Nouvelles

Bombardier recently announced that in light of provincial shutdowns by the governments of Ontario and Quebec, the OEM would be suspending production of its business aircraft, effective at the end of the business day on March 24. The production halt will also include its rail operations and will stay in effect until at least April 26. On March 23, both Ontario and Quebec announced the shutdown of all non-essential work within the provinces to “flatten the curve” of the spread of COVID-19. Ontario's shutdown is poised to last two weeks, while Quebec's will last until at least April 13. Bombardier's line of Challenger aircraft, along with a number of aircraft components, are produced in Quebec at sites in Dorval and Mirabel, while most of the company's Global line — including the Global 5500, 6500 and 7500 — are produced at the company's Downsview facility near Toronto, Ont. The company said in a statement that all employees impacted by the shutdown will be placed on furlough, while Bombardier's CEO Alain Bellemare, along with its senior leadership team, have agreed to forgo “board compensation” for the rest of 2020. “Since the coronavirus outbreak, the company has been focused on keeping our employees safe, serving our customers to the best of our ability during these difficult times and taking the necessary actions to protect our business for the long term,” said Pierre Beaudoin, chairman of Bombardier's board of directors, in the statement. “In addition to the actions announced today, Bombardier has cut all discretionary spending, is continuing the work on closing the previously announced transactions and is pursuing additional measures to enhance liquidity.” According to Reuters, employees at Bombardier's Downsview facility were sent home early on March 23 after a contractor tested positive for the coronavirus. The worker had gotten sick a week earlier, and had stopped going into work and has since received the positive test. In the same statement announcing the production halt, Bombardier also announced it will be suspending its financial outlook for 2020. Undoubtedly a tough turn of events for the Canadian manufacturer, who have made recent strides to help combat the company's overwhelming debt. Earlier this year the company announced the sale of its stake in the C Series with Airbus (now named the A220 program), and the sale of its rail division to the French company Alstom. https://www.skiesmag.com/news/bombardier-suspends-canadian-operations

The Aerospace Industries Association of Canada issued the following letter to the Canadian government, asking to be declared as an essential service during the COVID-19 crisis. Dear Prime Minister and provincial Premiers, Canada's aerospace sector plays a critical role in Canada's overall economy and continues to do so even during this current COVID-19 crisis. Employing nearly 215,000 people, including jobs in manufacturing, technical trades, and management, we have built world-class capability and capacity when it comes to high-value, innovative aerospace products and series. AIAC members operate in all regions of the country, offering products and services to Canada and indeed the entire world. Home to leading aviation and space companies, Canada is a world leader in producing and servicing all aspects of the global aerospace, defence and space industry. It is also a sector that can, and will, play a significant role in Canada's economic recovery, if allowed to do so. The unprecedented Coronavirus (COVID-19) health crisis is resulting in difficult decisions, including shutting down parts of our economy that are not deemed essential. However, Canada's aerospace industry ensures the safe transport of products and services necessary in times of crises, and also products and services required for maintaining critical infrastructure such as satellite systems in space and defence infrastructure. Aerospace businesses must have the option to remain open to support the flow of these goods and services. Therefore, the Aerospace Industries Association of Canada (AIAC) calls on the government, and the provincial premiers, to declare the aerospace industry as an essential service. As this uncertain global situation continues, AIAC and its members are in contact daily with many of your ministers and their officials. We are in this together and have indicated our full support. We are actively engaging with our members and working closely with officials at the department of Innovation, Science, & Industry and Economic Development and Small Business, Export Promotion and International Trade to determine how we can best support the critical need in terms of items and supplies required to combat the virus. Prime Minister and Premiers, as you take further action to prevent the spread of the virus, please allow aerospace to stand with you and continue our vital contributions to the safety and security of Canadians, and indeed the world. https://www.skiesmag.com/news/aerospace-industry-calls-for-essential-designation

