28 janvier 2021 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité
Byron Callan January 26, 2021
The Biden administration probably will not unveil an outyear spending plan for the Defense Department until the late spring of 2021 at the earliest, and more likely it will come out with the fiscal 2023 budget submission in February 2022. The administration should, however, be commenting on some of the bigger changes as different reviews and assessments are completed before that budget plan is released.
Consensus now is that Pentagon spending will be flat at least in the first term of the Biden administration, though analysts are not clear on what this means. Will the Pentagon's budget be unchanged from the level that was appropriated for fiscal 2021? Will it be flat in inflation-adjusted terms, which means it would rise at 2% annually in current dollars? Or will the budget be flat in current dollars, which would entail a roughly 2% annual decline in Pentagon purchasing power, assuming inflation is 2%? Each would have different outcomes for the spending that would flow to contractors.
Defense optimists could argue that flat budgets historically have not lasted too long. There were periods in which budgets were flat over 2-4 years annually in the late 1950s, early 1960s and mid-1990s. Flat periods, however, were succeeded by growth—usually because of a crisis or a new military contingency.
No one has a working crystal ball that will show what is ahead for the 2020s. There are reasons to believe, however, that the 2020s are different. Although interest rates are at historic lows, the ratio of U.S. debt to GDP is at levels seen during World War II. There is pent-up demand for non-defense discretionary spending—notably for infrastructure, and an aging U.S. population will likely demand more health care and other “social” spending. “Endless wars” in the Middle East may temper Americans' willingness to engage in new overseas missions, unless a major provocation occurs that is akin to the 9/11 attacks. The flat budget period could last longer than the post-World War II era suggests.
Is “flat” good for contractors? That depends. Markets started to digest that U.S. defense spending was flattening in 2020. The largest U.S. defense contractors underperformed the S&P 500 in 2020 and are doing so again in the first days of 2021. The initial market verdict is that flat is not good.
The assessment might be true, but it is going to depend on two factors: how the Pentagon reallocates resources in a flat budget environment and how contractors change their strategies and portfolios.
A flat top-line defense budget could be positive if the Pentagon can successfully cut military personnel and operations and maintenance (O&M) spending. Both are tall tasks. Winding down operations in Afghanistan and the Middle East is not going to free up significant troop numbers, and in any event, both are apt to exert gravitational pulls from which the U.S. cannot easily break free. Global security risks are not going to allow the sort of force structure cuts that occurred at the end of the Cold War and the Korean and Vietnam wars. Readiness and training also will remain a priority in this environment.
Spending on military personnel and O&M that keeps pace with inflation may place even more pressure on investment. If those accounts grow at 1-2% annually, in a flat top-line period, that will put even more pressure on investment. Still, while there has been no indication so far, it is conceivable that the Biden administration will propose reductions in force structure and will attack O&M costs with more vigor. It will take 1-2 years at least to realize those savings, but they could be applied to modernize a smaller military.
For a number of years, the Pentagon attempted to retire older “legacy” weapon systems in order to fund new investment, but Congress has stymied efforts to muster out older Navy cruisers, aircraft carrier refueling systems and aircraft such as the A-10. The Defense Department could renew this line of attack, but it may be reminded of the old adage that repeating the same thing over and over and expecting a different outcome is the definition of insanity. The Pentagon will have to change its approach here by offering more incentives to states and districts that could be affected by the elimination of squadrons or units, and it has to be more forceful in confronting contractors whose net interests are harmed by such moves.
A final thought is how contractors' strategies might change. In 2020 and so far in 2021, outperformance was evidenced by small-to-midsize contractors that appeared better aligned with Pentagon investment priorities in artificial intelligence, autonomy, supply chain resilience and low-cost weapons. The largest contractors may be able to unlock value in a flat top-line environment if they can spin off segments that are stagnant or declining. Sprawling program portfolios are apt to perform more in line with market growth rates, and that is not a recipe for superior performance.
12 novembre 2021 | International, Aérospatial
From an ornithopter UAS to a $95 billion Boeing commitment, there have been some huge announcements at the Dubai Airshow over the years.Ensure you are across this years developments by keeping up to date with the 2021 show.
