The US and the UK have finalized a bilateral defense trade treaty that puts in place a new exemption (ยง126.17- the UK Exemption) to ITAR. See Frequently Asked Questions.
The US Navy’s latest 30-year shipbuilding plan [PDF] projects an average fleet size of 298 ships. An average of 8.9 new ships would be built each year for a total of 268 vessels. Spending is expected to peak to almost $20B/year in the early 20s and 30s because of SSBN (X) recapitalization. Out of 45 ships to be inactivated over the FY13-17 period, 22 are set aside for foreign military sales. See chart at the bottom of this entry.
Huntington Ingalls Industries reported revenue down 2.2% to $6.58B in 2011, and $5.6B of new contract awards. Total backlog at the end of December 2011 was $16.3B.
Hawker Beechcraft is preparing to file for bankruptcy according to Reuters and the NYT.
Finmeccanica declared [PDF] a EUR 2.3 billion loss for 2011 (slightly more than $3B) on EUR 17.3B of revenue (-7% vs. 2010) because of high nonrecurring charges. Sales declined 22% to EUR 17.4B. Total backlog dropped 5% to 46 billion euros but from the company’s own admission it is “marked by a number of uncertain orders.”
The Pentagon is on board with more support for Israel’s Iron Dome rocket defense systems. RAFAEL is partnered with Raytheon to market Iron Dome in the USA, and several NATO allies are interested in system.
The US Navy’s MZ-3A military research airship is about to get another year’s lease on life, as an Army test bed. With LEMV coming along, that’s probably a good idea.
The GAO says US Army payroll is a mess – not the kind where you get to eat.
Dassault Aviation released its 2011 results [PDF]. Net sales were down 21% to 3.3B euros (about $4.4B) because of markedly lower Falcon business jet deliveries vs. a record 2010. Defense orders grew 17.5% to 931 million euros. The consolidated backlog is down 7% to 8.75 billion euros.
The GAO published its latest report on the Pentagon’s space acquisitions.They recognize some areas of progress but they also think there is still “an array of challenges” to confront.
The Pentagon is still working on spelling out its cyber doctrine.
SAIC announced results for its fiscal year 2012 which ended on Jan 31, 2012. Total revenue decreased by 3% to $10.6B, dragged by a 10% drop in defense solutions to $4.2B (39.6% of total revenue). Behind these results is the $500M settlement with the City of New York over the CityTime contract; otherwise revenue on the defense side would have lost a single percentage point from the previous fiscal year. The total defense backlog stood at $7.1B at the end of January, 30% of which is funded.
In advance of a more thorough review, the GAO published a report listing the various ways the JSF program is late and over budget:
“Cost overruns on the first four annual procurement contracts total more than $1 billion and aircraft deliveries are on average more than one year late. Officials said the government’s share of the cost growth is $672 million; this adds about $11 million on average to the price of each of the 63 aircraft under those contracts.”
These GAO reports will be read closely in Senate where some are not convinced the F-35B should have been taken off probation. Meanwhile Air Force Secretary Michael Donley told the Senate Armed Services Committee (SASC) there was “no more money to put against contract overruns or problems” with the JSF program.
EADS announced they grew yearly revenue by 7.4% to 49.1 billion euros in 2011 (about $65B). Growth was driven by Airbus Commercial (their best year ever) and Eurocopter (whose revenue was 47% military). The Airbus Military business lost 6.7% from 2010 to 2.5 billion euros, with an order book of 217 aircraft down from 241 with only 5 new net orders. The A400M generated sales of 758M vs 1.04B in the previous year. Astrium (34% defense sales) and Cassidian (92% defense sales) saw smaller topline decreases.
EADS overall defense revenue dropped by 6% to 11.6B while the defense backlog dropped by 9% to 52.8B. The group has increased its Euro sales to lower its exposure to currency risk and about half its US revenue in dollars is hedged by local procurement in the same currency. EADS was sitting on about $15B worth of net cash at the end of 2011, lending credence to talks of forthcoming acquisitions.
Northrop Grumman produced a report [PDF] for the US-China Economic and
Security Review Commission on Chinese cyber capabilities:
Airbus Military got a firm order from Kazakhstan for 2 C295 transport aircraft with a Memorandum of Understanding (MOU) for 6 more. Four years ago EADS made titanium sourcing agreements with Kazakh suppliers.
Finmeccanica, after winning a 50 million cybersecurity contract with NATO, is quite bullish about its prospects in the field and the size of the coming addressable market in Europe.
BAE Systems announced its 2011 financial results: sales dropped by 14% to 19.2 billion pounds (about $30B) while the order book shrank by 8% to 36.2 billion pounds ($56.7B). US sales accounted for 47% of the total but the Platforms & Services US division is the one that lost the most ground vs. 2010.
Indonesia will buy 9 C295 light transport planes from Airbus Military, for an undisclosed sum. They were a partner in designing & building the smaller CN-235 transport, and operate 19, so it’s a compatible acquisition on all fronts.
The Defense Acquisition University (DAU) overhauled the online resources dedicated to its Life Cycle Logistics Community of Practice (LOG CoP). The new website, available at https://acc.dau.mil/logtools, keeps track of hundreds of documents dedicated to technical management, product support, contracting strategies et. al.
Pakistan received its 18th and final new F-16C/D Block 52 fighter, and its 1st 2 upgraded F-16 fighters, under a multi-billion set of deals with the USA and Turkey.