Tony Osborne Post-Brexit Britain is taking its first steps toward understanding its place in the world and the military capabilities it may need to ensure it can hold onto that status. A review, described by Prime Minister Boris Johnson as the most extensive of its kind since the end of the Cold War, is examining the UK's foreign, defense, security and development policies. And it is proceeding despite the challenges and costs surrounding the COVID-19 pandemic. Although it will examine the work of several government departments—notably the Foreign Office, the Defense Ministry and the Department for International Development—considerable focus is likely to be on defense. It has the largest budget of those under the microscope and an oft-criticized procurement process that some in government are eager to overhaul. The process will run in parallel with the government's comprehensive spending review. That assessment decides UK government spending for the next three years and will deliver its findings potentially as early as this summer. Some critics argue that is simply too soon for a thorough analysis of Britain's future defense needs. “If you are to have a strategy that is worth the name, you must address ends, ways and means together. . . . If you do not do the whole package, including the money, together, then you do not have a strategic review,” Jock Stirrup, a former chief of the Royal Air Force (RAF) and UK Defense Staff, told parliamentary defense committee hearings on March 17. The 2020 review represents a break from the traditional defense-led Strategic Defense and Security Review (SDSR) usually held every five years. Some analysts contend the 2020 edition could shape defense capabilities for decades to come. Jack Watling, Land Warfare research fellow at the London-based Royal United Services Institute (RUSI) says the review would have to make “hard choices” but that these would “determine the trajectory of the UK's defense capabilities for a generation.” He notes that for a post-Brexit Britain looking to expand its trading and security partners, future conflicts may be difficult to avoid. “Security and trade partnerships are closely intertwined. . . . If ‘Global Britain' means diversifying our economic partnerships, it will be necessary to build meaningful security ties as well,” Watling says. The UK must look at its role in the Euro-Atlantic alliance and in the Great Power competition, in addition to other global issues and homeland security, Defense Minister Ben Wallace told Parliament. The review will also “place prosperity and manufacturing at its heart,” he added. The assessment comes at a challenging time for Britain's defense and its equipment-procurement plans. The National Audit Office recently warned that for a third consecutive year there will be shortfalls in the budget. The ministry's plans call for the spending of £183.6 billion ($214 billion) over the next 10 years, equivalent to 42% of the ministry budget during that period. Auditors say the Defense Ministry has a shortfall of at least £2.9 billion over that period, but this could be as high as £13 billion. Although the UK is expanding its intelligence, surveillance and reconnaissance (ISR) capabilities with the upcoming arrival of the General Atomics Protector unmanned aircraft system and deliveries of the Boeing P-8 Poseidon maritime patroller—two of which have already arrived—capability gaps in the ISR mission are imminent. The planned retirement of the RAF's long-suffering Boeing E-3D Sentry fleet has been pushed to December 2022. But the Boeing E-7 Wedgetail, the 737-based platform planned as its replacement, is not due to enter service until the end of 2023, potentially leaving a yearlong capability gap. The RAF also plans to retire its Raytheon Sentinel radar-reconnaissance platform in March 2021. It got several reprieves after its Afghanistan duties ended, but its departure would leave the UK without a standoff ground-moving-target-indicator and synthetic aperture radar platform. Several commitments made in the 2015 SDSR, such as the UK's decision to commit all 138 Lockheed Martin F-35 Joint Strike Fighters across the lifetime of the program, have also not been budgeted, auditors note. Current plans forecast only the costs of the first 48 aircraft. The government says that “decisions on future numbers and aircraft variants will be taken at the relevant time,” but it is unclear whether this will be considered in the review. The British government is aiming to maintain the target of 2% of GDP set by NATO for all allies. Defense ministers have said they will fight to meet that share, and more if needed, although the UK has a history of not fully funding post-review defense portfolios. “It is not a ​review designed to cut costs,” says Jeremy Quin, minister for defense procurement. “It is a review designed to ensure we know what we are doing in the world and that [this is achieved] through really effective equipment.” Along with defining capabilities required for land, sea and air, the review is also likely to conclude that the UK should make additional investment in both the cyber and space domains. https://aviationweek.com/defense-space/post-brexit-defense-review-challenged-costs-coronavirus

