Weak Book-to-Bill Ratio from Prime Contractors Shows Sales Declines Are Here to Stay

• Northrop Grumman’s 2013 sales were down 2.2% to $24.7B. Total backlog shrunk 9.3% to $37B, with a book-to-bill ratio of only 89% in 2013. Thus the company predictably provides guidance below $24B in revenue for 2014. Aerospace and Electronic systems have actually done OK, it’s really Information Systems (-10.3% Y/Y) that has been dragging down the overall topline, just as it did in 2012.

• Like Lockheed Martin and Northrop Grumman, Raytheon is closing 2013 with a modest decline in its sales, down 2.9% to $23.7B. The backlog is down by 6.9% to $33.7B (68% funded). With a 93.4% book-to-bill ratio in 2013, here too the company’s 2014 outlook anticipates another year of declining revenue. 3% growth abroad was not enough to offset lower domestic sales. Space and Airborne Systems saw the steepest revenue decrease (-7%) among divisions.

US Modernizing its FPS-117 Surveillance Radars

Early brochure

The L-band, solid-state, 3-D AN/FPS-117 remains a very popular air surveillance radar around the globe, and can support both military and civilian functions. They’re designed for relatively good range and minimal maintenance, even in extremely harsh environments like northern Alaska and Greenland.

Lockheed Martin MS2 Radar Systems in Liverpool, NY has long since taken over from GE as the contractor who makes and maintains them, while the Air Logistics Center at Hill AFB, UT handles contracts, with a goal of maintaining current system coverage until 2025…

Boeing’s Humongous Backlog is Overwhelmingly Commercial

• Boeing reported 2013 revenue up 6% to a record $86.6B. Total backlog grew by $51B to $441B. As big as that number is, Airbus towers above it with more than $800B in their order book, or 8 years of production. Is this too much of a good thing? Boeing’s Defense, Space & Security business grew by 2% to $33.2B, though the company expects to lose as much as 10% of that topline in 2014. At $67B, the DSS backlog amounts to just 15% of the total.

Supporting Britain’s Apaches: IOS and Beyond

AH Mk.1

Britain flies a unique version of the AH-64D Apache Longbow, built under license from Boeing by AgustaWestland. Their AH Mk.1s have put their more powerful Rolls Royce/ Turbomeca RTM322 engines to good use in Afghanistan’s lift-killing “hot and high” flying conditions, allowing them to retain key equipment that other countries had to strip out as a weight-saving measure.

In October 2009, AgustaWestland signed the Apache Integrated Operational Support (IOS) through-life contract with the UK Ministry of Defence. The contract fits within their March 2005 Partnering and Business Transformation Agreement, and will result in a shift of British military personnel toward the front lines…

Asian Rebalance, With or Without the US

• India seems closer to ordering 15 US-2 amphibious aircraft from Japan for a total of up to $1.65B, probably with local assembly to satisfy Indian requests for indigenous production. This will provide India longer reach for naval patrolling as well as search & rescue.

• The US House Armed Services Committee held a hearing about the implementation of the Obama administration’s rebalancing to Asia-Pacific. Defense acquisition chief Frank Kendall renewed his call for sustained research funding, pointing out how China is testing hypersonic technology that air defenses might not be able to counter. Video.

• The CSIS think tank was hosting this morning its annual Asiapalooza, to forecast what might happen in the Asia/Pacific region in 2014. They observed that Xi Jinping has consolidated power very rapidly, though it was apparent right from the start that Xi was playing a strong hand. The audience got to vote during the panel, and is expecting assertiveness “with or without charm” from China, as one of the moderators quipped.

Congressionally-Constrainted Pentagon Castigates Contractors

• The Pentagon is increasingly enforcing an Earned Value Management clause in defense acquisition legislation (DFARS 252.242-7005) to withhold payments from prime contractors whose internal business systems are found inadequate.

• Todd Harrison and Mark Gunzinger from the Center for Strategic and Budgetary Assessments (CSBA) argue that the US Congress should stop interfering, both fiscally and strategically, with the Department of Defense, and allow more flexibility in DoD’s decision making.

T-6Cs to Train the Te Tauaarangi o Aotearoa

T-6C

The Royal New Zealand Air Force has made an interesting choice. They’re about to begin replacing their 12 locally-designed CT-4E basic trainers, and 4 leased Beechcraft King Air multi-engine conversion trainers, with 11 Textron Beechcraft T-6C basic/intermediate trainer turboprops. The NZ$ 154 million package includes the planes, 2 CAE operational simulators, computer-based training courseware, and customized RNZAF pilot training syllabi.

It’s an interesting platform choice, since the RNZAF has no high performance aircraft to train for.

US Air Force Weapons PEO to Present Future Armament Plans in April

• The Air Force’s Program Executive Officer for Weapons will hold an industry day on April 15/16 at Eglin AFB, FL, to present its armament acquisition plans. This PEO has been headed by Brig. Gen. Scott Jansson since April last year. The event is hosted by the Armament Systems Development Division, an office helping research coming from the Air Force Research Laboratory (AFRL) make it into programs of record. Their current efforts include the Airborne Weapon Layer (AWL) and the Anti-Jam Precision Guided Munition (AJPGM).

MUSIS: Can Europe Share Space Surveillance, Seamlessly?

Helios 2

Europe has a number of military satellite programs underway at the moment, but cooperation has been mostly haphazard and bilateral. Hence the ideal of MUSIS, a Multinational Space-Based Imagery System that would bring future sets of optical and radar imaging satellites under a common ground infrastructure, combining national or bilateral programs with interoperability that would allow these nations to make better use of their limited space surveillance resources.

So far, MUSIS remains more of an aspiration, though satellite components have been contracted. If it works, the overall MUSIS constellation will replace a number of previous platforms: France’s Helios 2, Germany’s Sar-Lupe radar satellite; and the ORFEO cooperative program that includes both France’s dual-use Pleiades optical satellites, and Italy’s dual-use COSMO-SkyMed X-band radar observation satellites. Participants would include Belgium, France, Germany, Greece, Italy and Spain.

Finland Updating Its Air Defense Systems

Finnish Buk M1

Control of the air isn’t a cornerstone of Finland’s defense, as it is for a country like Australia. Instead, Finland needs to make its airspace dangerous enough to deny enemies full air dominance, while its difficult terrain and mobile land forces bleed any Russian invasion until it quits.

That thinking fed into Finland’s recent decision to upgrade its medium and long-range air defenses, Russian 9K37-M1 Buk (SA-11 ‘Gadfly’) intermediate range anti-aircraft missiles, and radars with NATO-compliant solutions. The move was Finland’s largest single defense purchase since it bought its current fighter fleet of over 60 F/A-18C/D Hornets. The next step is to replace some of its man-portable, short range missile systems.