Lockheed wins $1.1B contract to design Navy’s Integrated Combat System

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  April 23, 2024 | International, Land

  Exclusive: US defense contractor L3Harris to cut 5% of workforce to save costs, email shows

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  June 26, 2018 | International, Aerospace

  B-21 Bomber Critical Design Review by End of Year

  JOHN A. TIRPAK The secret B-21 bomber will progress to a major milestone—critical design review—by the end of this year, Air Force Rapid Capabilities Office director Randall Walden said Monday. Walden also revealed that the B-21 is merely one of 28 programs being managed by the RCO, which he noted is funded at about $30 billion over the five-year future year defense plan. Walden, speaking at an AFA Mitchell Institute event in Arlington, Va., said the B-21 has already passed its preliminary design review, and noted that the release of drawings for the bomber is progressing well. As for critical design review, "we haven't done it, but we're on our way," and he predicted it would happen by the end of December. Major design work on the bomber is taking place at Northrop Grumman's Melbourne, Fla., facility. He acknowledged that subscale models of the aircraft have been tested in wind tunnels, but said no full-size version has yet been fabricated. "Component testing" is moving along at an "appropriate" speed, he said. "We're looking forward to ... an 'on-time' start of production," Walden said. Walden has spoken publicly about the RCO in a number of venues, but was more forthcoming than usual about the organization and its products at the Mitchell event. Of the 28 projects in the RCO's portfolio, 13 are "ACAT 1," he noted, meaning they are major defense acquisition programs, which usually means a major platform, like an aircraft, missile, or command and control system. While Walden would only identify the B-21 and X-37 orbital vehicle among those that the RCO is working on, he said the majority of the rest could best be characterized as "family of systems" projects. Interestingly, Walden said the RCO has not been called on to undertake any hypersonics programs. The Air Force is pursuing hypersonics projects with the Defense Advanced Research Projects Agency (DARPA), and the other services are conducting independent research in the field. Walden said the RCO has about 220 people, who are headquartered at JB Anacostia-Bolling, in Washington, D.C. Among them are experts from the line Air Force who are "embedded" with programs to offer operator advice on design and development. Four bomber pilots are attached to the RCO to advise on the B-21's development, he noted. The B-21 program manager—who Walden did not name—has had experience with management of the F-22 and F-35 programs, he said. The B-21 program has long been scheduled to produce a "usable asset" in the 2024 timeframe, according to comments offered by Air Force officials for the last three years. Rep. Rob Wittman (R-Va.), chair of the House Armed Services Seapower and Projection Forces panel, revealed in March that problems had arisen with airflow to the B-21's engines, and Walden said Monday that these had been resolved. "Complex weapon systems, especially engine integrations, ... you've got to get throat sizes done right, prior to anything being built" he said, referring to the serpentine tunnels by which air reaches the B-21's engines, which are buried in the fuselage. The RCO obtained "insight from actual lab testing" and found the optimal solution, he said. The RCO has been asked to help with the set-up of a dedicated "Space RCO" at the Space and Missile Systems Center at Los Angeles AFB, Calif., and Walden