Bridging the ­Procurement Divide

Sur le même sujet

• 

  10 juin 2019 | Information, Aérospatial, Naval, Terrestre, C4ISR, Sécurité, Autre défense

  Raytheon Technologies Corporation: UTC, Raytheon make marriage official

  By: Aaron Mehta Updated with comments from officials on June 10, 2019, at 9:21 a.m. ET. WASHINGTON — Raytheon and United Technologies Corporation will officially merge into a new entity called Raytheon Technologies Corporation, with the deal taking place in first half of 2020. Following Saturday reports that a merger was imminent, the two firms made the news official Sunday, launching a website about the planned all-stock deal. On Monday, Raytheon CEO Thomas Kennedy and UTC CEO Greg Hayes held a conference call, where the two revealed that discussions about a potential merger started in summer 2018, before taking off in earnest this January. “It's like a mirror,” Kennedy said of UTC, noting both companies invest heavily in new technologies while remaining “platform agnostic.” Hayes added that there is roughly a one percent overlap between the two firms portfolios. The new company will be roughly 50-50 defense and commercial, with plans to spend $8 billion on R&D after combining. Much of that funding will go towards high-end defense programs, including, per a news release, “hypersonics and future missile systems; directed energy weapons; intelligence, surveillance, and reconnaissance (ISR) in contested environments; cyber protection for connected aircraft; next generation connected airspace; and advanced analytics and artificial intelligence for commercial aviation.” The new firm has a “tremendous opportunity to invest” in the future, Hayes said. “The resources of the combined company will allow us to do things on a stand alone basis that would have been very difficult” individually. Hayes also expressed his belief the Pentagon would not see major issues, given the limited overlap. However, other trouble may be brewing; during a Monday interview with CNBC, U.S. President Donald Trump expressed concern about the agreement. While being billed as a “merger of equals,” UTC shareowners will own approximately 57 percent and Raytheon shareowners will own approximately 43 percent of the combined company. A spokesperson for Raytheon confirmed to Defense News Sunday that the combined company will be based in the greater Boston area. Raytheon is based in the Boston suburb of Waltham, while UTC is based in Farmington, Conn. Per a news release, the new company will have approximately $74 billion in pro forma 2019 sales. The release also highlights that the merged company will be a major player in both the defense and commercial aerospace markets, giving greater market resiliency. Byron Callan, a defense analyst with Capital Alpha Partners, wrote Sunday in a note to investors that the merger may be a sign of market trends to come. “An RTN-UTX deal may be a signal (a siren?) that 1) this U.S. defense cycle is peaking, and firms need to start repositioning for growth in 2021 and beyond; 2) Maybe the commercial aerospace outlook is looking wobbly too and Western firms need to hedge against fallout from a U.S.-China trade split. A U.S. recession is overdue; 3) Defense firms will need to fund more of their own R&D in the future so joining a larger firm will limit margin pressure which could be evidenced in the 2020s,” Callan wrote. Callan also sees “some overlap in the defense portfolios” for the two companies, primarily through the Mission Systems segment of Collins Aerospace. That could require some small divestitures down the road as the deal is finalized, but there do not appear to be any major issues that would lead to objections from the Pentagon. “Both are active in defense communications, though Collins has a larger share. Both have imaging/IR products, though Raytheon has a larger product offering,” he wrote. “Collins provides large space imaging mirrors used in surveillance satellites but it's not clear to us if there is an overlap with Raytheon's classified space payload work.” The deal should create a mammoth defense contractor second only to Lockheed Martin. Raytheon already ranked number two on the most recent Defense News Top 100 list, with $23.5 billion in defense revenues, 93 percent of its overall revenue total; UTC has $7.83 billion in defense revenues, a mere 13 percent of its overall figures. However, that UTC number came before its acquisition of Rockwell Collins and its $2.28 billion in defense revenues, which will naturally increase United's overall number. The move comes after 18 months of major defense consolidation. In addition to UTC's move on Rockwell, there was the General Dynamics acquisition of CSRA, Northrop Grumman's acquisition of Orbital ATK, and L3 and Harris announcing in Oct. 2018 that they would combine to form what at the time appeared to be the seventh largest global defense firm. https://www.defensenews.com/industry/2019/06/09/raytheon-technologies-corporation-utc-raytheon-make-marriage-official/

• 

  23 mars 2022 | Information, Autre défense

  Canada’s vision for a resilient North American trade relationship

  Mary Ng outlines the benefits of the unique trilateral relationship between Canada, the United States, and Mexico.

