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by Pat Host Boeing would perform final assembly of its F/A-18 Block III Super Hornets in the United States rather than Canada if it wins Canada's Future Fighter Capability Project (FFCP) competition. Jim Barnes, Boeing Defense, Space, and Security director of business development in Canada, on 27 October cited the small production run for performing final assembly in St. Louis, Missouri, where the Super Hornet is built. Canada will purchase 88 advanced fighters as part of its competition with the first aircraft anticipated for 2025. The procurement is expected to be worth USD11-14 billion. “It was decided that the benefits of standing up these types of operations in Canada were not worth the investment,” Barnes said. “We are concentrating on the decades of life cycle support for our partners' work share, including potential work on US Navy Super Hornets.” Boeing is competing against the Saab Gripen E with production in Canada and the Lockheed Martin F-35A Lightning II Joint Strike Fighter (JSF) for the FFCP. The winning company will replace the Royal Canadian Air Force's (RCAF's) legacy Boeing F/A-18 (CF-18/CF-188 in national service) fighter fleet. The industrial and technical benefits (ITB) portion of an offeror's bid is an important part of a proposal. Jennifer Seidman, Boeing international strategic partnerships country manager for Canada, said on 27 October that both defence production and skills development were part of the company's ITB proposal, but that she could not provide further details. https://www.janes.com/defence-news/news-detail/boeing-would-perform-canadian-super-hornet-final-assembly-in-us

Tom Kington ROME — Italy has announced a major boost to its defense budget even as the country spends millions of euros battling the devastating effect of COVID-19 on its economy. Overall defense ministry spending is up 9.6 percent this year to €15.3 billion (U.S. $18.1 billion), with the procurement budget emerging as the big winner as it rises by 26 percent from last year if coupled with top-up spending from the industry ministry. “This is a very positive budget for the armed forces, especially for procurement during this challenging economic climate,” said Paolo Crippa, a defense analyst at the CESI think tank in Rome. The figures are included in Italy's 2020 budget, which should have been released in the spring, but was held up by the COVID-19 crisis which hit Italy hard in March and is now threatening the country again. This year's €15.3 billion defense ministry spending compares to just under €14 billion last year, signaling a halt in a series of year-on-year falls. Procurement takes up €2.8 billion of the budget, up 50 percent on last year, but for a true picture of Italian procurement spending the annual top-up for domestic procurement provided by the Italian industry ministry must be added, which amounts to €2.64 billion, also up from last year. The total to spend on procurement therefore comes to €5.45 billion, up 26 percent on last year's €4.32 billion. Of the other two other spending categories in the ministry budget, Maintenance and Operations rises 23 percent to €2.15 billion, while personnel spending remains stable at €10.4 billion. “The rise in M&O spending follows claims by generals that cuts were damaging military readiness,” said Crippa. The budget was drawn up by defense minister Lorenzo Guerini, a member of the center-left Democratic Party which governs in a coalition government with the anti-establishment Five Star party. Since first entering government in 2018, Five Star has softened its anti-military stance, which saw it initially push to scrap the F-35 program. This year, the F-35 program receives €800 million to help conclude the purchase of the first 28 of Italy's planned 90 aircraft buy. A further €126 million is also budgeted to get the purchase of the next 27 aircraft underway. Other ongoing programs that get more funding in 2020 include the purchase of 650 new VTLM 2 vehicles – an upgrade of the army Lince vehicle, as well as a mid-life refurbishment for Italy's Storm Shadow missiles and the purchase of T-345 and T-346 jet trainers. Further programs also getting a dose of regular funding are Italy's new, €1.17 billion LHD vessel the Trieste, a €2 billion acquisition of 150 new Centauro II wheeled tanks and a €974 million purchase of 16 new CH-47F helicopters. Comparing the total envisaged price tag of some programs in the budget to the price listed in last year's budget reveals costs are rising. A plan to buy four new U-212 NFS submarines has risen from €2.35 billion to €2.68 billion this year, a hike of over €300 million. The ongoing purchase of ten PPA naval vessels has risen over €400 million to €4.27 billion. Some programs appear for the first time in the budget, including two new “DDX” destroyers for the Navy. No money is earmarked in 2020 but €4.5 million is due to be used for a de-risking study beginning in 2021. A second new entry is a listing for a “multi-mission, multi-sensor” Gulfstream G-550 jet. Without stating