Israeli, British firms to deliver unmanned vehicles for UK experimental program

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  4 août 2020 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité

  Defense contractor with billions in sales got millions in pandemic loans intended for small businesses

  By Aaron Gregg August 3, 2020 at 8:00 a.m. EDT A military equipment supplier that has been accused of fraudulently misrepresenting its size in order to benefit from privileges associated with being a small business has received a Paycheck Protection Program small business loan worth at least $2 million, public records show. Atlantic Diving Supply, a Virginia Beach, Va.-based reseller of specialized military gear, is the latest organization whose receipt of taxpayer-backed loans through the Paycheck Protection Program has raised questions about a program launched in early April to help sustain employment at small companies through the economic crisis. In late April, the Treasury Department retroactively clarified its rules after well-known restaurant chains, car dealerships and hotel companies reported receiving PPP loans. Several of them returned the loan funds following public uproar; others kept the money. The SBA has said it will audit all PPP loans above $2 million to determine whether the recipients were eligible. Representatives from the Small Business Administration and Atlantic Diving Supply did not comment on the company's receipt of SBA loans. The company's legal issues are detailed extensively in a report released Monday by the nonprofit Project on Government Oversight, known as POGO. A review of business data by POGO and the nonprofit Anti-Corruption Data Collective concluded that ADS was one of at least 27 PPP recipients estimated annual sales of more than $1 billion in 2019. Another 2,068 loan recipients cleared $100 million in sales last year, according to the analysis. Nick Schwellenbach, a senior investigator at POGO, questioned whether it's appropriate for ADS to receive small business coronavirus loans. Schwellenbach's investigation also found that two other firms allegedly tied to ADS ― including one that was named in a settlement with the Department of Justice ― separately received smaller PPP loans. “It's important that taxpayer funding reserved for genuine small businesses isn't siphoned off by companies that are not eligible,” Schwellenbach said. “As a top government contractor with revenues well over a billion dollars a year, it strains credibility that Atlantic Diving Supply is a real small business, especially given several recent settlements and law enforcement outcomes related to their alleged small business contracting fraud." Although it received a favorable ruling from the SBA as recently as November 2019, ADS's small business credentials have long been called into question. ADS started as a small, family-owned shop focused on the military diving community in Virginia Beach, which includes the Navy SEALs. It was transformed under the leadership of long-time chief executive Luke Hillier, winning its first major government contract in 2000. It grew quickly to meet an insatiable demand for military gear of all sorts in the years following 9/11. That fast growth became permanent business as the U.S. military presence in Iraq, Afghanistan and elsewhere dragged on for nearly two decades. At one point, ADS filed papers to go public, something that is usually the purview of large corporations. In 2015 it purchased Theodore Wille International, a military food and equipment supplier with offices in seven countries. Its business has remained healthy despite recent troop reductions. ADS received more than $3 billion in unclassified government contract dollars in 2019, procurement records show. That's more than some well-known, objectively large government contractors, including Bechtel, KBR and CACI. ADS has already cleared $1 billion in federal contract receipts in 2020 despite the economic crisis. As it has grown ADS's continued status as a small business status has been critical to its participation in the Defense Department's Tailored Logistics Support, or TLS program, a lucrative military supply line that is largely restricted to SBA-approved small and disadvantaged businesses. In recent years, ADS's official headcount has teetered close to the SBA's 500-employee limit for small-company designation, and the company has fought off repeated challenges to its size status. If ADS were declared “no longer small,” it would not only be ineligible for SBA coronavirus assistance, but would also be forbidden from competing on small business set-aside contracts that drive its business. In 2017, ADS settled federal allegations that it used a network of allegedly-affiliated companies to rig bids and fraudulently misrepresent its size. The Justice Department called the $16 million settlement “one of the largest recoveries involving alleged fraud in connection with small business contracting eligibility.” Hillier, who has moved on from the CEO role but remained the company's chairman as of July 20, according to a company filing, separately paid $20 million to settle federal allegations that he “violated the False Claims Act by fraudulently obtaining federal set-aside contracts reserved for small businesses that his company was ineligible to receive.” The settlements resulted from a Qui Tam lawsuit brought by whistleblowers. Two of the alleged affiliate businesses — Karda Systems and SEK Solutions — were named in a related case in which Ron Villanueva, a former state lawmaker from Virginia Beach, pleaded guilty to federal charges that he conspired to defraud the United States. Villanueva admitted that he and a friend pretended both companies were run by people who qualified for particular grants and drafted a misleading letter to the SBA that mischaracterized the degree to which one firm relied on other suppliers. ADS briefly lost its small business designation as a result of those allegations when a Defense Department contracting officer, concerned by ADS's settlement, requested a formal SBA review of the company's size status and its degree of affiliation with other companies named in the whistleblower lawsuit, according to documents obtained by The Washington Post. That SBA review determined that ADS was “other than small,” which temporarily blocked the company from bidding on set-aside contracts. But ADS successfully appealed that ruling, which was reversed because it relied on old financial records. Today the company continues to receive federal contracts designated for small firms. Because the settlements arrived at by ADS and Hillier did not include a determination of liability, the company has been allowed to keep benefiting from the SBA's various small business programs. Its most recent size determination, which found it to be a small business, was finalized in November 2019. https://www.washingtonpost.com/business/2020/08/03/defense-contractor-with-billions-sales-got-millions-pandemic-loans-intended-small-businesses

