Scorpene’s Sting: Malaysia’s Bribery & Murder Scandal

The Franco-Spanish Scorpene diesel-electric attack submarine competes on the global market against an array of competitors, especially ThyssenKrupp HDW’s U209/212/214 family. In June 2002, the Malaysian government signed a EUR 1 billion contract with Armaris (now DCNS) and Spanish naval shipbuilder Izar (now Navantia) for 2 SSK Scorpenes and associated support and training. Both submarines have been delivered to Malaysia, though there have been some technical problems. Which pale in comparison to the deal’s other problems.

Within Malaysia, the sale has been compromised by an ongoing trial and set of legal actions around the public kidnapping and private execution of Mongolian modeling student, translator, and paramour Altantuya Shaariibuu. Full and impartial accountability for public figures is not a prominent feature of Malaysian justice, but French Journalist Arnaud Dubus added to the pressure with a March 5/09 report in France’s Liberation, “Un cadavre très dérangeant: L’étrange affaire du meurtre d’une interprète mongole qui gène le pouvoir en Malaisie” (Page 30-31). It named very prominent names, offered details, and revealed the contents of documents that Malaysian courts had refused to admit. A subsequent bribery investigation by French authorities has led to the emergence of even more documents, and the scandal is becoming a significant presence in Malaysian politics.

Harris Corp. Rising as Tactical Radio Market Grows

Falcon II Multiband

After the bell last Thursday, Harris Corp. raised its revenue and per-share earnings forecast for fiscal year 2006, citing higher-than-expected orders for its Falcon II tactical radios. Harris said the U.S. military was moving toward deploying more mobile and self-sufficient units that rely on radios and that demand is rising in the Middle East, Central Asia, and Africa. Pakistan, for instance, awarded a $68 million contract for Falcon-II tactical multi-band radios in February 2005.

Meanwhile, new analysis from Frost & Sullivan’s “Aerospace and Defense Group, U.S. Tactical Military Communications Markets” reveals that Department of Defense (DoD) spending for tactical communications was $4.78 billion in 2004 and predicts $5.68 billion by 2010.

Trainer Jets for Israel: From the Skyhawk, to the M-346 Lavi

Israeli A-4Ns

After more than 40 years operating the A-4 Skyhawk, a maintenance scandal led Israel to conclude that its remaining Skyhawk’s needed to be replaced as advanced trainers. That triggered a $1 billion advanced trainer competition, and a major geo-political decision.

In 2012, Israel made up its mind. The Italian M-346 “Lavi” will be their new trainer.

Baby Come Back: Iraq is Buying, Fielding Russian Weapons Again

Pantsir-S1

In October 2012, Iraqi Prime Minister Maliki signed a deal with Russia’s Rosoboronexport, variously estimated at $4.2 – $5.0 billion. The deal is characteristically murky, but it includes a combination of 43 Mi-35 (28) and Mi-28NE (15) attack helicopters, plus 42-50 mobile SA-22 Pantsir low-level air defense systems. Their combined cost is unlikely to approach $4 billion unless very extensive long-term support arrangements are included, but Iraq’s maintenance record suggests that this would be a very good idea. There has also been discussion in the press concerning MiG-29M2 fighters or armored vehicles as follow-on options, and the recent crisis in Iraq has led to a limited sale of refurbished SU-25 close air support aircraft.

The deals fill some important military and political holes for Iraq, and the full civil war in progress

Algerian Arms Deal Brings Russia $7.5 billion, Gas Market Leverage

Yak-130

A February 2006 report noted that a $4 billion arms sale was brewing between Algeria and Russia involving fighter aircraft, tanks, and air defense systems, with the possibility of additional equipment. Those options came through the following month, as a high-level Russian delegation in Algeria closed up to $7.5 billion worth of arms contracts. The Algerian package remains post-Soviet Russia’s largest single arms deal. As an instructive comparison, annual Russian weapons export orders from all customers were just $5-6 billion per year in 2004 and 2005.

Reuters South Africa quoted Rosoboronexport chief Sergei Chemezov as saying that “Practically all types of arms which we have are included, anti-missile systems, aviation, sea and land technology.” The actual contents of that deal were murky, though DID offers triangulation among several sources to help sort out the confusion. A number of these deals have evolved over time, and other public-source information has helped to sharpen the picture a bit. The subsequent crash of Algeria’s MiG-29 deal, and its ripple effects, are also discussed.