how many aircraft Italy plans to order, the budget gives the total price tag of the program as €1.23 billion and states that funding will start in 2021. The capabilities of the platform listed include command-and-control, “electronic superiority” and “electronic protection of forces.” An Italian analyst who declined to be named said the program was a reprisal of a long nurtured Italian plan for a sensor platform dubbed JAMMS, which would offer signals intelligence, communications relay and radar capabilities. The Italian Air Force declined to comment on the program. An illustration of the aircraft in the budget document resembles Israel's “Shavit” Signals Intelligence Gulfstream. Italy already flies two Gulfstream 550 Conformal Airborne Early Warning aircraft it purchased from Israel's IAI in 2012 as part of a swap deal under which Israel purchased 30 M-346 trainers from Italian firm Leonardo. The budget document states that after getting underway, the new program will take onboard future technology advancements and the benefits of “international cooperation accords.” The analyst said, “There is a plan to buy the platform now since the Gulfstream G550 is going out of production, then add Israeli systems in return for purchases by Israel from Italian industry.” Programs on the military's wish list which do not have any funding earmarked yet also get a mention in the budget document, starting with investment in the U.K.-led Tempest program for a future sixth-generation fighter. But the absence of cash for the program, which the U.K. and Sweden have already invested in, risked making Italy the weakest partner in the trio, wrote Italian defense publication RID. “In this way, there is the risk that Italy's ability to influence the development decreases and it will be weaker when it comes to future talks on the dividing of manufacturing,” the publication stated. The document also confirms Italy's interest in joining the U.S. Future Vertical Lift helicopter initiative to build next generation helicopters, which is currently being pursued by the United States only. Government officials have already mulled investing in the program using funds paid out by the EU to help the Italian economy rebound from COVID-19. Analysts have suggested that buying into FVL may overlap with work by Italy's Leonardo to build the AW249, a replacement for Italy's AW129 Mangusta attack helicopter. This year, the plan to complete a €2.7 billion purchase of 48 of the AW249 helicopters receives funding in the budget. “There is cash for the successor to the AW129 but seeing the mention of the FVL confirms Italy is also interested in that initiative,” said Crippa. https://www.defensenews.com/global/europe/2020/10/28/italy-defense-budget-rebounds-despite-covid-crisis/

Nathan Strout WASHINGTON — The U.S. Air Force Research Laboratory has awarded Descartes Labs a $2.2 million contract to generate real-time analytics with a focus on developing moving target indication data, the company announced Oct. 27. Under this new contract, AFRL will gain access to the company's geospatial analytics platform, which uses artificial intelligence and computer vision to process and fuse sensor data, such as satellite imagery, for tactical use. Descartes Labs claims the focus of this contract will involve using its platform to help the Air Force solve the challenge of generating moving target indication data for ground and airborne targets. The New Mexico-based company was recently awarded a contract from AFRL and AFWERX — an Air Force effort to spark innovation through nontraditional vendors — that gave the service access to Descartes Labs' geospatial analytics platform for multi-sensor data fusion and situational awareness. The company has also worked with the Defense Advanced Research Projects Agency and the National Geospatial-Intelligence Agency, helping the firm further refine its approach. “Through the implementation of multi-sensor analytics, the Air Force is creating a forward-thinking state-of-the-art national security system,” Mike Warren, Descartes Labs co-founder and chief technology officer, said in a statement. “Through increasing use of diverse types of data, the Air Force is laying the groundwork to solve tactical intelligence, surveillance and reconnaissance problems now and in the future.” This latest contract was issued through AFRL's Space Technology Advanced Research program, which was launched in summer 2019 to develop enabling technologies for space-based capabilities, including on-orbit servicing, debris management, ground systems and more. http://9. https://www.c4isrnet.com/intel-geoint/2020/10/28/the-air-force-wants-help-seeing-moving-targets-in-its-sensor-data/

