but I think [modernizing is] important given the trajectory that China is on, and we know where Russia may be going in the coming year.” Earlier this week, Esper said he was concerned that exploding budget deficits would put an end to the dream of 3% to 5% yearly defense budget growth, which he had targeted for Pentagon modernization. “There is a concern there that that may lead to smaller defense budgets in the future at the critical time we need to continue making this adjustment, where we look at China, then Russia, as our long-term strategic competitors,” he said at the Brookings Institute. Some lawmakers are bracing for the coming cuts. “I am extremely concerned about that,” House Armed Services Committee member Rep. Mike Gallagher told me recently. “I think it is going to require defense hawks, like myself, to make not only more energetic arguments, but new and creative geopolitical arguments,” to advocate for spending on modernization programs. “If you assume downward pressure on the defense budget, it means that DoD will need to get the most out of every dollar spent.” Those arguments will be critically important for the services as they pitch their latest modernization efforts. “I think the budget comes down sooner rather than later,” Mackenzie Eaglen, resident fellow at the American Enterprise Institute, said during a recent webinar Adding fuel to that view was Todd Harrison, DoD budget expert at the Center for Strategic and International Security, who added, “what has historically happened is, when Congress's fiscal conservatives come out and get serious about reducing the debt, reducing spending on defense is almost always part of what they come up with for a solution,” he said. “So, we could be looking at a deficit-driven defense drawdown coming.” https://breakingdefense.com/2020/05/old-weapons-under-fire-as-covid-debt-rises/

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  January 28, 2021 | International, Aerospace, Naval, Land, C4ISR, Security

  Opinion: Are Flat Pentagon Budgets The New Up Or The New Down?

  Byron Callan January 26, 2021 The Biden administration probably will not unveil an outyear spending plan for the Defense Department until the late spring of 2021 at the earliest, and more likely it will come out with the fiscal 2023 budget submission in February 2022. The administration should, however, be commenting on some of the bigger changes as different reviews and assessments are completed before that budget plan is released. Consensus now is that Pentagon spending will be flat at least in the first term of the Biden administration, though analysts are not clear on what this means. Will the Pentagon's budget be unchanged from the level that was appropriated for fiscal 2021? Will it be flat in inflation-adjusted terms, which means it would rise at 2% annually in current dollars? Or will the budget be flat in current dollars, which would entail a roughly 2% annual decline in Pentagon purchasing power, assuming inflation is 2%? Each would have different outcomes for the spending that would flow to contractors. Defense optimists could argue that flat budgets historically have not lasted too long. There were periods in which budgets were flat over 2-4 years annually in the late 1950s, early 1960s and mid-1990s. Flat periods, however, were succeeded by growth—usually because of a crisis or a new military contingency. No one has a working crystal ball that will show what is ahead for the 2020s. There are reasons to believe, however, that the 2020s are different. Although interest rates are at historic lows, the ratio of U.S. debt to GDP is at levels seen during World War II. There is pent-up demand for non-defense discretionary spending—notably for infrastructure, and an aging U.S. population will likely demand more health care and other “social” spending. “Endless wars” in the Middle East may temper Americans' willingness to engage in new overseas missions, unless a major provocation occurs that is akin to the 9/11 attacks. The flat budget period could last longer than the post-World War II era suggests. Is “flat” good for contractors? That depends. Markets started to digest that U.S. defense spending was flattening in 2020. The largest U.S. defense contractors underperformed the S&P 500 in 2020 and are doing so again in the first days of 2021. The initial market verdict is that flat is not good. The assessment might be true, but it is going to depend on two factors: how the Pentagon reallocates resources in a flat budget environment and how contractors change their strategies and portfolios. A flat top-line defense budget could be positive if the Pentagon can successfully cut military personnel and operations and maintenance (O&M) spending. Both are tall tasks. Winding down operations in Afghanistan and the Middle East is not going to free up significant troop numbers, and in any event, both are apt to exert gravitational pulls from which the U.S. cannot easily break free. Global security risks are not going to allow the sort of force structure cuts that occurred at the end of the Cold War and the Korean and Vietnam wars. Readiness and training also will remain a priority in this environment. Spending on military personnel and O&M that keeps pace with inflation may place even more pressure on investment. If those accounts grow at 1-2% annually, in a flat top-line period, that will put even more pressure on investment. Still, while there has been no indication so far, it is conceivable that the Biden administration will propose reductions in force structure and will attack O&M costs with more vigor. It will take 1-2 years at least to realize those savings, but they could be applied to modernize a smaller military. For a number of years, the Pentagon attempted to retire older “legacy” weapon systems in order to fund new investment, but Congress has stymied efforts to muster out older Navy cruisers, aircraft carrier refueling systems and aircraft such as the A-10. The Defense Department could renew this line of attack, but it may be reminded of the old adage that repeating the same thing over and over and expecting a different outcome is the definition of insanity. The Pentagon will have to change its approach here by offering more incentives to states and districts that could be affected by the elimination of squadrons or units, and it has to be more forceful in confronting contractors whose net interests are harmed by such moves. A final thought is how contractors' strategies might change. In 2020 and so far in 2021, outperformance was evidenced by small-to-midsize contractors that appeared better aligned with Pentagon investment priorities in artificial intelligence, autonomy, supply chain resilience and low-cost weapons. The largest contractors may be able to unlock value in a flat top-line environment if they can spin off segments that are stagnant or declining. Sprawling program portfolios are apt to perform more in line with market growth rates, and that is not a recipe for superior performance. https://aviationweek.com/defense-space/budget-policy-operations/opinion-are-flat-pentagon-budgets-new-or-new-down

