• Russia’s top military officer says US missile defense in Europe should be curbed in new arms control treaty.

• Russia is developing the T-50 stealth fighter to rival F-22, but can aircraft maker Sukhoi meet the 2015 deadeline?

• India says it will integrate the Agni-III long-range missile system into the armed forces following 4th successful test launch.

• Rep. Norman Dicks, a Democrat from Washington with ties to Boeing, is expected to suceed Rep. John Murta [D-PA] as chairman of the US House defense appropriations panel.

• Textron mulls acquisitions in the defense sensor, ISR system, and military vehicle markets.

• Is Microsoft refusing to sell XBoxes to the US Army for training purposes?

• Tory leader says UK must develop military capabilities to act unilaterally if required.

• California state CIO Takai expected to be President Obama’s nominee for DoD CIO post.

• SSI secures $48 million contract to provide USAF with space launch services.

• Versar gets $13 million subcontract from URS to supply chemical weapons destruction technology developed with Japan’s Kobe Steel.

Dassault Rafale
(click for cutaway view)

Performance-based support contract for Thales. (Feb 2/10)

Will Dassault’s fighter become a fashionably late fighter platform that builds on its parent company’s past successes – or just “the late Rafale”? It all began as a 1985 break-away from the multinational consortium that went on to create EADS’ Eurofighter. The French needed a lighter aircraft that was suitable for carrier use, and were reportedly unwilling to cede design authority over the project. As is so often true of French defense procurement policy, the choice came down to one of paying additional costs for full independence and exact needs, or losing key industrial capabilities by partnering or buying abroad. France has generally opted for expensive but independent defense choices, and the Rafale was no exception.

Those costs, and associated delays triggered by the end of the Cold War and reduced funding, proved to be very costly indeed. Unlike previous French fighters, which relied on exports to lower their costs and keep production lines humming, the Rafale has yet to secure a single export contract – in part because versions fielded to date have impaired capabilities in key roles. The Rafale may, at last, be ready to be what its vendors say: a true omnirole aircraft, ready for prime time on the global export stage. The question is whether that will come in time. Rivals like EADS’ Eurofighter, Russia’s Su-27/30 family, and the American “teen series” of F-15/16/18 variants are all well established. Meanwhile, Saab’s versatile and cheaper JAS-39 Gripen remains a stubborn foe in key export competitions, and the multinational F-35 juggernaut is bearing down on it.

• Dassault’s Rafale: Variants
• Dassault’s Rafale: Program
• Contracts and Key Events, 2009-Present [updated]
• Additional Readings
  
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• In the Quadrennial Defense Review 2010 the Pentagon seeks to rebalance the US military and to institutionalize DoD reforms.

• President Obama FY 2011 budget contains a record $708 billion in defense spending, including a 3.4% increase in the Pentagon’s base budget and $159 billion to fund US military missions in Iraq, Afghanistan and Pakistan, Reuters reports. At the same time, the Pentagon may be targeting at least 7 programs for cancellation.

• US defense firms felt the economic pressure this quarter, as Rockwell Collins’ profits fell 20% and Lockheed Martin’s earnings were flat, notes the Wall Street Journal. Bucking the trend, Raytheon’s profit rose 20% for the quarter.

• Morgan Keegan analyst Brian Ruttenbur predicts a wave of cyber security firm acquisitions by big defense companies in the next 12 – 24 months, because more federal money is going into that area.

• Research and Markets: The market for military tactical radio systems is predicted to grow substantially in the coming years. Also, technical issues with JTRS are driving the need for more legacy radios.

• Boeing unveils plans to provide up to $2 billion in subcontracting work to Canadian companies for in-service support for 15 CH-47F Chinook helicopters purchased by the Canadian government.

• General Dynamics Electric Boat says it will lay off 434 workers at its Groton, CT, shipyard due to lost submarine maintenance, overhaul and repair work.

• USAF is undertaking a massive restructuring of the C-17 Globemaster Sustainment Partnership after 2012, which the service predicts will save $9-12 billion over 30 years.

• The Obama administration is working with Saudi Arabia and other Persian Gulf allies to speed up arms sales and upgrade defenses for oil terminals and other key infrastructure, in a bid to thwart future military attacks by Iran.

• DARPA’s Cyber Genome Program is developing “digital fingerprint” technology to track down cyber terrorists.

• The Pentagon is looking to cut its greenhouse gas emissions for non-combat activities, such as buildings and fleet vehicles, by 34% by 2020.