Production at facilities of Aviation and defence firms such as Airbus, Dassault Aviation, MBDA and Leonardo has been hit due to COVID-19 pandemic now sweeping across Europe. Dassault Aviations plants that manufacture the Rafale fighter jet and Falcon business aircraft have been working at below par since last week. The company's ability to deliver its Rafale jets to India, Qatar and Egypt is now in doubt and dependent upon how quickly the COVID-19 crisis is contained and employees are able to get back to work, local media reported. Europe's biggest Aerospace industry employer, Airbus which has some 46,000 workers in France, announced a gradual re-opening of its production in France and Spain after a weekend shutdown. However, a member of the Airbus' employees union was quoted as saying to French newspaper, LATribune, "It is a very partial recovery of 5 to 10% of employees, only with volunteers," adding, “we would have preferred total containment.” “By absolutely wanting to continue production activity, the Airbus management requires employees to go to the site and work in conditions which is extremely difficult, if not impossible, to guarantee that they eliminate any risk of contamination," the union member was quoted as saying. Missile Manufacturer MBDA has already announced the stoppage of operations in its France-based facilities to mitigate the Coronavirus crisis. Labor unions of engine manufacturer Safran have called for a complete halt to activities at all Safran sites worldwide. At Dassault Aviation, the measures announced by CEO Eric Trappier like the reorganization of work, the distribution of hydroalcoholic gels and masks, which could make it possible to resume "degraded activity in complete safety" for employees, are not yet in place, a member of its labour union, the CFDT told the French newspaper. Meanwhile, Airbus said in a statement, “We have withdrawn our 2020 guidance due to the volatility of the situation,” quoting Airbus Chief Executive Officer Guillaume Faury. Airbus' management has received approval from the Board of Directors to suspend the voluntary top up in pension funding. “By maintaining production, managing its resilient backlog, supporting its customers and securing financial flexibility for its operations, Airbus intends to secure business continuity for itself even in a protracted crisis,” the statement said. Leonardo's marine systems division Fincantieri has suspended operations for two weeks at its Italian facilities. Its helicopter facility and an F-35 assembly line have come back on track after a weekend shutdown, the company said. BAE Systems in Barrow which builds submarines was shut after two cases of coronavirus last and has since re-opened after deep clean."We recognize this is a difficult time for our employees and members of the public and we are taking all necessary steps to protect the health and safety of our workforce," a company spokesperson said to local media. https://www.defenseworld.net/news/26569/Production_at_Airbus__Dassault__Leonardo_Hit_due_to_COVID_19_Pandemic#.XnokiohKiUk

“This is information we don't want opposing forces to have as we're relatively a small force,” a spokesman said Friday. DAVID PUGLIESE, OTTAWA CITIZEN The Canadian Forces won't be releasing information on the numbers of military personnel who have tested positive for the novel coronavirus because of security reasons. The military had previously confirmed three cases, including one involving a reservist who had been on a personal trip to Spain. The Canadian Forces had also stated that no personnel on overseas operations had tested positive for COVID-19. But going forward, the Canadian military will no longer be confirming any other cases publicly because of operational security, Department of National Defence spokesman Dan Le Bouthillier said Friday. “This is information we don't want opposing forces to have as we're relatively a small force,” he added. Chief of the Defence Staff Gen. Jon Vance has warned that the “integrity” of some military units could be threatened by personnel contracting coronavirus. The Canadian Forces could be eventually called upon by the federal government to provide support if the pandemic worsens. The U.S. military has confirmed that more than 50 of its personnel have tested positive for COVID-19. The Canadian Forces has also ordered approximately 2000 COVID-19 test kits for military clinics across the country, Le Bouthillier said. The kits are expected in the next week. “The needs of deployed units for COVID-19 testing will be considered in the distribution plan,” he added. “In the interim, we are working in collaboration with our partners, through a combination of integral, allied and host nation supports, to ensure deployed CAF members are provided with the best available health care.” COVID-19 has also caused the cancellation of Exercise Maple Resolve, the army's main training event for the year, as well as a naval exercise off the coast of Africa. HMCS Glace Bay and HMCS Shawinigan, which were to take part in that naval training, are now returning to Halifax. The ships are expected to arrive in mid-April. Troops from Canadian Forces Base Petawawa who were supposed to take part in Exercise Maple Resolve will now be training in smaller groups, Le Bouthillier said. “We will mitigate this lost training opportunity through the aggressive pursuit of smaller training events and professional development,” he noted. “We will return to our normal managed readiness cycle when conditions permit.” “The current situation with COVID-19 is unprecedented and prudence demands we adopt a posture that allows us to best support civilian authorities should the need arise while safe-guarding the well-being of our personnel and the broader Canadian public,” Le Bouthillier stated. Maple