Both BAE Systems and EADS have confirmed that BAE has initiated a discussion on the potential disposal of BAE Systems’ 20% stake in Airbus.” Negotiations were described as being in “the very early stages”; BAE’s 20% holding is valued at EUR 3.5 billion ($4.3 billion) in EADS’s books, but The Scotsman newspaper noted that analysts expect any sale to be worth GBP 3.0-4.5 billion ($5.2-7.8 billion at current conversion). EADS adds that the initiation of these discussions does not represent an exercise of the put option held by BAE Systems in relation to this stake.
More details regarding the potential deal, its military procurement significance, and some analysis regarding both its strategic implications and BAE’s future options can be found below… along with updates as the deal progresses.
Maj. Gen. Roger Nadeau, who heads the US Army’s research and development command, told the U.S. Army Winter Show on February 15th that fighting in Iraq is shaping almost every Army spending decision. One of those lessons is that urban warfare is the new baseline, a point that has been by many observers over the last five years. Nadeau challenged industry to come up with new and more innovative ways of thinking: “This is nose-to-nose street fighting; if you can help me fight in this environment, then we will listen to you.” Items on the wish-list include better night-vision devices for soldiers and vehicles, sensors to allow troops to see through walls and buildings, active protection systems for vehicles that work in short-range urban environments, and even an improved bunker-busting type weapon to allow soldiers to breach walls (q.v. Britain’s recent buy).
“If [FCS] were here in its entirety today, how would the soldier’s life in that city be better? If we can’t answer that, we’re probably going down the wrong path and we need to make some modifications.”
As of Friday, February 3, 2006, the USA’s 2006 Quadrennial Defense Review has been released. As Title 10, Section 118 stipulates, the QDR’s Congressional mandate is:
The Secretary of Defense shall every four years… conduct a comprehensive examination (to be known as a “quadrennial defense review”) of the national defense strategy, force structure, force modernization plans, infrastructure, budget plan, and other elements of the defense program and policies of the United States with a view toward determining and expressing the defense strategy of the United States and establishing a defense program for the next 20 years.
DID has a roundup of relevant resources and links:
In FY 2005, the US Air Force designated 8 five-year NetCents contract winners: 4 small businesses and 4 large ones. Each, it turn, brings a host of partners in with them but manages any contracts received through one point of contact & responsibility. In short, NetCents created a single contract to competitively buy IT products and services, aimed at increasing the standardization of hardware and software service-wide.
A November 2005 article in Federal Computer Weekly reported that the US Air Force’s CIO was readying a new memo covering policy, marketing and training information for the $9 billion Network Centric Solutions (NetCents) contract so it will be used 80% of the time to buy IT products and services. At the moment, they’re a long way from that.
The patterns within the NetCents awards are interesting, and DID will discuss some of them. We’re also going to highlight one of the small business winners, a company called Telos. They’ve picked up an impressive share of NetCents awards. Their people also took the time to talk to DID about the dynamics of NetcCents – and even some best practices for other government agencies agencies looking at implementing these kinds of large, omnibus umbrella contracts.
One of the key sources of savings proposed for the new CVN-21 Class aircraft carriers is a trend toward more automation and fewer personnel. Now the GAO helps shed light on the larger phenomenon behind those moves. A recent GAO report that pegged the average for active duty enlisted personnel and officer compensation at $112,000 a year, 51% of which takes the form of health care and other benefits (NAVSEA’s figure was $90,000 FY 2004).
This amounts to about double the average for civilian pay, and also represents a much higher benefits ratio than civilian pay. Ironically, the GAO report also found that the US military’s efforts to educate its personnel about this important recruiting and retention lever did not get good marks, and that many military members were unaware of how competitive their compensation was.
GAO Comptroller David Walker’s key point at a recent GovExec.com breakfast was that the budgeting process needed to reflect the full financial impact of funding decisions. For example, health care costs since are not only spiraling in the present thanks to a benefits expansion in 2000 – they also represent a major future stinger. Specifically…
DID has covered the growing US interest in blimps for everything from low-altitude surveillance and communications relay, to air mega-transport, to near space operations. Lockheed Martin Maritime Systems & Sensors in Akron, OH received a $149.2 million cost-reimbursable contract to build and demonstrate the technical feasibility and military utility of the High Altitude Airship (HAA). The Missile Defense Agency issued this contract (HQ0006-06-C-0001), and eventually plans to deploy approximately 10 blimps to provide overlapping coverage of U.S. coastal regions.
In 2005 it looked like the Aerial Common Sensor (ACS) program, a joint US Army/ US Navy program, would replace three different reconnaissance planes used for signals interception (SIGINT), ground-looking SAR radars, and imagery intelligence (IMINT).
By November 2005 Lockheed had dropped Embraer’s ERJ-145 jet from its proposal in favor of Bombardier’s larger, longer-range, longer endurance Global Express jet. Its new design would closely resemble the in-service British ASTOR Sentinel R1 in order to offer lower risk, greater cost certainty, and even allied interoperability. Hedging its bets, Lockheed also offered the US military a cut-down ERJ-145 option with less equipment as a lower-budget alternative.
Modern diesel submarines have advanced propulsion systems and coatings, and many of them are hard to detect with the current sonar technologies aboard the U.S. Navy’s nuclear-powered submarines and surface ships. As nations in Asia and beyond race to buy these vessels, the US Navy’s Antisubmarine Warfare (ASW) Task Force is preparing for that future with a new “concept of operations” that includes new tactics and new technologies. It’s the first major revision of anti-submarine doctrine since the middle of the Cold War.
The U.S. Army Contracting Agency, at White Sands Missile Range, NM has just issued $3.24 billion in contracts for “Omnibus VII enhanced third generation image intensifier ground night vision devices and spare image intensifier tubes.” What this means in practice is that the US Army and US Marine Corps are using one omnibus contract to purchase the following night-vision devices, in quantity: AN/PVS-14 monocular, AN/PVS-7D binocular, MX-10130/UV image intensifier tubes, and MX-11769/UV image intensifier tubes.
The U.S. Army Research, Development, and Engineering Command at Aberdeen Proving Ground, MD has issued $1.37 billion in contracts for Multi-Functioning Aiming Laser Systems. What’s that, you ask? It’s a dual-use ‘flashlight’/ laser pointer that can make “point and shoot” more of a standardized reality, especially in the close-quarters battles that often characterize the Global War on Terror.
A few years ago, Laser Devices, Inc. notes that the U.S. Naval Surface Warfare Center and the U.S. Army Special Operations Command conducted a joint Operational Test on the effectiveness of visible laser aiming systems in low light and night-time environments. The results were eye-opening.