AIR FORCE Megan-PCI JV LLC, Dayton, Ohio (FA8601-21-D-0002); CPM-AWA LLC, Dayton, Ohio (FA8601-21-D-0003); Peak Runge Co. JV, Port Clinton, Ohio (FA8601-21-D-0004); John Cecil Construction Co., Columbus, Ohio (FA8601-21-D-0005); NISOU LGC JV LLC, Detroit, Michigan (FA8601-21-D-0006); CAM Management and Services, Dayton, Ohio (FA8601-21-D-0007); Pontiac Drywall Systems Inc., Pontiac, Michigan (FA8601-21-D-0008); OAC Action Construction, Miami, Florida (FA8601-21-D0009); Butt Construction Co., Dayton, Ohio (FA8601-21-D-0010); Dawn Inc., Warren, Ohio (FA8601-21-D-0011); A&H Ambica JV LLC, Livonia, Michigan (FA8601-21-D-0012); and Pinnacle Construction & Development, Independence, Ohio (FA8601-21-D-0013), have been awarded a $247,000,000 multiple award, indefinite-delivery/indefinite-quantity contract for construction projects. Work will be performed at Wright-Patterson Air Force Base, Ohio, and is expected to be completed Aug. 31, 2025. These awards are the result of a competitive acquisition and 21 offers were received. Fiscal 2021 operations and maintenance funds in the amount of $2,500 are being obligated to each contractor at the time of award. The Air Force Life Cycle Management Center, Wright-Patterson AFB, Ohio, is the contracting activity. Lockheed Martin Corp., Syracuse, New York, has been awarded a $25,000,000 ceiling indefinite-delivery/indefinite-quantity contract for the Atmospheric Early Warning System AN/FPS-117 Radar program. This contract provides for contractor logistics support and radar hardware/spares procurement. Work will be performed in Syracuse, New York, as well as various sites in Alaska, Hawaii, Canada, Puerto Rico and Utah. The work is expected to be complete by March 2026. This award is the result of a sole-source acquisition. Fiscal 2020 operations and maintenance funds in the amount of $3,946,336 are being obligated at the time of award. Hill Air Force Base, Utah, is the contracting activity (FA8217-20-D-0006). NAVY Q.E.D. Systems Inc., Virginia Beach, Virginia, is awarded a $76,360,281 cost-plus-fixed-fee contract for specification development and availability execution support, formerly known as third party planning services for guided missile cruiser (CG), guided missile destroyer (DDG), landing helicopter assault, landing helicopter dock landing platform dock, and dock landing ship class vessels. This contract includes options which, if exercised, would bring the cumulative value of this contract to $229,411,097. Work will be performed in Norfolk, Virginia (51%); San Diego, California (43%); and Everett, Washington (6%), and is expected to be completed by October 2023. Fiscal 2021 operations and maintenance (Navy) funding in the amount of $2,825,931 is being obligated at time of award and funding in the amount of $2,825,931 will expire at the end of the current fiscal year. This contract was not competitively procured; a history of one bids and a lack of sources sought responses form the basis of the justification and approval for this effort. This single source contract to Q.E.D. will allow the government additional time to conduct extensive market research in preparation for a follow-on competitive effort. The Naval Sea Systems Command, Washington, D.C., is the contracting activity (N00024-21-C-4200). DRS Systems Co. Inc., Melbourne, Florida, is awarded a $10,503,852 cost-plus-fixed-fee modification to previously awarded contract N00024-13-C-4229 for an engineering change to the Energy Magazine Prototype design for the DDG51-class destroyer program. This award is for an engineering change proposal to the Energy Storage Module that will provide capability to supply power to a directed energy load and includes design, build and testing for a total of two prototype units. Work will be performed in Milwaukee, Wisconsin, and is expected to be completed by June 2022. No funding will be obligated at time of award. The Naval Sea Systems Command, Washington, D.C., is the contracting activity. Lockheed Martin Corp., Missiles and Fire Control, Orlando, Florida, is awarded a $9,835,348 cost-plus-fixed-fee order (N00019-21-F-0062) against previously issued basic ordering agreement N00019-19-G-0029. This order provides non-recurring engineering for the production of target designator sets and electro-optical in support of AH-1Z Light Attack helicopters for Foreign Military Sales (FMS) customers. Work will be performed in Orlando, Florida (97%); and Ocala, Florida (3%), and is expected to be completed in November 2022. FMS funds in the amount of $9,835,348 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. ARMY General Atomics Aeronautical Systems Inc., Poway, California, was awarded a $70,706,229 modification (P00019) to contract W31P4Q-15-D-0003 for engineering and technical services required to accomplish research, development, integration, test, sustainment and operation across the family of General Atomics Aeronautical Systems Inc. unmanned aircraft systems. Work locations and funding will be determined with each order, with an estimated completion date of Jan. 27, 2022. U.S. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity. *Small business https://www.defense.gov/Newsroom/Contracts/Contract/Article/2397509/source/GovDelivery/

