WILL COVID-19 SPENDING SEND ACQUISITION PLANS INTO TAILSPIN?
The financial burden that the coronavirus crisis is piling on national governments has soared far beyond the comprehension of anyone a mere three months ago. National borrowing has soared; counties such as the UK are looking at the highest National Debt for decades and the US National Debt is now $25 trillion and rising.
Even as far back as 7 April (yes, it seems a long time ago), the RAND Organisation in a comment entitled Defense Budget Implications of the COVID-19 Pandemic foresaw that the effects of spending caused by the coronavirus pandemic would require “the U.S. Department of Defense (DoD) to find efficiencies that are of at least the same magnitude as the recent sequestration.” And that was on a day that the number of deaths in the US was approaching 11,000, a long way from nearly the 100,000 by the time this article is published on Monday 25 May. The medical community in the US is also virtually united in expecting the rate of infection to increase again with the early opening of so many public areas, shops and other facilities across the country.
Defence, like all other sectors of the economy, has suffered, not least because of the international tier supply chain that supports manufacturing across the world. Some defence companies have tried to inject short-term financial support into their supplier chains, but globalisation means that the differences in how each country is emerging from lockdown is having a very staggered effect on any attempts to normalise once again.
On Tuesday 19 May, Lockheed Martin announced a temporary shift change to its Forth Worth F-35 production line which will result in “a slower workflow” due to supplier delays. The move is also designed to allow the company to retain the capacity of its home-based skilled workforce.
However, the defence industry remains a core strategic asset to many nations; threats still exist and those behind them see potential openings for exploitation. This may provide governments with a dilemma of continuing to meet existing and new threats, while financially having to divert defence spending into national recovery.
It is highly likely that defence acquisition will be slowed, requirements re-worked and even planned replacements deferred or even cancelled. A reduction in manpower is highly likely too, especially among the single or low skilled workforce.
This could prove to be an opening for defence companies specialising in areas such as robotics and artificial intelligence (AI). Industry sectors that can quickly stand up their research and development, including rapid prototyping, will be looked at to help alleviate the enduring financial costs of men and materiel that are still inherent in most armed forces.
Economies are likely to take time to recover, and growth at pre-COVID-19 rates are not widely expected to be seen for several years. As defence will undoubtably be cut back, the alternative will be to increase the march towards new defence capabilities offered in space, networking, robotics, AI – and a lot more unmanned.
EDITOR’S NOTE: (If your company is donating equipment or services to the military or government to help in the fight against COVID-19, let us know and we will publicise it here in the weekly briefing).
GENERAL NEWS AND ITEMS OF INTEREST
US Navy Nabs Speeding Narco Craft
A sleek, low-profile, drug running speedboat was intercepted by the Arleigh Burke-Class guided-missile destroyer USS Pinckney in the eastern Pacific Ocean on 14 May. The vessel was stuffed with an estimated 3,000 pounds (1,360 kilograms) of cocaine in 70 bales with a street value of around $28 million.
On 22 May, the Department of Defense (DoD) released news of the capture revealing that the drug runner has been initially spotted by a US Navy maritime patrol aircraft. The USS Pinckney, working as part of US Southern Command and Joint Interagency Task Force South’s counter-drug operations in the Caribbean Sea and the Eastern Pacific, was vectored to intercept the craft. The destroyer usually embarks two Sikorsky SH-60 helicopters; US Coast Guards were also onboard to enforce the arrest.
Agencies involved in counter narcotics operations include the departments of Defense, Justice and Homeland Security together with the Federal Bureau of Investigation (FBI) and Drug Enforcement Administration (DEA) and others.
US Splits from NATO over Proposal to Leave Treaty on Open Skies
The United States will exit the Treaty on Open Skies in six months citing continuous interference by Russia to prevent the monitoring of specific geographical areas within Russia, which are allowed by the Treaty.
The Treaty on Open Skies has 35 signatories and began on 1 January, 2002. It permits unarmed aerial surveillance flights over the entire territory of its participants, which include the US, Russia and the majority of Europe. China is not a signatory. Satellites are not included in the Treaty.
Secretary of State Mike Pompeo said the Russia has blocked the US from conducting surveillance flights around Georgia and Kaliningrad on the Baltic Sea, as well as preventing overflights and monitoring of military exercises.
President Trump said that a change of position by Russia may allow the decision to be reconsidered. However, having withdrawn the US from the 31 year old Intermediate-Range Nuclear Force (INF) Treaty on 2 August, 2019, observers believe President Trump will also not recommit to the 2010 New START (Strategic Arms Reduction Treaty) which is due to expire in 2021.
On 22 may, NATO Secretary General Jens Stollenberg stated: “We are firmly committed to the preservation of effective international arms control, disarmament, and non-proliferation.”
He did acknowledge that “Russia has for many years imposed flight restrictions inconsistent with the Treaty, including flight limitations over Kaliningrad, and restricting flights in Russia near its border with Georgia. Russia’s ongoing selective implementation of its obligations under the Open Skies Treaty has undermined the contribution of this important Treaty to security and stability in the Euro-Atlantic region.” However, he concluded that the allies would continue to engage with Russia to comply with the Treaty.”
US GOVERNMENT CONTRACTS
Highlighting a selection of $100 million+ government awarded contracts awarded between 18-22 May 2020:
DEFENSE LOGISTICS AGENCY
General Electric Aviation, was awarded a maximum $394 million contract for supplies related to the J85 engine. Using military services are Air Force and Navy. The contracting activity is the Defense Logistics Agency Aviation.
No orders over $100 million. Largest orders of the day:
US TRANSPORTATION COMMAND
Marine Terminals was awarded a $95 million contract to provide stevedoring and related terminal services at ports in Northern California. US Transportation Command is the contracting activity.