Procurement Nadir: India’s Murky, Messed-Up Howitzer Competitions

FH-77Bs, Kargil War

India has marked over $4 billion worth of artillery projects to purchase several hundred new 155mm howitzers. They are intended to supplement India’s dwindling artillery stocks, while out-ranging and out-shooting Pakistan’s self-propelled M109 155mm guns. It seemed simple enough, and in the main towed artillery competition, BAE Systems Bofors had been competing against systems from Israel’s Soltam and Denel of South Africa.

Unfortunately, India’s 2 towed howitzer competitions, and its 2 self-propelled artillery procurements, have mostly served as cautionary tales. If the stakes weren’t so high, they’d qualify as farce. The simple process of buying off-the-shelf artillery guns has become a decades-long affair filled with legal drama, accusations of corruption, and multiple re-starts – but not one new gun. Competitions are declared, and canceled, again and again. One is on its 5th iteration. Another is on its 3rd. Meanwhile, India’s stock of operational 155mm FH77 howitzers has dwindled to around 200, and their last successful artillery buy was over 2 decades ago. Is there an end in sight to any of these competitions? Or a potential winner?

Canadians Unhappy with Defense Procurement, Looking at F-35 Alternative

F-35 AA-1

Liberal versus Conservative politics are dominating the coverage of Canadian self examination of their defense procurement process. Conservatives came to power criticizing a broken and opaque process run by the Liberals, and now the Liberals are enjoying throwing similar barbs at the majority party. But in the fray, several interesting analyses have surfaced that the defense establishment is taking seriously.

The Harper government insists that a defense procurement overhaul conducted last year has yet to toll, and that patience is needed to prove that things have improved. By far, the largest effect is exerted by the major fighter and ship programs, which evolve in year and decade timescales.

As to the actual content of the report, much blame is placed at the cutting of procurement staff levels, which have been halved over the past 20 years. Also unpopular among the procurement officials are rafts of the new reporting requirements – reportedly up by about 50 percent – that are part of the Harper governments reforms.

Separately, the objectives of major defense procurement projects have also been called into question. Because the F-35 has greatest advantage in the objective of overpowering a state with top anti-air resources, Canadian officials are now questioning whether this is something relevant to Canada, especially in the face of a lopsided price disadvantage versus other fighters. Reportedly, the only other fighter contending still against the F-35 is Boeing’s Super Hornet. This analysis, a product of the 2012 decision to delay what was to be a $45 billion purchase of F-35s, did not draw a conclusive recommendation, although it did note that the likelihood of requiring a mission profile uniquely suited to the F-35 was low.

The F-35 program has been controversial in Canada, even more so than in other countries, complete with alleged plots to conduct secret initial procurement of four fighters to be delivered in 2015, with a commitment for 9 more two years later. Internal pressures led the Harper administration to develop a more explicit offset seeking program, called the Value Proposition Guide, as in show-us-what-industrial-value-we-can-bank domestically.

Updates

February 26/16: After sensationally backing out of the F-35 Joint Strike Fighter program, the Canadian government will not exclude the jet from the renewed CF-18 replacement competition. Canadian minister of national defence Harjit Sajjan said at the annual Conference of Defence Associations (CDA) that once the government determines its needs, and capabilities are specified, potential contractors will be allowed to bid, including Lockheed Martin with its F-35. The announcement marks the first time that Sajjan has explicitly said that the F-35 could still be in the running, after weeks of hinting at the possibility.

February 23/16: Major defense purchases through Canada’s problem-plagued procurement process is to be guided by a cabinet-level committee. The committee will have direct access to support from Prime Minister Justin Trudeau, and is tasked with seeing that billion dollar sales, which include all aircraft purchases, will not be held up in federal bureaucracy. While details of the committee have not been disclosed, it will include high ranking members of the Liberal government including Procurement Minister Judy Foote, Defence Minister Harjit Sajjan, Navdeep Bains, minister of Innovation, Science and Economic Development, and Scott Brison, the president of the Treasury Board.

The USA’s M4 Carbine Controversies

An M4 – or is it?

The 5.56mm M-16 has been the USA’s primary battle rifle since the Vietnam war, undergoing changes into progressive versions like the M16A4 widely fielded by the US Marine Corps, “Commando” carbine versions, etc. The M4 Carbine is the latest member of the M16 family, offering a shorter weapon more suited to close-quarters battle, or to units who would find a full-length rifle too bulky.

In 2006 an Army solicitation for competitive procurement of 5.56mm carbine designs was withdrawn, once sole-source incumbent Colt dropped its prices. The DoD’s Inspector General weighed in with a critical report, but the Army dissented, defending its practices as a sound negotiating approach that saved the taxpayers money. As it turns out, there’s a sequel. A major sequel that has only grown bigger with time.