Resolve was scheduled to take place from May 11 to 24 at Wainwright Alta. It normally involves approximately 5000 personnel and 1450 pieces of major equipment. The exercise gives participating personnel the opportunity to train with a wide variety of weapons, simulation technology, armoured fighting vehicles, and aircraft in order to hone their skills in a realistic setting, short of an actual operation. Another exercise that was to have taken place before Maple Resolve has also been cancelled. That training event, scheduled to run from April 5 to May 5, would have involved around 2,000 troops. Military personnel from the U.S., United Kingdom, France and Brazil had been scheduled to take part in Maple Resolve. Many other nations are also cancelling military exercises because of COVID-19. In addition, the Canadian Forces is also limiting public access to its recruiting centres across the country. The military is continuing to recruit but has asked new applicants to begin their recruiting process using its website. “For those applicants currently going through the recruitment process, please note that all face-to-face interactions will be restricted and by appointment only,” the Canadian Forces added in a social media post. “If contacted for an appointment, please note that we are implementing additional protective protocols including increased questions specific to individual circumstances in order to ensure the continued health of our recruiting teams.” https://ottawacitizen.com/news/national/defence-watch/canadian-military-will-no-longer-release-info-about-numbers-of-personnel-affected-by-covid-19

"Looking ahead, defense acquisition is in uncharted territory," says Air Force acquisition head Will Roper of the effects of the COVID-19 virus. By THERESA HITCHENS WASHINGTON: While the cancelation of the biennial Farnborough Air Show due to the COVID-19 pandemic may not have an immediate impact on the bottom lines of aerospace firms in the defense sector, the decision to close one of the world's top two airshows is yet another harbinger of pending upheaval in the overall market, analysts say. In particular, it deprives US firms of publicity abroad and highly valuable face-time with customers and potential customers from foreign governments. “Things like Farnborough are important to US aerospace companies because they help to facilitate sales and marketing,” said Todd Harrison, director of the Aerospace Security Project at the Center for Strategic and International Studies (CSIS). “It's traditionally been a place where you show off your latest technology and latest systems, but it's also where you finalize deals that have been in the works for a while. And so, some of that can still happen, but some of it may not happen.” Richard Aboulafia, a veteran aircraft industry analyst at Teal Group, echoed: “It's just a reflection of a sad reality: economic time has simply come to a halt for our industry and for others. That means fewer big opportunities to meet clients, advertise products and capabilities, share information, and look for opportunities. Big air shows are essential for these, but here we are.” The Farnborough Air Show — which takes place south of London — registered representatives from 96 countries in 2018, and some logged $192 billion in orders and contract commitments. The cancelation of the 2020 show, slated for July 20-24, was announced today. “I don't see the cancellation of Farnborough as a big blow to defense contractors. It is generally a way of raising their profile, but has no immediate impact on their business prospects,” said Phil Finnegan, Teal Group's director of corporate analysis. That said, Finnegan and a number other analysts agreed, the aerospace market is in for a rough ride — and not just on the commercial side as airlines see their profits for 2020 nosediving, making it increasingly unlikely that they will invest in new planes. “Looking ahead, defense acquisition is in uncharted territory. Near- and far-term impacts of Coronavirus evolve daily,” Air Force acquisition head Will Roper said this afternoon. “As we complete our first week of response, our teams navigated potential work stoppages, changing local and state directives, halted supply chains, and gearing up to support any national Defense Production Act requirements.” The Defense Production Act, which allows the government to order companies to boost production or produce new things, was invoked last week by President Donald Trump. Finnegan said “the biggest threat to defense contractors will come to those with significant commercial aerospace operations. The cash flow drain from those operations potentially could hurt them. “It also reiterates the importance of maintaining a balance in operations,” he added. “Obviously, in recent years commercial aerospace has offered greater growth and potentially high profit margins. This crisis reiterates the importance of a diversified approach to defense and aerospace to take advantage of the stability of the defense market in a crisis.” Indeed, several other long-time industry analysts said that DoD may face price hikes as firms try to shift the costs of commercial overhead to the defense contracts — especially for spare parts. Further, Harrison noted, governments around the world are going to be cash-strapped and likely loathe to make new commitments to large buys of new fighter jets or drones. According to the latest report from the Aerospace Industries Association, US aerospace and defense exports in 2018 amounted to $151 billion: civil aerospace accounted for the majority with $131.5 billion; defense products the remaining $19.5 billion. “So, Farnborough may not be the reason that sales go down, It's more of a symptom of the fact that there just aren't going to be as many opportunities for a while,” he said. https://breakingdefense.com/2020/03/covid-19-farnborough-cancelation-another-blow-for-defense-biz

