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November 22, 2019 | International, Aerospace, Naval, Land, C4ISR, Security

Opinion: How The 2020 Election Is Likely To Affect Defense

By Byron Callan

Unlike in the U.S. health care or energy sectors, it is so far hard to discern much of a stock market reaction for the defense sector in the run-up to the 2020 U.S. election. There has not been the equivalent of issues such as Medicare for all or fracking that has grabbed the attention of defense investors. That might be because defense and security issues have been absent from the debates so far, and Democratic candidates have put forth few detailed defense and foreign policy plans and proposals.

It is way too soon to act with conviction on the potential outcomes of the 2020 election and their implications for defense. Polls can and will change. The likely Democratic presidential candidate may not be known until April, when most of the primaries are completed, or July 2020, when the party holds its convention. And it remains to be seen how that candidate will fare against President Donald Trump, presuming he is not removed from office. Still, leaders at defense companies and analysts have to assess potential outcomes and what they may entail for 2021 and beyond.

The current consensus is that there likely will be split-party control of Congress and the White House in 2021-22. The House probably will remain in Democratic control, but the Republicans may retain a slim majority in the Senate, given the number of “safe” seats they will defend. Democrats might sweep in, but they are very unlikely to gain a 60-seat majority, and it is arguable that if they do not, the chamber will vote to do away with cloture, which gives the minority party in the Senate power to shape and channel legislation. This alone should temper expectations that there will be radical changes for defense. Moreover, the day after the 2020 election, both parties will have their eyes on the 2022 election, when 12 Democratic and 22 Republican seats will be contested.

If Trump is reelected, the simplest path forward will be to conclude that current defense policies will remain in place. Congress has not been willing to approve the deep nondefense discretionary cuts the administration has proposed for 2017-19, and it is not clear what would change this posture in 2021-22. Barring a major change in the global security outlook, U.S. defense spending may thus remain hemmed in by debt/deficit concerns and demands for parity in increases of nondefense spending.

Trump is likely to continue to browbeat allies in Europe and Asia to spend more on defense. The Pentagon will push ahead with its current major modernization and technology priorities, including artificial intelligence, directed energy and hypersonics, and there should be some continuity with civilian leadership at the Pentagon.

However, the global security outlook may be the biggest variable for the sector to assess. Iran has not shown any readiness to bow to U.S. “maximum pressure,” and North Korea has not denuclearized. How Russia and China respond to the prospects of another four years of Trump also has to be weighed. NATO and other alliances also may be under more stress. And inevitably, there are likely to be new security issues in the early 2020s that are not top of mind or even conceivable today.

There are a range of defense views and perspectives among the leading Democratic candidates. The views of the two most progressive candidates—Sen. Bernie Sanders (I-Vt.) and Sen. Elizabeth Warren (D-Mass.)—could be viewed as potentially the most disruptive for defense. Warren, in particular, has emphasized her view of “agency capture” by major U.S. contractors, and her health care plan is to be paid for in part by a $798 billion cut to defense spending over 10 years, though the baseline of those cuts has not been stipulated.

If a progressive candidate appears to do well in the Democratic nomination process and in polling against Trump, however, it will be useful to recall the congressional dynamic noted above. Congress could act as a firewall against steeper cuts and sweeping change. Equally, it is useful to recall that what candidates promise is not always what they do once they are in office.

A more moderate, centrist Democratic candidate such as former Vice President Joe Biden or South Bend, Illinois, Mayor Pete Buttigieg may appear benign for defense and will very likely face the same geopolitical security challenges that Trump could face. If there is a shift back toward a U.S. promotion of democracy and human rights, that could affect recent international defense export patterns and raise tensions with China, Russia and other autocratic regimes.

Probably, there will be a bigger debate over nuclear strategic forces modernization, the role of technology in defense and whether it can deliver credible military capability and deterrence at lower cost. Even if U.S. defense spending evidences little real growth in the early 2020s, these factors could be the most important for contractors to navigate.

https://aviationweek.com/defense/opinion-how-2020-election-likely-affect-defense

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    November 23, 2018 | International, Aerospace, Naval, Land, C4ISR, Security

    Contract Awards by US Department of Defense - November 20, 2018

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DEFENSE LOGISTICS AGENCY Pacific Unlimited Inc., Barrigada, Guam, has been awarded a maximum $288,000,000 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for full food-line distribution. This is a 90-month contract with no option years, but three tier periods. This was a small business set-aside with two responses received. The maximum dollar amount is for the life of the contract. Location of performance is Guam, with a May 20, 2026, performance completion date. Using customers are Army, Air Force, Navy, Marine Corps and the Guam Department of Education. Type of appropriation is fiscal 2019 defense working capital funds. The contracting agency is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE300-19-D-4045). WGL Energy Services Inc., Vienna, Virginia (SPE604-19-D-7503; $68,917,749); Direct Energy Business Marketing LLC, Iselin, New Jersey (SPE604-19-D-7500; $28,236,905); UGI Energy Services Inc., Reading, Pennsylvania (SPE604-19-D-7501, $9,110,525) and Enspire Energy LLC, Chesapeake, Virginia (SPE604-19-D-7504, $8,626,448), have been awarded a fixed‐price with economic‐price-adjustment contract under solicitation SPE604-18-R-0405 for natural gas. These were competitive acquisitions with eight offers received. These are two-year base contracts with six‐month option periods. Locations of performance are Massachusetts, New York, New Jersey, Pennsylvania, Delaware, Maryland, Washington, District of Columbia, and Virginia, with a March 31, 2021, performance completion date. Using customers are Army, National Guard, Marine Corps, Navy, Air Force, Coast Guard and federal civilian agencies. Type of appropriation is fiscal 2019 through 2021 defense working capital funds. 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IMSAR LLC,* Springfield, Utah, is awarded a $9,952,769 cost-plus-fixed-fee, firm-fixed-price delivery order (N6833519F0016) against a previously issued basic ordering agreement (N6833518G0015). This order provides for the procurement of Small Business Innovation Research (SBIR) Phase III work that derives from, extends, or completes an effort performed under SBIR Topic AF112-144 entitled “Advanced Radar Concepts for Small (Tier I/II) Remotely Piloted Aircrafts.” Research and development will be performed in Springfield, Utah, and is expected to be completed in November 2019. Fiscal 2018 research, development, test and evaluation (Navy); and fiscal 2018 procurement (Marine Corps) funds in the amount of $9,952,769 are being obligated on this award, $5,332,588 of which will expire at the end of the current fiscal year. The Naval Air Warfare Center Aircraft Division, Lakehurst, New Jersey, is the contracting activity. 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