Global military spending up to an all-time high

On the same subject

• 

  October 1, 2020 | International, Land, C4ISR, Security

  Secretive, never profitable Palantir makes its market debut

  Frank Bajak, The Associated Press BOSTON — Seventeen years after it was born with the help of CIA seed money, the data-mining outfit Palantir Technologies is finally going public in the biggest Wall Street tech offering since last year's debut of Slack and Uber. Never profitable and dogged by ethical objections for assisting in the Trump administration's deportation crackdown, Palantir has forged ahead with a direct listing of its stock, which is set to begin trading Wednesday. In its stock offering, the company isn't selling newly minted shares to raise money; it's simply listing existing shares for public trading. The low-key strategy may not generate the enthusiasm many technology offerings do. But it's in character for a secretive company long reliant on spies, cops and the military as customers — and whose founders are holding onto voting control of the company. The big question for both investors and company management: Can Palantir successfully transition from a business built on the costly handholding of government customers to serving corporate customers at scale? The company is a hybrid provider of software and consulting services that often embeds its own engineers with clients. Analysts say its future depends on selling multinationals on its tools for gathering disparate data from an ever-expanding data universe and using artificial-intelligence technology to find previously undetectable patterns. Those can theoretically guide strategic decisions and identify new markets much as they have aided in tracking terrorists and sorting military intelligence. The company sets itself apart from most U.S. technology providers, and just moved its headquarters to Denver from Silicon Valley. Palantir colors itself patriotic and belittles other tech firms that won't unquestionably support U.S. dominance in war fighting and intelligence. “Our software is used to target terrorists and to keep soldiers safe,” CEO Alex Karp wrote in a letter accompanying Palantir's offering prospectus. While Karp acknowledged the ethical challenge of building software that “enables more effective surveillance by the state,” Palantir's prospectus touts its work helping U.S. soldiers counter roadside bombings and fight the Islamic State group. The iconoclastic entrepreneur and PayPal co-founder endorsed President Donald Trump in 2016, worked on his transition team and holds the largest chunk of Palantir stock. Thiel already exerts tremendous power from the board of Facebook, which dominates global media and seeks to create a digital currency. In its IPO prospectus, Palantir paints a dark picture of faltering government agencies and institutions in danger of collapse and ripe for rescue by a “central operating system” forged under Thiel's auspices. As the offering is structured, Thiel will be the dominant voice among the Palantir co-founders who will retain voting control. “Is that someone who you want deciding how a component of the (national) security apparatus is designed?” asked New York University business professor Scott Galloway. “If you believe that power corrupts and checks and balances are a good idea, this is just from the get-go a really bad idea.” Earlier in September, BuzzFeed reported that Thiel hosted a known white nationalist, Kevin DeAnna, at a 2016 dinner party, citing emails it obtained and published whose authors refused to talk to the online news outlet. Thiel declined through a spokesman to discuss the report with The Associated Press. Critics say he shares the blame for Facebook's incomplete removal of toxic disinformation disseminated by the pro-Trump far-right fringe. Then there are Palantir's fundamentals, which Galloway considers lousy. The company has just 125 customers in 150 countries, including Airbus, Merck, Credit Suisse and the Danish National Police. Slightly less than half its 2019 revenues were from government agencies, and three clients — which Palantir did not name — accounted for almost a third of revenues. “They're massively unprofitable and they've never been able to figure it out,” Galloway said, noting that it took Google three years to earn a profit, and Amazon seven. Over a much longer span, Palantir has accumulated $3.8 billion in losses, raised about $3 billion and listed $200 million in outstanding debt as of July 31. Palantir, named for the mystical all-seeing stones from Tolkien's “Lord of The Rings,” has recently been deepening its relationship with Uncle Sam, including winning a modest contract early in the COVID-19 pandemic for helping the White House gather data on the virus' impact. Senior emerging technology analyst Brendan Burke of Pitchbook says he isn't worried that Thiel's association with Trump will hurt the company if Trump loses the election. “The political connections don't appear to be the main driver of their recent substantial contract wins,” he said, although he noted that government contracts can be more volatile than corporate ones, where Palantir's foothold is less firm. Palantir offers two software platforms. Foundry is designed to link disparate and largely incompatible data sources into a central operating system. It's the company's primary hope for broadening its business. An earlier product, Gotham, has been used by defense and intelligence analysts and police departments to identify patterns deep within datasets. But the value of “predictive policing” tools developed with the platform have been questioned for their potential to unfairly target people of color. The New Orleans and New York City police departments, once customers, have used it. A 2017 research paper by University of Texas sociologist Sarah Brayne, who studied the Los Angeles Police Department's use of Gotham, found the software could lead to a proliferation of unregulated personal data collected by police from commercial and law enforcement databases. On Monday, Amnesty International issued a briefing that says Palantir is failing to conduct human rights due diligence around its contracts with Immigration and Customs Enforcement, calling it “deeply ironic” that the company crows about its determination not to work with regimes like China that abuse human rights. Palantir's ICE contracts involve the maintenance and improvement of two products used in deportation raids. One of them, its web-based Falcon tool, has enhanced data accessible to investigators “involving the illegal movement of people into, within, and out of the United States,” according to documents obtained by The Associated Press, including court records, and by the nonprofit Electronic Privacy Information Center in a freedom-of-information request. Palantir has acknowledged in its SEC filing that “unfavorable coverage in the media” and from social activists could hurt its business. It also says its contractual obligations might prevent it from being able to defend its actions publicly, although it recently named a former Wall Street Journal reporter to its board. Negative publicity over ICE contracts may also have hurt company recruitment on college campuses. https://www.defensenews.com/industry/2020/09/30/secretive-never-profitable-palantir-makes-its-market-debut/