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  April 27, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

  Défense : les industriels veulent une relance

  Tous alignés pour mener la charge. Les présidents des organisations patronales de l'aéronautique, du naval militaire et de l'armement terrestre plaident d'une seule voix afin que l'industrie de défense fasse partie des plans de relance en France, mais aussi en Europe. « C'est absolument fondamental », ont-ils affirmé, lors d'une audition devant la commission de la défense de l'Assemblée nationale. L'objectif est de préserver la Base industrielle et technologique de défense (BITD) avec ses dizaines de milliers d'emplois hautement qualifiés, répartis sur tout le territoire et le long du littoral. À elles seules, les 400 entreprises aéronautiques membres du Groupement des industries françaises aéronautique et spatiale (Gifas) emploient 200 000 personnes. La filière navale fait travailler 40 000 personnes et les acteurs du terrestre, 20 000. Sans oublier les salariés des milliers de PME et TPE, dont beaucoup de pépites technologiques. Il s'agit aussi d'assurer aux armées, sursollicitées à l'intérieur et à l'extérieur des frontières nationales, le meilleur niveau d'équipements. Cela, en restant compétitifs face à la concurrence internationale et en pérennisant l'indépendance stratégique militaire du pays. Face à la crise du Covid-19 qui affecte les industriels de l'armement, « nous proposons un plan de relance pour soutenir la défense, sur le modèle de celui mis en place après la crise financière de 2008 », déclare Stéphane Meyer, président du Gicat (armement terrestre) et PDG du constructeur de blindés Nexter. Le volet défense du plan de relance de 2008 représentait 2,4 milliards d'euros sur un total de 34 milliards. Compte tenu de la profondeur inédite de la crise économique attendue, il faut aller plus loin. « Il est nécessaire d'augmenter les crédits afin d'amplifier la relance de l'industrie de défense, ce qui passe par la hausse de son budget dans la loi de finance 2021 et une révision de la loi de programmation militaire 2019-2025 avec prise en compte des montants absolus et pas du pourcentage du PIB, qui s'est contracté. Cela en affermissant des commandes qui sont encore optionnelles », précise-t-il. « La commande publique est le meilleur outil pour relancer l'économie », insiste Hervé Guillou, président du Groupement des industries navales (Gican). « Avant de parler de relocalisations, rappelons que l'industrie de défense est déjà localisée en France, et qu'un euro dans le budget français va directement dans l'emploi en France », relève Éric Trappier, président du Gifas et PDG de Dassault Aviation *, constructeur de l'avion de combat Rafale. À court terme, les entreprises qui tournent avec 20 % à 30 % en moyenne des effectifs ont pour « priorité absolue » la maintenance des matériels, la dissuasion et la défense aérienne. Les grands industriels ont aussi, en liaison avec le ministère des Armées, organisé la solidarité interfilière, afin de repérer les PME les plus en difficultés, dont la défaillance « peut affecter toute l'industrie ». L'autre combat se déroule sur le front européen. Les États-Unis ont placé l'aéronautique et la défense au premier rang des industries stratégiques dans leur plan de relance. « Est-ce que l'Europe a un plan pour ces industries stratégiques ? Nous discutons avec Thierry Breton (commissaire au Marché intérieur, notamment en charge de la défense, NDLR) afin que le budget de 13 milliards destiné au fonds européen de défense ne soit pas réduit dans le prochain budget de la Commission », souligne Éric Trappier. Le président du Gifas appelle aussi à la reprise et à la réussite des coopérations européennes et à l'instauration - enfin - d'une préférence européenne en matière d'achat de matériels militaires. « Ce n'est pas le moment de baisser la garde en Europe », martèle Hervé Guillou. « Il faut espérer que la situation fera réfléchir la Direction de la concurrence sur la consolidation européenne, qui est un moyen de créer des champions capables de se défendre contre leurs concurrents étrangers et de se protéger des OPA hostiles », conclut le président du Gican. Véronique GUILLERMARD Le Figaro https://www.asafrance.fr/item/defense-les-industriels-veulent-une-relance.html