ARMY Southwest Valley Constructors, Albuquerque, New Mexico, was awarded a $524,000,000 modification (P00011) to contract W912PL-19-C-0015 for design build of the Tucson sector barrier wall replacement project. Work will be performed in Tucson, Arizona, with an estimated completion date of Sept. 7, 2021. Fiscal 2020 operations and maintenance, Army funds in the amount of $524,000,000 were obligated at the time of the award. The U.S. Army Corps of Engineers, Phoenix, Arizona, is the contracting activity. BAE Systems Land & Armaments L.P., York, Pennsylvania, was awarded a $339,131,639 modification (P00050) to contract W56HZV-17-C-0001 for 48 vehicle sets of self-propelled howitzer and carrier, ammunition, tracked vehicles and associated support. Work will be performed in York, Pennsylvania, with an estimated completion date of Jan. 31, 2023. Fiscal 2018, 2019 and 2020 other procurement, Army funds in the amount of $339,131,639 were obligated at the time of the award. U.S. Army Contracting Command, Detroit Arsenal, Michigan, is the contracting activity. SGS LLC,* Yukon, Oklahoma, was awarded a $19,940,157 firm-fixed-price contract for design-build construction of a fire rescue center. Bids were solicited via the internet with nine received. Work will be performed in Altus, Oklahoma, with an estimated completion date of April 21, 2022. Fiscal 2020 military construction, Army funds in the amount of $19,940,157 were obligated at the time of the award. U.S. Army Corps of Engineers, Tulsa, Oklahoma, is the contracting activity (W912BV-20-C-0005). PD Systems Inc.,* Springfield, Virginia, was awarded a $14,829,404 firm-fixed-price contract to maintain and sustain equipment assigned to the 63rd Army Reserve Readiness Division. Bids were solicited via the internet with two received. Work locations and funding will be determined with each order, with an estimated completion date of March 29, 2025. The 419th Contracting Support Brigade, Fort McCoy, Wisconsin, is the contracting activity (W911SA-20-D-3000). SAWTST LLC,* Newnan, Georgia, was awarded a $10,842,921 firm-fixed-price contract to maintain and sustain equipment assigned to the 63rd Army Reserve Readiness Division. Bids were solicited via the internet with seven received. Work locations and funding will be determined with each order, with an estimated completion date of March 29, 2025. The 419th Contracting Support Brigade, Fort McCoy, Wisconsin, is the contracting activity (W911SA-20-D-3001). CORRECTION: The $14,143,940 firm-fixed-price contract announced on March 20, 2020, to Stantec Consulting Services Inc., New Orleans, Louisiana (W912P8-20-D-00004), for the design of pump stations and drainage structures was actually awarded today, March 23, 2020. NAVY Pratt and Whitney, a United Technologies Corp. company, Hartford, Connecticut, is awarded a $193,780,323 cost-plus-incentive-fee, fixed-price-incentive-firm contract for the procurement of long lead materials for the production of low rate initial production of propulsion systems (Lot 15 F135) for the Air Force, Navy, Marine Corps, non-Department of Defense (DoD) participants and Foreign Military Sales (FMS) customers. Work will be performed in East Hartford, Connecticut (56%); North Berwick, Maine (13%); Indianapolis, Indiana (10%); Jupiter, Florida (7%); Windsor Locks, Connecticut (5%); Bristol, United Kingdom (4%); Rockford, Illinois (2%); Santa Isabel, Puerto Rico (2%); and Phoenix, Arizona (1%), and is expected to be complete by December 2023. Fiscal 2020 aircraft procurement (Air Force) funds in the amount of $66,446,810; fiscal 2020 aircraft procurement (Navy) funds in the amount of $61,396,328; non-DoD participants funds in the amount of $52,153,031; and FMS funds in the amount of $13,784,154 will be obligated at time of award, none of which will expire at the end of the current fiscal year. This contract combines purchases for the Air Force ($66,446,810; 34.3%); Navy ($30,788,105; 15.9%); Marine Corps ($30,608,223; 15.8%); non-DoD participants ($52,153,031; 26.9%); and FMS customers ($13,784,154; 7.1%). This contract was not competitively procured pursuant to U.S. Code 2304(c)(1). The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity (N00019-20-C-0011). Sabre Systems Inc., Warrington, Pennsylvania, is awarded $77,733,927 for a cost-plus-fixed-fee, indefinite-delivery/indefinite-quantity contract. Work will be performed in Patuxent River, Maryland, and is expected to be complete by May 2025. This contract provides digital transformation planning and execution; enterprise alignment; technology exploration; acceleration and integration; digital/information technology (IT) consultation business intelligence; application portfolio management; system integration; enterprise architecture; design and management; web