• 

  December 17, 2018 | International, Aerospace

  Budget watchdog warns this fighter could cost three times that of the F-35

  By: Valerie Insinna WASHINGTON — A next-generation air superiority jet for the U.S. Air Force, known by the service as Penetrating Counter Air, could cost about $300 million in 2018 dollars per plane, the Congressional Budget Office states in a new study. At that price, PCA would be more than three times that of the average F-35A jet, which is set at about $94 million to capture both the expense of early production lots and the decline in cost as the production rate increases, according the report, which predicts the cost of replacing the Air Force's aircraft inventory from now until 2050. This sum, while not an official cost estimate from the Pentagon, represents the first time a government entity has weighed in on the potential price tag for PCA. The CBO estimates the Air Force will need 414 PCA aircraft to replace existing F-15C/Ds and F-22s, the Air Force's current fighters geared toward air-to-air combat. It also surmises that the first aircraft will enter service in 2030, based on the service's stated desire to begin fielding PCA around that time frame. The reason for the whopping price tag? Part of it comes down to the cost of new technology. “The PCA aircraft would probably have a greater range and payload, as well as improved stealth and sensor capabilities, than today's F-22; those characteristics would help it operate in the presence of the high-end air defenses that DoD believes China, Russia, and other potential adversaries may have in the future,” the CBO states. The other reason comes down to history. The Air Force doesn't have a great track record when it comes to producing stealth aircraft at the low costs initially envisioned by leadership. Both the B-2 and F-22 programs were truncated in part due to the high price per plane — which in turn contributed to the production rate never accelerating to the point where unit costs begin to decrease. The early years of the F-35 program were also marred by a series of cost overruns that eventually prompted the Pentagon to restructure it. “Containing costs for the PCA aircraft may be similarly difficult,” the report states. The Air Force has said little about PCA since the release of the Air Superiority 2030 flight plan in 2016, which stated a need for a new fighter jet that would be networked into a family of systems of other air, space, cyber and electronic warfare technologies. “The replacement may not be a single platform,” Gen. Dave Goldfein, the Air Force's chief of staff, told Defense News earlier this year. “It may be two or three different kinds of capabilities and systems. And so as we look at air superiority in the future, ensuring that we're advancing to stay ahead of the adversary, we're looking at all those options.” Although Air Force leadership won't say exactly what it's doing to develop PCA or when a new jet may be coming online, it's clearly making investments. In the fiscal 2019 budget, the service requested $504 million for “next-generation air dominance,” its portfolio of future fighter technologies and weapons. The Air Force expects to ramp up funding to $1.4 billion in FY20, hitting a high in FY22 with a projected $3.1 billion in spending. According to the CBO's analysis, Air Force procurement of new aircraft could peak at about $26 billion in 2033, as the service buys both the F-35 and PCA. Those two fighters, together with the B-21 bomber, are set to be the largest drivers of cost as procurement reaches its height in the mid-2030s. “Although the Air Force could probably modify both retirement plans and replacement schedules to smooth out the 2033 peak, the average annual costs of procuring new aircraft would still be higher than in the recent past: $15 billion in the 2020s, $23 billion in the 2030s, and $15 billion in the 2040s,” the report states. Dealing with an upcoming bow wave CBO's estimates included 35 platforms that will be replacing legacy systems, with six programs making up more than 85 percent of the projected procurement costs cited throughout the report: the F-35, PCA, the KC-46A, the B-21, the C-130J cargo plane as well as the yet-unannounced C-17 replacement. The report envisions a future where the Air Force is allowed to retire all of its legacy fighter and attack aircraft — the A-10, the F-15, the F-16 and even the F-22 — in favor of three aircraft: the F-35, PCA and a light attack aircraft configured to take on low-threat missions. The Air Force has yet to decide whether to buy a light-attack aircraft or how extensive its purchase may be, although the service is expected to put out a request for proposals by the end of the month. “Funding for new fighter aircraft makes up about half of the total projected costs of procuring new aircraft,” the CBO states, with the F-35 set to be the most expensive program through the 2020s until PCA takes its place in the early 2030s. The Air Force could decrease costs in a couple of ways, although all of them come with significant drawbacks. For one, it could extend the lives of its legacy fighter and attack aircraft, and delay programs like PCA. However, the CBO notes that “obtaining replacement parts can be both difficult and expensive, and a refurbished fleet may not provide as many available and mission-capable aircraft as a new fleet.” If the service wants to increase the availability of its inventory without paying the high price associated with developing a new stealth fighter, it could retire its legacy F-15s and F-16s and buy new ones. That option is probably more expensive, but would result in aircraft that are more reliable. The Air Force could also defer the PCA program while allowing some of its legacy aircraft to be retired, the CBO posits. However, Air Force leadership contend that the service is already too small, with Secretary Heather Wilson arguing that the number of operational squadrons needs to increase from 312 to 386 — a goal that necessitates buying more aircraft. https://www.defensenews.com/air/2018/12/14/budget-watchdogs-warn-of-expensive-price-tag-for-next-air-force-fighter/