17 décembre 2020 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité
By: The Associated Press STOCKHOLM — Sweden's parliament on Tuesday approved a 40 percent increase in the defense budget for 2021-2025 because of tensions in the Baltic Sea region in recent years, with officials saying Russia is the main reason for the move. The 349-member Riksdag assembly approved the largest hike in 70 years, bringing the annual defense budget by 2025 to 89 billion kronor (U.S. $11 billion). Defence Minister Peter Hultquist told the assembly before the series of votes that “it is the largest investment since the 1950s.” The proposal was put forward in October by Sweden's two-party Social Democrat-Green Party minority government, and it received immediate backing from two smaller opposition groups. The government described it as sending a signal after Russia's 2014 annexation of Crimea, repeated airspace violations by Russian military aircraft in the neighboring Baltics and a military buildup in Russia's exclave of Kaliningrad, which sits across the Baltic Sea from Sweden. “There is much to suggest that Russia's military capabilities in absolute terms will increase throughout the next 10-year period,” the adopted proposal read. The plan will see the armed forces grow from the current 55,000 positions to 90,000 by 2030. Several disbanded regiments will be reestablished and the number of conscripts will increase to 8,000 annually, which is a doubling compared with 2019. The Navy will receive new equipment and there will be upgrades in armament. Sweden currently spends 1.1 percent of gross domestic product on defense. Guidelines issued by NATO, of which Sweden isn't a member, advise that members spend 2 percent, although many do not achieve that target. In December 2017, Sweden decided to establish the nation's first new military regiment since World War II — a unit of 350 soldiers based on the strategically important Baltic Sea island of Gotland. In the same year, Sweden also introduced a selective military draft for men and women, having previously abolished a men-only draft in 2010. https://www.defensenews.com/global/europe/2020/12/15/sweden-ups-defense-budget-40-due-to-regional-tensions/
31 juillet 2018 | International, Aérospatial, C4ISR
By: Kelsey Atherton Space is not so much hard as it is expensive. Satellites today are expensive machines, expensively built and expensive to launch, with the understanding that, once on orbit, they can work for years. That calculus assumes several eggs in every pricey basket, and as space moves from a home for military satellites to a domain where nations prepare for actual combat, building resilience in orbit means rethinking how satellites are done. It means rethinking costs in the billions and imagining them instead in the millions. And to the Defense Advanced Research Projects Agency's Paul “Rusty” Thomas it means creating a whole new ecosystem for payloads and launches. Thomas is the program manager for Blackjack, a DARPA initiative that wants to pilot a constellation of cheaper satellites for military communication, with the costs low, uplinks up and the resilience of the whole constellation baked-in. C4ISRNET's Kelsey Atherton spoke with Thomas about the program. C4ISRNET: There's a lot of interest in both low Earth orbit [LEO] and constellations of satellites. What is DARPA's specific goal with Blackjack? PAUL “RUSTY” THOMAS: Blackjack, as an architecture demonstration, will build a portion of a constellation, looking at about 20 percent of a fully proliferated LEO constellation. That's a range of 20 satellites, 20 percent of the 90 to 100 satellite constellation, which would give a ground user three to four hours per day or more of theater-level operations so that we could actually demonstrate what we're going to do with a full, fully proliferated 24/7 constellation that covers the entire Earth and gives global constant coverage and global constant custody. C4ISRNET: What was the logic behind accepting separate proposals for busses and payloads? THOMAS: Most exquisite spacecraft we built have been married to the bus and payload from Day 1. That's a wonderful model for exquisite spacecraft. But we're trying to build a proliferated LEO payload ecosystem — like the commercial commoditized bus ecosystem — that can match the numerous types of payloads. To do that you don't want to just show that one payload matches great and then move forward. That just gives you a great payload. To try and build that ecosystem out, you want to go to at least Program Design Review with the payload developers working to a generalized initial design covering numerous types of commoditized busses. Once you get deeper into the design phase, match that payload to a bus, which allows a large range of payloads to be developed. C4ISRNET: There's a lot of commercial interest in this space; does that pose any risk to deploying a new constellation? THOMAS: The goal of Blackjack is to prove you can leverage commercial approaches with potentially lower costs, lower cycle times, lower times for design and build. It also comes with the issue that we're not directing the approach to building the bus, we're not directing how the constellation is put together for these folks; therefore, the rest is getting the government itself to do that match and to put our systems into play in a way that marches in lockstep with them without directing their commercial elements will play. That brings risk. We have to learn how to do business a little different than it's been done in the past, and to move a little quicker than the government has in the past. C4ISRNET: So, there's no risk of LEO being too crowded to accommodate more constellations? THOMAS: No. Well, I wouldn't say no risk, there's always risk, the mega constellations that you're starting to see FCC filings for look like they're going to put hundreds, and some of them into the 10,000-plus range, and that's certainly going to be a challenge and it's going to be a risk. Fortunately, we