Valerie Insinna   WASHINGTON — Boeing reported another $67 million charge on the KC-46 tanker program in third-quarter earnings disclosed Oct. 28, capping off a difficult quarter defined by continued hardships on its commercial side. The increase in KC-46 costs was “due to continued COVID-19 disruptions and productivity inefficiencies,” Boeing's chief financial officer, Greg Smith, told investors during an earnings call. However, Boeing CEO Dave Calhoun expressed confidence that the program would turn the corner in 2021 and become profitable for the company. “The tanker has been a drag on us for three or four years in every way you can think of with respect to investors,” he said. “But we are continuing to clear the hurdle with our customers with respect to its performance in their fleet and their need for that tanker. "That whole relationship, I believe, will begin to transition next year, and opposed to being a drag on our franchise — which it's been — I believe it will become a strength in our franchise.” Previous charges on the KC-46 program amount to about $4.7 billion — almost equal to the $4.9 billion sum of the company's firm fixed-price contract with the U.S. Air Force, which it signed in 2011. In July, a $151 million charge was attributed to the decline in commercial plane production driven by the COVID-19 pandemic. That slowdown has made it more expensive to produce commercial derivative planes like the KC-46, which is based on the Boeing 767 and made on the same production line in Everett, Washington. Overall, defense revenues slightly decreased to $6.8 billion “primarily due to derivative aircraft award timing,” the company said in a news release. But that impact paled in comparison to Boeing's commercial business, where revenues dropped from $8.2 billion in 2019 to $3.6 billion in 2020. As a result of those continued difficulties, the company plans to lay off an additional 7,000 workers by the end of 2021, Calhoun announced. At that point, Boeing's workforce will have been cut by almost 20 percent, down from 161,000 earlier this year to about 130,000 employees. Smith characterized 2020 has a “year of transition” for defense programs like the MQ-25, T-7 trainer and the Air Force One replacement, which are in development. Once those programs move into production, Boeing expects to see “modest growth,” he said. But Calhoun added that global defense spending is unlikely to greatly increase in the coming years, meaning that growth in Boeing's defense portfolio will be limited. “In fact, we believe there will be pressure on defense spending as a result of all the COVID-related spending that of course governments around the world have been experiencing,” he said. “I don't think we're looking at that world through rose-colored glasses. I expect real pressure on that market.” https://www.defensenews.com/industry/2020/10/28/boeing-has-another-overrun-on-the-kc-46-but-its-ceo-says-theres-some-reason-for-hope/

Ed Adamczyk Oct. 28 (UPI) -- Lockheed Martin Corp. announced the award of a $25 million contract on Wednesday supporting the use of U.S. Air Force cargo planes to deploy missiles. The contract was issued by the Strategic Development Planning and Experimentation Office, and is meant to support the fourth phase of the Palletized Munitions Experimentation Campaign, Lockheed said in a press release. The campaign is meant to investigate, and test, the idea of delivering large volumes of air-launched weapons via airlifters. The system uses C-17 and C-130 cargo planes, rolling the packaged missiles onto the planes for high-altitude airdrops to locations where they are needed. "Initial studies show that airlifters have the potential to deploy large quantities of Joint Air-to-Surface Standoff Missile Extended Range missiles, providing a significant increase in long-range standoff scale and complementing traditional strike and bomber aircrafts," Lockheed said in a statement. The Joint Air-to-Surface Standoff Missile Extended Range, or JASSM-ER, is a long-range, conventional, air-to-ground missile used by the United States and allied forces to destroy high-value and well-defended targets. "This innovative approach enables warfighters to launch offensive operations from a greater number of airfields and engage a larger number of near-peer adversarial targets," the company said. Tests with simulated weapons earlier this year demonstrated the feasibility of packing JASSM-ER missiles into modular containers atop standard shipping pallets, and then delivering them through airdrops. "A Palletized Munitions capability could enable various airlift aircraft to employ a range of weapons en masse via a self-contained, roll-on/roll-off palletized system, and may offer an alternative way for the Air Force to bring more mass to the fight," Dr. Dean Evans of the SDPE said after a test in September. "The successful demo represents a key step in SDPE's Palletized Munitions Experimentation Campaign, which will determine if the Palletized Munitions concept is feasible and provides a competitive advantage for the warfighter." The first-of-its-kind test was conducted at Eglin Air Force Base, Fla. The contract announced Wednesday includes a system-level demonstration in 2021 and continuing research of the program's viability. https://www.upi.com/Defense-News/2020/10/28/Lockheed-to-research-air-dropped-packaged-missiles-in-25M-contract/8691603902444/?ur3=1

