March 16, 2020 | International, Aerospace, Naval, Land, C4ISR, Security
Michael Bruno
The COVID-19 outbreak is the biggest punch to the gut commercial aviation has taken since the Sept. 11, 2001, terrorist attacks. And coming on the heels of the Boeing 737 MAX crisis, Airbus and Boeing widebody production rate cuts, U.S. trade wars and the flight-shaming movement in Europe, the coronavirus emergency is challenging the aerospace manufacturing sector and its global supply chain.
Is the historic upcycle of commercial aircraft orders over? Will orders be canceled and deferred? Will business aviation go out of favor? Only time will tell, but it has been interesting to hear what aerospace and defense (A&D) executives are worrying about.
First, lost revenue from disrupted operations in China is not among their worries. Practically no one in A&D manufacturing has revised their 2020 financial forecasts—provided in January or February—because of COVID-19 alone.
“To date, we have no reported cases of our employees having contracted the virus, and the direct impact to our trading activities has been minimal,” Senior Plc CEO David Squires said March 2.
Likewise, GE CEO Larry Culp did not change the company's financial outlook because COVID-19 was already cited in a forecast given last month. “In our view, in all likelihood it is going to be temporary, but it doesn't mean it is going to disappear tomorrow,” Culp said at a March 4 shareholder briefing.
To be sure, some OEMs and suppliers with Chinese operations had to shut down in recent weeks due to COVID-19. But those factories are back up, and the impact to revenue was limited. For instance, only 20 of Triumph Group's roughly 5,000 active suppliers are located in China or South Korea. All 20 remain operational, and no supply chain interruptions have occurred.
On the supply side, the glancing blow could have a lot to do with the fact that not much in Western aerospace is sourced in China. According to U.S. Commerce Department data, the U.S. imports just $1.1 billion annually in aircraft, spacecraft and related parts. What is more, that figure has been dropping since 2016—before the U.S.-China trade war—and was expected to fall off a cliff for 2019 and 2020 regardless of the “Phase One” trade deal truce.
China always was a twofold market for U.S. aerospace: Sell parts and services to existing Western-supplied fleets there, and partner for local production of nonproprietary parts and systems for emerging Chinese fleets. But China is ramping up efforts to get its own fleet into operation and is pairing with Russian suppliers more often. Any growth in overall aerospace trade likely would have to come from a jump in Chinese orders of Airbus or Boeing airliners, which was not widely expected in the wake of the Jan. 16 trade truce and is not anticipated now after the recent plummet in Chinese air traffic.
Although collapsing demand worldwide for air travel could have a devastating effect on A&D manufacturing and supply, executives do not consider it likely. COVID-19 quickly turned into a short, sharp shock to the system, but industry leaders see the same underlying macro conditions driving long-term growth. Chief among them: expanding middle classes worldwide that spend more discretionary funds traveling by air for leisure.
During the 2020 Aviation Summit in Washington, new Collins Aerospace President Stephen Timm was asked if the airliner-customer landscape could look a lot different in coming years due to the scare. “Frankly, we're going to see differences,” Timm said. “This will be a blip—a serious blip that we have to deal with today—but compared with the macro aerospace industry, we're in a really good place.”
Where do industry insiders see change coming to the supply chain? For one thing, COVID-19 could help deepen resistance to business travel, said some attending Aviation Week's Annual Aerospace Raw Materials and Manufacturers Supply Chain Conference on March 9-12. That would exacerbate the ongoing drop in demand for widebodies.
Still, the biggest change could come in accelerating a budding shift in A&D supply from globalization to regionalization. Executives and consultants at both the Wharton Aerospace Conference on Feb. 29 and Aviation Week's supply chain event discussed how COVID-19 cements a belief that just-in-time global supply chains are too risky and not worth the lower cost anymore.
Instead, they look to capitalize on aerospace manufacturing hubs in Asia, Europe-North Africa and North America to supply themselves. The trend could start with aerostructures for future single-aisle airliners, especially as composite materials are increasingly incorporated. “From a colocation strategy,” says one supplier executive, “you will see it in the next-gen airplanes.”
