19 mai 2020 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité
t's harder to win business amid a pandemic, said one-third of industry respondents in a Defense One reader survey.
Federal contractors and private-sector workers say the coronavirus pandemic is hurting business and their ability to compete for government work, a new survey of Defense One readers has found.
More than 75 percent said COVID-19 had a moderate, major, or extreme impact on their company's day-to-day operations. About 22 percent said the virus had a minimal impact; 2 percent, no impact.
Nearly 60 percent of the respondents said coronavirus has forced them to slow or pause production. Nearly 40 percent said their business has seen disruptions to its cash flow.
Defense One commissioned the survey, which was conducted by Government Business Council, a division of Defense One's parent company, Government Executive Media Group. The survey was conducted May 8-14 and received 677 responses, yielding a 5 percent margin of error. Of those, 313 self-identified as a government contractor or private sector employee.
Related: 62% Disapprove of Trump's Coronavirus Response, Reader Survey Finds
In March, the Pentagon began paying its contractors more money up front so these large firms could send more money to the smaller companies that make up their vast and diverse supply chains. Collectively, companies have sent or pledged to send billions of dollars to their suppliers in a quicker fashion. Still, Ellen Lord, defense undersecretary for acquisition and sustainment, said last month that she was expecting a three-month slowdown in weapons deliveries as companies faced shutdowns and modified their processes and procedures to comply with social distancing and other guidelines.
About 30 percent of contractors and private sector workers said their business has experienced supply-chain disruptions.
While more than one-third of respondents said social distancing has hurt their company's ability to compete for government contracts, more than half said social distancing has made no difference in their company's ability to win contracts and 12 percent said restrictions have helped their company's competitive advantage.
More than 17 percent said their business has had to lay off employees; 18 percent said their companies have furloughed workers.
One-quarter of respondents said lack of access to senior officials and decision makers and the inability to attend networking events has affected their business. With conferences, trade shows and other in-person events on hold indefinitely, trade associations and event organizers have looked for virtual ways to replicate not only speaker presentations, but the sideline discussions and other types of networking that many consider essential to doing business in the defense sector.
“Your ability to pull somebody off the stage coming off a panel, the ability to ask a question in the question-and-answer period in this environment, is a little bit challenging,” Hawk Carlisle, a retired Air Force general who is CEO of National Defense Industrial Association, said in an interview late last month. “It is having an effect and I do believe the longer this goes on it will continue to have an effect.”
This week, NDIA, which represents 1,700 large and small companies and has 70,000 individual members, became the first to transform a large conference and trade show into a fully virtual conference. Typically, its SOFIC event is held in Tampa, near the U.S. Special Operations Command headquarters.
This year, the speeches and panel discussions were broadcast online. What's more, the organization facilitated meetings between companies and government officials. NDIA, which usually hosts dozens of events around the country each year, is considering new ways to hold its gatherings, including hosting hybrid events, with some people in attendance and others attending virtually, Carlisle said.
26 avril 2021 | International, Aérospatial
The Defense Department underestimated the complexity of migrating to the new Operational Data Integrated Network, the F-35 program executive officer said.
17 novembre 2020 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité
By: Eric Chewning and Frank Coleman III After years of growth, defense budgets will likely flatten (or decline). In such a financial environment, the U.S. Department of Defense will consider trade-offs between funding modernization, sustaining legacy equipment and preserving force structure. These hard choices will be informed by the DoD's strategic acquisition priorities, which will likely continue to reflect the need for innovation around leading-edge capabilities in areas like space, C5ISR, long-range precision fires, unmanned vehicles and artificial intelligence. To support these evolving mission requirements, the defense industry will need to ensure the industrial base is able to deliver technological advantage. This requires attracting world-class talent as well as the necessary financial capital to operate global industrial enterprises. Attracting these resources requires continued value creation through growth and return on invested capital improvements. But in a down budget environment, where is this growth to come from? While many will think organic growth is the best value-creating option (and often is), the answer also lies in augmenting a classic portfolio strategy with a systematic approach to transactions. Mergers and acquisitions are a proven growth accelerant for defense companies, and have generated superior shareholder returns and greater resilience for companies that have pursued it systematically. At first glance, this may simply seem like an obvious description of recent history. The aerospace and defense sector, after all, has seen rapid consolidation in the last five years, with deals worth $358 billion struck between 2015 and 2019, three times the total between 2010 and 2014. The problem for defense companies looking for more of the same is that this wave of consolidation now appears to have run its course. The combined market value of the top five defense hardware