8 janvier 2024 | International, Aérospatial
US Air Force logistics officer talks basing, drones in the Pacific
"We learned a lot of skills that were multi-capable back in the late 1980s that we are now dusting off."
2 avril 2020 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité
Opinion: Six Ways COVID-19 Could Change Defense Sector
Byron Callan
The coronavirus pandemic is going to be as consequential for defense and security as were the Sept. 11, 2001, attacks in the U.S. For the defense sector, there are multiple implications to ponder and possibly to begin to position for as these play out in 2021 and beyond.
Large contractors should fare relatively well in 2020, compared to other sectors. They will not see the demand destruction that is ripping through commercial aerospace and therefore are unlikely to experience financial duress. That alone may enable them to act strategically and aggressively in 2020 and beyond, although there are risks to weigh as well. Here are six changes to ponder:
First, a crisis the size of the COVID-19 pandemic is bound to spawn new government investment and organization to address future outbreaks. The Sept. 11, 2001, attacks led to the formation of the U.S. Department of Homeland Security and creation of the position of director of national intelligence. It's fair to assume there will be changes in the wake of the current pandemic. Some contractors already have federal services segments that address U.S. health care. Core skills they can bring are dealing with bureaucracies, technology and regulations. There should be new opportunities in 2021 and beyond from whatever changes are made to improve the national resilience and response to future pandemics.
Second, small and medium-size businesses are being stressed. The CARES Act in the U.S. may help somewhat, and changes in Defense Department progress payment rates could be another short-term relief. Large contractors might choose to vertically integrate to improve their fortitude against future shocks. Or there could be further consolidation, particularly of distressed suppliers.
A reintegration of defense and commercial aerospace is a third change that might emerge. The Raytheon-United Technologies merger may be a harbinger of this shift. The ramifications of the coronavirus crisis on the air transport and commercial aerospace sectors could lead to structural changes and a need for capital, particularly in commercial aerospace. If valuations remain depressed in 2020-21 in commercial aerospace, there could be more opportunity for defense contractors to reintegrate.
A fourth change could be to expectations for contractors. The model for U.S. defense since 1945 has largely been that the Pentagon pays for the bulk of research and development, and contractors can reclaim most of their own research and development as an allowable cost for which they are reimbursed. Operating margins have generally risen, compared to levels evidenced in the 1980s and before, and large contractors have in the last 15-20 years allocated most free cash flow to shareholders.
It is conceivable that this model will change in the 2020s. Operating margins may appear to be ho-hum compared to other sectors, but returns on invested capital are attractive.
If there is a greater squeeze on the Pentagon budget and demand for security remains steady or increases, this could compel the Pentagon to change expectations for contractor behavior. Could they be expected to take on more contract risk? Will they need to step up their own independent research and development funding or find more creative ways to access and apply technology to national security needs? On the flip side, could there be more emphasis on dual-use technology investment, as occurred in the 1990s, where research and development for defense should have commercial/civil benefits as well?
A fifth potential change is in security threats and national defense strategies. Some governments and regimes might come through this crisis with their positions enhanced, having overseen relatively mild disruptions and having been able to achieve quick economic bounce-backs. Others, however, will have failed this test, and they could see new political challengers (in democracies) or be overthrown or consumed by internal unrest from competing forces or mass movements that are emboldened by recent failures. The Middle East remains a likely place for these sorts of changes; Venezuela is another. The civil war in Syria and the fighting in Libya are current examples of how state collapse and regime challenge can drag in outside interests.
The U.S. National Defense Strategy that reoriented the Pentagon and contractors toward “great power” competition could be pulled in different directions depending on where fragilities emerge. Some allies may be significantly weakened, and that could bear on U.S. defense planning and export sales. It is not just the coronavirus that matters in this regard; the crash in oil prices is also a factor to weigh.
Finally, the coronavirus has turbocharged federal deficits and is sending federal debt to record levels. It may take weeks or months to assess just how much is going to be added, but there will be a fourth and possibly a fifth stimulus package in the U.S. Ultralow interest rates and the urgency of limiting social and economic damage and keeping the health care system functioning make this tolerable. But higher debt raises the risk in the 2020s that if rates increase, interest outlays could weigh on defense.