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  19 juin 2019 | International, Aérospatial

  US Air Force looks to fast track cash to Kratos Defense for more Valkyrie drones

  By: Valerie Insinna LE BOURGET, France — Things are looking up for Kratos Defense's XQ-58A Valkyrie drone. Fresh off its second flight, the U.S. Air Force is considering buying 20-30 aircraft for further experimentation, the service's acquisition executive said Monday. “I'm now looking at ways to do that and what the cost will be,” Will Roper told reporters on the sidelines of Paris Air Show, saying that the Air Force is looking for prototyping funds that it can access for a rapid procurement of those aircraft. The XQ-5A Valkyrie is an “attritable” drone, the word the military uses for an asset that can be reused but is cheap enough that a commander could use them aggressively and would expect — and be comfortable with — some losses in combat. What sets Valkyrie apart is not only its low price point, which Kratos estimates will be $2 million per copy in a production run of 100 jets or more, but also the aircraft's near supersonic speed, long endurance and maneuverability, which could make it a formidable partner for manned fighter jets. Once the Air Force buys additional Valkyrie drones, the idea would be to pair those unmanned aircraft with manned fighter jets. “Depending on what comes out of that campaign, the idea would be to look and do a program of record. You'd want to start spiraling the development,” Roper said. A decision on starting a program could be made as soon as fiscal 2021, and from there it would be only two to three years to begin production and fielding aircraft, he said. “I am really pleased we're getting strong buy-in, strong appetite at the pointy end for attritable systems by our pilots.” Roper's comments come after another milestone for the Valkyrie — the second flight demo, held June 11 at Yuma Proving Grounds. According to a Kratos release, the aircraft completed unspecified objectives over a 71 minute test. “With this most recent milestone, the readiness of the XQ-58A is accelerating and increasing the near-term application opportunities for the system,” said Steve Fendley, the company's president of its unmanned systems division. “I am extremely proud of our development, production, and test teams who continue to deliver successful results, in record time, on our comprehensive system level efforts — rare within the aerospace and defense industry." The Air Force Research Laboratory is partnered with Kratos to develop Valkyrie through the Low Cost Attritable Strike Demonstrator program, the service's effort to field a “Loyal Wingman”-style drone that can be flown alongside a fighter jet or other combat aircraft in manned-unmanned teams. But Roper has alluded to even more ambitious plans for Valkyrie or other attritable drones like it. Not only does the Air Force want to add sensors and weapons to Valkyrie, but it wants to implant artificial intelligence in the drone so that it can train and learn alongside pilots, eventually growing in skill and becoming able to respond independently to threats. Roper calls that effort “Skyborg” and in May told Defense News that the service was considering how to incorporate it with manned fighters like the F-35 and the F-15EX. “I don't want this to just be a laboratory project that lives and dies there in a petri dish. I want this to become a program,” he told reporters in March. “I want to see real, operational demonstrations within a couple years. And I will push them to be faster than that.” https://www.defensenews.com/digital-show-dailies/paris-air-show/2019/06/17/us-air-force-looking-to-fast-track-cash-to-kratos-defense-for-additional-valkyrie-drones/

