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  29 octobre 2019 | International, Aérospatial

  Does major joint military procurement really work in the Baltics?

  By: Aaron Mehta WASHINGTON — On paper, the Baltic nations appear to have closely aligned defense modernization needs that make the joint procurement of advanced military equipment a no-brainer. After all, Latvia, Estonia and Lithuania have historically shared national interests, are currently facing a similar threat from Russia and each have relatively small defense budgets. Joint procurement would drive down costs for large defense articles by allowing the smaller Baltic nations to buy in greater numbers. It would also allow the countries to share maintenance responsibilities, which would save money. And it would drive greater interoperability in countering an adversary's simultaneous attack all three nations. But then there's the reality of the situation. “I think there are many misperceptions on Baltic integration,” Janis Garisons, state secretary for the Latvian Ministry of Defence, told Defense News during a September visit to Washington. “I think this is a little bit of a wrong perception that there is a lot of added value in those common procurements.” Garisons, the No. 2 civilian at the ministry, said he is not against joint procurement efforts, but believes such initiatives work best when purchase ammunition, small arms, or chemical, biological, radiological and nuclear defense equipment — purchases already in the works among the European neighbors. But for major defense articles, the legal and logsitical challenges of coordinating a trilateral contract, combined with a lack of major savings, means it might not be worth it. “We do common procurements when it's possible, but I have to say, I haven't seen much savings on those because even if you combine all three numbers, it's not like the U.S. buying together with the U.K. — thousands and thousands. It is still numbers that are very small,” Garisons said. Lithuania's vice minister for defense, Giedrimas Jeglinskas, agrees that joint procurement of major defense articles may never be feasible among the three Baltic nations. “Joint procurement, multinational procurement — I don't think it exists that much in the world,” Jeglinskas told Defense News during a visit to Washington in October. “Most of the programs out there are joint development. But when you talk about something like three-country procurement, it has been really hard for us to achieve.” Like Garisons, Jeglinskas said smaller transactions have proven successful, specifically the joint procurement of mines with Estonia and gas masks with Latvia. But even then, “the syncing of the budgets and the procurement plans for each country [is difficult]. Say we are ready to buy gas masks this year, but the Estonians may buy them two years ahead. And that's just the small things.” Kusti Salm, the director of the Estonian government's Centre for Defence Investment, told Defense News that joint procurement among the Baltic states is challenging given the need to sync up defense budget cycles, noting that “the amounts we procure are small and do not always bring us the economies of scale.” While the idea of joint procurement is popular, there is a “genuine disconnect” between the idea and the reality, according to Chris Skaluba, a former Pentagon official who is now the director of the Atlantic Council's Transatlantic Security Initiative. Skaluba points to two reasons for this: The first is that while the Baltic states are concerned about Russia, both Latvia and Estonia are more directly concerned with the threat of “little green men” — a reference to masked soldiers in green uniforms who led Russia-backed separatists in the beginning of the conflict in Ukraine. The concern steps from the high populations of ethnic Russians in Latvia and Estonia. In response, those two countries are focuses on homeland defense, whereas Lithuania is focused on resisting a direct Russian invasion — an approach that requires a different set of equipment. Secondly, America's famously convoluted security cooperation process makes trilateral procurement from the Western ally tricky. Small purchases of ammunition or night vision goggles are doable, but the more advanced the gear, the higher the costs and the stricter the regulations. Throw in three separate national budget cycles and the process “can be daunting and just not worth the squeeze when you're through with all that work,” Skaluba said. “Do I think all sides could be more determined and find creative ways to do this? I do. I think maybe something that is technically difficult but not super expensive, like unmanned aerial vehicles, would be a good test case,” Skaluba said. “But I'm also sympathetic that because of how regulations work, the congressional requirements, having to work through [the U.S. Department of] State and the Pentagon, any major purchase is difficult. Trying to do that times three is three times as hard.” National priorities The question of maintenance is another issue for joint procurement in Garisons' eyes. The idea of having shared maintenance facilities spread across the area — for example, one tank depot in Lithuania and one helicopter depot in Estonia to service all three Baltic nations — creates vulnerabilities during an invasion, he said. “I would be very cautious assuming that we will be able to freely import, to bring everything, all supplies needed. Our goal is to ensure that all the basic things, like small arms, ammunition, the maintenance of vehicles, the maintenance of major equipment — that can be done locally,” he said. “For operational reasons we can't have shared maintenance because during wartime we will not be able to bring vehicles, for example, to any other state. “It complicates common procurements because it is not so easy to agree on joint procurements, where the maintenance base will be held and other issues. For us, I think of paramount importance to have a maintenance base.” Ultimately, Latvian officials and their regional counterparts are making informed decisions about their respective country's security, Skaluba said. “These are all really serious governments. They really feel a threat. They know precisely how they think this would work in a crisis situation and what they need to have available to them,” he said. “At a strategic level, of course it [joint procurement] makes sense, but if you're a politician or defense planner or minister of defense, your first responsibility is to defend your country. And of course you want to make sure you have resources available to you.” While skeptical of joint procurement efforts, Garisons was supportive of joint education and training across the region, calling Baltic military cooperation “as strong as any you can find.” He noted that the three nations share a high-level military education center, the Baltic Defence College in Tartu, Estonia. Estonia's Salm considers interoperability among the Baltic states critical to successful joint procurement efforts. “Defense in Estonia cannot be separated from defense in Latvia and Lithuania, as we form a single region from the military point of view,” he said. One example of that raised by both Salm and Garisons is the creation of NATO's Multinational Division North, a headquarters operation organized by Latvia, Estonia and Denmark. Garisons called it “the first attempt when we will have joint command structure, which will be able also to feed into the NATO command structure.” The command-and-control aspect of joint operations is vital, he added. A pair of major exercises in Latvia toward the end of the year will serve as test beds for the NATO division, which is expected to reach initial operational capability in early 2020. https://www.defensenews.com/global/europe/2019/10/28/does-major-joint-military-procurement-really-work-in-the-baltics/

