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Byron Callan The coronavirus pandemic is going to be as consequential for defense and security as were the Sept. 11, 2001, attacks in the U.S. For the defense sector, there are multiple implications to ponder and possibly to begin to position for as these play out in 2021 and beyond. Large contractors should fare relatively well in 2020, compared to other sectors. They will not see the demand destruction that is ripping through commercial aerospace and therefore are unlikely to experience financial duress. That alone may enable them to act strategically and aggressively in 2020 and beyond, although there are risks to weigh as well. Here are six changes to ponder: First, a crisis the size of the COVID-19 pandemic is bound to spawn new government investment and organization to address future outbreaks. The Sept. 11, 2001, attacks led to the formation of the U.S. Department of Homeland Security and creation of the position of director of national intelligence. It's fair to assume there will be changes in the wake of the current pandemic. Some contractors already have federal services segments that address U.S. health care. Core skills they can bring are dealing with bureaucracies, technology and regulations. There should be new opportunities in 2021 and beyond from whatever changes are made to improve the national resilience and response to future pandemics. Second, small and medium-size businesses are being stressed. The CARES Act in the U.S. may help somewhat, and changes in Defense Department progress payment rates could be another short-term relief. Large contractors might choose to vertically integrate to improve their fortitude against future shocks. Or there could be further consolidation, particularly of distressed suppliers. A reintegration of defense and commercial aerospace is a third change that might emerge. The Raytheon-United Technologies merger may be a harbinger of this shift. The ramifications of the coronavirus crisis on the air transport and commercial aerospace sectors could lead to structural changes and a need for capital, particularly in commercial aerospace. If valuations remain depressed in 2020-21 in commercial aerospace, there could be more opportunity for defense contractors to reintegrate. A fourth change could be to expectations for contractors. The model for U.S. defense since 1945 has largely been that the Pentagon pays for the bulk of research and development, and contractors can reclaim most of their own research and development as an allowable cost for which they are reimbursed. Operating margins have generally risen, compared to levels evidenced in the 1980s and before, and large contractors have in the last 15-20 years allocated most free cash flow to shareholders. It is conceivable that this model will change in the 2020s. Operating margins may appear to be ho-hum compared to other sectors, but returns on invested capital are attractive. If there is a greater squeeze on the Pentagon budget and demand for security remains steady or increases, this could compel the Pentagon to change expectations for contractor behavior. Could they be expected to take on more contract risk? Will they need to step up their own independent research and development funding or find more creative ways to access and apply technology to national security needs? On the flip side, could there be more emphasis on dual-use technology investment, as occurred in the 1990s, where research and development for defense should have commercial/civil benefits as well? A fifth potential change is in security threats and national defense strategies. Some governments and regimes might come through this crisis with their positions enhanced, having overseen relatively mild disruptions and having been able to achieve quick economic bounce-backs. Others, however, will have failed this test, and they could see new political challengers (in democracies) or be overthrown or consumed by internal unrest from competing forces or mass movements that are emboldened by recent failures. The Middle East remains a likely place for these sorts of changes; Venezuela is another. The civil war in Syria and the fighting in Libya are current examples of how state collapse and regime challenge can drag in outside interests. The U.S. National Defense Strategy that reoriented the Pentagon and contractors toward “great power” competition could be pulled in different directions depending on where fragilities emerge. Some allies may be significantly weakened, and that could bear on U.S. defense planning and export sales. It is not just the coronavirus that matters in this regard; the crash in oil prices is also a factor to weigh. Finally, the coronavirus has turbocharged federal deficits and is sending federal debt to record levels. It may take weeks or months to assess just how much is going to be added, but there will be a fourth and possibly a fifth stimulus package in the U.S. Ultralow interest rates and the urgency of limiting social and economic damage and keeping the health care system functioning make this tolerable. But higher debt raises the risk in the 2020s that if rates increase, interest outlays could weigh on defense. https://aviationweek.com/defense-space/opinion-six-ways-covid-19-could-change-defense-sector