• 

  June 11, 2018 | International, Aerospace

  US Navy officially inducts Triton UAV into service

  Gareth Jennings, London - Jane's Navy International The US Navy (USN) has officially commenced operations of its Northrop Grumman MQ-4C Triton Broad Area Maritime System (BAMS) unmanned aerial vehicle (UAV), it was announced on 1 June. A ceremony to formally induct the high-altitude long-endurance (HALE) UAV into service with Unmanned Patrol Squadron (VUP)-19 – the navy's first unmanned patrol squadron – was held the previous day at Naval Base Ventura County in Point Mugu, California. VP-19 now has two Triton UAVs, which are housed in specially constructed to facilities designed to accommodate their nearly 40 m wingspans. With this milestone, VP-19 will undertake training and trials ahead of the platform's inaugural overseas deployment, which will be to the Pacific island of Guam later this year. For this and later deployments, the Triton will operate in concert with the manned Boeing P-8A Poseidon maritime multimission aircraft. The MQ-4C Triton has been developed from the Block 30 RQ-4N naval variant of the RQ-4 Global Hawk HALE UAV to provide the USN with a persistent maritime intelligence, surveillance, and reconnaissance (ISR) capability in support of a full range of military operations. Designed for high-altitude, long-endurance ISR tasks, the Triton has a range of about 2,000 n miles and, with an endurance of 24 hours, will be able to cover more than 2.7 million sq miles in a single mission. Its payload primarily comprises the AN/ZPY-3 multifunction active-sensor radar. The USN has established the infrastructure to train its Triton operators at Naval Air Station (NAS) Jacksonville in Florida. Operators undergo training under the supervision of Patrol Squadron (VP) 30 at the 11,600 m2 Integrated Test Center (ITC), which is also used for the training of P-8A Poseidon and P-3 Orion crews. http://www.janes.com/article/80602/us-navy-officially-inducts-triton-uav-into-service