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

When the challenge of coronavirus becomes a catalyst to change

One way to understand how the United States' largest defense companies are responding to the coronavirus pandemic is to listen to what their leaders said on the most recent round of earnings calls.

Consider this anecdote from General Dynamics.

Phebe Novakovic, the company's chief executive, told analysts in late July that when COVID-19 struck, “our classified customers closed their sites to all but mission-essential employees. This impacted revenue and earnings and will continue to do so. Some of IT services' highest-margin programs have come to a hard stop because of COVID-19.”

Novakovic described the pandemic as a time of “significant uncertainty.”

That story was not unusual.

David Calhoun, Boeing's CEO, described this as “a historically dynamic and challenging time.” Greg Hayes, Raytheon Technologies' top executive, opened his second-quarter call by stating: “As everyone knows, these last several months have been incredibly challenging.” And Bill Brown, the CEO of L3Harris, said: “The pandemic has challenged us all to find new ways of working effectively.”

To be clear, defense contractors have lost roughly 20 percent of their value in the last six months, by tracking exchange-traded funds. That's the worst run for publicly traded companies in at least a decade.

So what to make of this?

James Taiclet, Lockheed Martin's new leader, said his philosophy is that there may be “an opportunity for us if there is a downturn, we're going to look at the silver linings that may be there.” He was talking about mergers and acquisitions.

But defense companies of all sizes should look for another opportunity: a reason to operate differently, not an excuse to get back to basics. Leaders should reexamine how to embrace new talent, how to effectively telework, and how to add new equipment or partnerships with unexpected sources.

Military leaders for years have said they value agility. Now they will get to watch firsthand who changes, who is prepared for the long term, who adapts and who merely talks about adapting. These “challenges” can give acquisition officials a reason to reward agility.

But back to the earnings calls. Officials hinted about what may happen next, before we — fingers crossed — enter a post-pandemic world. Lockheed's Kenneth Possenriede, the company's chief financial officer, said that while solicitations may be slower getting out the door, final deadlines have not changed.

Brown at L3Harris said: “We believe that the heightened threat environment will drive the trajectory of U.S military spending regardless of the election.”

Novakovic seconded that notion. “There's a general consensus that the threat has not dissipated,” she said. “In fact, arguably some of our potential adversaries have raised additional questions. ... We'll see going forward, but [I'm] not hearing a lot at the grassroots level on ... any pending defense cuts.”

The threat may not have changed. Nor may the business of defense. Yet.

But it's impossible to ignore that almost everything else has.

https://www.defensenews.com/opinion/2020/08/17/when-the-challenge-of-coronavirus-becomes-a-catalyst-to-change/

On the same subject

October 15, 2020 | International, Aerospace

Army to conduct thorough review of aviation fleet in FY23
Jen Judson WASHINGTON — As the Army looks to bring on two future helicopters by 2030, the service is planning to review its entire aviation fleet in fiscal 2023, Lt. Gen. James Pasquarette, the Army G-8, told Defense News in an Oct. 8 interview. Over the past several years, the Army has said it is at “an inflection point” when it comes to prioritizing modernization in order to ensure soldiers can fight in a multidomain environment against near-peer adversaries. Part of that is ensuring the Army is balanced properly when it comes to making sure the current fleet is ready while funding the ambitious development of two new aircraft along with a number of other enablers like a digital backbone, air-launched effects and a new engine, to name a few. In FY20, the Army took controversial steps to shift funding from the current fleet to the future one when it decided it would not buy Block II CH-47F Chinook cargo helicopters for the active force, opting to procure the variant just for special operations. Congress has pushed back on that decision in both its FY20 and FY21 defense bills, injecting funding into the program to keep the pump primed to build Block II Chinooks for the active component against the Army's wishes. So far the Army isn't planning on backing down on its decision to scale down and only buy the Block II variant for special operations. “The Army's position has not changed. I mean, our position is we don't have to make a decision,” Pasquarette said. “It's based on the age of the fleet and other factors,” Pasquarette said. “Our concern is that if Congress decides that we need to move down the Block II path here ... that starts to push out dollars against our modernization priorities that we're very concerned about.” The Army “must develop” both the Future Armed Reconnaissance Aircraft (FARA) and the Future Long-Range Assault Aircraft (FLRAA), he stressed. Army Secretary Ryan McCarthy also signaled during an Oct. 8 interview with Defense News that tough decisions on the aviation fleet would have to be made as the FLRAA and FARA aircraft begin to fly. The prototype aircraft for FARA are expected to start flying in the fourth quarter of FY22 and the engineering and manufacturing development phase is expected to begin in FY24. FLRAA prototypes will be delivered in roughly the summer of 2026. The last time the Army restructured its fleet was in 2013 to deal with impending budget cuts and reductions that would have been made through sequestration. The effort was a way to take control of what was cut rather than let every program across the board take salami-slice chops. As a result, the service decided to retire its OH-58D Kiowa Warrior helicopters and use AH-64E Apache attack helicopters paired with Shadow unmanned aircraft systems to fill the armed scout role until future aircraft could come online. https://www.defensenews.com/digital-show-dailies/ausa/2020/10/14/army-to-conduct-thorough-review-of-aviation-fleet-in-fy23/
September 20, 2018 | International, Aerospace