have air traffic control systems on the ground that cover large numbers of aircraft in the air at any given time. We haven't actually taken that step into how to manage large numbers of spacecraft in space yet, but we believe that all the technology is there and it's just a matter of implementing an area where the government is going to be tracking what the commercial folks are doing. There's a risk — it's not major, space is big — but you absolutely need to track the spacecraft and make sure they can deorbit. But in terms of putting thousands or even tens of thousands of satellites into low Earth orbit, all of that seems very feasible and is not in the high-risk bucket. C4ISRNET: What's the rough timeline you're expecting for demonstrations? THOMAS: For the 20-satellite constellation, we plan to have the first two spacecraft that we have integrated to the commercial busses and the payload together ready by the end of 2020, with launch by early 2021. We will follow that in 2021 with the rest of the 18, once we've confirmed the first two are fine. We will have the full demonstration capability running late in 2021 with an expectation of theater-level autonomous operations from low Earth orbit in 2022. C4ISRNET: One argument for satellite constellations and against exquisite satellites is resiliency. How does that work here? THOMAS: You get a lower cost, the individual node becomes a bit expendable, you don't build your resiliency around the individual node, you don't try to protect that spacecraft to the nth degree like in exquisite billion-dollar-plus craft. If the Blackjack model works, spacecraft will be in the $3 million to $4 million range, $2 million to $3 million to put it into orbit. We're talking about a $6 million node, including the cost of getting it into space. Therefore, it's less than the cost of a high-end munition. The constellation itself becomes your resilient element. You can put your high-level availability, reliability and mission assurance at the constellation level instead of at the node, because of the numbers you're putting up. If one satellite has fallen, its replacement is coming over the horizon 10 to 15 minutes later. You have a different approach to resiliency, large numbers of spacecraft in play, which totally turns some of the counterspace elements on its ear. C4ISRNET: What counter-space elements might this be especially resilient against? THOMAS: You now have low-cost nodes, so a lot of the direct ascent type of methods out there no longer makes a lot of sense. Of course, you still have varied threats from non-kinetic and cyber. We still need to protect the constellation against all the other types of threats out there, so it probably helps the most on the kinetic side, but it certainly gives you lot of resilience in all the areas. C4ISRNET: What kind of communications presence will this enable? THOMAS: Blackjack is aimed at leveraging the new mesh networks being set up by these commercial companies. A user currently in the DoD might need to look up at two or three different options in space to actually talk and do communications in this space segment. Once we link up and do encryption, the user on the ground will look up and see hundreds or more potential network nodes overhead at any given point on the planet, North Pole to South Pole; it's going to drastically change how the DoD does communication. That is a bit independent of what Blackjack is going to do. If the commercial companies succeed and come out, that capability, call it raw gigabit-per-second class, not all of them it. But they all have many megabit data links from one point of the planet to another, at very low latency, 100-200 milliseconds, so you do really change the game for how any user, DoD included, does global communication. C4ISRNET: Is a desired end goal of Blackjack specifically a redundant spaceborne network that can function independently if access to internet on the ground is cut off? THOMAS: If you have a problem with your terrestrial network — whether it's a ground network system or point-to-point comms, fiber optics or others being interfered with — the space mesh network provides the ability to move the data up, move it through the space mesh, and move it back to the ground, without any other system being involved in that data transition. The switch network that Iridium has up right now, it's low bandwidth but a wonderful system in terms of moving data from one point to another on the planet through the Iridium gateways that DoD and its users have worldwide. Move that up to high broadband access, and not just two or three satellites overhead but dozens or hundreds, and it really does move us into a new realm. C4ISRNET: At what point in the program do bus and payload link? Is there a point where they're demoed together? THOMAS: In the [broad agency announcement] out right now, you can see we're looking for multiple payloads to go at least through phase one, potentially multiple buses to go through phase one. As we progress the programs through the preliminary design review into phase two and get critical design review, first two spacecraft built, we'll be selecting the ones to continue deeper and deeper into the program to match up and do the demo. We'll start with a wide range and narrow down to a smaller set to actually do the demonstration with a secondary objective of showing why a huge payload will work, why different types of payloads will be successful in this type of architecture, even though we've only got one or two of them. C4ISRNET: What does the future of Blackjack look like? THOMAS: We are looking at large numbers of types of payloads. We very much want to get into a rapid tech refresh cycle ... putting up payloads every two or three years that are newer version of the ones that have gone previously, have an open architecture standard so we can update over the air with better algorithms. https://www.c4isrnet.com/thought-leadership/2018/07/30/the-calculus-of-cheaper-military-comms-satellites/