COVID-19 is the most disruptive event to hit the world's economy and nations since World War II, and the end is nowhere in sight. So how will the mix of business shutdowns, self-isolation, and plummeting government tax revenues (further depleted by COVID-19 relief spending) affect the Canadian defence industry? At this early stage, it is impossible to provide a definitive answer. That said, the companies and experts contacted by CDR provided some insights into the problem; based on their best assessments of what is going on. EXPECT DELAYS IN PROCUREMENT DECISIONS COVID-19 is bad news for Canada's defence procurement process. It has already resulted in delays to current projects, such as Irving Shipyards closing down work on the Canadian Surface Combatant in mid-March. It could also delay ongoing procurements such as the Future Fighter Capability Project, which is due to receive proposals from Boeing, Lockheed-Martin, and Saab by June 30, 2020. “In a situation like this, the key decisions are put off in government,” said Alan Williams, (During his 33 years in the federal civil service, Williams was Assistant Deputy Minister, Supply Operations Service in Public Works and Government Services Canada for five years; followed by fives years as DND's Assistant Deputy Minister of Materiel.) “Now you can do a lot of the paperwork associated with the procurement; including reviews and evaluations. But until things get back to normal, the key decisions will be put off.” AIRBUS HELICOPTERS REMAINS OPEN Canadian Airbus Helicopter operators can count on getting service during the COVID-19 shutdown. The reason: “Airbus Helicopters Canada qualifies as an essential workplace in the Province of Ontario,” said Dwayne Charette, the company's President/COO. “This allows us to continue to support our customers operating their helicopters to save lives, protect people and maintain critical infrastructure both in Canada and around the world. Our customers, including law enforcement agencies, militaries, emergency air medical service operators, and utility companies, are all relying on us to ensure they can continue to perform their critical missions and we have a responsibility to support them.” (In maintaining operations, Airbus is following approved COVID-19 infection-prevention procedures.) When it comes to Airbus Defence and Space Canada's contracts with the Canadian Armed Forces for CC-295 fixed-wing search and rescue (FWSAR) aircraft, “We are closely monitoring the situation and are in close contact with our customers,” said company President Simon Jacques. “We will review the situation once operations resume.” (Airbus delivered the first of 16 CC-295s to the RCAF in January 2020.) Airbus is also looking into producing critical medical equipment, in line with the federal government's plea to industry. MV ASTERIX READY TO HELP, DAVIE STILL RUNNING The Canadian Armed Forces are primed and ready to help with COVID-19 relief across Canada. So is Federal Fleet Services, which owns and operates the MV Asterix supply ship on behalf of the Royal Canadian Navy. At the moment, it is sitting crewed and ready for action in Halifax. “When we first designed the MV Asterix, we did a lot to ensure that it was ready for humanitarian assistance and disaster relief,” said Alex Vicefield, chairman and CEO of Inocea Group; the parent company for Federal Fleet Services and Davie Shipbuilding. This is why the MV Asterix has an operating theatre, Intensive Care Unit, and other medical facilities onboard; ready to sail to whatever accessible port the federal government sends it to. “The Asterix is ready to serve as a scaled-down hospital ship; if it were needed for that,” said Vicefield. The ship's hospital even has its own separate HVAC system that would keep the air breathed by COVID-19 patients separate from the rest of the air circulating throughout the ship. Meanwhile, Davie Shipbuilding is continuing to convert three Swedish oil and gas icebreakers to serve with the Canadian Coast Guard. “We're not going to stop this project, obviously, because those are important national security assets for Canada,” said Vicefield. He explained the need to boost Canada's icebreaking capacity without delay in terms COVID-19's possible impact on US food exports to Canada. If this year's US crop yields are slashed due to pandemic deaths and social isolation, “the potential for that food supply to stop coming over the border would make Canada more reliant on foreign ships coming from Europe and so on,” Vicefield told CDR. “So the need for icebreakers is even more pressing.” TERRANOVA PITCHES IN Before COVID-19 hit, Terranova Defense Solutions was focussed on providing drones for air, land, and water applications; including its remotely-controlled Dolphin One water rescue drone. Now that COVID-19 is here, the company intends to answer Ottawa's call for help by adding much-needed medical supplies to its product roster. “Terranova Defense Solutions has already engaged with other companies to global source medical supplies for Canada,” said company President/Founder James Castle. “We are currently waiting for a response from the Canadian government to the next steps and we are prepared to help Canada in whatever way we can for no profit to best serve our