January 9, 2019 | International, Aerospace, Naval, Land, C4ISR, Security
By: Valerie Insinna
WASHINGTON — As the U.S. government shutdown continues into its 18th day, defense firms and industry advocates are beginning to worry that the pause in business could eat into companies' cash flow.
The Defense Department is funded for fiscal 2019, with Congress having passed a spending bill for the new fiscal year in September. That means work on the military's weapons programs continue apace, but many defense companies also hold contracts with agencies that are not currently funded, like the Department of Homeland Security — which includes the Coast Guard as well as Customs and Border Protection — and NASA.
The Aerospace Industries Association, a lobbying group that represents defense and commercial aviation companies, warned that impacts to the aerospace sector extend beyond the 800,000 federal workers who are furloughed or working without pay.
For example, weapons sales and transfers to U.S. allies and partners are stalled as a result of the closure of the departments of State and Commerce, AIA said in a Jan. 8 statement. Research projects at NASA, the Federal Aviation Administration, and National Oceanic and Atmospheric Administration are suspended, “setting back development of game changing technologies.” And meetings between the government and industry have been canceled or delayed.
“Every day the shutdown lasts, the impacts grow and become more difficult and more expensive to fix,” said AIA President and CEO Eric Fanning. “It's time to get these dedicated public servants back to work.”
Tony Moraco, the CEO of government service and information technology firm SAIC, told investors Jan. 7 that the effects of the shutdown are expected to be short term and primarily affecting accounts with NASA, the FAA and the U.S. Department of Agriculture.
Moraco characterized the effect on SAIC and Engility — the latter of which is set to merge with the former this year — as a “modest impact on revenues and potentially cash collection, which we think we can recover — mostly — if this is resolved in the near term.”
But SAIC Chief Financial Officer Charlie Mathis said the government is already behind on payments to the two companies by about $40 million to $50 million.
“If we get through this quickly, they could catch up,” he said, but the shutdown would have to be resolved within a week for the companies to hit their cash-flow goals for their fiscal year ending Jan. 31.
Furthermore, the companies are seeing a hit of about $10 million per week in revenue as the shutdown progresses, and “if it continues, that number could increase,” Mathis said.
The probability of an extended shutdown seems to be rising.
The government shutdown started Dec. 22 amid disagreements between President Donald Trump and Congress over funding for a border wall that would separate the United States and Mexico.
But with Democrats now controlling the House of Representatives, a deal on funding for the wall may take weeks and could propel this shutdown past the 21-day mark of the 1995 shutdown, currently the longest on the books, according to CNN.
Defense contractors will eventually get paid back for work accomplished while the government was shut down, but there could be long-standing consequences.
If the shutdown persists for a protracted amount of time, there could be repercussions for the federal government's recruiting pipeline, as well as the balance of federal employees and contractors, said Byron Callan, an analyst for Capital Alpha Partners.
“How will this shutdown impact the ability of federal agencies impacted by the shut-down to recruit and retain skilled individuals?” he wrote in an emailed analysis of SAIC's investor meeting. “There might be near-term collateral damage if people leave government service, but a 1-3 year factor to consider is how this shutdown and the potential for future ones accelerates reliance on federal service contractors.”
December 13, 2023 | International, Aerospace
The Minister of National Defence, the Honourable Bill Blair, has appointed Michelle Douglas as the Canadian Armed Forces’ first Honorary Colonel for Chief, Professional Conduct and Culture.