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May 19, 2020 | International, Aerospace, Naval, Land, C4ISR, Security
AIR FORCE Northrop Grumman Systems Corp., Redondo Beach, California, has been awarded a not-to-exceed $2,375,000,000 undefinitized contract modification (P00013) to contract FA8810-18-C-0006 for Next Generation Overhead Persistent Infrared Polar Space Vehicles 1 and 2. This modification adds Phase One for design/development, critical path flight hardware procurement, and risk reduction efforts leading to a critical design review to the basic contract. Work will be performed in Redondo Beach, California, and is expected to be completed by December 2025. Fiscal 2020 research, development, test and evaluation funds in the amount of $70,500,000 are being obligated at the time of award. Total cumulative face value of the contract is $2,419,295,532. Space and Missile Systems Center, Los Angeles Air Force Base, California, is the contracting activity. Lockheed Martin Corp., Orlando, Florida, has been awarded a ceiling $485,000,000 indefinite-delivery/indefinite-quantity contract for Department of Defense and Foreign Military Sales (FMS) Sniper, Infrared Search and Track (IRST); and Low Altitude Navigation and Targeting Infrared for Night (LANTIRN) navigation pod (fixed wing) hardware production. This contract provides the necessary resources required for the management, fabrication, upgrade/retrofit, integration support and testing and shipping of its non-developmental item (NDI) Sniper Advanced Targeting Pods (ATP) System, NDI LANTIRN Fixed Image Navigation Set upgrades, and the NDI IRST system as it relates to the requirements document associated with each specific delivery order placed under this contract. Work will be performed in Orlando, Florida, and various locations to be identified at the order level. The work is expected to be completed by May 2025. This contract involves FMS to (this list is not all inclusive): Bahrain, Belgium, Bulgaria, Canada, Egypt, Greece, Indonesia, Iraq, Israel, Jordan, Republic of Korea, Kuwait, Morocco, Netherlands, Norway, Oman, Pakistan, Poland, Qatar, Romania, Saudi Arabia, Slovakia, Taiwan, Thailand and Turkey. This award is the result of a sole-source acquisition. FMS funds in the amount of $34,900,000 are being obligated at the time of award under delivery order FA8540-20-F-0034 for the country of Morocco. Air Force Life Cycle Management Center, Robins Air Force Base, Georgia, is the contracting activity (FA8540‐20‐D‐0001). Canadian Commercial Corp., Ottawa, Canada, has been awarded a $44,473,960 indefinite-delivery/indefinite-quantity contract for the installation of the Block Upgrade 7.0/8.1 kits into C-130J cargo aircraft. This contract provides for installation of government provided BU 7.0/8.1 kits into designated C-130J aircraft. Work will be performed in British Columbia, Canada, and is expected to be completed by Oct. 5, 2025. This award is the result of a competitive acquisition and four offers were received. Fiscal 2020 aircraft procurement funds in the amount of $4,690,950 are being obligated at the time of award. Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, Ohio, is the contracting activity (FA8625-20-D-2016). The Corporation of Mercer University, Warner Robins, Georgia, has been awarded a $9,039,309 task order (FA8523-20-F-0029) on basic contract FA8523-20-D-0001 to provide Laboratory Intelligence Validated Emulators (LIVE)-Virtual-Constructive (LVC) closed loop engineering test and evaluation of newly developed electronic warfare (EW) systems. This order provides integration of gold-standard intelligence community threat definitions into the Electronic Warfare and Avionics Integrated Support Facility, where LVC closed loop operational test – vertical testability demonstration simulations and testing will be conducted to inform the baseline capability and to identify growth areas for improving operational survivability, reliability and mission success of fielded EW systems in support of airborne U.S. warfighting elements. Work will be performed in Warner Robins, Georgia, and is expected to be completed by May 13, 2022. Fiscal 2020 operations and maintenance funds in the amount of $4,140,106 are being obligated at the time of award. The Air Force Life Cycle Management Center, Robins Air Force Base, Georgia, is the contracting activity. JOINT ARTIFICIAL INTELLIGENCE CENTER Booz Allen Hamilton Inc., McLean, Virginia, has been awarded a five-year, $800,000,000 task order contract (47QFCA20F0032) to deliver the Joint Artificial Intelligence Center (JAIC) artificial intelligence (AI) enabled products to support warfighting operations and be instrumental in embedding AI decision-making and analysis at all tiers of Department of Defense (DOD) operations. This is a General Services Administration (GSA) Alliant 2 government-wide acquisition contract for AI products that will leverage the power of DOD data to enable a transformational shift across the DOD that will give the U.S. a definitive information advantage to prepare for future warfare operations. Specific tasks of this order will encompass a wide mix of technical services and products across the full spectrum of technical support to the JAIC Joint Warfighter National Mission Initiative. This will include data labeling, data management, data conditioning, AI product development, and the transition of AI products into new and existing fielded programs and systems across the DOD. The task order contract award has a base period through May 2021 with option years that run through May 2025. GSA Federal Systems Integration and Management Center, Washington, D.C., is the contracting activity. ARMY Lockheed Martin Corp., Grand Prairie, Texas, was awarded a $497,301,405 modification (P00035) to contract W31P4Q-17-D-0026 for Phased Array Tracking on Radar to Intercept Advanced Capability-3 missile support center post-production support. Bids were solicited via the internet with one received. Work locations and funding will be determined with each order, with an estimated completion date of May 18, 2022. U.S. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity. Central Environmental Inc., Anchorage, Alaska, was awarded a $26,990,428 firm-fixed-price contract to relocate an existing road. Bids were solicited via the internet with two received. Work will be performed in Porterville, California, with an estimated completion date of July 30, 2021. Fiscal 2018 civil construction funds in the amount of $26,990,428 were obligated at the time of the award. U.S. Army Corps of Engineers, Sacramento, California, is the contracting activity (W91238-20-C-0009). Dignitas Technologies LLC,* Orlando, Florida, was awarded an $8,723,110 firm-fixed-price contract to provide technical and management support for the Program Executive Office for simulation, training and instrumentation and provide access to Army Mission Command information systems. Bids were solicited via the internet with five received. Work will be performed in Orlando, Florida, with an estimated completion date of May 31, 2025. Fiscal 2018, 2019 and 2020 other procurement (Army); 2020 research, development, test, and evaluation (Army); and 2020 operations and maintenance (Army) funds in the amount of $1,615,202 were obligated at the time of the award. U.S. Army Contracting Command, Orlando, Florida, is the contracting activity (W900KK-20-C-0024). DEFENSE INTELLIGENCE AGENCY Clear Resolution Consulting, Baltimore, Maryland (HHM402-20-D-0018); NextGen Federal Systems, Morgantown, West Virginia (HHM402-20-D-0019); S2 Technologies, Smithfield, North Carolina (HHM402-20-D-0020); LBO Technology LLC, Leesburg, Virginia (HHM402-20-D-0016); Lock4 LLC, Red Springs, North Carolina (HHM402-20-D-0017); Parra Consulting Group, Middletown, Maryland (HHM402-20-D-0014); and SHINE Systems, Charlottesville, Virginia (HHM402-20-D-0021), have been awarded an indefinite-delivery/indefinite-quantity contract with a ceiling of $99,500,000 for facility management, logistics, administrative, readiness, executive and security support services to support the National Media Exploitation Center. Task orders will be competed among all awardees. The contract has a base period of performance from May 29, 2020 to May 28, 2025, with an optional ordering period from May 28, 2025 to May 27, 2030. All task orders must be completed no later than one year after the end of the ordering period. Work will be performed in the National Capital Region; Charlottesville, Virginia; and Patrick Air Force Base, Florida. Fiscal 2020 operations and maintenance funds in the amount of $1,000 are being obligated on task order after award. This contract has been awarded through a HUBZone set-aside competitive acquisition and sixteen offers were received. The Virginia Contracting Activity, Washington, D.C., is the contracting activity. DEFENSE LOGISTICS AGENCY Metrex Research LLC, doing business as Orascoptic, Madison, Wisconsin, has been awarded a maximum $45,000,000 fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract for hospital equipment and accessories for the Defense Logistics Agency electronic catalog. This was a competitive acquisition with 115 responses received. This is a five-year contract with no option periods. Location of performance is Wisconsin, with a May 17, 2025, performance completion date. Using military services are Army, Navy, Air Force and Marine Corps. Type of appropriation is fiscal 2020 through 2025 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE2DH-20-D-0040). CORRECTION: The contract announced on May 8, 2020, for S&L Aerospace Metals LLC,* Flushing, New York (SPRRA1-20-D-0043), for $24,386,400, was announced with an incorrect award date. The correct award date is May 15, 2020. MISSILE DEFENSE AGENCY Lockheed Martin Rotary and Mission Systems, Moorestown, New Jersey, is being awarded a $22,300,000 cost-plus-fixed-fee modification (P00365) under Aegis Combat Weapon System development contract HQ0276-10-C-0001, which covers multiple Aegis Weapon System baselines and platforms. This modification increases the total cumulative contract value by $22,300,000, from $3,211,352,549 to $3,233,652,549; $64,900,000 of which was obligated for Aegis Ashore Japan (under Contract Line Item Number 0135). Under this modification, the contractor will continue performing engineering design support services necessary for continuation of planning efforts and risk reduction efforts required to maintain initial operational capability schedule to support the Aegis Ashore Japan Foreign Military Sales main case. The work will be performed in Moorestown, New Jersey, with an expected completion date of July 31, 2020. Funds from the government of Japan in the amount of $22,300,000 are being obligated at the time of award. This contract modification is the result of a sole-source acquisition. The Missile Defense Agency, Dahlgren, Virginia, is the contracting activity. WASHINGTON HEADQUARTERS SERVICES Chenega Healthcare Services LLC, San Antonio, Texas, has been awarded an indefinite-delivery/indefinite-quantity contract with an overall ceiling of $10,000,000. This contract provides COVID-19 contact tracing for the Pentagon support services. Fiscal 2020 operations and maintenance funds in the amount of $508,000 are being obligated at the time of the award. The expected completion date is May 17, 2025. Washington Headquarters Services, Arlington, Virginia, is the contracting activity (HQ0034-20-D-0008). *Small business https://www.defense.gov/Newsroom/Contracts/Contract/Article/2190758/source/GovDelivery/