South Africa’s Denel Forced Into Strategic Shift – Now Paying Off

Base, Bleeding Out?

Back in July 2005 it was apparent India’s sanctions against Denel and possible disqualification from a $2 billion artillery contract could have a major effect on the South African defense firm as a whole. In August 2005, those sanctions came to pass, barring Denel from a contract it was likely to win and accelerating efforts already underway to radically restructure the firm.

CEO Shaun Liebenberg launched that shift in late 2005 with some frank discussion of the global defense market, and the position of small-medium players like Denel in it. At DSEI 2005 in London, UK, the outline of this new strategy was already apparent. Many of the products Denel is known for will no longer define the firm. But could it find a way to stanch the bleeding and survive in a globalized market?

And how has it done since?

• Denel’s Position
  
• Denel’s New Strategy
  
• Updates and Key Events [updated]
  

Top Falcons: The UAE’s F-16 Block 60/61 Fighters

F-16F “Desert Falcon”

The most advanced F-16s in the world aren’t American. That distinction belongs to the UAE, whose F-16 E/F Block 60s are a half-generation ahead of the F-16 C/D Block 50/52+ aircraft that form the backbone of the US Air Force, and of many other fleets around the world. The Block 60 has been described as a lower-budget alternative to the F-35A Joint Strike Fighter, and there’s a solid argument to be made that their performance figures and broad sensor array will even keep them ahead of pending F-16 modernizations in countries like Taiwan, South Korea, and Singapore.

The UAE invested in the “Desert Falcon’s” development, and the contract reportedly includes royalty fees if other countries buy it. Investment doesn’t end when the fighters are delivered, either. Money is still needed for ongoing training, fielding, and equipment needs – and the UAE has decided that they need more planes, too. This DID article showcases the F-16 Block 60/61, and offers a window into its associated costs and life cycle, including dedicated equipment purchases for this fighter fleet.

High Afghan Exit Costs Force US Military to Contemplate End of Era

Yours for a low, low price

In July 2012, after protracted bargaining over American aid money, Pakistan reopened its roads – the so-called PAKGLOC in military lingo – to NATO traffic in and out of Afghanistan after their closure at the end of 2011. That is the theory at least, but the practice has left much to be desired. Pakistani customs routinely slow traffic to a crawl with clearance paperwork. Add threats of violence from local tribal strongmen, when it’s not customs on the Afghan side suddenly claiming a right to exit taxes, and you end with near-gridlock. Security concerns have led the Pentagon to stop using PAKGLOCs for outgoing traffic as of December 3/13 for an indefinite period. This has forced continued use of the Northern Distribution Network (NDN), at a much greater cost.

Faced with these prohibitive outgoing logistics, the US military has a big incentive to think hard about what it really needs to bring back for future use.

DLA Guidance: Something’s Gotta Squeeze

DLA: It’s a Blast!

This week DID’s Olivier Travers is attending WBR’s 2013 Defense Logistics event. Email me if you’d like to meet up or submit logistics themes for us to look into.

Vice Admiral Mark Harnitchek has been heading the Defense Logistics Agency (DLA) for 2 years and presented an update on the agency’s challenges and progress during WBR’s 2013 Defense Logistics conference. He candidly talked about how DoD at large, and DLA specifically, had benefited from “budget largesse” in recent years, especially with supplemental budgets (i.e. OCO / war spending) and had grown “thicker in the middle” as a result. In plain admission of the government’s shortcomings, the development of a “culture of judiciousness” to apply better judgment and save money is necessary within DLA. This is a welcome evolution in public discourse after so much hand-wringing about sequestration and befuddlement at the very idea of having to operate within financial constraints.

VADM Harnitchek was equally frank in recognizing that part of the agency’s focus will translate into margin pressure for contractors. Like other DoD senior officials, he’s broadcasting a clear signal that budget constraints are expected to stay and everyone should learn to operate within them. This should lead to increased reliance on commercial capabilities and less DoD resources, in relative terms. To that effect, fuel and food are pretty much already run “factory to foxhole” through commercial suppliers.

US Defense Logistics by the Numbers: The Cheatsheet

Aerial resupply, the hard way
click to play video

DID will cover WBR’s Defense Logistics conference on Dec. 3-5 in Alexandria, VA. The following entry gives a quick sense of the massive scale of US military logistics, for background context. It aims to provide orders of magnitude and key datapoints, rather than extremely precise and detailed data.

The US Department of Defense is well known as one of the largest organizations worldwide, with its sprawling physical footprint across the world and massive needs for storage, transportation, and distribution. How big of a logistics user and provider do they turn out to be? Let’s find out.

[NDIA Logistics Forum] Program Commonalities Good; Long Term Contracts Hard to Pull Off Domestically

Not the British soccer player

Ed. note: This entry is part of DID’s coverage of the NDIA’s National Logistics Forum 2013.

In his keynote, Dale Bennett, EVP of Mission Systems and Training at Lockheed Martin, listed a few things DoD and industry can do to get better results despite increased funding constraints.

First, Bennett thinks that sharing technologies across programs can not only improve interoperability, but also reduce sustainment costs, presumably thanks to shared spare parts and better familiarity (because of repeat exposure) from the people doing the maintenance. AEGIS and its various spin-offs (e.g. AEGIS Ashore) is the program that he used to illustrate this trend.

Rapid Fire 2010-02-17: Super Tucanos for Lebanon?

