* The UK’s government released 2013 defense export numbers up 11% to £9.8B ($16.8B), thanks to helicopter sales to Norway and South Korea, ongoing Middle Eastern deals, and a still respectable billion pounds worth of orders from the US. The report shows the UK far ahead of Russia, France and Germany, though it does recognize that relying on publicly acknowledged deals may overstate Britain’s actual market share. Another caveat is that this data tracks bookings rather than billings, but large defense contracts often follow a tortuous path to actual completion and payment.
A Market Ripe for Consolidation, Open to Disruption
* The AlixPartners consultancy thinks market conditions are in place for strong merger and acquisition activity in defense and aerospace, as well as potential “disruptive innovation” – aka “creative destruction” if you’re the incumbent on the receiving end of said innovation – which was not on their radar 5 years ago. Former Defense Undersecretary and current DRS CEO William J. Lynn III said yesterday during a think tank event that consolidation was inevitable in the defense sector, and also talked about potential disruption coming from tech firms outside of the traditional military sphere.
Expensive Parts
* An audit by the Pentagon’s Inspector General found that the Defense Logistics Agency potentially overpaid Bell about $9M on 33 sole-source commercial spare parts reviewed by the IG:
“This occurred because the contracting officer did not perform an adequate analysis when procuring sole-source commercial parts. Specifically, the contracting officer used the previous DoD purchase price without performing historical price analysis and accepted Bell’s market-based pricing strategy in a noncompetitive environment without performing a sufficient sales analysis.”
Modeling for Missiles
* The US Missile Defense Agency wants to hear from industry participants within and outside of the defense field about the latest Modeling and Simulation (M&S) developments. At this stage this is a Request for Information which does not commit them to any spending.
Middle East
* ISIL’s offensive in northern Iraq has looked sometimes surprisingly like conventional warfare, but the mass killings and abductions associated with civil wars are also rising.
* Israel launched dozens of airstrikes in the Gaza strip against Hamas, which has improved the range of its rockets but may have difficulties getting resupplies.
Making Cyber Friends
* The Washington Post reviews China’s pervasive cyberspying/hacking of American think tanks, law firms, news organizations and other institutions.
* Not to be outdone, the US continues its campaign to make Germany really angry with more inter-ally spying. Note that Chancellor Merkel happened to be meeting with Chinese Premier Li Keqiang when she responded to allegations that a German intelligence agent had sold information to the US. Meanwhile French finance minister Michel Sapin was calling for a rebalancing of global trade away from the US dollar and towards broader use of the Euro and (implicitly but clearly) China’s renminbi.
Asia
* The WSJ and the Diplomat ponder the closer relationship between China and South Korea. China is likely more interested in a Finlandization of the peninsula than a balanced relationship, but the two countries agree on disliking Japan.
* CCTV America, a TV channel owned by the Chinese government, is showing a keen interest for this year’s RIMPAC exercise. The video below is their segment on the Chinese ships sent to the exercise, with the Peace Ark hospital touted as a symbol of cooperation and mutual understanding. The only thing missing is a soundtrack from Sting singing that the Chinese love their children too:
