Winslow T. Wheeler is the Director of the Straus Military Reform Project of the Center for Defense Information in Washington. He spent 31 years on national security issues for US Senators, from both parties, and the GAO. In this series, he begins “Part I: How Big is the Defense Budget?” by explaining the basics of the FY 2006 defense budget (q.v. DID coverage): some aspects of basic composition, the disagreement over its true size, etc.
Small business qualifier Safety Systems Corp. in Carol Stream, IL received a $5.5 million firm-fixed-price contract for the M4 Surefire light’s rapid fielding initiative. Work will be performed in Carol Stream, IL and is expected to be complete by June 30, 2006. This was a sole source contract initiated on Jan. 23, 2006 by the Army Tank-Automotive and Armaments Command at Picatinny Arsenal, NJ (W15QKN-06-C-0115). These are very high-end flashlights at $330 per (retail) with accessories extra, but $5.5 million will still buy quite a few of them.
Is spending this much on flashlights a waste? Why should our readers care about a flashlight, anyway, or consider this important? No, it’s not a waste, and there are plenty of potentially life-saving reasons to care – as stories from both the front lines and the civilian world attest…
Andrew Leckey has some interesting observations about the US defense industry as a whole right now. The hot tickets, he says, are information technology, communication, and high-tech equipment designed to assist soldiers in the field. These trends have helped drive recent acquisitions of defense IT firms (CACI International Inc. – Information Systems Support Inc.; General Dynamics – Anteon International Corp.; L-3 – Titan; Lockheed Martin – Aspen Systems Corp.; ManTech – Gray Hawk; et. al.).
He also quotes some analysts who see the small-mid cap defense technology companies outperforming large caps throughout the whole cycle of upturns and downturns in defense spending. Acquisitions drive that, too, and are are driven in turn by US government procurement policies. Some create set-asides for small businesses, which drives the consistent formation of new companies. These set asides also encourage cooperation with larger defense firms via strategic partnering, which is given a further boost by contract vehicles like NetCents. These smaller firms may get bought by larger firms in time, and so the cycle continues. Additional thoughts on key sectors, stocks to watch, and industry performance can be found in the article itself: “Tech Firms Big Guns In Defense Sector” (defunct) | FindArticles.com version | RedOrbot version.
UPDATE: The acquisition trend has continued; between the March 2005 selection of firms eligible to compete for the $20 billion ITES-2 contract, and its final resolution of awards in November 2006, 3 of the 17 firms on the original short list had been acquired by larger firms.
Boeing Satellite Systems Inc. in El Segundo, CA received a $148.2 million firm-fixed incentive with firm-target contract. It instructs Boeing to begin work on the fourth satellite in the Wideband Gapfiller Satellite (WGS) system, a set of 13-kilowatt spacecraft based upon Boeing’s 702 satellite model. Boeing is already under contract to build the first three satellites for the WGS system, a multi-spacecraft constellation designed to do exactly what its name implies, and provide much-needed bandwidth-anywhere capacity for US forces. DID has covered the Wideband Gapfiller System in-depth.
As part of the non-recurring engineering effort, Boeing Satellite Systems will be addressing spacecraft hardware obsolescence issues through the implementation of alternative components or designs, or selection of new suppliers. They’ll also be handling advance procurement of long-lead-time parts for the manufacture of WGS #4. Solicitations began December 2005, negotiations were complete in February 2006, and work will be complete by July 2007. The Headquarters Space and Missile Systems Center at Los Angeles Air Force Base, CA issued the contract (FA8808-06-C-0001).
According to US DoD documents, The FY 2006 budget allocated $164.3 million to the WGS program: $72 million for procurement, and $92.3 million in R&D. The FY 2007 request for the program is $452.1 million: $414.4 million to procure satellite #4, and $37.7 million in R&D.
Lucent Technologies Inc is being awarded a firm-fixed-price, indefinite-delivery/ indefinite-quantity contract to provide the forward-deployed war-fighter critical Command and Control (C2) information and IT services over a broadband gigabit optical network for the Army and other DITCO customers throughout European Command and Central Command area of responsibility.
This award is made on behalf of the product manager, Defense Communications Systems – Europe Dense Wave Division Multiplexed – Optical Transport Network (DWDM-OTN) project. The contract has a base period of 2 years with 3 one-year options, and estimated life cycle value for the DWDM-OTN project is $94 million.
Kiewit Building Group Inc. in Omaha, NB won a $27 million firm-fixed-price contract for construction of an Air Force weather agency headquarters at Offutt Air Force Base, NB. Work is expected to be complete by Oct. 22, 2007. There were 23 bids solicited on Oct. 11, 2005, and four bids were received by the Army Corps of Engineers in Omaha, NB (W9128F-06-C-0005).