API Technologies, a Ronkonkoma, NY-based defense supplier of electronic and commmunications components, is doubling in size with its recent $24 million acquisition of the Kuchera Group of Companies (KGC), including Kuchera Defense Systems. The combined company will have revenues of $120 million.

Kuchera supplies printed circuit boards, robotic systems, unmanned aircraft, electro-mechanical assemblies and final systems integration to the defense, aerospace and communications industries…

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ManTech International completed the acquisition of Sensor Technologies Inc. (STI) for $242 million in cash. STI in Red Bank, NJ is a supplier of systems engineering and command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR) services and products to the US Army.

STI expects to produce approximately $340 million in revenue in 2009 and $450 million in revenue in 2010.

The company is a prime contract for the Army’s Strategic Services Sourcing (S3) contract vehicle and has received over $2.5 billion in S3 task orders to date…

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Dell Perot Systems’ Government Services Business Unit in Fairfax, VA received a five-year, $42 million agreement to provide command, control, communications, computer and information management (C4IM) services to the US Army’s Rock Island Arsenal in Illinois.

On Nov 3/09, Dell completed its $3.9 billion acquisition of Perot Systems.

Perot Systems had previously provided C4IM services to the Rock Island Arsenal to help the Army implement a number of IT initiatives, including consolidating the base’s Directorate of Information Management (DOIM) centers into a single DOIM while migrating the base’s networks to the Army’s 1st Area Processing Center (APC)...

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OM Group in Cleveland, OH agreed to acquire EaglePicher Technologies, a Joplin, MO-based manufacturer of batteries, battery management systems and energetic devices for the defense, aerospace, and medical industries, from EaglePicher Corp. for $171.9 million.

In fiscal year 2009, EaglePicher recorded revenues of approximately $125 million, of which approximately 60% came from its defense business, approximately 31% from its aerospace business, and the balance from its medical and other businesses…

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Canberra concept
(click to view full)

In May of 2006 the Royal Australian Navy announced its decision to expand its naval expeditionary capabilities. HMAS Manoora and Kanimbla would be replaced with substantially larger and more capable modern designs, featuring strong air support. Navantia and Tenix offered a 27,000t LHD design that resembled the Strategic Projection Ship (Buque de Proyeccion Estrategica) under construction for the Spanish Navy. The DCNS-Thales Australia team, meanwhile, proposed a variation of the 21,300t Mistral Class that is serving successfully with the French Navy.

Navantia’s larger design eventually won, giving the Spanish firm an A$11 billion clean sweep of Australia’s “Air Warfare Destroyer” and LHD programs. These 5 ships will be the core of Australia’s future surface navy. The LHDs will be able to serve as amphibious landing ships, helicopter carriers, floating HQs and medical facilities for humanitarian assistance, and launching pads for UAVs or even short/vertical takeoff fighters.

The latest inclusion involves a contract for IFF systems…

• Winner: The Navantia-Tenix LHD
• Construction and Program
• Contracts and Key Events [updated]
• Additional Readings
  
  Continue Reading… »

On Nov 17/09, J.F. Lehman & Company reached an agreement to sell Atlantic Inertial Systems to Goodrich Corporation, for about $375 million, subject to customary government approvals. AIS’ 2009 sales are expected to be approximately $180 million, but that’s expected to grow significantly over the next several years. Hence the price of approximately 9x estimated adjusted EBITDA.

Goodrich saw AIS’ portfolio of inertial sensors, inertial measurement units (IMUs), integrated IMU/GPS systems, stability systems, and terrain avoidance systems as an excellent complement to Goodrich’s guidance, control and navigation systems. AIS joins other recent Goodrich acquisitions such as Sensors Unlimited, TEAC Aerospace, former CROWS manufacturer Recon/Optical, and Cloud Cap Technology.

As James Hasik, our February 2009 guest author of “Arming the Bug Hunt: Industry Changes and Opportunities” points out, the most interesting fact is never mentioned in the releases:

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Raytheon has completed its acquisition of BBN Technologies, a provider of high-tech defense products, for approximately $350 million, subject to post-closing adjustments.

BBN’s defense portfolio includes advanced networking, speech and language technologies, information technologies, sensor systems, and cybersecurity products. BBN has won numerous contracts from the US Defense Advanced Research Projects Agency (DARPA) to supply advanced technologies for the military…

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