management; Navy Marine Corps Intranet/Next Generation Enterprise Network program management; IT operations; cybersecurity; information assurance; cloud services; maintenance functions; network security; automated data processing support services; digital modeling and virtual environment support; talent change management; data analytics and integration; and business process management and improvement in support for the Naval Air Systems Command Digital Group. No funds will be obligated at the time of award. Funds will be obligated on individual orders as they are issued. This contract was competitively procured via an electronic request for proposal; three offers were received. The Naval Air Warfare Center Aircraft Division, Patuxent River, Maryland, is the contracting activity (N00421-20-D-0072). Lockheed Martin Rotary and Mission Systems, Manassas, Virginia, is awarded a $29,647,813 cost-plus-incentive-fee and cost-only modification to a previously-awarded contract (N00024-18-C-5218) for program management office and engineering services in support of the Surface Ship Undersea Warfare System model AN/SQQ-89(V). Work will be performed in Manassas, Virginia (78%); Syracuse, New York (12%); Lemont Furnace, Pennsylvania (6%); and Liverpool, New York (4%), and is expected to be complete by March 2021. This contract combines purchases for the Navy (90%); and the government of Australia (10%) under the Foreign Military Sales (FMS) program. Fiscal 2016 - 2020 shipbuilding and conversion (Navy); 2018 – 2019 other procurement (Navy); 2020 research, development, test and evaluation (Navy); and FMS Commonwealth of Australia funding in the amount $23,075,308 will be obligated at the time of award. Funds in the amount of $14,387 will expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity. Pave-Tech Inc., Vista, California, is awarded $15,189,633 for a firm-fixed-price task order (N62473-20-F-4372) under a multiple award construction contract for repairs to Taxiway Bravo and Taxiway Golf at Naval Air Station, Fallon, Nevada. Work will be performed in Fallon, Nevada, and is expected to be complete by January 2022. The work will provide for the repair and replacement of deteriorated taxiway conditions, shoulders and associated surfaces. This project will also repair damaged 5kV airfield wire, lighting and ancillary parts and devices associated with Taxiways Bravo and Golf. All airfield lighting and electrical infrastructures shall be repaired to a state that complies with current Naval Air Systems Command, Unified Facilities Criteria and Federal Aviation Administration Airfield Regulations. Fiscal 2020 operations and maintenance (Navy) contract funds in the amount of $15,189,633 are obligated on this award and will not expire at the end of the current fiscal year. Three proposals were received for this task order. The Naval Facilities Engineering Command Southwest, San Diego, California, is the contracting activity (N62473-19-D-2440). Lockheed Martin Corp., Rotary and Mission Systems, Liverpool, New York, is awarded a $8,800,000 firm-fixed-price modification to a previously-awarded contract (N00024-20-C-5503) to increase quantities for the full-rate production of the Surface Electronic Warfare Improvement Program and the AN/SLQ-32(V)6, a combat system that provides a full range of undersea warfare functions. Work will be performed in Liverpool, New York (78%); and Lansdale, Pennsylvania (22%), and is expected to be complete by April 2022. Fiscal 2019 shipbuilding and conversion (Navy) funding in the amount of $8,800,000 will be obligated at time of award and will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity. (Awarded March 20, 2020) KJS Support Services JV LLC,* Fort Worth, Texas, is awarded an $8,594,573 firm-fixed-price, indefinite-delivery/indefinite-quantity modification for the exercise of the first option under the contract for base operating support services at the Naval Air Facility El Centro, California. Work will be performed in El Centro, California, and the option performance period is from April 1, 2020, to March 31, 2021. The work provides for labor, supervision, materials, equipment, tools, parts, supplies and transportation to be used for various base operating support service functions as follows: grounds electronics; airfield facilities; passenger terminal and cargo holding; supply; morale, welfare, and recreation; facility management and investment; janitorial services; pest control services; swimming pools operation and maintenance; grounds maintenance; street sweeping; electrical; gas; wastewater; water; base support vehicles and equipment; and environmental response. After the award of this option, the maximum dollar value including the base period, seven option years and one six-month option will be $74,821,438. No funds will be obligated at time of award of the modification. Fiscal 2020 operations and maintenance (O&M) (Navy); fiscal 2020 Defense Health Program; fiscal 2020 Defense Commissary Agency account; fiscal 2020 family housing (O&M) (Navy); and fiscal 2020 non-appropriated funds in the amount of $5,594,573 for recurring work will be obligated on individual task orders issued during the option period. Naval Facilities Engineering Command Southwest, San Diego, California, is the contracting activity (N62473-18-D-5606). AIR FORCE The FlightSafety