Canadian family.” Thanks to its mainstream drone business, Terranova Defense Solutions already has procurement relationships with international partners. “These groups have been working with us as one united front -- helping Canadians through our Call to Arms against COVID-19 – to help us in sourcing new Europe CE and US FDA Certified medical supplies and ventilators for those in need,” said Castle. This said, “Finding transportation and funding to purchase and ship these items has been a challenge.” Looking ahead, “The main challenge facing us at this time is the uncertainty of what the landscape will look like following the pandemic,” Castle told CDR. “We believe that, while there will be negative impacts to the industry, there are and will be opportunities for companies that provide fresh and innovative solutions to the country going forward.” CAE TAKES TOUGH STEPS As detailed in a March 23, 2020 webcast to investors, CAE sees COVID-19 as “a crisis of unprecedented speed and magnitude,” said Marc Parent, CAE's President and Chief Executive Officer. To manage its way through the pandemic's economic impact, CAE farsightedly formed a crisis committee in January 2020. As of March 23rd, “we're taking immediate steps to preserve cash by cutting capital expenditures and reducing operating expenses, including temporary layoffs and salary cuts across the board,” Parent said. In response to a CDR question about the impact of COVID-19 on CAE's defence projects, Parent noted that the company's defence training programs are service level agreements with government clients. This means that payments associated with these defence agreements are not reliant upon actual usage by clients, which is the case with CAE's civil aviation training programs. “We're providing critical services here too, and the US government has recently articulated the absolute necessity of this activity,” said Parent. This said, some US bases have restricted access to their facilities; specifically by imposing 14-day quarantine pre-entry requirements on people from 100 miles outside of these installations. “Anything and everything that has to do with the movement and cooperation of people is more challenging in this environment,” Parent said. “So we've been impacted in terms of getting orders fulfilled, just because of that; getting access to the people, meeting face-to-face ... As well, the general preoccupation with the crisis clearly has an impact on the speed of the procurement processes.” The only good news for CAE in the COVID-19 crisis is that “we have approximately a $4 billion backlog in defence, which provides us with a good source of diversification and visibility,” said Parent. “Longer term, we don't see an obvious structural impact on defence. But I think we can anticipate some short-term friction as we move through this period.” AFTER CANCELLING CANSEC, CADSI TAKES UPBEAT APPROACH COVID-19 is proving to be difficult for the Canadian Association for Defence and Security Industries (CADSI); most notably because it has cancelled plans to stage the CANSEC 2020 global defence and security trade show in Ottawa May 27-28, 2020. The bad news was announced on March 31, 2020, during CADSI's Annual General Meeting (which, due to COVID-19, was held as a teleconference.) “As you can imagine, the decision was not made lightly,” said CADSI President and CEO Christyn Cianafarani. The reason CADSI took so long to cancel this year's CANSEC – compared to other COVID-19 related event cancellations – is because “it has a $10 million impact on the local Ottawa economy,” she explained. “We took the time necessary to explore every possible option with the City of Ottawa, our partners, contractors and suppliers to mitigate the losses to our community, in order to secure the long-term viability of CANSEC.” Despite the loss of CANSEC 2020, Cianafarani is taking an upbeat approach to the pandemic, by focussing on the good things her members are doing for Canada. “Throughout this crisis, the Canadian defence and security sectors have stepped up to support where help is most needed,” Cianafarani told CDR. “Companies from coast-to-coast have refocused their attention to produce in-demand equipment like N95 masks, gloves, testing kits, shelters and ventilators needed to protect health care workers, patients, and the public. With the rise in online activity, cyber defence and security companies have offered free cyber protection services to hospitals, medical supply chains and other essential service providers.” “These are just some examples,” she continued. “At the Association level, we are working hard to ensure companies facing hardships and challenges are connected to the government programs best placed to help them get through these exceptional economic times.” AIAC SEEKS ‘ESSENTIAL SERVICE' STATUS In an emergency like the COVID-19 pandemic, access to aviation is vital. This is why the Aerospace Industries Association of Canada (AIAC) – in association with AIAC member companies and regional aerospace industry associations – “has been calling for action from the Prime Minister and Premiers to designate the aerospace, defence and space sectors an essential service in all of Canada's provinces and territories,” said AIAC President and CEO Jim Quick. “Canada's aerospace industry is