The M4/M16 family is both praised and criticized for its current performance in the field. In recent years, the M4 finished dead last in a sandstorm reliability test, against 3 competitors that include a convertible M4 variant. Worse, the 4th place M4 had over 3.5x more jams than the 3rd place finisher. Was that a blip in M4 buys, or a breaking point? The Army moved forward with an “Individual Carbine” competition, but as the results started to show the M4 again lagging – even with ammunition changed to a round specially formulated to make the M4 shine – the Army abruptly stopped the process once again, stating that the performance superiority of the competing gun was not better to a degree making it worthwhile. The Army stated after the tests that only a result that was twice as good as the existing gun’s performance would signify an actionable performance difference.

More recently, the Marines have considered adding
various after-market upgrades to the platform in order to increase accuracy, learning from the private sector and competitive shooting circuit what appears to be providing the best bang.

Halliburton/KBR Contracts Under Fire from Congress, DCAA

Headed for Iraq

Pentagon auditors are questioning more than $108 million in costs claimed by Halliburton subsidiary Kellogg Brown Root (KBR) under its $875 million “Task Order 5” contract to provide fuel in Iraq in 2003 and 2004. The Defense Contract Audit Agency (DCAA) also faulted KBR for the quality of the records it delivered to the investigation, citing discrepancies between reported actual costs and accounting records. Halliburton is asserting that no wrongdoing was involved, claiming that the costs stemmed directly from the strictures it was working under and the challenges of getting shipments into a war zone without fail. Company officials also point out the firm’s estimating and purchasing systems have recently received a nod of approval from the Pentagon’s Defense Contract Management Agency (DCMA).

A Pentagon spokeswoman said the audit was conducted to determine whether “fair and reasonable” prices were charged, and that DCAA (Defense Contract Audit Agency) auditors believe that KBR paid an unreasonable price for the fuel in some cases. “The major issues in this audit report have not been resolved,” she said, without providing details. Halliburton spokeswoman Wendy Hall said the company was cooperating fully with auditors, and would work with the Pentagon to resolve the issue. Army Corps spokeswoman Carol Sanders said the Corps was looking at a series of audits before starting final negotiations with KBR over final prices and potential payment adjustments. Meanwhile, Congressional pressure shows no signs of letting up.

Counterfeit Chinese Electronics Redux; AESA & GBU-39 Suspect

On Sept 30/08, “The USA’s National Cybersecurity Initiative” focused on the belated but growing reaction to recent uses of cyber-attacks as an adjunct to warfare, and by the growing rate of attempted intrusions into American systems from countries like China. “Secure Semiconductors: Sensible, or Sisiphyean?” discussed the growing realization within the US military that massive use of commercial electronics, coupled with the complexity of modern chip designs, made it very difficult to be sure that “backdoors” and other security flaws weren’t being inserted into high-end American defense equipment. It’s a difficult conundrum, because commercial chips offer orders of magnitude improvements in cost and performance. Hence DARPA’s “Trust in IC” program, which hopes to crack the problem and offer the best of both worlds.

On Oct 2/08, Business Week’s in-depth article “Dangerous Fakes” claimed that a key component of the silicon security threat might be even simpler:

“The American military faces a growing threat of potentially fatal equipment failure – and even foreign espionage – because of counterfeit computer components used in warplanes, ships, and communication networks. Fake microchips flow from unruly bazaars in rural China to dubious kitchen-table brokers in the U.S. and into complex weapons. Senior Pentagon officials publicly play down the danger, but government documents, as well as interviews with insiders, suggest possible connections between phony parts and breakdowns… Potentially more alarming than either of the two aircraft episodes are hundreds of counterfeit routers made in China and sold to the Army, Navy, Air Force, and Marines over the past four years. These fakes could facilitate foreign espionage, as well as cause accidents. The U.S. Justice Dept. is prosecuting the operators of an electronics distributor in Texas – and last year obtained guilty pleas from the proprietors of a company in Washington State – for allegedly selling the military dozens of falsely labeled routers… Referring to the seizure of more than 400 fake routers so far, Melissa E. Hathaway, head of cyber security in the Office of the Director of National Intelligence, says: “Counterfeit products have been linked to the crash of mission-critical networks, and may also contain hidden ‘back doors’ enabling network security to be bypassed and sensitive data accessed…”

Update

August 19/15: A Chinese company has been accused of selling counterfeit Active Electronically Scanned Array (AESA) radar systems, using a design taken from Israel’s Elta Systems. NAV Technology Company is believed to be selling a version of Elta Systems’ EL/M-2052 system, an airborne fire control radar capable of tracking dozens of targets simultaneously. The company also offers other products thought to be taken from US designs, including a copy of the GBU-39 precision munition.