October 10, 2022 | International, Aerospace
Competition heats up for Army's future tactical UAS
The U.S. Army is poised to launch a competitive prototyping effort for a tactical drone after selecting AeroVironment's Jump 20 as an interim solution.
July 6, 2020 | International, Aerospace, Naval, Land, C4ISR, Security
Opinion: Why Interest On Federal Debt Matters For Defense
Byron Callan June 30, 2020
The COVID-19 pandemic has stoked consternation that U.S. defense spending is going to be significantly pressured in the 2020s. Congress will likely stick to the $740.5 billion defense discretionary top line agreed to in last year's budget deal for fiscal 2021. But the combination of trillions more in federal debt from higher spending and lower tax receipts this year and next and the probability that there will be future federal spending to better prepare for pandemics raise a higher probability of defense spending pressure.
“Flat” was already the new “up,” but “flat” now may be a budget that does not keep pace with annual inflation. The fears may be that defense spending will decline in the 2020s after a couple of good years of largesse from Congress and the White House.
Despite trillions in additional deficits and federal borrowing in 2020-21, there is one bright spot that indicates less dire defense spending pressures than now perceived—the interest on the federal debt.
U.S. federal debt is comprised of debt held by the public and intragovernmental debt, which is owned by different federal trust funds, the largest of which is Social Security. As of May, total debt held by the public was $19.8 trillion, and intragovernmental debt was another $6 trillion. Often, these two sums are lumped together, but they should be treated separately. The interest paid on debt held by the public is dispersed by the Treasury in the form of outlays to the owners of that debt. The interest paid on intragovernmental debt is, in essence, interest the federal government pays itself.
The Office of Management and Budget (OMB), in its annual projections of outlays, breaks out these two components of interest outlays to show net interest outlays. This is mandatory spending, and so it has been paid along with the other mandatory and discretionary funding the U.S. federal government provides.
One of the silver linings of the pandemic has been the Federal Reserve's aggressive lowering of interest rates. This makes federal debt more affordable, much in the way that a lower interest rate on a home mortgage can make a place to live more affordable.
The OMB projections released in February showed net interest outlays of $378 billion for fiscal 2021 rising to $665 billion by 2030. One could take issue with the deficit projections behind these outlay projects, as they may have rested on GDP growth expectations that were too optimistic and nondefense spending cuts that were not going to be realized. However, dividing interest outlays on debt held by the public by debt projections implied an interest rate of 3% or more over the forecast period.
The pandemic has trashed those rate projections. Federal debt held by the public is offered in different maturities. Treasury bills, which mature in a year or less as of May, were 23% of the total debt held by the public. Treasury notes that mature in 1-10 years were 51%, and bonds that mature in 10-30 years were 12%. (There is another 10% of other Treasury instruments.)
Rates now are much lower, although clearly that would only matter for new debt that is issued by the Treasury. The rate on a 90-day Treasury bill is currently 0.13%. On a five-year note, it is 0.33%, and on the 10-year note, 0.69%. The 30-year note rate is 1.4%.
This implies that interest outlay projections should be declining, although new projections may have to wait until the White House releases its 2022 fiscal budget request and out-year projections, presumably in February-March 2021. Net interest outlays could be at least $100 billion less in 2022-23 than the February 2020 projections on higher debt but lower rates.
In the scheme of total federal outlays, which the OMB projected to be $4.8 trillion for 2021, $100 billion is not a lot, but it indicates there is a bit more headroom for defense spending and other nondefense discretionary spending than a focus on federal debt alone might suggest. Federal infrastructure spending could be one area of more traction in the 2020s, and the issue of social justice may also spur more demand for federal resources.
One outcome of the pandemic, however, will be to make defense expectations more sensitive to interest rate expectations. It is not too difficult to project scenarios with rising debt and interest rates that increase to more “normal” levels. The pandemic also underscores that the unthinkable should be given a bit more room on long-term projections. It is quite conceivable that a major military conflict, a massive natural disaster or another economic contraction could further add to federal debt in the 2020s.