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  20 septembre 2019 | International, Terrestre

  Tank-killing missile tests ‘Europe First’ weapons policy

  By: Sebastian Sprenger COLOGNE, Germany — The defense chiefs of France, Belgium and Cyprus have signed an agreement to pursue a common anti-tank missile meant for wider adoption in Europe — an effort that puts the spotlight once again on accusations of protectionism in defense programs here. The three defense ministers inked the cooperation deal for the Beyond-Line-of-Sight Land Battlefield missile project on the sidelines of a meeting of European defense chiefs in Helsinki, Finland, in late August. The goal is to develop a new “family” of missiles for integration on an “extensive variety of platforms,” according to the official project description. It would be operated by a “dedicated users' club” under a common European doctrine for such weapons. Pan-European missile company MBDA has claimed the project as its own since officials announced it under the Permanent Structured Cooperation framework, or PESCO, in fall 2018. The vendor wants to sell its Missile Moyenne Portée, or MMP, to other armies besides the French, eyeing a far-reaching partnership with Belgium on ground vehicles as a potential avenue. Aside from being handed a potentially lucrative market on the continent, products or concepts picked as PESCO leads can win sizable funding contributions from common coffers like the envisioned €13 billion (U.S. $14 billion) European Defence Fund, or EDF. MBDA executives have danced around the question of how they came to be the quasi-incumbent for the missile project, arguing that the company is the only eligible manufacturer because the weapon is wholly developed and made in Europe. At the same time, company officials coyly painted the selection of the MMP weapon as a decision still up in the air. That is because there is a formal solicitation process under the European Defence Industrial Development Programme with a closing date of Sept. 20. The process envisions weapons trials sometime in 2020 or 2021 funded by the European Union, according to an MBDA spokesman. “The next step is that we hope to achieve this trial campaign and demonstrate the capability to inform future acquisitions from European nations,” the spokesman told Defense News. The problem is, however, that several other European nations already have a different weapon in their arsenals: a variant of the Spike missile, made by Israel's Rafael and sold in Europe by Germany-based Eurospike. Over the summer, Estonia moved to buy the weapon under a €40 million deal, becoming what Rafael said is the 19th user within NATO and the EU. Germany, which seeks to drive Europe's new defense posture alongside France, also relies on Spike — both the man-portable and the vehicle-mounted variants. Eurospike officials at the DSEI defense trade expo in London, England, last week complained about being left out of the nascent European missile program. While the Spike weapon is entirely produced in Germany, it is based on Israeli technology, resulting in what one company executive in London estimated to be an overall ratio of roughly 70 percent European and 30 percent Israeli. According to still-emerging rules for access to European defense projects, only members of the European Economic Area are eligible for EDF funding and collaboration-inducing mechanisms promised by PESCO. As it stands, Britain — after it leaves the EU — and its wares likely would be in, but the Israel connection means the Spike missile is out. For now, Eurospike officials said they are closely watching the process. “I can't imagine that they will just take the market by storm,” one executive said of MBDA and its missile offering. With its industrial infighting, the anti-tank weapons serve as something of a test case for whether common projects set up under EU auspices can truly serve the purpose of increasing collaboration among member states. Industry insiders suggest that the raft of existing PESCO efforts — covering everything from battlefield communications to future naval platforms to ground vehicles — comes with a built-in potential for turf battles. In the end, it seems a good number of PESCO projects come with a vendor team pushing a specific product under the banner or European unity. And as the dust of Euro enthusiasm settles, insiders say, vendors that weren't part of the initial project considerations are bound to find out that defense cooperation on the continent is also about winners and losers. https://www.defensenews.com/global/europe/2019/09/19/tank-killing-missile-tests-europe-first-weapons-policy/