State Department's political-military leader sees mixed signals from abroad. Marcus Weisgerber The coronavirus pandemic might prompt U.S. allies to restructure arms deals for American-made weapons, a top State Department official. But R. Clarke Cooper, assistant secretary of state for political-military affairs, said there is still an appetite for U.S. weapons overseas — especially F-16 fighter jets and Patriot missile batteries. “If we're looking at long-term modernization plans across the board, we're seeing what I would say is [a] steady state in that place,” Cooper said Wednesday during a virtual Defense Writers Group meeting. Since April, the State Department has approved more than four dozen foreign arms deals with a potential total value of more than $91 billion. But just because the sales were approved doesn't mean they'll come to fruition. In some cases, U.S. companies are competing against one another and/or overseas firms for contracts. “On big-ticket modernization, while some states...may have looked to re-frame or push right to a later date particular procurements, we've not seen dramatic changes in their planning,” he said. “What it may mean is how they sequence certain procurements.” Germany last month canceled a multibillion- dollar helicopter competition between Boeing and Lockheed Martin, calling the project too expensive. At the same time, Switzerland recently moved forward with a competition to replace its F/A-18 Hornets. But economic pressures could prompt some countries to adjust payments schedules, Cooper said. “Based on their national budgets, [countries] might seek some sort of dependable undertaking,” he said. “Some states might seek foreign military financing or grant assistance.” By the way, Cooper added, the economic downturns could result in more NATO allies meeting the alliance's goal of members spending 2 percent of their gross domestic product on defense. “Bizarrely, we may have some states where their numbers look like they've had an increase [in defense spending] because they've had a drop in GDP,” he said. https://www.defenseone.com/business/2020/10/will-covid-stressed-countries-slow-their-arms-buys/169642/

POLITICO spoke with managers at eight defense companies of varying sizes to see how their response to the pandemic has changed seven months in. JACQUELINE FELDSCHER From Zoom meetings to mental health check-ins during the work day to reconfiguring office spaces, most defense CEOs say the changes forced by the coronavirus will be permanent even after this crisis is over. The pandemic upended the industry in March, sending most employees who could telework home and requiring additional safety precautions for those who still had to go to the office. Companies quickly adopted best practices, such as frequent hand-washing, deep cleaning, distance between employees and eventually wearing masks. But over the past seven months, many companies have gone beyond these initial steps to protect the health of their employees and changed how they operate in other areas of their business. That includes adding benefits for the workforce, increasing the use of virtual communications and protecting supply chains. “We need to first calm down any sense of a focus on getting back to normal,” said Karl Hutter, the CEO of Click Bond, a supplier to defense companies. “There's not going to be a going back to normal.” A top challenge CEOs cited is trying to maintain a company's culture and community when at least some of the workforce is working from home full-time and it's still unsafe to gather for morale-building events such as anniversary celebrations or holiday parties. Industry leaders are also rethinking what their companies will look like in the future, including how many employees will continue to work from home full-time and how offices will be laid out. POLITICO spoke with managers at eight defense companies of varying sizes to see how their response to the pandemic has changed seven months in. Caring for the workforce The coronavirus pandemic has heaped stress on employees, many of whom are trying to juggle a full-time job with full-time child care amid a crisis that can make it anxiety-inducing to step outside. As a result, industry leaders almost unanimously said they have prioritized caring for employees' mental health in a new way to try to both give workers coping mechanisms and ease whatever stress they can. Click Bond, for example, has launched a pilot program in which about two dozen staff meet weekly for a 12-week program on wellness, including a focus on mindful movement and meditations. Hutter said he hopes the pilot, which is being used by many different demographics from younger workers to “hard-boiled tool makers,” will become a broader, long-term initiative. To help working parents, SAIC has given employees access to online tutoring help for their children to help ease the burden of working full-time while also helping children navigate the virtual classroom, said