Services Corp., Centennial, Colorado, has been awarded a not-to-exceed $25,000,000 firm-fixed-price, indefinite-delivery/indefinite-quantity, single-award contract for a multi-country KC-46 aircrew and maintenance simulator training. The contractor will provide KC-46 aircrew and maintenance training to support the U.S. government and Air Force Security Assistance Training international partners' mission objectives. Work will be performed at Altus Air Force Base, Oklahoma, and is expected to be completed September 2026. This is a sole-source requirement as the FlightSafety Corp., in accordance with 10 U.S. Code 2304 (c)(1), as implemented by Federal Acquisition Regulation 6.302-1, only one responsible source and no other supplies or services will satisfy agency requirements. Security and Cooperation funds in the amount of $2,500 are being obligated at the time of award. The Air Force Installation Contracting Agency, 338th Specialized Contracting Squadron, Joint Base San Antonio-Randolph, Texas, is the contracting activity (FA3002-20-D-0005). (Awarded March 19, 2020) *Small business https://www.defense.gov/Newsroom/Contracts/Contract/Article/2122344/source/GovDelivery/

By: Aaron Mehta WASHINGTON — The Pentagon has opened up cash flow for the defense industry, the latest in a series of moves from the department to combat economic damage brought about by the new coronavirus pandemic. In a memo released Sunday, the department announced that progress payment rates for defense items under contract will increase from 80 percent of cost to 90 percent for large businesses, and from 90 percent to 95 percent for small businesses. The move will allow industry to receive more cash up front than under normal circumstances. The order was signed by Kim Herrington, acting principal director for defense pricing and contracting at the Department of Defense. In a statement, spokesman Lt. Col. Mike Andrews called the move “an important avenue where industry cash flow can be improved." The Defense Contracting Management Agency “will work on mass modifications to contracts where applicable (vs one by one) using DCMA authorities,” Andrews said. “In addition, the Department is accelerating payments through several means to prime contracts and directing prime contracts to expedite payments to subcontractors.” The increase in cash flow was sought by both industry and supporters in Congress. An increase in early payments was one of the requests made by the Maine delegation to Defense Secretary Mark Esper last week. The Pentagon plans to return to normal operations once the national emergency caused by COVID-19 has passed. Notably, the announcement of the move included a warning that “it is especially important to understand that during this crisis the [defense-industrial base] is vulnerable to adversarial capital, we need to ensure companies stay in business without losing their technology.” Over the last two years the department has focused on ensuring Chinese investment is limited in the defense-industrial base. The move comes after the DoD issued guidance to industry that defense contractors are considered “critical infrastructure” under a Department of Homeland Security definition, which should allow contractors to continue to work even if local governments issue orders to freeze work, as has happened in New York and San Francisco. However, that guidance was advisory in nature and does not have the full legal authority that industry leadership had sought, per a Friday letter to Esper from the Aerospace Industry Association. “Recent DHS and USD (A&S) memoranda have been helpful on a case-by-case basis, but they are advisory in nature and not legally binding; to establish stability for our operations across the nation, the federal government should legally establish national security programs and our workforce as essential,” read the letter, signed by AIA head Eric Fanning; Northrop Grumman CEO Kathy Warden; and Kelly Ortberg, special adviser to the Office of the CEO of United Technologies. In an investors note, analyst Roman Schweizer of Cowen noted: “These new policies provide clarity on issues companies have been concerned about, but we do not think they alleviate all of industry's concerns nor do they eliminate all the disruption. But they are positive signs that DoD will help mitigate reasonable impact.” More efforts are likely to emerge in the coming days, including new measures from the Small Business Administration and its small business emergency loan program to help protect small key defense suppliers who are particularly vulnerable at this time. Major defense industry partners are also seeking relief in fulfilling contract milestones that could be impacted by the outbreak. “We encourage DoD to publish regulatory authority requiring contracting officers to consider financial relief as part of requests for equitable adjustments for measures we take in response to COVID-19,” the AIA letter read. “This includes relief related to bans, closures, quarantines and other travel restrictions, the loss of public infrastructure and public transportation, restricted access to resources and tools, and other public safety restrictions.” On Friday, the Acquisition and Sustainment division of the Small Business Office reached out to the defense industry's small businesses and is working with the Small Business Administration and its small business emergency loan program to help protect these companies. https://www.defensenews.com/coronavirus/2020/03/23/pentagon-loosens-cash-flow-for-industry-more-measures-likely-coming/

