March 24, 2020 | International, Aerospace, Naval, Land, C4ISR, Security
By: Aaron Mehta
WASHINGTON — The Pentagon has opened up cash flow for the defense industry, the latest in a series of moves from the department to combat economic damage brought about by the new coronavirus pandemic.
In a memo released Sunday, the department announced that progress payment rates for defense items under contract will increase from 80 percent of cost to 90 percent for large businesses, and from 90 percent to 95 percent for small businesses. The move will allow industry to receive more cash up front than under normal circumstances.
The order was signed by Kim Herrington, acting principal director for defense pricing and contracting at the Department of Defense. In a statement, spokesman Lt. Col. Mike Andrews called the move “an important avenue where industry cash flow can be improved."
The Defense Contracting Management Agency “will work on mass modifications to contracts where applicable (vs one by one) using DCMA authorities,” Andrews said. “In addition, the Department is accelerating payments through several means to prime contracts and directing prime contracts to expedite payments to subcontractors.”
The increase in cash flow was sought by both industry and supporters in Congress. An increase in early payments was one of the requests made by the Maine delegation to Defense Secretary Mark Esper last week. The Pentagon plans to return to normal operations once the national emergency caused by COVID-19 has passed.
Notably, the announcement of the move included a warning that “it is especially important to understand that during this crisis the [defense-industrial base] is vulnerable to adversarial capital, we need to ensure companies stay in business without losing their technology.” Over the last two years the department has focused on ensuring Chinese investment is limited in the defense-industrial base.
The move comes after the DoD issued guidance to industry that defense contractors are considered “critical infrastructure” under a Department of Homeland Security definition, which should allow contractors to continue to work even if local governments issue orders to freeze work, as has happened in New York and San Francisco.
However, that guidance was advisory in nature and does not have the full legal authority that industry leadership had sought, per a Friday letter to Esper from the Aerospace Industry Association.
“Recent DHS and USD (A&S) memoranda have been helpful on a case-by-case basis, but they are advisory in nature and not legally binding; to establish stability for our operations across the nation, the federal government should legally establish national security programs and our workforce as essential,” read the letter, signed by AIA head Eric Fanning; Northrop Grumman CEO Kathy Warden; and Kelly Ortberg, special adviser to the Office of the CEO of United Technologies.
In an investors note, analyst Roman Schweizer of Cowen noted: “These new policies provide clarity on issues companies have been concerned about, but we do not think they alleviate all of industry's concerns nor do they eliminate all the disruption. But they are positive signs that DoD will help mitigate reasonable impact.”
More efforts are likely to emerge in the coming days, including new measures from the Small Business Administration and its small business emergency loan program to help protect small key defense suppliers who are particularly vulnerable at this time.
Major defense industry partners are also seeking relief in fulfilling contract milestones that could be impacted by the outbreak.
“We encourage DoD to publish regulatory authority requiring contracting officers to consider financial relief as part of requests for equitable adjustments for measures we take in response to COVID-19,” the AIA letter read. “This includes relief related to bans, closures, quarantines and other travel restrictions, the loss of public infrastructure and public transportation, restricted access to resources and tools, and other public safety restrictions.”
On Friday, the Acquisition and Sustainment division of the Small Business Office reached out to the defense industry's small businesses and is working with the Small Business Administration and its small business emergency loan program to help protect these companies.
December 13, 2021 | International, Aerospace, Naval, Land, C4ISR, Security
In an effort to spur innovative ideas for how to improve the force, one segment of the Army has created a challenge called the "Dragon's Lair."
December 13, 2023 | International, Land, Security
The team-up will kickstart Italy’s involvement in the Main Ground Combat System and secure the country a spot at the table for Leopard 2 A8 upgrades.
July 6, 2020 | International, Naval
Haifa, Israel, July 1, 2020 – Elbit Systems Ltd. (NASDAQ: ESLT, TASE: ESLT) (“Elbit Systems” or “the Company”) announced today that it was awarded a contract valued at approximately $53 million to provide and integrate intelligence suites onboard vessels of the Navy of a country in Southeast Asia. The contract will be performed over a two-year period. Under the contract Elbit Systems will equip several vessels with suites that provide the capability to perform complex reconnaissance missions, generating an operational picture of the air, surface and underwater domains. Elbit Systems will supply and integrate comprehensive suites comprised of an array of systems from across the Company's maritime portfolio, including: AES-212 electronic intelligence systems, NATACS naval tactical communication intelligence systems and jamming capabilities, SPECTRO XRTM electro-optical payloads, M670 hull mounted sonars, TRAPS towed reel-able active/passive sonars, underwater communication systems and combat management systems. The program also includes maritime radars and satellite communication capabilities. In addition, the Company will provide training services. Elad Aharonson, General Manager of Elbit Systems ISTAR Division, said: “There is growing demand for our maritime solutions. I believe that the unique combination of a diverse portfolio of operational systems and groundbreaking technological innovation enables us to effectively address the evolving needs of maritime forces.” About Elbit Systems Elbit Systems Ltd. is an international high technology company engaged in a wide range of defense, homeland security and commercial programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (“C4ISR”), unmanned aircraft systems, advanced electro-optics, electro-optic space systems, EW suites, signal intelligence systems, data links and communications systems, radios, cyber-based systems and munitions. The Company also focuses on the upgrading of existing platforms, developing new technologies for defense, homeland security and commercial applications and providing a range of support services, including training and simulation systems. For additional information, visit: https://elbitsystems.com/ , follow us on Twitter or visit our official Facebook, Youtube and LinkedIn Channels. Contacts: Company Contact: Joseph Gaspar, Executive VP & CFO Tel: +972-4-8316663 j.gaspar@elbitsystems.com Rami Myerson, Director, Investor Relations Tel: +972-77-2946403 rami.myerson@elbitsystems.com David Vaaknin, VP, Brand & Communications Tel: +972-77-2946691 david.vaaknin@elbitsystems.com IR Contact: Ehud Helft Gavriel Frohwein GK Investor Relations Tel: 1-646-688-3559 elbitsystems@gkir.com View source version on Elbit Systems Ltd: https://elbitsystems.com/pr-new/elbit-systems-awarded-53-million-contract-to-supply-and-integrate-intelligence-suites-to-a-navy-in-southeast-asia/