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June 20, 2019 | International, Land
US Marines to test drone-killing laser weapon
By: Cal Pringle WASHINGTON — The U.S. Marine Corps is testing a prototype laser weapon that could be used by war fighters on the ground to counter enemy drones, according to a Wednesday news release. The prototype Compact Laser Weapons System — or CLaWS — is the first ground-based laser approved by the Defense Department for use by ground troops, the Marine Corps explained. The program is on a rapid prototyping, rapid delivery track, the service said. “This project, from start to finish — from when we awarded the DOTC [Defense Ordnance Technology Consortium] contract, to getting all the integration complete, all the testing complete, getting the Marines trained, and getting the systems ready to deploy — took about one year,” said Lt. Col. Ho Lee, product manager for ground-based air defense future weapons systems at Program Executive Office Land Systems. The Defense Department believes lasers are a more affordable alternative to traditional firepower and that they prevent drones from tracking and targeting Marines on the ground. The release notes the laser is not a standalone weapon, but is meant to serve as part of a larger counter-drone system. If the prototype is successful, it could be incorporated into fixed-site and mobile capabilities designed to counter unmanned aircraft, the Marine Corps said. The Army and Navy are also exploring the possibilities of laser technology. https://www.defensenews.com/industry/techwatch/2019/06/19/us-marines-to-test-drone-killing-laser-weapon/
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October 8, 2020 | International, Aerospace, Naval, Land, C4ISR, Security, Other Defence
Contract Awards by US Department of Defense – October 07, 2020
AIR FORCE Hydraulics International Inc., Chatsworth, California, has been awarded a $377,357,493 firm-fixed-price, requirements-type, indefinite-delivery/indefinite-quantity contract for multiple pieces of hydraulic equipment and hydraulic fluid purification systems to be used on multiple aviation platforms. Work will be performed in Chatsworth, California, and is expected to be completed Oct. 7, 2029. This award is a result of a sole-source acquisition. Fiscal 2021 aircraft procurement; and future fiscal aircraft procurement funds will be obligated upon availability for task orders. Air Force Life Cycle Management Center, Robins Air Force Base, Georgia, is the contracting activity (FA8532-21-D-0001). PKL Services Inc., Poway, California, has been awarded a $13,757,191 firm-fixed-price modification (P00008) to contract FA4897-18-C-2002 to continue providing military aircraft F15 SG maintenance and operations training. This contract provides for the Republic of Singapore Air Force training on F15 aircraft, and includes both maintenance and operations on the F15 aircraft. Work will be performed at Mountain Home Air Force Base, Idaho, and is expected to be completed Sept. 30, 2022. Foreign Military Sales funds in the full amount are being obligated at the time of award. The 366th Financial Acquisition Squadron, Mountain Home AFB, Idaho, is the contracting activity. Honeywell International Inc., Minneapolis, Minnesota, has been awarded an $11,638,078 modification (P00006) to contract FA9453-19-C-0010 to exercise Option Two for critical design review, providing research options for Space Enterprise Technologies. The contractor shall conduct experiments, evaluate, and perform process development back-end pillar fabrication process. Work will be performed in Minneapolis, Minnesota, and is expected to be completed April 14, 2022, per Option Two: Critical Design Review contract line item number 2001 and a Military interdepartmental purchase request from HQ0157 Office of the Under Secretary of the Air Force – Acquisition, Technology and Logistics will be obligated to incrementally fund the option at time of modification. Total cumulative face value of the contract is $17,361,381. Air Force Research Laboratory, Kirtland Air Force Base, New Mexico, is the contracting activity. CORRECTION: The dollar amounts awarded and obligated on Oct. 1, 2020, to Gryphon Technologies L.C., Washington, D.C. (FA7022-21-D-0001), for the processing, analysis and quantitative evaluation of environmental samples and other associated services in support of the Air Force Technical Applications Center's mission were announced inaccurately. The contract amount is actually $49,503,924, and the obligated amount is $4,160,824. DEFENSE LOGISTICS AGENCY Senn Brothers Inc.,* West Columbia, South Carolina, has been awarded a maximum $225,000,000 fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract for fresh fruit and vegetables. This was a competitive acquisition with two responses received. This is a five-year contract with no option periods. Location of performance is South Carolina, with an Oct. 3, 2025, ordering period end date. Using customers are Army, Navy, Air Force, Marine Corps, Coast Guard and Department of Agriculture schools. Type of appropriation is fiscal 2021 through 2026 defense working capital funds. The contracting agency is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE300-21-D-P365). The Boeing Co., St. Louis, Missouri, has been awarded a maximum $149,528,875 firm-fixed-price delivery order (SPRPA1-21-D-9001) against five-year basic ordering agreement SPRPA1-14-D-002U for KC-46 Commercial Common Program consumable parts. This was a sole-source acquisition using justification 10 U.S. Code 2304 (c)(1), as stated in Federal Acquisition Regulation 6.302-1. This is a three-year base contract with two one-year option periods. Location of performance is Missouri, with an Oct. 7, 2023, performance completion date. Using military service is Air Force. Type of appropriation is fiscal 2021 through 2023 defense working capital funds. The contracting activity is the Defense Logistics Agency Aviation, Philadelphia, Pennsylvania. L1 Enterprises Inc., Frederick, Maryland, has been awarded a maximum $45,000,000 fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract for medical equipment and accessories for the Defense Logistics Agency electronic catalog. This was a competitive acquisition with 131 responses received. This is a five-year contract with no option periods. Location of performance is Maryland, with an Oct. 6, 2025, ordering period end date. Using military services are Army, Navy, Air Force and Marine Corps. Type of appropriation is fiscal 2021 through 2026 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE2DH-21-D-0050). * Small business https://www.defense.gov/Newsroom/Contracts/Contract/Article/2375598/source/GovDelivery/