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  29 avril 2019 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité, Autre défense

  Scrutiny over Pentagon official’s Boeing ties highlights defense industry consolidation

  By SAMANTHA MASUNAGA The year was 1989. The Pentagon was under the command of President George H.W. Bush and Defense Secretary Dick Cheney. And aviation giant McDonnell Douglas Corp. was riding high as the top federal contractor, grabbing 4.6%, or $9.15 billion, of all federal contracting dollars. The next two largest contractors, General Dynamics Corp. and General Electric Co., raked in about 4% and 3.4%, respectively. Thirty years and many acquisitions later, Pentagon spending has grown far more top-heavy. Today, Lockheed Martin Corp. and Boeing — which bought McDonnell Douglas in 1997 — together reaped almost 15% of total U.S. government contracting dollars in fiscal year 2017, according to the most recent federal numbers. The two aerospace giants are the only makers of fast combat jets in the U.S. and are the dominant players for military transport aircraft. The concentrated power of big defense companies became an issue two years ago when longtime Boeing executive Patrick Shanahan was confirmed as deputy secretary of Defense. Then in December, President Trump named him to serve as acting Defense secretary. After a monthlong ethics investigation into allegations that Shanahan promoted Boeing while slamming rival Lockheed Martin, particularly in discussions about its F-35 fighter jet contract, the Pentagon's office of inspector general concluded Thursday that Shanahan “did not promote Boeing or disparage its competitors.” “We did not substantiate any of the allegations,” the report said. “We determined that Mr. Shanahan fully complied with his ethics agreements and his ethical obligations regarding Boeing and its competitors.” Shanahan is considered a leading candidate for permanent Defense secretary. The question of possible favoritism toward Boeing had also been raised by some when the U.S. Air Force, in its 2020 budget, made a surprise request to purchase F-15X fighter jets, an update of that company's fourth-generation jet. The Air Force, Navy and Marine Corps have all made major commitments to the F-35, Lockheed Martin's more advanced and pricier fifth-generation fighter. The inspector general report said the Pentagon's mix of fourth- and fifth-generation aircraft was a decision made by former Defense Secretary James N. Mattis before Shanahan's confirmation to the department. A Defense official told trade publication Defense News that the decision was bolstered by concerns about keeping “multiple providers in the tactical aircraft portfolio.” But there was no contract competition based on a set of defined requirements — the way business typically works in the industry, said Richard Aboulafia, aviation analyst at market analysis firm Teal Group. “It's a duopoly structure business with a lot at stake,” he said of fast combat jet manufacturing. “It's amazing that no one considered the optics here.” In some cases, the military has encouraged monopolies. In 2006, Lockheed Martin and Boeing got government approval to form United Launch Alliance, a joint venture set up specifically to launch national security satellites. The venture was proposed after the companies argued there were not enough launches to sustain two competitors. “The market is more concentrated,” said Mandy Smithberger, director of the Center for Defense Information at the Project on Government Oversight, an independent watchdog group. “You see the government making decisions thinking about how it will impact industry probably more than they should be.” Still, when President Reagan was in office, there were a number of major manufacturers of tactical military jets — Northrop Corp., Grumman Corp., Boeing, McDonnell Douglas, and General Dynamics, to name a few, Aboulafia said. But as the Cold War ended in the 1990s, defense funding dried up, leading to major aerospace mergers, such as Lockheed and Martin Marietta, and Boeing's acquisition of Rockwell International's aerospace business and McDonnell Douglas. A push for commonality among the Pentagon's planes also led to the fewer numbers of tactical military jets. The idea was that using similar aircraft would lead to savings in development and production costs, Andrew Hunter, director of the defense-industrial initiatives group at the Center for Strategic and International Studies think tank, said in an email. As a result, the share of federal defense contracts awarded to the top largest private companies increased to 31.3% in 2000 from 21.7% in 1990, according to a National Bureau of Economic Research working paper on the effect of 1990s-era defense industry consolidation. In 2017, the share of the top five reached 35%, according to federal data analyzed for that paper by Stanford University researchers. The paper concluded that those mergers resulted in a less competitive procurement process. But it did not find evidence of a significant