doing vital work -- providing products, services and solutions for a variety of purposes including emergency medical services and the transportation of vital medical equipment, domestic and international transportation, firefighting, search and rescue, telecommunications, border and maritime patrol and security, law enforcement, and military operations and support -- and it needs a consistent approach across the country. Not surprisingly, the global shutdown is seriously affecting AIAC member companies. To help them weather the storm, “we've been actively reaching out to our members, letting them know we are here to assist in any way we can during this crisis,” said Quick. To achieve this the AIAC is sending out a daily ‘News You Can Use' COVID-19 update that outlines the latest aerospace industry related news and announcements. The association has also launched a specialized 'COVID-19 Updates and Resources' website page for the latest on government resources on stimulus, subsidies, webinars and more; plus holding briefings with federal cabinet members. As well, “Aerospace is responding to the government's call for retooling to convert operations to deliver on needed supplies such as ventilators, masks and other essential supplies and equipment,” Quick told CDR. CDAI POLLS SHOWS SOLID SUPPORT FOR CAF INTERVENTION 88% of Canadians believe that the Canadian Armed Forces have a role to play in supporting civilian authorities manage and mitigate the COVID-19 outbreak, according to a survey conducted by the Conference of Defence Associations Institute (CDAI) and Ipsos Canada. Based on a March 20-23, 2020 online survey of 2,000 Canadians aged 18+, the poll foreshadowed Ottawa's decision to publicly commit the CAF to COVID-19 relief on March 30, 2020. Among the CDAI/Ipsos Canada poll findings: 65% supported the CAF helping to deliver medical and other supplies to service providers and the Canadian public; 64% were okay with the CAF supporting Canadian law enforcement agencies; 58% supported the continued use of CFB Trenton to quarantine at-risk or infected travellers/evacuees; 54% wants the CAF to help with evacuating and medical transporting infected Canadians. "I am not surprised by these survey results,” said LGen (Ret'd) Guy Thibault, CDAI Chair and former Vice-Chief of Defence Staff. “Time and again Canadians have seen the outstanding professionalism and critical contributions of the men and women of the Canadian Forces in humanitarian missions and natural disaster relief operations abroad and at home. There is no more important mission for the Forces than protecting Canadians in times of great need, and they are a highly respected and trusted national institution.” http://www.canadiandefencereview.com/Featured_content?blog/168

L'arrêt de certaines usines a surpris nombre de militaires. Après un travail de concertation, tous les industriels ont rouvert afin d'assurer le soutien des armées. Par Anne Bauer Publié le 31 mars 2020 à 15h50Mis à jour le 31 mars 2020 à 16h06 C'est une des découvertes de la crise du coronavirus : la défense n'a pas d'obligations de production particulières par rapport à d'autres secteurs . De quoi surprendre les commandants militaires. Aussitôt le confinement déclaré, une entreprise comme Arquus (ex-Renault Trucks Defense), filiale de Volvo, annonçait la fermeture de ses sites industriels sans concertation avec ses partenaires, alors que l'entreprise fabrique avec Thales et Nexter les blindés de l'armée de terre. Après un certain flottement, les choses sont rentrées dans l'ordre et les sites industriels se remettent en marche depuis lundi. Cartographier les besoins prioritaires « Un dialogue s'est ouvert entre les industriels de la défense, la Direction générale de l'armement et le ministère des Armées pour faire une cartographie des activités les plus critiques pour la défense, donner des prévisions d'activité et bien mesurer tous les impacts sur les systèmes de soutien au profit des forces armées », explique-t-on au ministère des Armées. Dès le 20 mars, la ministre Florence Parly envoyait un courrier aux industriels pour leur rappeler que « sans transiger sur les mesures barrières dont le respect strict est indispensable pour endiguer la propagation du virus, l'activité des entreprises de défense devait continuer ». Pas question de ne pas assurer l'entretien des hélicoptères au moment où ils sont plus que jamais engagés dans le transport des malades , de baisser la garde sur la dissuasion nucléaire, ou encore de ne pas pouvoir changer les pièces défaillantes des blindés utilisés au Sahel. Renégociation prochaine des objectifs Après une grosse semaine de fermeture, histoire de bien analyser les conditions de production et de nettoyer les sites de fond en comble, les industriels de la défense ont rouvert. Chez Nexter, les sites de production sont de nouveau actifs, même si la totalité des effectifs n'est évidemment pas appelée. Arquus, de son côté, explique avoir terminé la semaine dernière son inventaire, ce qui lui a permis de livrer à la Direction générale de l'armement nombre de blindés stockés et de rappeler ses salariés pour assurer les livraisons des pièces de rechange, notamment à l'heure où les camions de l'armée sont extrêmement sollicités dans l'opération « Résilience » de soutien à la lutte contre la pandémie. Globalement, le soutien aux armées sur terre, mer et air est assuré, sachant qu'il y aura plus tard, au printemps, des négociations pour réviser les objectifs de livraison de matériel neuf, qui étaient inscrits dans la loi de programmation militaire. Il faudra tenir compte de la baisse de la mobilisation du personnel pour des raisons sanitaires - et sans doute, in fine, d'un recadrage des ressources budgétaires. https://www.lesechos.fr/industrie-services/air-defense/coronavirus-retour-au-travail-pour-les-industriels-de-la-defense-1190687

