November 16, 2021 | International, Land
German powertrain company makes play in US as combat vehicle competition heats up
Here's how a German company is making a big play in the American combat vehicle market.
July 23, 2020 | International, Aerospace
Lockheed, Boeing Got Half of $2.3 Billion in Pentagon Virus Cash
Lockheed Martin Corp. and Boeing Co. received about half of an initial $2.3 billion in increased, accelerated payments the Pentagon provided contractors to help companies' cash flows after the Covid-19 pandemic erupted in the U.S.
The initial infusion was included in $13 billion in regular, periodic progress payments paid to the companies, according to newly released defense figures. Lockheed Martin initially received $685 million while Boeing got $670 million, according to a Pentagon statement to Bloomberg News
In a separate statement, Lockheed Martin said that modifications to existing contracts resulted in additional accelerated payments to the company, increasing its total received to $1.1 billion by June 30, “all of which we have flowed down to our supply base.”
Lockheed and Boeing are the top two U.S. defense contractors, so they were expected to get the biggest share of the funds. Other companies receiving the accelerated payments include:
- Raytheon Technologies Corp.: $410 million
- L3 Harris Technologies Inc.: $74 million
- The Boeing/Lockheed United Launch Alliance LLC: $70 million
- Northrop Grumman Corp.: $70 million
Another $321 million went to other companies.
The companies are benefiting from a policy the Pentagon announced in March, just as the pandemic was building in the U.S., that provided for faster, and bigger, payments to companies. The move was intended to guarantee that critical national security contracts -- including the production of key weapons systems and supplies -- weren't interrupted by companies having problems accessing cash or credit. The extra funding would ensure production lines were able to stay open.
The Defense Department's move meant that larger firms could get as much as 90% of their payments for contracts in progress, up from 80% previously. For smaller businesses, which might be more susceptible to virus impacts, the rate rose to 95% from 90%.
As the initial funds were identified, the Pentagon “worked with each of the major primes to ensure that they were identifying at risk companies in their supply chain and flowing down payments to those companies, as well as all companies doing work for the prime,” said the statement.
The major contractors “have been flowing down payments, in some cases more than the payments received from DOD,” it said.
Pentagon officials initially estimated in March about $3 billion would be paid but that number included a potential $700 million payment on a long-standing contract that further analysis deemed was not necessary.
In addition to the accelerated progress payments, the Air Force in April released to Boeing $882 million withheld from the company over current deficiencies with its KC-46 military tanker program as part of Covid-19 relief efforts.
After the program was announced, Senator Elizabeth Warren, who serves on the Armed Services Committee, expressed concern about its oversight. In particular, the Massachusetts Democrat questioned whether companies might try to divert the increased payments for stock buybacks, dividends or executive pay.
Pentagon Undersecretary for Acquisition and Sustainment Ellen Lord in a May 15 letter to Warren said that hasn't been the case.
“Companies do not divert payments for incurred costs to share buybacks, dividends or executive salaries because contractors must have already incurred costs before they receive the increased progress payments,” Lord wrote.