• US SPAWAR awards up to $3.2 billion in contracts for DoD C2 software support.

• Back from driving LeMans, Lord Drayson picks up his British military reform agenda.

• EADS gets new offer from 7 member governments to save the A400M military transport plane program.

• US knows it wants a front-line LEMV surveillance blimp – but how to field one? RFP is now out.

• Russia’s 5th generation PAK-FA fighter makes its 2nd flight. And just how good could it be?

• Iran crushes popular protests using high-tech Chinese riot vehicles.

• US may help Lebanon field AT-6B Texan or EMB-314 Super Tucano counter-insurgency aircraft by 2013.

• P-8A Poseidon aircraft passes armed ground vibration tests.

• Fincantieri’s new US subsidiary hires former head of Lockheed Martin Maritime Systems & Sensors.

• AeroVironment stock selloff: an overreaction?

• India to spend billions of dollars to upgrade military equipment.

• Tata Motors plans to bid on $75.8 million Indian Army light truck contract.

• US Army confronts challenge of aging helicopter fleet.

• Alion gets $71.8 million Seaport-E task order to support US Navy’s PEO Ships.

• Up to $46 million to URS for aircraft maintenance at Robins AFB.

• China to allow nuclear-powered aircraft carrier USS Nimitz [CVN 68] to make a port call in Hong Kong, despite decision to suspend military exchanges with the US over Taiwan arms sales.

• Top Taliban military commander captured in Pakistan, says top US official.

Virginia Class Sub Program Wins Acquisition Award

Virginia Block I-II
(click for SuperSize)

The SSN-774 Virginia Class submarine was introduced in the 1990s as a Clinton-era reform that was intended to take some of the SSN-21 Seawolf Class’ key design and technology advances, and place them in a smaller, less heavily-armed, and less expensive platform. The resulting submarine would have learned some of the Seawolf program’s negative procurement lessons, while performing capably in land attack, naval attack, special forces, and shallow water roles. In the end, the Seawolf Class became a technology demonstrator program that was canceled at 3 ships, and the Virginia Class became the naval successor to America’s famed SSN-688 Los Angeles Class. The Virginia Class program was supposed to reach 2 submarines per year by 2002, removing it from the unusual joint construction approach between General Dynamics Electric Boat and Northrop Grumman Shipbuilding – but that goal has been pushed back to 2012 in progressive planning budgets.

In FY 2005 dollars, SSN-21 submarines cost between $3.1-3.5 billion each. According to Congressional Research Service report #RL32418, and the Navy is working toward a goal of shaving FY05$ 400 million from the cost of each Virginia Class boat, and buying 2 boats in FY2012 for combined cost of $4.0 billion in FY 2005 dollars – a goal referred to as “2 for 4 in 12”. In real dollars subject to inflation, that means about $2.6 billion per sub in 2012, and $2.7 billion in 2013. The Navy believes that moving from the current joint construction arrangement will shave FY05$ 200 million from the cost of each submarine, leaving another FY05$ 200 million (about $220 million) to be saved through ship design and related changes. “Virginia Block III: The Revised Bow” chronicles some of the significant cost-saving design changes underway to the Virginia Class Block 3 subs, which begin at SSN-784, the 11th ship of class.

How is the program doing? The good news is, they just won a major procurement award for their efforts…

10th Annual American Veteran Center Conference Starting!

“Killer Chick”

The American Office of the Secretary of Defense sent this on to DID, and we thought we’d pass it on to all of our readers in the Washington area. The American Veteran Center’s 10th Annual Conference begins today, and will take place November 8-10 at the Renaissance Washington Hotel. there is still time to register and attend.

The AVC conference is one of the largest annual gatherings of decorated military combat veterans, and will host some of the greatest heroes of WWII, Korea, Vietnam and Iraq/Afghanistan. It features 3 days of speaker panels, wreath laying ceremonies at the World War II, Korea, and Vietnam memorials and an awards banquet. The conference also features salutes to Medal of Honor recipients and service members wounded in Iraq and Afghanistan. Some of the participants include:

Git Rockin’ 2007 Prepares to Amp Up

Vicki Golding

Government Information Group will host GIT Rockin’ 2007, government IT’s 2nd annual battle of the bands that showcases the alter egos and talents of professionals from across the government information technology community. The finalist bands were chosen in a “blind panel” judging, and had to include two members of the government IT community (government and vendor executives were both eligible to participate).

Proceedings will be kicked off by Australian-born Specialist Vicki Golding of the D.C. National Guard’s 257th Army Band, winner of the 2006 Military Idol competition. The selected GIT Tockin’ bands and their affiliations include:

• The DISA-Peering Act (Verizon Business at DISA, Unisys at TSA, Canadian Army Special Ops for the JTF at DISA HQ, USMC for the JTF at DISA HQ). Our favorite band name;
  
• The Groove (EMC Software, Formatta Corporation);
  
• The Moogly Blues Band (VDOT, VITA);
  
• Outta Scope (NIH, NASA Goddard Space Flight Center, DOD/State Department, WTEC) Does this band go to 11?; and
  
• Tacocat (AT&T Government Solutions, Perot Systems Government Services, Skjei Telecom)

The event will be hosted on Thursday, Oct 18/07 at the State Theater in Falls Church, Virginia. Tickets are $20 each, with an event maximum of 800 tickets. Proceeds from all ticket and band voting sales will be donated to the United Services Organization of Metropolitan Washington (USO-Metro). Git your tickets here.