19 décembre 2024 | International, Naval
India commissions Russian-built warship amid enduring ties with Moscow
India has been trying to diversify its weapons portfolio, as Russian-made equipment permeates the country's armed forces.
2 avril 2020 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité
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
19 décembre 2024 | International, Naval
India has been trying to diversify its weapons portfolio, as Russian-made equipment permeates the country's armed forces.
11 novembre 2024 | International, Terrestre
Repkon USA - Defense has won a contract action with a ceiling of $435m for domestic trinitrotoluene (TNT) production from the US Army’s Joint Program Executive Office Armaments & Ammunition (JPEO A&A) and US Army Contracting Command - Rock Island.
21 octobre 2018 | International, Aérospatial
By: Sebastian Sprenger COLOGNE, Germany — French procurement chief Joël Barre met with his Swiss counterpart Martin Sonderegger this week for bilateral talks on a multibillion-dollar Swiss air-defense program and other defense topics. The Oct. 15 gathering in Switzerland was the first high-level meeting between the two procurement organizations since Barre took office in August 2017. It follows France's recent acquisition of an initial batch of PC-21 trainer aircraft, made by Swiss manufacturer Pilatus Flugzeugwerke. The visit comes as French companies Dassault and MBDA each await the fate of their offerings in the upcoming Swiss “Air 2030” program, valued at more than $8 billion. The effort amounts to a complete revamping of the neutral country's air-defense and air-policing capabilities, with roughly $6 billion envisioned for a new fleet of fighter aircraft and $2 billion for ground-based defenses. The Swiss government over the summer invited bids from Dassault for its Rafale jets, and from MBDA and its parent joint venture Eurosam for the SAMP/T air-defense weapon. Also in the running for the aircraft portion are Airbus and its Eurofigher Typhoon, Saab and its Gripen E, Boeing with its F/A-18 Super Hornet, and Lockheed Martin with its F-35A. Vendors were asked to submit pricing options for a fleet of 30 or 40 aircraft. In the ground segment, MBDA's competitors include Raytheon's Patriot system and Rafael's David's Sling. A spokesman for Armasuisse, Switzerland's defense procurement arm, told Defense News that similar bilateral meetings would be held with other governments whose companies have a stake in the Air 2030 program. “We talk to all governments,” said the spokesman. Meanwhile, the “competitive dialogue” phase of the program is in progress, which means the Swiss government engages in the complicated game of answering contractors' questions about programmatic details – some individually, some directed at the whole group. Companies are expected to deliver their offers by February. Asked what types of questions the procurement chiefs discussed this week, the Armasuisse spokesman said, “Of course there were questions, but we don't make those types of conversations public.” Swiss government officials are in the midst of sifting through feedback from political parties, trade unions, and regional governments on the best path toward making Air 2030 a reality. The key question for proponents is how to convince the population, under the rules of Switzerland's famous direct democracy, that the bulk sum of more than $8 billion is worth spending while leaving the decisions on hardware types to the government. https://www.defensenews.com/global/europe/2018/10/17/swiss-french-procurement-chiefs-meet-amid-high-stakes-air-2030-race