21 août 2023 | International, Aérospatial
Space Development Agency awards $1.5 billion for transport satellites
The 72 satellites are part of a constellation SDA expects will one day include hundreds of small satellites operating in low Earth orbit.
6 juillet 2020 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité
Opinion: Why Interest On Federal Debt Matters For Defense
Byron Callan June 30, 2020
The COVID-19 pandemic has stoked consternation that U.S. defense spending is going to be significantly pressured in the 2020s. Congress will likely stick to the $740.5 billion defense discretionary top line agreed to in last year's budget deal for fiscal 2021. But the combination of trillions more in federal debt from higher spending and lower tax receipts this year and next and the probability that there will be future federal spending to better prepare for pandemics raise a higher probability of defense spending pressure.
“Flat” was already the new “up,” but “flat” now may be a budget that does not keep pace with annual inflation. The fears may be that defense spending will decline in the 2020s after a couple of good years of largesse from Congress and the White House.
Despite trillions in additional deficits and federal borrowing in 2020-21, there is one bright spot that indicates less dire defense spending pressures than now perceived—the interest on the federal debt.
U.S. federal debt is comprised of debt held by the public and intragovernmental debt, which is owned by different federal trust funds, the largest of which is Social Security. As of May, total debt held by the public was $19.8 trillion, and intragovernmental debt was another $6 trillion. Often, these two sums are lumped together, but they should be treated separately. The interest paid on debt held by the public is dispersed by the Treasury in the form of outlays to the owners of that debt. The interest paid on intragovernmental debt is, in essence, interest the federal government pays itself.
The Office of Management and Budget (OMB), in its annual projections of outlays, breaks out these two components of interest outlays to show net interest outlays. This is mandatory spending, and so it has been paid along with the other mandatory and discretionary funding the U.S. federal government provides.
One of the silver linings of the pandemic has been the Federal Reserve's aggressive lowering of interest rates. This makes federal debt more affordable, much in the way that a lower interest rate on a home mortgage can make a place to live more affordable.
The OMB projections released in February showed net interest outlays of $378 billion for fiscal 2021 rising to $665 billion by 2030. One could take issue with the deficit projections behind these outlay projects, as they may have rested on GDP growth expectations that were too optimistic and nondefense spending cuts that were not going to be realized. However, dividing interest outlays on debt held by the public by debt projections implied an interest rate of 3% or more over the forecast period.
The pandemic has trashed those rate projections. Federal debt held by the public is offered in different maturities. Treasury bills, which mature in a year or less as of May, were 23% of the total debt held by the public. Treasury notes that mature in 1-10 years were 51%, and bonds that mature in 10-30 years were 12%. (There is another 10% of other Treasury instruments.)
Rates now are much lower, although clearly that would only matter for new debt that is issued by the Treasury. The rate on a 90-day Treasury bill is currently 0.13%. On a five-year note, it is 0.33%, and on the 10-year note, 0.69%. The 30-year note rate is 1.4%.
This implies that interest outlay projections should be declining, although new projections may have to wait until the White House releases its 2022 fiscal budget request and out-year projections, presumably in February-March 2021. Net interest outlays could be at least $100 billion less in 2022-23 than the February 2020 projections on higher debt but lower rates.
In the scheme of total federal outlays, which the OMB projected to be $4.8 trillion for 2021, $100 billion is not a lot, but it indicates there is a bit more headroom for defense spending and other nondefense discretionary spending than a focus on federal debt alone might suggest. Federal infrastructure spending could be one area of more traction in the 2020s, and the issue of social justice may also spur more demand for federal resources.
One outcome of the pandemic, however, will be to make defense expectations more sensitive to interest rate expectations. It is not too difficult to project scenarios with rising debt and interest rates that increase to more “normal” levels. The pandemic also underscores that the unthinkable should be given a bit more room on long-term projections. It is quite conceivable that a major military conflict, a massive natural disaster or another economic contraction could further add to federal debt in the 2020s.