Amy Benson, SAIC's vice president of government affairs. United Launch Alliance and SAIC both established “leave banks,” which allow employees who won't use all of their vacation to donate that time off to colleagues who may need it. ULA CEO Tory Bruno said this will become a permanent benefit at his company once the pandemic is over. “It forces you to take on things like this, then you learn about them,” he said. “None of these benefits I just described will stop.” Companies have contracted with services to provide employees 24/7 virtual access to medical professionals for some health concerns. Managers are also making sure employees have access to health care. Huntington Ingalls Industries, for example, gave new hires health insurance immediately instead of making them wait 90 days, said Bill Ermatinger, the chief human resources officer at the shipbuilding company. Some companies are also regularly testing employees for Covid-19, both to keep facilities running by quickly diagnosing and quarantining any sick people and to ease the minds of those who report to work. “Employees have been very very grateful we're doing it,” said Mark Aslett, the CEO of Mercury Systems. “It's the only way to deal with employees at scale and get results back quickly enough to manage business continuity.” One of the top challenges for CEOs is making up for lost in-person interactions at company-wide events. Bruno has also gotten creative to try to replicate some of the morale boosting and team building that would come from a BBQ at a space launch, for example, by paying for employees to pick up meals from local small businesses. Hutter also stressed the importance of maintaining the culture of Click Bond, and is planning a “drive in theater event” for the company's annual holiday party as a way to safely gather and raise employees' spirits. Embracing virtual tools The inability to safely fly to visit vendors has forced businesses to get comfortable doing more virtually, which industry leaders say they will continue doing because it's more efficient. Anne Shybunko-Moore, the owner of GSE Dynamics, said her team can now check on the status of parts and address technical issues virtually. “I can see that impacting the way I do business going forward,” she said. “Vendor visits and building relationships are still critical in our supply chain, but maybe it's not necessary to fly to California. ... I could meet with eight vendors a day if I had to, virtually, all over the nation.” Some companies also had to overcome security concerns to use video meeting tools such as Zoom. United Launch Alliance did not allow employees to turn video on for virtual meetings before the pandemic out of a concern that something in the background, such as a model or a drawing of a rocket, would be either classified or controlled by international export laws. But after months of no in-person meetings, Bruno said he's instead issued workers rules for what can appear alongside them on camera. This is another practice that will continue after the pandemic is over, he said. “I started to worry about new employees never seeing their coworkers and feeling disconnected ... so we're enabling video everything and giving guidelines asking them to be careful about what's behind them,” he said. Planning for future business Heather Bulk, the CEO of Special Aerospace Services, said she is already knocking down walls at her company's Colorado headquarters to reconfigure the office to accommodate many who say they will feel safer coming back to work in a personal office with a door that closes. She also acknowledged she will need to update the break room, but is not yet sure what a space that is both communal and safe looks like now. “I like the idea that you can have 75 people in one room and they can all share a coffee pot and chat, but I don't foresee this pivoting back to the way it was in 2018 and 2019 for a while,” she said. “By making these changes and making them quickly, I'm able to move forward so in January of 2021, all these office changes should be up to date.” Bulk also said she is taking steps to bring more capabilities in-house, a trend she expects to see across the industry as CEOs work to mitigate disruptions at small businesses that produce critical parts. Many CEOs said they intend to keep some of the enhanced cleaning and distancing policies in place post-pandemic because they will keep the workforce healthy from diseases such as colds and the flu as well. As to what the future of telework looks like once it's safe to return to the office, CEOs are split over how much of their workforce is likely to remain at home. But most agree a hybrid model with some people in the office and some working from home at least part-time is likely to become the new normal. “Productivity has been good. It's been great in fact,” Bruno said. “If you're working a five-day work week, why can't one or two days be at home teleworking where you're not interrupted by a bunch of meetings?” https://www.politico.com/news/2020/10/28/coronavirus-changed-defense-industry-culture-433447