said he has recommended veterans of his own shop to run it, especially those who have worked on space systems, and they have been hired, he said. Walden resisted allowing his own people to be hired away for the new organization, he said. Walden was asked whether the RCO is working on a successor platform to the X-37, and although he did not reply directly, he did say that it is "no different from any other system, ... it starts to get old," and there begin to emerge problems with vanishing vendors and parts obsolescence. However, he forecast no "big change" in that program in the near future. The X-37 tends to fly two-year missions, and various agencies that use the data collected from it are very happy with its activities, he said. Walden told Air Force Magazine he is not experiencing trouble obtaining the workforce he requires, but he said he's aware that major vendors are experiencing difficulties hiring all the engineering and especially software talent needed to execute the Air Force's array of high-tech projects. He also reported that the RCO's experience with protests—wherein a contractor not selected for a program complains that the judging was not fair—is no worse, and probably somewhat better, than that experienced by the Air Force in its "white world," or non-secret programs. Commenting on the "culture" of the RCO, Walden said it is largely based on the Lockheed "Skunk Works" model of small teams with tightly defined objectives and a vastly shortened reporting chain. Where the RCO saves time and money is usually in the area of "deciding to do" something and not going into endless coordination efforts. The RCO can save two to three years on a project simply by having the authority to make decisions, Walden said, avoiding "the tyranny of consensus." It reports to an executive committee comprised of the Secretary and Chief of Staff of the Air Force, the service's acquisition executive, and the Pentagon's acquisition chief. It's not possible to rush the development of, say, an aircraft, he said, noting that basic design must be gotten right or problems are inevitable later on. It takes about three years at a minimum to develop a design, he said. Asked whether the RCO can provide a model to the overall acquisition system, Walden said it can be applied to a degree, but there is the risk that the organization could get too big. "There is a knee in the curve. I can't tell you" what it is, he said, but at a certain size, an RCO-like acquisition agency would no longer be able to do things rapidly. The value of something of constrained size, like the RCO, is to "make a decision, get on contract," Walden said. The mainstream acquisition system takes "an inordinate amount of time" on those two steps. An analysis of alternatives can take up to three years and "sometimes no one makes a decision," Walden said. Walden insisted the RCO is fully observant of the 5000-series of acquisition regulations, but makes a careful review of them on all its efforts and works to "avoid" the ones that don't really affect its programs. He also said the organization turns away many people who want to be involved in overseeing or getting briefed on RCO activities unless they are required under regulations. Even so, he said the RCO has a good relationship with Congress because it tries to be transparent with members, and even when it runs into problems, people on Capitol Hill "want to help." He added that the Pentagon's "risk-averse" acquisition process took many years to get that way and reversing that mindset to one of risk-taking and experimentation will not happen quickly. http://www.airforcemag.com/Features/Pages/2018/June%202018/B-21-Bomber-Critical-Design-Review-by-End-of-Year.aspx