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23 juillet 2020 | International, Aérospatial
Trilateral Tempest Expands Industrial Base
Tony Osborne Ninety percent of Britain's front-line combat aircraft are crewed, but British Defense Secretary Ben Wallace says he expects a “major reversal” of these proportions by 2040. Wallace's speech at the opening of a virtual Farnborough Airshow on July 20—a message reminiscent of the late Duncan Sandys' 1957 defense white paper that declared the manned fighter redundant and guided and ballistic missiles to be the future of Britain's defense—may hint at a radically altered Royal Air Force (RAF) with heavy fielding of swarming UAVs and other additive capabilities such as “loyal wingmen” dominating fleets. But Wallace's comments also touched on the trajectory for the UK-led Tempest Future Combat Air System (FCAS), which is targeted to begin to replace the UK's fleet of Eurofighter Typhoons from 2035. Air Chief Marshal Mike Wigston, chief of the Air Staff, said at the RAF's annual air power conference on July 15 that he intended any FCAS to be optionally manned. Sandys' defense plan sent reverberations through the UK aerospace industry, but the vision for the Tempest calls for a similar fundamental revolution. Saab spending £50 million on UK FCAS hub Technologies are being matured to support year-end business case submission BAE Systems says its factory of the future will subsume the need for heavy, fixed and long-lead tooling—halving production time compared with previous programs. And industry is looking to new players for cybersecurity technology from the banking world and materials technology from the automotive sector, companies from outside the typical defense industrial base. Two years since the announcement of Team Tempest—the industry consortium of BAE Systems, Leonardo, MBDA, Rolls-Royce and the British government's Combat Air Strategy that coalesced at the 2018 Farnborough Airshow—the group is growing for the first time, with the inclusion of Bombardier UK, Collins Aerospace, GE UK, GKN, Martin-Baker, Qinetiq and Thales UK. The additions to the team come in the form of a first wave of industrial agreements, with BAE hinting that more industrial partners will follow. Of the new partners, Collins announced it had been contracted by BAE to provide advanced actuation capabilities. Sweden's Saab announced also on July 20 that it is investing £50 million ($58 million) into the creation of an FCAS center in the UK. The facility will serve as a hub for the company's participation in the FCAS and represent Stockholm's first tentative steps into the venture. Saab does not name the Tempest specifically, with CEO Micael Johansson hinting that Sweden's involvement is focused more on the technology rather than the future platform. “Saab's FCAS strategy ensures that the technology is in place to support a long-term future air capability and also to support continuous upgrades of Gripen E for decades to come,” Johansson said. While the international partnership model for the Tempest has yet to be finalized, British officials have suggested that the partnerships could be agile and scalable. In other words, allowing nations to “partner in a way that suits them,” Richard Berthon, the UK Defense Ministry's Combat Air acquisition program director, previously told Aviation Week (AW&ST July 13-26, p. 52). Johannsson said nations looking to refresh their fleets with the current generation of fighters, like the Gripen or Typhoon, should not be concerned about the push to deliver the Tempest during the 2030s. “A strong joint partnership around a future combat air system will also guarantee Gripen and Eurofighter access to new technologies,” Johannsson said. Existing customers, he said, should see the FCAS as a “seal of approval as we safeguard continuous fighter development.” Until now, the work between the national partners had been on a bilateral basis. The aim was “to define our common objectives,” BAE Systems CEO Charles Woodburn says. But this work has now extended into trilateral studies that include “assessing how we can start to realize the huge potential for collaboration across our three nations,” Woodburn says. Although the talks are now trilateral in nature, the UK says it is still keen to see more international partners “join our flightpath to discovery,” Wallace adds. Industry is already beginning to think trilaterally, with GKN Aerospace in Sweden confirming it will work with Rolls-Royce in the UK and Avio Aero in Italy on feasibility studies for a future fighter jet engine. GKN states it was contracted in the first quarter of 2020 by Sweden's defense materiel agency, FMV, to conduct a study in collaboration with Rolls-Royce. Few details have emerged on the 60 technology demonstration programs currently being developed and matured by Team Tempest in support of the UK Future Combat Air System Technology Initiative (FCAS TI). Michael Christie, BAE's head of Future Combat Air Systems, says work on maturing the technologies ready to support the business case submission to the British government at the end of this year has seen the partners “at least achieve or exceed” the maturity targets set, doing so “at great pace” and providing “fundamental evidence to the business case.” “Every one of these [60] projects will deliver a UK, European or world first,” says Cecil Buchanan, the RAF Rapid Capability Office's chief scientist. https://aviationweek.com/ad-week/trilateral-tempest-expands-industrial-base
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23 octobre 2023 | International, Terrestre, C4ISR
Airbus lands $1.27 billion French air tanker upgrade, service deals | Reuters
Airbus said on Monday it had signed two contracts valued at 1.2 billion euros ($1.27 billion) to provide capability enhancement and in-service support of France's fleet of A330 MRTTs (Multi Role Tanker Transports).