By: Jill Aitoro WASHINGTON — Defense companies with substantial exposure to commercial markets are taking dramatic measures to limit overhead and preserve cash, with one chief executive calling the new coronavirus pandemic “worse than anything we've seen.” Among the companies that announced cost-cutting measures tied to losses or potential losses from the COVID-10 crisis, CAE pointed to temporary layoffs — starting first with almost 500 unionized employees, but with more inevitably to follow, CEO Marc Parent said during a webcast hosted by RBC Capital Markets. Parent and his executive team are taking salary cuts of 50 percent, with vice presidents taking cuts of 30 percent, managers and directors 20 percent, and all others 10 percent. The company is also taking capital expenditures as well as research and development investment to the bare minimum. “We're not Pollyanna here,” Parent said during the webcast. “We're assuming a tough period, and we're taking immediate steps to preserve cash.” In terms of business disruption, “this is worse than anything we've seen,” including 9/11, he added. GE Aviation, which already announced a hiring freeze, the cancellation of salaried merit increases and a reduction of nonessential spending, will cut about 10 percent of its U.S. workforce. CEO David Joyce will give up half of his salary starting April 1. The division also pointed to temporary lack of work impacting about 50 percent of its U.S. maintenance, repair and overhaul employees for 90 days. Meanwhile, Airbus is looking to investor incentives to gain some cash, canceling one planned dividend payment and another proposed 2019 dividend payment of 1.80 euros (U.S. $1.90) per share to save the company 1.4 billion euros ($1.5 billion). It's also lining up 15 billion euros in new credit to provide more cash to weather the crisis. All three companies are big players in commercial aviation. Airbus ranked No. 9 on the Defense News Top 100 list of defense companies, but with only 17 percent of its 2018 revenue coming from the defense and security business. GE ranked No. 29, with 13 percent of business coming from defense, and CAE ranked No. 70, with 40 percent coming from defense. The defense portions of the businesses are also feeling the impact, though less substantial because of the structure of contracts that often extend to multiple years. For CAE, programs fall under long-term contracts, versus “per sip” agreements more typical of commercial customers where revenue is driven by utilization. The company's CEO, Parent, also pointed to a $4 billion backlog in defense. Still, base access restrictions and the natural limitations on movement of people has made both training and order fulfillment more difficult for the defense business. “And the general preoccupation of the crisis has impact on the speed of procurement processes,” Parent said. “We don't see obvious structural impact, but we can anticipate short-term friction.” Publicly traded companies with mixed commercial-defense business have also seen deeper losses to stock price, generally speaking, compared to more pure-play defense companies. While Lockheed and Northrop Grumman stock prices have dropped about 34 percent and 24 percent in the last month, respectively, CAE and GE have dropped 66 percent and 48 percent, respectively. Boeing, with 66 percent of revenue coming from commercial and other nondefense markets, has seen a whopping 67 percent drop during that period. Raytheon, despite being almost entirely focused on defense, saw a bigger drop than most pure-play companies of about 47 percent during the last month, likely due to the increased exposure to commercial that will come with its United Technologies merger. But stock price can be a rather deceiving picture of impact on industry, particularly long term, warned Byron Callan of Capital Alpha Partners. “A lot of these stocks are part of the S&P 500, where price movements have no relation to underlying fundamentals,” he said. “On the flip side, you could see rotation out of defense and into [those companies] that people think will recover. In other words, folks may be hiding out in defense stocks, but reallocate to markets that they figure are bound to recover eventually” — such as travel and leisure. Looking at defense companies, “Raytheon has been the worst performing stock because they got tied into commercial aerospace through the merger," Callan said, “but going forward that may be the most interesting [stock] of all because there will be a degree of balance.” In other words, what's true now on Wall Street could change considerably months from now. The same could be said about the long-term position of these companies, regardless of how grave the circumstances are today. “The world will return to normal. All crises will come to an end,” Parent said, pointing to the advantage of supporting a highly regulated industry. “We have staying power and stamina to weather the storm, but we're not taking anything for granted. ... We want to be ready when we come out of this.” https://www.defensenews.com/coronavirus/2020/03/23/worse-than-911-defense-firms-cut-overhead-to-the-bone/