USAF Targets Light Attack Final RFP For December
Lee Hudson and Steve Trimble | Aerospace Daily & Defense Report NATIONAL HARBOR, Maryland—The U.S. Air Force still is aiming to release the final solicitation for light attack aircraft in December and continues to discuss the findings of its recent light attack experiment with international ... Full article: http://aviationweek.com/awindefense/usaf-targets-light-attack-final-rfp-december
February 5, 2019 | International, Aerospace, Naval, Land, C4ISR, Security, Other Defence

Contract Awards by US Department of Defense - February 4, 2019
DEFENSE COMMISSARY AGENCY Coast Produce Co., Los Angeles, California, is being awarded an indefinite-delivery, requirements type contract to provide fresh fruits and vegetable products for commissaries located in the west areas of the continental U.S. The award amount is estimated at $153,648,855 for the base year. Actual obligations using resale stock activity group, defense capital funds, will occur upon issuance of delivery orders during the period of performance. Contract funds will not expire at the end of the current fiscal year. The contract is for a 24-month base period beginning Feb. 25, 2019, through Feb. 21, 2021. The contract includes three one-year option periods. If all three option periods are exercised, the contract will be completed Feb. 21, 2024. The Defense Commissary Agency, Fort Lee, Virginia, is the contracting activity (HDEC02-19-D-0002). NAVY General Dynamics Bath Iron Works (BIW), Bath, Maine, was awarded a $126,171,106 cost-plus-award-fee contract for DDG 51 class integrated planning yard services. BIW will provide expert design, planning and material support services for both maintenance and modernization. This contract includes options which, if exercised, would bring the cumulative value of this contract to $719,178,832. Work will be performed in Bath, Maine, and is expected to be completed by January 2024. Fiscal 2019 operations and maintenance (Navy); and fiscal 2019 other procurement (Navy) funding in the amount of $21,022,460 was obligated at time of award, and $4,549,434 will expire at the end of the current fiscal year. This contract was not competitively procured, in accordance with 10 U.S. Code 2304(c)(1) - only one responsible source and no other supplies or services will satisfy agency requirements. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity (N00024-19-C-4452). (Awarded Jan. 30, 2019) Swiftships LLC,* Morgan City, Louisiana, is awarded a $26,683,722 modification to previously awarded fixed-price incentive contract N00024-18-C-2401 to exercise an option for construction of Landing Craft, Utility (LCU) 1701 and 1702. LCU 1700 will replace the existing LCU 1610 class of amphibious landing craft on a one for one basis. LCU 1700 will be a similarly rugged steel craft which will recapitalize the LCU 1610 capabilities and have a design life of 30 years. LCU 1700 craft will be a highly reliable and fuel efficient heavy lift platform whose capability will be complementary to the faster air cushion landing craft which have a significantly shorter range, smaller payload capacity, no habitability, and operating hour limitations. Work will be performed in Morgan City, Louisiana, and is expected to be completed by May 2021. Fiscal 2019 shipbuilding and conversion (Navy) funding in the amount of $26,683,722 will be obligated at time of award, and will not expire at the end of the current fiscal year. The Naval Sea Systems Command Washington, District of Columbia, is the contracting activity. Kingfisher Systems Inc., Falls Church, Virginia, is awarded a $14,236,278 cost-plus-fixed-fee contract for advanced cyber support services in support of the Marine Corps Cyberspace Operations Group. This one-year contract includes four one-year option periods which, if exercised, would bring the potential value of this contract to an estimated $73,344,685. Work will be performed in Quantico, Virginia. The period of performance of the base period is from Feb. 4, 2019, through Feb. 3, 2020. If all options are exercised, the period of performance would extend through Feb. 3, 2024. Fiscal 2019 operations and maintenance (Marine Corps) funds in the amount of $5,500,000 will be obligated on this award and will expire at the end of the current fiscal year. This contract was competitively procured via request for proposal N66001-18-R-0011 which was published on the Federal Business Opportunities website and the Space and Naval Warfare e-Commerce Central website, with five offers received and one selected for award. The Space and Naval Warfare Systems Center Pacific, San Diego, California, is the contracting activity (N66001-19-C-3406). Northrop