• 

  17 septembre 2020 | Information, Autre défense

  Coronavirus has kept us close to home. It’s a helpful lesson for strengthening national defense.

  Justin P. Oberman Despite being warned, with impressive precision, about the dangers of so-called black swan events, America tends to ignore or downplay them because they seem remote, or the perceived financial, societal and political costs are too great. In the aftermath of 9/11, of Hurricane Katrina and other major domestic tragedies, we too often learn that our relevant capabilities have atrophied. Now, following perhaps the most devastating such event — the COVID-19 pandemic — the defense industrial base is actively seeking billions of dollars to prop it up without necessarily committing to making step-function leaps forward in a highly complex threat environment. And while keeping the thousands of small companies that support the defense primes alive is important, the Pentagon — flush with cash and a mandate to act quickly to react to the pandemic — should use this opportunity to refine its technology acquisition approach, in part by doing more to engage nontraditional defense firms. The reasons for bringing in new ideas for defense are clear. Just last week, the Department of Defense released its annual report to Congress on China, which states that “China has already achieved parity with — or even exceeded — the United States in several military modernization areas.” Even more concerning, DoD analysts describe China's military-civil fusion development strategy as “a nationwide endeavor that seeks to ‘fuse' its economic and social development strategies with its security strategies to build an integrated national strategic system and capabilities in support of China's national rejuvenation goals.” The United States doesn't need and shouldn't pursue a “fusion” strategy; rather, we need a better approach to strengthening the defense industrial base and engaging with innovators. The United States is at risk of losing its ability to manufacture critical national security technology thanks to a combination of byzantine domestic procurement processes, offshoring and overseas competitors. To counter these and other negative trends, the DoD needs a sustainable, continuous innovation model. In Silicon Valley, everyone from the biggest players to the youngest startups view working against or around slow, tired establishment organizations as almost a prerequisite to success (Uber vs. taxis, Tesla vs. legacy automakers, Amazon vs. everybody). Despite the Pentagon's attractive budget and important missions, many innovators are repelled by restrictive requirements, lengthy sales cycles, high costs of bidding and a deck often stacked in favor of large prime contractors. The DoD must throw open its doors to innovators and free itself to make bets; if it does, it will get more world-class tools for its mission owners. The department should: Make requirements less prescriptive, easier to understand and run two ways. Develop an outreach program for innovators that uses channels they're already occupying, in language they understand, with requirements that are compelling. Encourage two-way communication that surfaces non-obvious solutions to critical defense missions. At the Transportation Security Administration, we worked with an In-Q-Tel-backed company that was founded in Las Vegas to catch casino cheats; the Pentagon should look for similar outside-the-box opportunities. Engage substantively with private sector innovation experts. The best investors and executives back successful entrepreneurs, mentor them as they refine their offerings and support world-changing scale. The DoD needs these skill sets and should set up (unpaid) innovation mentoring boards. Insert flexibility into contracting and financing. To remove barriers to entry without sacrificing quality, the DoD should: Create “off-campus” labs to mitigate procurement and security clearance delays. Build on the work of Dr. Will Roper, the assistant secretary of the Air Force for acquisition, technology and logistics. to ensure innovators don't run out of funding. In what would be a great advancement and threshold change, work with Congress to arrange for private sector investment in key technologies to bolster programs of record. Lift government price and margin controls. Cost, often controlled through the anti-innovation technique of lowest-price, technically acceptable contracts, is not the key metric, particularly in emerging, dynamic technologies. What matters are outcomes and value. Restricting profit to a bureaucrat-calculated rate of 15 percent will drive innovative and nimble companies away from the DoD. Cost does not effectively incorporate other important metrics, including risk, prior investment and return on investment. Order quantities and frequency are also critical in determining reasonable costs, as these factors underpin business cases. It's not a coincidence that the world's largest, most innovative economy belongs to the same country that has the world's largest, most lethal military and is the world's most attractive target for emerging threats. The threat environment (intensified by the pandemic) makes clear that we need to change our approach; the state of our economy means that we need to start now. https://www.defensenews.com/opinion/commentary/2020/09/16/coronavirus-has-kept-us-close-to-home-its-a-helpful-lesson-for-strengthening-national-defense/