BAE Systems announced its 2011 financial results: sales dropped by 14% to 19.2 billion pounds (about $30B) while the order book shrank by 8% to 36.2 billion pounds ($56.7B). US sales accounted for 47% of the total but the Platforms & Services US division is the one that lost the most ground vs. 2010.
Indonesia will buy 9 C295 light transport planes from Airbus Military, for an undisclosed sum. They were a partner in designing & building the smaller CN-235 transport, and operate 19, so it’s a compatible acquisition on all fronts.
The Defense Acquisition University (DAU) overhauled the online resources dedicated to its Life Cycle Logistics Community of Practice (LOG CoP). The new website, available at https://acc.dau.mil/logtools, keeps track of hundreds of documents dedicated to technical management, product support, contracting strategies et. al.
Faced with a really tough fiscal environment, Italian Defense Minister Giampaolo Di Paola announced that Italy intends to reduce its F-35 order by about 40 units. Bloomberg | Reuters [in Italian].
The US Defense Science Board task force published its final report [PDF] on DOD’s basic research efforts after it was asked to assess them in August 2010. It finds them pretty good but urges the Department to pay more attention to the globalization of science, and calls its acquisition system an “immense burden.”
The Joint IED Defeat Organization (JIEDDO) released its 2012-16 strategic plan [PDF]. It’s not just about defeating devices – though of course that does not go away – they also want to go after the support networks behind the people making these explosives. Easier said than done when the use of cheap mass-market staples such as fertilizer is involved.
The US federal government puts together its budget by way of a protracted, ongoing process. As the largest recipient of discretionary federal funds, the Department of Defense adds its own layer of complexity unknown to other smaller departments. This article explains how the process unfolds with its major milestones, players, and how they interact.
Budget killer? With TRICARE costs spiraling, pharmacists and lawmakers are calling attention to the fact that the proposed merger of the USA’s only 2 national “pharmacy benefit managers” would not be good for TRICARE costs. If the merger is allowed by the FTC, it will be one more reason to push TRICARE recipients toward mail-order for drugs.
We welcome the Department’s better performance in controlling project-level cost increases, but remain concerned that total costs of the top 15 projects continue to rise for other reasons each year. Projects approved since 2002 have shown significantly lower overall cost growth than those approved before this date and since 2008 there has been no overall cost increase from project-specific technical issues. However, in 2010-11 the forecast costs to complete the 15 largest defence projects still increased by £466 million overall [DID: about $735M], and the Department continues to struggle to live within its means.
A note on variables that a Department cannot control: macro-economic factors such as exchange rate changes accounted for 38% of the 2010-2011 increase. Meanwhile the National Audit Office (NAO) reviewed the way the Ministry of Defence is handling reductions in the size of its workforce.
The Brookings think tank, on the proliferation of IED attacks in 2011: “[D]anger will not disappear even after the U.S. campaign in Afghanistan ends. […] It is unsustainable to keep throwing billions of dollars to fight a technology that costs the other side tens of dollars. […] We need […] solutions […] that are cheap and scalable.”
The inherent cost asymmetry imposed by mines is also on the Naval War College Review’s mind in their overview of mine warfare in China’s near seas [PDF]. Duly filed under the fashionable “anti-access/area-denial (A2/AD) in Asia” category.
US Congressman Mike Coffman [R-CO] is urging [PDF] Secretary Panetta to be bolder in applying his own Strategic Guidance and get US troops out of Europe. Coffman sits on the Armed Services Committee and is a former member of the Army Reserve then served in active duty in the Marine Corps.
Pakistan received its 18th and final new F-16C/D Block 52 fighter, and its 1st 2 upgraded F-16 fighters, under a multi-billion set of deals with the USA and Turkey.
F-16C/D Block 52 aircraft serve as the backbone of Poland’s air force. In February 2012, the USA’s Defense Security Cooperation Agency announced [PDF] Poland’s official request for F-16 weapons, as well as a 5 year fleet support contract that includes associated equipment, parts, and training. They will be bought using the USA’s Foreign Military Sales process, and the requested items are expected to cost up to $447 million.
If a contract is negotiated after the 15-day FMS wait period for NATO members, the prime contractors are listed as Raytheon in Tucson, AZ and Waltham, MA; Boeing in St. Charles, MO; McAlester Army Ammunition Plant in McAlester, OK; and United Technologies Corporation in Hartford, CT. Poland’s specific request includes:
In February 2012, IAI revealed that it has secured a $150 million contract for its EL/M-2032 fighter radar, from an unnamed customer. A Globes report places the customer within Asia.
The EL/M-2032 can be delivered in different sizes, and equips a number of different aircraft. It has been fitted to F-16s, including Israel’s own fleet. It has also been used to upgrade V/STOL Sea Harriers, F-5E/F Tiger light fighters, and F-4 Phantom, Kfir C10s, and Jaguar strike fighters around the world; and was recently picked for South Korea’s TA-50 and India Tejas lightweight fighters. So the question is, who’s the customer?
Todd Harrison at the Center for Strategic and Budgetary Assessments (CSBA) reviews options [PDF] for DOD to handle sequestration. “If this downturn in defense spending is like previous downturns, the FY 2013 budget projection the administration is about to release may prove to be highly optimistic.”
The US Senate Armed Service Committee’s (SASC) most important hearing this month will take place on Feb. 14 to get started with the FY13 budget and get briefed on the latest FYPD 5-year plans. The March schedule is set to receive testimony by department between March 1st and March 20.
US Senators representing Alaska Mark Begich [D, SASC member] and Lisa Murkowski [R-] introduced legislation (S. 2073) seeking to prohibit the Air Force from moving an F-16 squadron from Eielson AFB to Elmendorf and wrote to Secretary of Defense Panetta.
Recently-confirmed US defense acquisition Under Secretary Frank Kendall (pending Senate approval) discussed with the Center for Strategic and International Studies (CSIS) the implications of DOD’s strategic guidance and what’s coming for FY13. He confirmed he is aiming for continuity from his predecessor and former boss Ashton Carter’s Better Buying Power, and spoke with candor about contracting schemes such as concurrency or fixed-price awards going in and out of fashion at the Pentagon with equal fervor. But it doesn’t seem to matter much whether low-rate initial production is done on a cost-plus or fixed-price basis. In the end, what does really work? On the sign out of Kendall’s door: “In God we trust; all others must bring data.” Audio | PDF transcript.
Some acquisition requests are more urgent than others. Dealing with pressing operational requirements is what the Joint Rapid Acquisition Cell (JRAC) does within DOD, as well as some offices within the services such as the Army’s PEO-C3T.