players is now more than four times that of the next five; so even as further mega-deals are theoretically possible, they will be increasingly difficult to execute, underscoring the value of programmatic M&A. Distinct from selective or organic deal-making approaches, programmatic M&A involves a company conducting two or more small or midsized deals per year, with an aggregate value greater than 15 percent of its market capitalization over five years, that align with their overall corporate strategy (which is hopefully linked to the “fast streams” of growth in the budget (see exhibit below)). These deals get choreographed around a specific business case, such as scaling or integrating vital digital capabilities, and are rooted in a disciplined appraisal of transactions. In the defense industry, programmatic M&A should be deployed against a strategy supported by the customer's need for innovation, lower costs and better mission outcomes for the war fighter. Our analysis shows that over the last decade, few defense companies took a programmatic approach to M&A. Those who did outperformed their peers in total shareholder returns by 10.4 percent. M&A was also an important key to resilience during the last defense spending downturn in 2007-2011: The top quintile of outperforming companies, as well as optimizing cash and flexing capex, used it as an opportunity to grow less cyclical parts of the business and build digital capabilities. Defense companies may be deterred by the current market environment, featuring stretched valuations, competition from institutional capital and a squeeze on mid-tier players. They may be cautious about the challenge of integrating smaller nondefense acquisitions into company processes and culture — a process that is easier to get wrong than right to be sure. The very complexity of these circumstances creates opportunities for bold players to differentiate themselves from their peers, align their strategies with national defense priorities and add significant value for shareholders. When done well, programmatic M&A can form a central pillar of their growth strategy. With a proactive approach to deal sourcing, holistic diligence, and in-house execution and integration expertise, companies can establish M&A as a critical capability and avoid the risks of reactive, one-off projects. In the challenging environment that confronts the defense industry today, those who act boldly will succeed in creating enduring businesses that can adapt to the evolving needs of the national defense. Eric Chewning and Frank Coleman III are partners at McKinsey and Company. Chewning previously served as chief of staff in the Office of the Secretary of Defense, and before that as the Pentagon's industrial chief. https://www.defensenews.com/opinion/commentary/2020/11/16/why-defense-firms-need-to-get-systematic-about-ma-big-and-small/
24 septembre 2020 | International, Aérospatial, C4ISR
Steve Trimble Developing larger and longer-ranged fighters, weaponizing the Boeing KC-46 fleet, and possibly fielding a new type of unmanned, small and stealthy tanker are all now in discussion by U.S. Air Force leaders, assistant secretary of the Air Force Will Roper said on Sept. 23. As the head of acquisition, technology and logistics, Roper said he and the new chief of Air Mobility Command, Gen. Jacqueline Van Ovost, are “excited” now about the direction of the long-troubled KC-46 program, as the Air Force and Boeing continue to finalize the Remote Vision System 2.0 upgrade. The KC-46's turnaround, Roper said, is allowing acquisition and mobility officials to turn their attention to addressing another Air Force refueling problem: How to solve a yawning gap between refueling capacity and operational need for inflight refueling, especially at the forward edge of a ring of contested airspace, where large and, for now, relatively defenseless aircraft such as the KC-46 are most vulnerable. Building a more survivable and responsive air refueling capability that can be used in a contested war zone was the focus of a meeting this week between Roper and Van Ovost, he said. “One of those next strategic questions for the Air Force is going to be can you defend a tanker against an onslaught of fighters who know that every tanker you kill, it's like killing a lot of fighters or bombers or drones that it supports,” Roper said. Roper prefers not to take a one-size-fits-all solution, such as a single major new acquisition program that buys only one type of aircraft. Instead, the Air Force should evaluate the solution to the contested aerial refueling problem as an architecture, with multiple options that can be dialed back and forth. One option for reducing demand on tankers is a new fighter aircraft that is designed to carry more fuel. “Maybe having [the] small, currently sized fighters is not the way to go in [the] future,” Roper said. “And since we're all abuzz with digital engineering and thinking about what the future fighter force could look like, thinking about bigger fighters is a natural question.” Another way to make the KC-46 fleet more survivable, and thus operate closer to the forward edge of contested airspace, is to weaponize the aircraft, he said. “We don't put weapons and sensors on tankers to shoot down aircraft, but the current KC-46 is a big airplane with the ability to mount sensors and weapons under the wings,” Roper said. “We just don't do it because we can use a fighter combat air patrol to defend high-value assets.” The Air Force also may need a different kind of tanker in the future, he said. Two options are possible: A larger aircraft than the KC-46 that could carry more fuel, but needs to stay farther away from potential threats, or much smaller, unmanned and stealthy “micro-tankers” that could operate much closer or even inside defended airspace, Roper said. “I expect that as we really look at airpower in the truly contested environment that we'll be looking at fuel very strategically,” Roper said. https://aviationweek.com/defense-space/aircraft-propulsion/usaf-discussing-larger-fighters-weaponized-kc-46-roper-says