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January 2, 2020 | International, Aerospace, Naval, Land, C4ISR, Security
Too many cooks in the DoD: New policy may suppress rapid acquisition
By: Eric Lofgren In 2015, Congress passed middle tier acquisition, or MTA, authorities for rapid prototyping and rapid fielding. Lawmakers expected detailed guidance to follow shortly after. By June 2019, the Government Accountability Office found little clarity on documentation and authority. Congress reacted by threatening to withhold 75 percent of MTA funding in 2020 until the Pentagon released guidance. Dangle the purse strings and compliance follows. The undersecretary for acquisition and sustainment, or USD(A&S), released Department of Defense Instruction 5000.80 on Dec. 30, 2019. The MTA guidance, however, is more likely to pump the brakes on rapid acquisition than propel it forward. Programs designated “middle tier” do not have to follow regulatory processes for requirements and milestone reviews. That can shave years off a program schedule. In return, the prototype must be completed — or system fully fielded — within five years. As of March 2019, there were 35 middle tier programs. The term “middle tier” is perhaps misleading considering nearly half of them exceed the cost thresholds for major weapon systems — roughly $200 million for prototyping or $1 billion for fielding. Many questions remained unanswered until the new policy. How big was a middle tier? What documentation does it require? What is the role of oversight and USD(A&S)? Authority For several years, acquisition authority had been delegated down to the services. While the services only managed 48 percent of major programs in 2014, the figure grew to 90 percent in 2019. DoDI 5000.80 reverses the trend. While the services can approve MTA for non-major programs, only USD(A&S) may approve major programs. Moreover, major programs have far more entrance documentation than non-majors, including approved requirements, an acquisition strategy and a cost estimate. The services may avoid some documentation by disaggregating major systems into multiple MTA programs. For example, two of the Navy's non-major programs are components to Standard Missile-6 Block 1B. The same is true of the Air Force's Airborne Warning and Control System. USD(A&S), however, can still disapprove any MTA program, whether major or non-major. With advisers from all around the Office of the Secretary of Defense, there will be will numerous potential veto points. Each official may extract concessions from MTA programs managed by the services. Even though 31 out of 35 MTA programs are rapid prototyping efforts, the undersecretary for research and engineering, or USD(R&E), has been relegated to a secondary position. All MTA authority rests with USD(A&S). Almost as an affront to USD(R&E), he was given control over a rapid prototyping fund that Congress stopped funding. The outcome reflects a broader weakening of USD(R&E). Congress has reacted negatively to the undersecretary's effort to move fast and reallocate funds to higher value uses. USD(R&E) may lose control of the Missile Defense Agency to USD(A&S). Documentation While MTA exempts programs from traditional requirements and milestone processes, documentation abounds. Each service must create its own requirements process with approval in six months. Joint service requirements are discouraged from using MTA pathways. MTA requirements, however, must still meet the needs determined by four-star generals in the Joint Chiefs of Staff and combatant commands. This may in effect bring the same approvals from the Joint Capabilities Integration and Development System process back into MTA. Many of the DoDI 5000.02 processes also apply. Still required are system analyses, sustainment plans, test strategies, cybersecurity, risk assessments, cost estimates and more. Contractors performing on MTA programs must still report cost data. No exemption was made for earned value management systems. Sidestepping many contract regulations — for example, with other transactions authorities — remains a separate process. Most importantly, Congress requires detailed justification in the budget for every MTA program. That means the services must start justifying MTAs at least two years in advance of funding receipt. Many of today's MTA programs spun off existing, budgeted line items. New programs may find a hard time finding funds. The present situation is reminiscent of the time David Packard attempted rapid acquisition between 1969 and 1971. A couple years later, new layers of bureaucracy descended. Similarly, MTA has built within it the seeds of another slow-paced bureaucratic order. Adm. Hyman Rickover's skepticism to the reforms nearly 50 years ago rings true today. As Rickover wrote to Packard in a memo: “My experience has been that when a directive such as the one you propose is issued, most of the effort goes into the creation of additional management systems and reports and the preparation of large numbers of documents within the Service to ‘prove' that the requirements of the directive are being met in order to justify funds for the Service. “So long as the bureaucracy consists of a large number of people who consider that they are properly performing their function of approval and evaluation by requiring detailed information to be submitted through the bureaucracy, program managers will never be found who can in fact effectively manage their jobs.” https://www.defensenews.com/opinion/commentary/2020/01/02/too-many-cooks-in-the-dod-new-policy-may-suppress-rapid-acquisition/
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February 15, 2023 | International, Other Defence
Pentagon technology chief seeks low-cost deterrence concepts
The study will consider how DoD can apply novel technology and operational approaches to deter âemerging regional powersâ from invading their neighbors.