https://aviationweek.com/defense-space/opinion-six-ways-covid-19-could-change-defense-sector
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16 janvier 2020 | International, Terrestre
Sig Sauer nabs $10M Army contract for sniper rifle ammo
Jan. 15 (UPI) -- The U.S. Army has awarded Sig Sauer a $10 million contract to manufacture ammunition for use in the branch's bolt-action sniper rifle. "This award by the U.S. Army is validation of our state-of-the-art manufacturing that has resulted in the highest quality, and most precise, ammunition delivering on-target accuracy for snipers in the field," said Ron Cohen, Sig Sauer president and CEO. The contractor will manufacture MOD 0 .300 Win Mag ammunition at its facility in Jacksonville, Ark. The contract also funds production of MK 248 MOD 1 ammunition for the military. In 2011, the Army transitioned from the 7.62mm to the .300 Win Mag round, providing the new round to sniper teams in Afghanistan. The new round allows snipers to engage targets from 1,200 meters as opposed to the 800-meter range of the older M24 sniper system. https://www.upi.com/Defense-News/2020/01/15/Sig-Sauer-nabs-10M-Army-contract-for-sniper-rifle-ammo/7371579124524/
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25 mai 2020 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité
The US needs to rethink its overseas supply chain
By: Thomas Ayres As Americans respond to the COVID-19 pandemic, we have become acutely aware of the outsized impact of our dependence on China in the supply chain. Pharmaceutical companies learned key chemicals and minerals are exclusively made or mined in China. For instance, reports show China produces 97 percent of the antibiotics, 95 percent of ibuprofen and 91 percent of hydrocortisone consumed in the U.S. market. Hospitals also learned that while China produces 50 percent of the world's face masks, they are of dubious reliability. There is cause for concern with the quantity or quality of ventilators. In sum, we learned as citizens what we in the Department of Defense have known for some time: Our national security supply chain must be free from dependence on China. The DoD's concern for its supply chain is not new. Congress spurred activity over a decade ago by questioning the DoD's supply chain risk management, or SCRM, policies. The National Defense Strategy‘s recognition of a new era of strategic, great power competition further sharpened the DoD's focus, propelling recent efforts to enhance regulations and procedures in addressing supply chain threats. We are transitioning from analog to digital, with the goal of planes, ships, tanks and satellites all seamlessly sharing data — a lethal version of the ride-sharing app on your smartphone. Yet, even as the DoD builds this future, the threat of supply chain disruption and concerns about component quality within the electronic backbone are real. Counterfeit or planted microelectronic parts can be vectors for cybersecurity intrusions. Recently, for instance, the DoD voiced concerns that Chinese telecommunications giant Huawei's 5G solution provided back doors, purposefully or negligently, for data corruption, data extraction, system failure or worse. Similarly, SCRM policies have increasingly addressed the concern of intellectual property theft enabled by subcomponents designed to allow information to flow back to larger architectures. The COVID-19 pandemic is giving new meaning to that threat, and the risk of disruption to both raw and manufactured materials from abroad has become apparent. Our SCRM focus must broaden in response to COVID-19 to better address national production capacity and sustainability. Being able to assure access to the minerals, chemicals, subcomponents and components required to build weapon systems is essential. China supplies 80 percent of the rare earth minerals imported to the U.S., many of which are essential to electronic parts. Since 1933, the Buy American Act has required federal agencies, including the DoD, to purchase items manufactured in the U.S. Additionally, these items must be made from supplies mined or made in the U.S. The act is implemented by regulations requiring analysis of the components — where they are mined or made, and where they are assembled. Companies that falsify “Made in America” designations can be debarred from the federal marketplace. In July 2019, months before the pandemic emerged, President Donald Trump issued an executive order seeking to increase the minimum domestic manufacture thresholds above the current 50 percent floors. The pandemic now shows even more needs to be done. We must increase to President Trump's mandated percentages, and we must also analyze where each of the subcomponents are manufactured. This doesn't mean we need to back away from allied contributions or alliance-based weapon systems like the F-35 fighter jet, which benefits from the industrial cooperation of nine partner nations. But in light of COVID-19, it does mean that when we make risk-based and measured decisions to produce an alliance system, we program in several months' worth of component backlogs to allow continued production during future quarantines. The majority of our weapon systems are made in the U.S. by American companies with greater than 50 percent of component production and assembly done domestically. Yet, what is less clear are the composition of the subcomponents in the components themselves. Not recognizing the risks of the subcomponents equally jeopardizes the new reality of disruptions to our supply chain and risks of data extraction, degradation and spying, about which we have increasingly been concerned. Recently, I sought to buy a grapefruit spoon on the internet and found it exceedingly difficult to learn where the offered spoons were made. The harder it was to find, the more I suspected it was made in China. Perhaps Congress should pass a law making it easier to learn the source of manufacturing. Ensuring my access to an American-made grapefruit spoon is not nearly as vital as assuring our access to critical weapon systems, rare earth materials, and pharmaceuticals and medical supplies. A vital step is knowing the source countries of components and subcomponents. We must have deeper knowledge of the full supply chains of subcomponents, and how and where they are produced. Trust can only come once we know all that is required to understand our supply chains and we seek even greater focus in our new normal. Our security depends on it. Thomas Ayres is general counsel for the U.S. Air Force. https://www.defensenews.com/opinion/commentary/2020/05/22/the-us-needs-to-rethink-its-overseas-supply-chain/