Ottawa (March 31, 2020) - Christyn Cianfarani, President and CEO of the Canadian Association of Defence and Security Industries, today issued the following statement regarding CANSEC 2020. Good afternoon, It goes without saying that the COVID-19 pandemic has disrupted our businesses, communities and our families close to home and around the globe. Over the last few weeks, CADSI has been working hard to determine what this means for our community and the events we produce for you. Today, I announce that we have made the difficult decision not to host CANSEC in 2020. As a result, we are now working hard to make CANSEC 2021 – which will take place June 2 and 3 at Ottawa's EY Centre – the best CANSEC ever. CADSI staff have begun reaching out to our members, specifically exhibit managers and sponsor reps, as well as partners and suppliers to provide details on next steps. Please stay tuned to your inboxes for more information. If you do have questions, please email cansecsupport@defenceandsecurity.ca. We are all hands-on deck to manage your inquiries, but it may take us a few days to get back to you. Please continue to be patient with us and we will respond to every inquiry as soon as we can. As you can imagine, this was a difficult but necessary decision. We know how important CANSEC is to our members, to our government and military partners, and to the broader defence and security community. It's more than a trade show; it's a time for us to come together as one and strengthen the community tasked with keeping Canada and the world safe. We also understand that this decision has taken longer to make than some would have liked. Let me share why. CANSEC is a large event with many moving parts. It has a $10 million impact on the local Ottawa economy and provides significant revenue for dozens of loyal suppliers that are struggling to deal with the economic fallout of COVID-19. Many of them are small businesses that rely on CANSEC as a key source of income. We took the time necessary to explore every possible option with the City of Ottawa, our partners, contractors, and suppliers to mitigate losses to our community and secure the long-term viability of CANSEC, which needs these partners and suppliers to be successful. We also took the time to think about our membership and the struggles it will face over the coming months. CADSI's prudent plans and budgets in recent years have placed us on a solid financial foundation for the situation we find ourselves in today. For this reason — and for the good of our community, our suppliers and our members — CADSI will refund 100% of CANSEC purchases paid by members to CADSI (e.g. sponsorship, exhibits, meeting suites), while respecting timely payments to our suppliers. Irrespective of whether CADSI will incur losses and changes to our business as a result of this decision, our commitment to our members remains the same. We are doubling down as the best advocates we can be for you in these tough times. We are also working hard to make CANSEC 2021 the best CANSEC ever. Thank you to all stakeholders who came to the table in the spirit of partnership as we made this decision, and to our members for your patience and understanding in this time of uncertainty. Many of you have been busy contributing to Canada's response to COVID-19 here at home and around the world. You have made us proud, and we cannot wait to reconnect with you – in person – at CANSEC 2021. Sincerely, Christyn Cianfarani President & CEO, CADSI Posted 2020-03-31 Last Modified 2020-03-31 14:22

L'industrie aérospatiale vit une situation exceptionnelle qui nous invite à faire preuve de créativité dans nos modes de communication. Aéro Montréal se mobilise pour ses membres et continue sa série de webinaires. Retrouvez-nous le vendredi 3 avril, de 11 h à 12 h 00, pour un second webinaire en partenariat avec Norton Rose Fulbright sur le thème : Coronavirus (COVID-19) : Défis et obligations légales des entreprises en temps de pandémie. Animé par Éric Lallier, Associé chez Norton Rose Fulbright Canada, ce rendez-vous, spécifiquement conçu pour les chefs d'entreprise et leurs gestionnaires, vise à faire le point sur les obligations légales liées à l'emploi dans cette situation exceptionnelle : À l'agenda : Les obligations des employeurs relatives au droit du travail à la lumière des nouvelles mesures disponibles pour leur entreprise La gestion d'employés dans un contexte de réduction des opérations (Refus de travailler, congés protégés, mises à pied temporaires, cessations d'emploi) Une période de question ouvertes avec Éric Lallier. Veuillez noter que le nombre de places est limité et réservé aux membres d'Aéro Montréal. RÉSERVEZ VOTRE PLACE *Suivant votre inscription, un lien Web vous sera envoyé. https://www.eventbrite.ca/e/billets-webinaire-coronavirus-covid-19-defis-et-obligations-legales-101663183318