Grumman Systems Corp., Military Aircraft Systems, Melbourne, Florida, is awarded $11,654,051 for modification P00068 to a previously awarded cost-plus-incentive-fee contract (N00019-13-C-9999). This modification provides for non-recurring engineering to incorporate the Multifunctional Information Distribution System/Joint Tactical Radio System into the E-2D Advanced Hawkeye aircraft in support of the government of Japan. Work will be performed in Melbourne, Florida (75.15 percent); Norfolk, Virginia (8.98 percent); Ronkonkoma, New York (8.42 percent); St. Augustine, Florida (6.34 percent); Misawa, Japan (.32); and various locations within the continental U.S. (.79 percent), and is expected to be completed in June 2020. Foreign Military Sales funds in the amount of $11,654,051 will be obligated at time of award, none of which will expire at the end of the current fiscal year. The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity. Canadian Commercial Corp., Ottawa, Ontario, Canada, is awarded an $11,382,478 firm-fixed-price, cost-reimbursable indefinite-delivery/indefinite-quantity contract. This contract provides services in support of Navy ship and weapons systems test events such as target presentations, planning and conducting of test, and analysis and evaluation of the assigned surface weapons systems during test events as well as systems engineering and program management support. Work will be performed at Point Mugu, California (85 percent); Ridgecrest, California (6 percent); Las Cruces, New Mexico (3 percent); Kauai, Hawaii (2 percent); Salt Lake City, Utah (2 percent); Lompoc, California (1 percent); and various locations outside the continental U.S. (1 percent), and is expected to be completed in February 2024. No funds will be obligated at the time of award. Funds will be obligated on individual orders as they are issued. This contract was not competitively procured pursuant to 10 U.S. Code 2304(c)(1). The Naval Air Warfare Center Weapons Division, China Lake, California, is the contracting activity (N68936-19-D-0008). UPDATE: The contract deductive modification awarded to Gilbane Federal, Concord, California (N39430-15-D-1634) on Jan. 16, 2019, to decrease the value of the contract for the cleaning, inspection and repair of Fuel Storage Tanks 305, 307, and 308 at Defense Fuel Support Point, Tsurumi, Japan, was not signed on that actual date. The modification for $10,966,383 will now be executed Feb. 4, 2019. Work on Tanks 305, 307, and 308 is being removed from the contract by mutual agreement of the parties. DEFENSE LOGISTICS AGENCY Beacon Point & Associates LLC,** Cape Coral, Florida, has been awarded a maximum $49,000,000 fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract for hospital equipment and accessories. This is a five-year contract with no option periods. This was a competitive acquisition with 71 responses received. Location of performance is Florida, with a Feb. 3, 2024, performance completion date. Using military services are Army, Navy, Air Force and Marine Corps. Type of appropriation is fiscal 2019 through 2024 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE2DH-19-D-0010). AIR FORCE Akima Logistics Services LLC, Herndon, Virginia, has been awarded a $13,536,602 firm-fixed-price contract for fuels and supply services. This contract provides for services to support all management, personnel and equipment to perform fuels and supply services. Work will be performed at Joint Base Andrews, Maryland, and is expected to be completed by Feb. 29, 2020. This award is the result of a competitive acquisition and five offers were received. Fiscal 2019 operations and maintenance funds in the amount of $6,768,301 are being obligated at the time of award. The 11th Contracting Squadron, Joint Base Andrews, Maryland, is the contracting activity (FA2860-19-C-0004). DEFENSE ADVANCED RESEARCH PROJECTS AGENCY General Dynamics Mission Systems Inc., San Antonio, Texas, has been awarded an $11,816,042 modification (P00037) to previously awarded contract HR0011-16-C-0001 for classified information technology services. The modification brings the total cumulative face value of the contract to $116,832,430 from $105,016,388. Work will be performed in Arlington, Virginia, with an expected completion date of February 2020. Fiscal 2019 research and development funds in the amount of $5,430,798 are being obligated at time of award. The Defense Advanced Research Projects Agency, Arlington, Virginia, is the contracting activity. *Small Business **Service-Disabled Veteran Owned Small Business https://dod.defense.gov/News/Contracts/Contract-View/Article/1747970/

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