increase in acquisition costs for large weapon systems, said Mark Duggan, director of the Stanford Institute for Economic Policy Research and co-author of the paper. As the industry gets more concentrated, it can lead to concern that “there's only one or two potential contractors for a certain product, and then you may not get the kind of competitive outcome you want,” he said. The consolidation process hasn't slowed, driven by the perceived need to compete for more and bigger contracts. Last year, Northrop Grumman Corp. acquired spacecraft and rocket motor manufacturer Orbital ATK Inc. Months later, military communications firms L3 Technologies Inc. and Harris Corp. announced their intent to merge. Although acquisitions and mergers can lead to greater efficiency, they can also have a detrimental effect on product innovation, said Aboulafia of Teal Group. For example, he said, as aircraft manufacturers consolidate, clean-sheet designs may be more of a rarity in the future as there are fewer design teams in the industry from different companies. For Boeing, “in terms of designing a clean-sheet fighter jet, it's been many, many, many years,” he said. In 2017, Lockheed Martin won more than $50 billion in total federal contracting dollars, making the Bethesda, Md., company No. 1 on a list of the top 100 federal contractors, according to federal procurement data. Boeing was a distant second with more than $23 billion. When narrowed to weapon acquisition contract dollars in fiscal year 2017, Lockheed Martin's individual piece of the pie totaled about 17%, with Boeing further behind at about 7.5%, according to federal data analyzed by the Center for Strategic and International Studies. News of the Defense Department ethics investigation came after watchdog group Citizens for Responsibility and Ethics in Washington sent a letter to the acting Defense Department inspector general, asking him to investigate allegations that Shanahan had boosted Boeing while working in the Pentagon. The letter includes a description from a Politico story published in January, in which Shanahan allegedly criticized Lockheed Martin's work on the F-35 joint strike fighter program, saying it “would be done much better” if Boeing had won the contract. In that article, an unnamed former Pentagon official told the news organization that Shanahan said during a high-level meeting that Lockheed “doesn't know how to run a program.” The inspector general's report said none of the witnesses interviewed said they heard Shanahan praise Boeing in meetings or discussions or make disparaging remarks about Lockheed Martin. Shanahan told the inspector general's team that he had never praised a Boeing military product and that he had said “program management on the F-35 is inadequate.” Shanahan's Boeing career spanned more than 30 years, during which he led its missile defense systems and military helicopter units. He also served as senior vice president of the company's commercial airplane division and is known for his work on Boeing's 787 Dreamliner program, which was behind schedule when he first took the helm. Boeing declined to comment this month on the initiation of the ethics investigation. The company referred to a statement it made in January, saying Boeing officials had not spoken to Shanahan about its programs during “his entire Pentagon tenure” and that the company “adheres to and respects Acting Secretary Shanahan's decision to recuse himself from company matters.” Shanahan isn't the first industry executive to lead the Defense Department. Under President Eisenhower, Defense Secretary Charles Wilson joined the Pentagon after serving as chief executive of General Motors, which made military vehicles at the time. Other defense industry brass have also joined the Pentagon over the years, though in lower roles. Analysts say the Pentagon could benefit from having a leader who understands how industry works, and who has been on the other side of the negotiating table and can avoid being tricked. And the Defense secretary typically works less with industry representatives than deputies do. “Secretaries aren't making a lot of decisions on individual contracts,” Smithberger said. “They're setting the priorities for the department.” But the potential conflicts may be “hard to escape,” said Loren Thompson, defense analyst at the Lexington Institute think tank, which receives funding from both Boeing and Lockheed Martin. “Boeing is so big that almost every discussion of strategy, budgets or programs bears upon its interests,” he said. https://www.latimes.com/business/la-fi-boeing-lockheed-shanahan-20190426-story.html

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  7 novembre 2023 | International, Aérospatial

  US Army says it needs $3 billion for 155 mm artillery rounds and production | Reuters

  The U.S. Army needs Congress to approve $3.1 billion to buy 155 millimeter artillery rounds and expand production to quickly replace stocks depleted by shipments to Ukraine and now Israel, an Army official said on Tuesday.