Canada's top general says the military is in the process of determining what forces would be required to assist federal and provincial governments in responding to the novel coronavirus and that response will be geared to supporting vulnerable populations and providing logistics support. There has been no official call yet for the use of military forces from federal, provincial or territorial governments. But Canadian Forces planners are preparing for such a request. “Our tasks will be geared to support Federal, Provincial, Territorial and Municipal governments and agencies in their efforts to suppress the disease, to support vulnerable populations and to provide logistical and general support to communities,” Chief of the Defence Staff Gen. Jon Vance noted in a statement released Friday on social media. “To do this we are now in the process of identifying the forces required, including our incredibly valuable Primary Reserves and Canadian Rangers. These forces will be organized down to individual level into task forces able to deploy by sea, road or air to where they are needed.” More information will come in the next week, Vance said. But defence sources tell this newspaper that the response if needed will, among other areas, focus on providing support to remote Indigenous communities. Such communities have limited resources, particularly in the area of health and medical capabilities. The Canadian Forces has an extensive logistics capability with its fleet of vehicles and aircraft. It can also set up mobile shelters and medical facilities. Vance noted that many military personnel volunteer in their communities but such work must now be restricted to first responder duties since they are required to be ready for Canadian Forces duties at short notice. “When it's time, we will marshal forces, conduct reconnaissance and deploy as, where and when required,” he added. In his message to military personnel and their families, Vance also announced that the Canadian Forces will go ahead with its annual process of shifting personnel around the country for promotions and new jobs, albeit at a reduced level. The annual military posting season comes at a time when federal government officials are advising Canadians to stay at home and practice physical distancing in an effort to reduce the number of cases of COVID-19. “It is our intention to execute as many of the planned postings as is responsible and reasonable to do,” Vance explained. He noted that the overall number of moves will be reduced significantly and they must be vetted and approved by senior leaders as operationally essential. The busiest time for postings and relocations from one community to another is during what is known as the “Active Posting Season” or APS, according to the Canadian Forces. During APS, about 5,000 to 6,000 members receive their posting messages, usually during the spring and most of the movement is carried out in the summer. Vance said the active posting season will be lengthened to conclude by Dec. 31. In addition, Vance warned that the COVID-19 pandemic is disrupting normal administration procedures for the Canadian Armed Forces or CAF. “To reduce the administrative risks and to preserve our strength as recruiting has almost ceased, transition out of the CAF and retirements may be voluntarily delayed,” he warned. “Those who are releasing voluntarily but wish to remain in the CAF are welcome to do so and appropriate terms of service will be offered. Those wishing to continue with transition may do so, but you must expect significant delays and disruptions.” Vance also encouraged former military personnel to rejoin the Canadian Forces. https://ottawacitizen.com/news/national/defence-watch/canadian-military-on-notice-to-provide-logistic-support-help-vulnerable-populations-in-wake-of-covid-19/

By: Aaron Mehta WASHINGTON — The Pentagon has asked Congress to allow it to classify its Future Year Defense Program spending projections, new documents have revealed. The FYDP numbers, which project five years into the future, are considered essential information for the public to see where the Department of Defense expects to invest in the future, and to hold the department accountable when those spending plans change. Information on the request was published Monday by Steven Aftergood of the Federation of American Scientists. Aftergood wrote that the proposal would “make it even harder for Congress and the public to refocus and reconstruct the defense budget.” In its request to Congress, the Pentagon wrote that an unclassified FYDP “might inadvertently reveal sensitive information,” despite the fact the numbers have been unclassified since 1989. “With the ready availability of data mining tools and techniques, and the large volume of data on the Department's operations and resources already available in the public domain, additional unclassified FYDP data, if it were released, potentially allows adversaries to derive sensitive information by compilation about the Department's weapons development, force structure, and strategic plans,” the DoD wrote. It added that there is a commercial concern with the FYDP providing too much