Primes Under Booking Pressure
* General Dynamics’ Q3 revenue was down by 1.7% to $7.8B. Information systems sales break from the trend with a 4.4% increase, but even combined with healthy aerospace gains, they can’t quite compensate for Combat Systems shrinking to become the company’s smallest division by revenue for the quarter and year to date. Total backlog stands at $47.9B (83% funded), 6.8% lower than a year ago. Press release.
* Raytheon reported Q3 2013 sales down 3% to $5.8B. Space and Airborne Systems (SAS) is down the most, with a 7% Y/Y decrease. Total bookings 9 months into the year are down by a much more pronounced 22% to $5.7B, and the total backlog lost $2.8B to $32.2B (69% funded). A book-to-bill ratio of 97% indicates that this quarter’s revenue level is a sign of things to come. Among recent Raytheon wins, AMDR and NGJ are both facing GAO protests from competitors. Investor slides | press release [PDFs].
* Overall, the primes have been smoothly managing their bottomline earnings since the current era of defense budget turbulence began. But there’s no escaping the fact that prime contractors are facing topline headwinds. There is only so much cost control and share repurchasing a company can do in a context of declining revenue.
DoD’s Shrinking, Fuzzy Budget
* Todd Harrison from the CSBA think tank explains [PDF] what’s going on with the Pentagon’s project. Among other difficulties, unobligated funds are decreasing, especially in RDT&E and procurement. Video:
Consolidate This
* The US Navy’s Space & Naval Warfare Systems Command (SPAWAR) will host an industry day to discuss its data center consolidation plans on Nov. 20 in Alexandria, VA.
Made in the Wrong Country
* Robert Luba, owner and GM of Allied Components LLC in New Jersey, pleaded guilty before a US district judge to making a false claim with the Pentagon by providing non-conforming made-in-India wing-pins for F-15s instead of parts made in the US. The US Air Force figured it out and had to ground 47 aircraft for inspection. Luba also pleaded guilty to a violation of the Arms Export Control Act for transmitting information about a component of a nuclear-powered submarine to India without State Department approval.
UAV GPS Jamming
* In May last year a Schiebel S-100 crashed during a test in South Korea, killing one person and harming two. This led to an audit by the South Korean Navy, which according to Yonhap found that the UAV’s backup navigation systems are not sufficient to maintain full functionality in case of GPS jamming.
Pakistan Knew About UAV Strikes, Wants Them to End
* Secret CIA documents and Pakistani diplomatic memos obtained by the Washington Post show that the US had kept Pakistan’s government informed of its strikes in the country. Prime Minister Nawaz Sharif met with President Obama yesterday to ask him to put an end to the strikes.
NSA Worldwide Tour: Euro Leg Fully Booked
* It’s a tough week for American ambassadors in Europe. The German foreign minister summoned the US ambassador following allegations that the NSA had tapped Chancellor Merkel’s cell phone. The Chancellor herself called President Obama to discuss the issue. (No, that one bit of information was not provided by the NSA!) This follows revelations on Monday of mass data collection by the US in France. On Tuesday US Director of National Intelligence James Clapper denounced the allegations published by Le Monde as “inaccurate and misleading information”. But yesterday the newspaper in return showed [in French] the source document backing their claims.
* Of course European countries, starting with France, spy too. But none can afford a program of the scale and reach revealed by Edward Snowden.
Mountain Roundup 2013
* Today’s video shows the German Air Force recently training with their US counterparts, as well as US marines, at Mountain AFB in Idaho. Germany’s population density is too high to allow the unimpeded airspace available in western US states where the federal government maintains a high share of land ownership [PDF].