October 29, 2018 | International, Aerospace, Naval, Land, C4ISR, Security
NAVY American International Contractors Inc., Arlington, Virginia (N62470-19-D-5000); Bryan 77 Construction JV,* Colorado Springs, Colorado (N62470-19-D-5001); ECC-MEZ LLC, Virginia Beach, Virginia (N62470-19-D-5002); P. & C. Development S.A/Ergotem S.A. JV, Athens, Greece (N62470-19-D-5003); SKE-ICM JV, Viale Venezia, 79/B33074 Fontanafredda (PN) (N62470-19-D-5004); and Zafer Taahhut, Insaat Ve Ticaret A.S., Ankara, Turkey (N62470-19-D-5005), are each awarded an indefinite-delivery/indefinite-quantity multiple award design-build, design-bid-build construction contract for construction and renovation projects located primarily at Camp Lemonnier, Djibouti (CLDJ), but also worldwide. The maximum dollar value including the base period and four option years for all six contracts combined is $240,000,000. The work to be performed provides for tasks for general building type projects (new construction, renovations, alterations, demolition, repair work, and any necessary design) including: industrial, airfield, aircraft hangar, aircraft traffic control, infrastructure, administrative, training, retail, food service, dormitory, community support facilities and both vertical and horizontal construction for Department of Defense activities. ECC-MEZ LLC is being awarded the initial task order at $9,990,000 for the construction of an Aircraft Apron Expansion at CLDJ, Djibouti, Africa. Work for this task order is expected to be completed by November 2020. All work on this contract will be performed in Camp Lemonnier, Djibouti, Africa, whose area of responsibility includes facilities located in Kenya, Africa, areas managed by the Naval Facilities Engineering Command, Europe, Africa and Southwest Asia, but also worldwide. The term of the contract is not to exceed 60 months with an expected completion date of October 2023. Fiscal 2018 military construction (Navy); and fiscal 2019 operations and maintenance (Navy) contract funds in the amount of $10,040,000 are obligated on this award; of which $50,000 will expire at the end of the current fiscal year. Future task orders will be primarily funded by military construction (Navy); and operations and maintenance (Navy). This contract was competitively procured via the Navy Electronic Commerce Online website, with 18 proposals received. These six contractors may compete for task orders under the terms and conditions of the awarded contract. The Naval Facilities Engineering Command, Atlantic, Norfolk, Virginia, is the contracting activity. Central Lake Armor Express Inc.,* Central Lake, Michigan, was awarded a $59,369,617 ceiling, firm-fixed-price, indefinite-delivery/indefinite-quantity contract for the production of up to a maximum 65,469 Plate Carrier Generation III – Soft Armor Inserts and data reports. Work will be performed in Central Lake, Michigan, and is expected to be complete by Oct. 24, 2023. Fiscal 2018 operations and maintenance (Marine Corps) funds in the amount of $2,220,578 will be obligated on the first delivery order immediately following contract award and funds will before the end of the fiscal year. This contract was competitively procured as a total small business set-aside via the Federal Business Opportunities website with 13 offers received. The Marine Corps Systems Command, Quantico, Virginia, is the contracting activity (M67854-19-D-1509). (Awarded Oct. 25, 2018) Praescient Analytics LLC,* Alexandria, Virginia, is awarded a $45,279,089 single award, indefinite delivery/indefinite quantity, supply and services contract (N65236-19-D-1002) utilizing firm-fixed-price and firm-fixed-price, level-of-effort delivery/task orders. This contract is for the delivery of an advanced analytics technical solution (AATS) software product. Work will be performed in Alexandria, Virginia (95 percent); and Charleston, South Carolina (5 percent), and is expected to be completed by October 2023. Fiscal 2018 and 2019 procurement (Marine Corps) funds in the amount of $15,701,990 will be placed on the first delivery order and obligated at the time of award. Funds will not expire at the end of the current fiscal year. The single award contract was competitively procured by full and open competition via the Space and Naval Warfare Systems Command - Electronic Commerce Central website and the Federal Business Opportunities website, with five offers received. Space and Naval Warfare Systems Center Atlantic, Charleston, South Carolina, is the contracting activity. Huntington Ingalls Industries San Diego Shipyard Inc., San Diego, California, is awarded a $44,779,160 firm-fixed-price contract for the execution of USS O'Kane (DDG 77) fiscal 2019 Extended Selected Restricted Availability. This availability will include a combination of maintenance, modernization, and repair of USS O'Kane. This contract includes options which, if exercised, would bring the cumulative value of this contract to $51,505,314. Work will be performed in San Diego, California, and is expected to be completed by January 2020. Fiscal 2019 operations and maintenance (Navy); fiscal 2019 other procurement (Navy); and working capital fund funding in the amount of $44,779,160 will be obligated at time of award, and funding in the amount of $35,141,499 will expire at the end of the current fiscal year. This contract was competitively procured using full and open competition via the Federal Business Opportunities website, with three offers received. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity (N00024-19-C-4406). BAE Systems Technology Solutions and Services Inc., Rockville, Maryland, is awarded $9,532,186 for modification P00021 to previously awarded cost-plus-fixed-fee contract (N00030-17-C-0001) to provide systems engineering and integration services in support of Trident II (D5) strategic weapons system, the SSGN attack weapon system, and strategic weapon surety. Work will be performed in Rockville, Maryland (70.6 percent); Washington, District of Columbia (14.7 percent); Kings Bay, Georgia (5.1 percent); Silverdale, Washington (2.7 percent); Norfolk, Virginia (1.5 percent); San Diego, California (1.1 percent); Barrow, United Kingdom (1.1 Percent); Alexandria, Virginia (1.0 percent); Buffalo, New York (0.3 percent); Downingtown, Pennsylvania (0.3 percent); Ocala, Florida (0.2 percent); Pittsfield, Massachusetts (0.2 percent); Montgomery Village, Maryland (0.2 percent); New Lebanon, New York (0.2 percent); New Paris, Ohio (0.2 percent); Wexford, Pennsylvania (0.2 percent); Alton, Virginia (0.2 percent); Springfield, Virginia (0.2 percent); Vienna, Virginia (0.2 percent); and St. Mary's, Georgia (0.2 percent), with an expected completion date of Sept. 30, 2019. United Kingdom funds in the amount of $8,488,977; and fiscal 2019 research and development test and evaluation (Navy) funds in the amount of $1,043,209 will be obligated on this modification. No contract funds will expire at the end of the current fiscal year. Strategic Systems Programs, Washington, District of Columbia, is the contracting activity. AIR FORCE Northrop Grumman Systems Corp., Herndon, Virginia, has been awarded a $54,626,116 labor hour and cost contract for the Unified Platform Systems Coordinator. This contract provides for continued development, integration, fielding and sustainment for the Unified Platform Program. Work will be performed in San Antonio, Texas, and is expected to be completed by Oct. 31, 2021. This award is a result of a competitive acquisition and six offers were received. Fiscal 2019 research, development, test and evaluation funds; and operations and maintenance funds in the amount of $2,000,000 are being obligated at the time of award. Air Force Life Cycle Management Center, Joint Base San Antonio, San Antonio, Texas, is the contracting activity (FA8307-19-F-0002). AAI Corp., Hunt Valley, Maryland, has been awarded a $23,696,816 firm-fixed-price contract for non-developmental contractor-owned and contractor-operated unmanned aerial systems, intelligence, reconnaissance and surveillance. This contract provides support force protection efforts at airfields located within U.S. Air Forces Central Command. Work will be performed at Bagram Airfield and Kandahar AF, Afghanistan, with an optional site at Muwaffaq Salti Air Base, Jordan, and is expected to be completed by March 27, 2024. Fiscal 2019 operations and maintenance funds in the amount of $17,556 are being obligated at the time of award. Total cumulative face value of this contract is $114,064,396. The Acquisition Management and Integration Center, Joint Base Langley-Eustis, Virginia, is the contracting activity (FA4890-19-C-0002). * Small business https://dod.defense.gov/News/Contracts/Contract-View/Article/1674381/
November 28, 2018 | International, Land
By: Sebastian Sprenger COLOGNE, Germany — German armored vehicles-maker Rheinmetall has confirmed initial talks about an acquisition of its rival Krauss-Maffei Wegmann, a move that would reorder the industry landscape involved in producing a new European main battle tank. According to a brief Rheinmetall statement, on the table is the takeover of KMW in the context of its partnership with French tank maker Nexter, known under the name KNDS. KMW and Nexter each own 50 percent of their Franco-German joint venture. KNDS and Rheinmetall were expected to pitch separate design proposals next year for the Main Ground Combat System, a novel tank meant as one of three signature military projects propelling the Berlin-Paris defense partnership. It remains to be seen how the dynamic of a KMW acquisition by Rheinmetall would play into those plans. Citing industry experts, the newspaper Die Welt on Tuesday wrote that the French government, through state-owned Nexter's deal with KMW, is expected to have a say in the transaction. Paris may even have a right of first refusal for KMW's portion in KNDS, the newspaper reported. Rheinmetall's statement on Monday noted that a final decision regarding the way ahead depends on a “multitude of political, economic and regulatory” aspects still to be sorted out. A takeover deal could put to rest the question of what vehicles German defense companies will pitch for multibillion-dollar modernization programs of the U.S. ground services. Rheinmetall is already offering the Lynx armored fighting vehicle as a Bradley replacement. KMW could make another attempt at selling the Puma vehicle, though Rheinmetall is also part of the joint venture producing that vehicle for the German forces. https://www.defensenews.com/global/europe/2018/11/27/tank-maker-takeover-germanys-rheinmetall-eyes-acquisition-of-rival-kmw