information to industry. “The Department is also concerned about the potential harm to its interactions with commercial interests by release of FYDP information prior to the budget year. Exposing resources allocated to future acquisition plans may encourage bids and other development activities not beneficial to the Government,” the proposal read. Seamus Daniels, a budget analyst with the Center for Strategic and International Studies, said in a tweet that “DoD's proposal to eliminate the unclassified FYDP severely limits the public's ability to track how strategy aligns with budgets and how program plans change over time. Serious step backwards in transparency from the department.” Earlier this year, the No. 2 uniformed officer in the Pentagon railed against the department's tendency toward overclassification, calling it “unbelievably ridiculous.” The Pentagon has requested a number of legislative changes this year, in addition to the FYDP classification attempt. Among the notable requests are one that would remove the requirement for the defense secretary to “notify the Senate and House Armed Services Committees whenever the Secretary establishes or modifies an end-of-quarter strength level;” a request for the ability to add an additional 15 general officer billets in the combatant commands and three general officer billets on the Joint Staff, to be filled exclusively by reserve component officers; and a request to rename the assistant secretary of defense for special operations and low-intensity conflict as the assistant secretary of defense for “Special Operations and Irregular Warfare.” https://www.defensenews.com/pentagon/2020/03/30/pentagon-seeks-to-classify-future-year-defense-spending-plans/

By: Aaron Mehta WASHINGTON — More than 60 percent of small companies in the defense supply chain are seeing disrupted cash flow, according to a new survey put forth from the National Defense Industrial Association. “This survey shows how the defense lifeline runs through small business,” Hawk Carlisle, NDIA's president and CEO, said in a statement. “These companies must survive if the defense industrial base is to remain the best in the world on other side of COVID-19.” COVID-19 is a newly discovered coronavirus — a family of viruses, some of which cause disease in people and animals, named for crownlike spikes on their surfaces. As of Friday, 458 small businesses had responded to the survey, which will remain open through April 10. Fifty-five percent of respondents have less than $5 million in annual revenue, and 70 percent have less than 50 employees. Sixty-two percent of the respondents have seen disrupted cash flow as a result of the economic downturn. Primarily, those have come as cuts to billable hours or delayed payments from prime contractors because of shutdowns or telework. A lack of telework options is also an issue for contractors. Notably, 54 percent of respondents say they cannot work on a contract because they are currently under a shelter-in-place order. And optimistically, 69 percent do not expect cost overruns on fixed-price contracts as a result of the coronavirus-related disruptions. Those that do expect such overruns predict them to be in the 10-20 percent range. The results of the survey were delivered Friday to Ellen Lord, the undersecretary of defense for acquisition and sustainment. Speaking to reporters on Wednesday, Lord said she is closely watching the lower tier of the supply chain for weak spots that may appear. Last week, the Defense Department announced new measures to increase progress payments out to both small and large companies to ensure they are able to keep work moving on schedule. https://www.defensenews.com/industry/2020/03/27/small-defense-businesses-seeing-cash-issues-during-coronavirus-outbreak-survey/

"I have mobilized the Department of the Air Force into a wartime acquisition posture," said Roper. "We are at war with this virus." By THERESA HITCHENS WASHINGTON: The Air Force has stood up a special acquisition task force to help keep its industrial base humming during, and after, the COVID-19 pandemic, says service acquisition czar Will Roper. “I have mobilized the Department of the Air Force into a wartime acquisition posture, and that is the purpose of our acquisition COVID-19 task force,” Roper told reporters in a teleconference today. “We are at war with this virus.” The move follows in the footsteps of DoD Undersecretary for Acquisition and Sustainment Ellen Lord, who has set up a number of task forces as the Pentagon puts into place the $2 trillion coronavirus relief package passed by the Senate last night, the House this morning and on its way to President Donald Trump for signature. The package includes $10-plus billion for Pentagon response efforts, including $1.5 billion that could go directly to industry. “Cash flow and liquidity are everything right now,” Roper explained. One of key focuses is on small businesses and the startup ecosystem, he stressed, given that the Air Force over the past two years significantly ramping up its efforts to reap technology innovations from the commercial sector. “All of you know that small businesses are the most vulnerable right now,” Roper said. “We're going to have to do things differently with our small companies than with our primes.” As