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  August 19, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

  Market exposure in the Top 100: Defense, commercial aviation and much more

  By: Doug Berenson and Chris Higgins This year's Defense News Top 100 list of global defense companies coincides with a steep economic downturn created by COVID-19. Although the defense sector has faced pandemic-related business disruptions, it remains a safe haven, with most defense-oriented firms reporting only modest impact on revenues and profits. Seeing how diversified players rely on their defense units is of particular interest at a time when the commercial aviation market has all but collapsed. While many defense firms are bracing for stagnation in defense-spending growth, other markets could experience an extended downturn. Avascent drew on the Top 100 list to examine the broader mix of market exposure among firms comprising the global defense industrial base. We segmented company revenues across more than two dozen defense and commercial end markets. This analysis provides insight into how companies with defense business leverage exposure to other markets, either as a complement or as a hedge to their defense activities. One can think of defense companies in three categories: Defense/government pure-plays: Companies that focus overwhelmingly on military markets generate about 23 percent of the defense-oriented revenue on this year's list. To the extent these companies have revenue outside defense, it comes from close adjacencies in intelligence, civil space or others. Indeed, the top ranks of the Defense News Top 100 list includes numerous firms for whom defense and government comprise 85 percent or more of total revenue. Lockheed Martin, Northrop Grumman, BAE Systems, LIG Nex1, and Huntington Ingalls Industries and many others fall in this category. BAE Systems and L3Harris maintain significant positions in the commercial aviation supply chain, but these activities represent a small portion of their total revenues. The unique demands of military and government markets — complex acquisition processes, challenging sales channels, burdensome regulatory compliance — has led many leading defense players to maximize their position across the defense product range. These frustratingly unique features of government customers have deterred many commercial technology firms from pursuing this space, a fact that the U.S. Department of Defense is struggling to reverse. Firms in this category have optimized their financial management, business development and other processes to the particular demands of government customers. Within government markets, the different economics that characterize the sale of products and services has increasingly led to the separation between these two distinct segments. Many of the market leaders in U.S. government services, including Leidos, Booz Allen Hamilton, CACI International, SAIC and others, feature a near-exclusive focus on government customers. A range of firms providing such services continue to find business with both the government and commercial clients, to be sure, including Bechtel, Jacobs, Babcock International and KBR, to list just a few on this year's Top 100 list. But companies with a significant focus on mission-oriented requirements have increasingly focused solely on government customers. Commercial and defense sectors: Nearly 60 percent of the defense revenue tracked in the Top 100 list comes from firms that compete in sectors that cross the defense-commercial divide. These include shipbuilders and automotive manufacturers, but the vast majority of firms serving both defense and commercial customers are focused on commercial aerospace. A range of firms recognize the unique complementarity between military and commercial aerospace technology in their business mix. Airframe primes like Boeing and Airbus are chief among these, sitting atop vast aerospace supply chains. But many other household names have sought opportunity in commercial aviation, either as airframe primes (General Dynamics via Gulfstream, Textron via Cessna) or as suppliers of avionics, structures, and other content. Because it calculates 2019 revenue, this year's Defense News list does not count Raytheon Technologies, which was created with the merger of Raytheon Company and United Technologies Corp. in April 2020. The new “RTX” would have pro forma 2019 revenue of about $43.4 billion in defense and $33.7 billion in commercial markets; this excludes Otis (elevators) and Carrier (air conditioners), which were spun off concomitant with the Raytheon-UTC merger. Many firms with heavy commercial market exposure now face unprecedented economic headwinds. Between March 1 and Aug. 1, 2020, stock prices for firms spanning defense and commercial aerospace declined by 33 percent, as global air travel nearly ground to a halt amid the coronavirus pandemic. By contrast, an index representing defense/government pure-plays has dropped by just 5 percent over the same period. Conglomerates were in the middle, declining about 16 percent. The silver lining, however, may be the ability of some companies to draw on defense-related cash flows to sustain commercial aerospace investment in preparation for an eventual upturn. Industrial conglomerates: Finally, there are firms with a foot squarely in defense but which also pursue markets far afield, in terms of customer types and market economics. About 18 percent of the defense revenue tracked in the Top 100 list is earned by firms with interests that have almost no technical or customer link with defense. Large Asian conglomerates — including China North Industries Group Corporation Limited, also known as NORINCO; Japan's Mitsubishi Heavy Industries; and South Korea's Hanwha — top this category in total revenue. But several Western firms also follow this approach to varying degrees: Textron, Ball Corporation, Diehl Group and others combine widely disparate product lines in a holding company structure. With defense versus commercial valuations relatively high, there may be competing instincts in the boardrooms of these giants. On one hand, these companies may decide to reorient their portfolio more toward defense activities by exiting underperforming industrial businesses. On the other hand, firms could elect to use defense cashflows to support the broader corporation and position the company for an economic rebound. Trends to monitor While defense budgets could face downward pressure in much of the world, many U.S. contractors have good predictability through 2021 because of DoD outlays already in process. It is the wider commercial economy where the real uncertainty lies. This makes it hard to predict how many firms active in defense markets will fare over the next year, given the variety of other markets they serve. Over half the revenue earned by the Defense News Top 100 is generated from commercial sectors. Commercial aviation markets are likely to languish at pre-2019 levels through 2022 or later. The outlook for other commercial markets is more heterogeneous, but challenges exist across areas like shipbuilding, automotive, industrial equipment and energy. To the extent that countries pursue infrastructure-led stimulus, some of the more diversified companies may find pockets of sunshine amid the gloom. Doug Berenson is a managing director at Avascent, where Chris Higgins is a principal. https://www.defensenews.com/opinion/commentary/2020/08/17/market-exposure-in-the-top-100-defense-commercial-aviation-and-much-more/