an example, Roper mentioned the move by the service's new AFVentures arm for startup investment to switch within 72 hours its planned ‘Pitch Bowl' at the March 13-20 South By Southwest festival in Austin to a virtual event. The event involved some 5,000 participants, he said and resulted in 599 contracts worth a total of almost $1 billion — “the single largest small business transaction in government history.” “That was one of our first big virtualizing activities within acquisition,” he said. “We flowed critical cash to companies who can burn it against that in their contracts now.” Further, he said, the Air Force already has put out another solicitation asking small businesses who might be able to help with COVID-19 response “to put their hands up so that we can get additional cash to them or put them on contract if their not already working with us.” Roper said the Air Force acquisition task force has “four lines of effort:” “Relief.” Roper said “these teams are thinking through external assistance requests that may potentially come in,” and how best to apply contracting to move out “billions of dollars if needed.” “Resilience.” This is focusing on “defense industrial base health issues,” he said. For example, if there are “suppliers under duress, or small businesses that are not getting enough cash flow fast enough,” are there ways the service can help? “Recovery.” This team will look at what is needed after the crisis lifts. While Roper cautioned industry that “COVID-19 is not a blanket excuse for programs slipping to the right,” he said the service will be mindful that some will do so — thus the “recovery” team will try to figure out what funding those programs might need to get back on track after a schedule slip. “Being rapid for small businesses.” This effort, Roper said, is led by AFVentures, and is meeting daily to ensure the Air Force spends all of its small business funds. “They have been in training for this for two years,” he said of AFVentures personnel. “They have demonstrated the ability to do more small business contracts that anyone in the government at speeds never seen.” Roper said that so far there have been “no major delays” in critical acquisition programs, such as the top priority Ground-Based Strategic Deterrent (GBSD) to replace the aging Minuteman III intercontinental ballistic missiles. Indeed, he said he talked with the GBSD team this morning who are “doing business as usual,” only virtually. Similarly, testing under the Skyborg program not only is moving ahead, but Roper has given that acquisition team the go-head to “accelerate solicitations as soon as they are ready.” Under the program, the Skyborg “brain” would use artificial intelligence to pilot low-cost “attritable” drones that would provide data (such as telemetry, flight plans and weather) to a manned fighter leading a formation — a job that a wingman's aircraft normally would do. While so far the only drone body to have flown the Skyborg computing package is the the Valkyrie, built by Kratos, the service isn't ruling out using others. One of the key reasons that Air Force acquisition programs can keep moving, Roper said, is because of the service's past efforts to innovate in the area of information technology. Asked about the some $300 million in the coronavirus relief package slated for DoD to spend on IT to support teleworking, Roper wouldn't provide the exact Air Force share. But, he stressed that IT is key to DoD's success not just during this crisis but for the future. “Information technology in the government has never been an exceptionally high priority, and it's been one of the most disappointing things to me about joining the government is having to have antiquated 1990s-era technologies to exchange information,” he said. The Air Force's “pivot” to begin using commercial cloud technology — now embodied in the cloudONE — has “really benefited” the service as the COVID-19 crisis has unfolded, he said. However, he added, a key barrier to taking full advantage of this tech are out-dated security measures — particularly around classified information — that have been in place for decades. Therefore, he said, his office is working with DoD CIO Dana Deasy and his Air Force counterpart Bill Marion “to try to smartly look at removing security restrictions and using new technology.” If this effort is successful, he explained, “then we'll be able to work remotely as long as needed.” The effort in part is bouncing off of Air Force's project — under its high-priority Advanced Battle Management System designed to underpin Joint All-Domain Command and Control (JADC2) — to develop the “deviceONE” that can securely allow classified information to be relayed to tablets and handhelds for operators in the field, he said. The bottom line, Roper said, is that the changes in how the Air Force and DoD as a whole are working in driven by the pandemic are likely to have lasting effects. “I'm excited to see what the Department of the Air Force will be like post-COVID-19, because with this much disruptive change happening in the government all at once, and rethinking about how we do our business, we won't go back to being the same department again.” https://breakingdefense.com/2020/03/covid-19-roper-stands-up-task-force-to-assist-industrial-base