AECOM-BAKER-CARDNO NAVFAC Atlantic Planning JV was awarded a $95 million contract for architect-engineer services for preparation of Navy and Marine Corps planning and engineering services for work located primarily in the continental US east coast, but also worldwide. This contract is via Naval Facilities Engineering Command Atlantic.
Raytheon received a $92 million hybrid contract for sustainment, maintenance, training, refurbishment, overhaul, engineering services and spares to support ongoing operations of the National Advanced Surface to Air Missile System. Via US Army Contracting Command.
No orders over $100 million. Largest order of the day:
General Dynamics Ordnance and Tactical Systems was awarded a $58 million modification contract for the production and shipping of Mk 82 guided-missile directors and Mk 200 director control units. The Mk 82 director serves to position the fire control system antenna to a commanded and stabilised position in space for the purpose of illuminating the target. The director has two axes of motion and has slip rings and a dual radio frequency rotary joint to allow unlimited rotation in train. The Mk 200 director control houses the elevation and train servo-amplifiers for its associated director. Within the director control, solid-state servo-amplifiers provide the servo drive signals that position the director to the desired target position. These components are part of the Mk 99 missile fire control system framework, which is a critical component of the Aegis Weapon System. Contract via Naval Sea Systems Command.
Viasat was awarded a $998 million contract for the production, retrofits, development and sustainment of the Multifunctional Information Distribution System (MIDS) Joint Tactical Radio Systems (JTRS) terminals. Currently, there are three variants of MIDS JTRS terminals: the Concurrent Multi-Netting-4, the Tactical Targeting Network Technology and the F-22 variant. These terminals will continue to be procured, sustained and updated for future growth, including JTRS advanced networking waveforms such as: multifunction advanced data link, intra-flight data link and other advanced networking waveforms. The MIDS JTRS terminal is a line-of-sight radio system for collecting and transmitting broadband, jam-resistant, secure data and voice across a variety of air, sea and ground platforms. This contract combines purchases for the Navy, Air Force and MIDS Program Office, as well as purchases for NATO and all NATO nations under the FMS programme. The Naval Information Warfare System Command is the contracting authority and awarded the contract on behalf of the MIDS Program Office.
Data Link Solutions, comprised of BAE; and Collins Aerospace is also awarded a $998 million contract for the production, retrofits, development and sustainment of the Multifunctional Information Distribution System (MIDS) Joint Tactical Radio Systems (JTRS) terminals. Again, this contract combines purchases for the Navy, Air Force and MIDS Program Office, as well as purchases for NATO and all NATO nations under the FMS programme. Also via the Naval Information Warfare System Command on behalf of the MIDS Program Office.
Intercontinental Construction Contracting; FBGC JV; Pontiac Drywall Systems; Maclean-Ocean JV; RAND Enterprises; and Aimcon Design Build are awarded $99 million construction contract for construction projects located primarily within the Naval Facilities Engineering Command (NAVFAC) Washington area of responsibility (AOR). Via the Naval Facilities Engineering Command.
US AIR FORCE
Ventech receive a $99 million for performance of the Base Level Software Support V contract. This contract provides for purchasing of commercial software, software maintenance and bundled maintenance, filing purchases and license information database operations and maintenance, report generation and general support to address software, documentation and licensing issues. Via Air Force Testing Center.
US AIR FORCE
Northrop Grumman Systems was awarded a $2.3 billion contract modification for Next Generation Overhead Persistent Infrared Polar Space Vehicles 1 and 2. This modification adds Phase One for design/development, critical path flight hardware procurement, and risk reduction efforts leading to a critical design review to the basic contract. Contract via Space and Missile Systems Center.
Lockheed Martin received a $485 million contract for Department of Defense and Foreign Military Sales (FMS) Sniper, Infrared Search and Track (IRST); and Low Altitude Navigation and Targeting Infrared for Night (LANTIRN) navigation pod (fixed wing) hardware production. This contract involves FMS to (this list is not all inclusive): Bahrain, Belgium, Bulgaria, Canada, Egypt, Greece, Indonesia, Iraq, Israel, Jordan, Republic of Korea, Kuwait, Morocco, Netherlands, Norway, Oman, Pakistan, Poland, Qatar, Romania, Saudi Arabia, Slovakia, Taiwan, Thailand and Turkey. FMS funds in the amount of $34 million are being obligated at the time of award for the country of Morocco. Contract through Air Force Life Cycle Management Center.
JOINT ARTIFICIAL INTELLIGENCE CENTER
Booz Allen Hamilton was awarded a five-year $800 million task order contract to deliver the Joint Artificial Intelligence Center (JAIC) artificial intelligence (AI) enabled products to support war fighting operations and be instrumental in embedding AI decision-making and analysis at all tiers of Department of Defense (DOD) operations. This is a General Services Administration (GSA) Alliant 2 government-wide acquisition contract for AI products that will leverage the power of DOD data to enable a transformational shift across the DOD that will give the US a definitive information advantage to prepare for future warfare operations. GSA Federal Systems Integration and Management Center provided the contract.
Lockheed Martin received a $497 million modification contract for Phased Array Tracking on Radar to Intercept Advanced Capability-3 missile support centre post-production support. Via US Army Contracting Command.
DEFENSE INTELLIGENCE AGENCY
Clear Resolution Consulting; NextGen Federal Systems; S2 Technologies; LBO Technology; Lock4; Parra Consulting Group; and SHINE Systems have been awarded a $99.5 million for facility management, logistics, administrative, readiness, executive and security support services to support the National Media Exploitation Center. This contract through HUBZone via the Virginia Contracting Activity.
New date: May 2022, Sydney, Australia.
Message from the organiser: “Reflecting the increasing importance of the Indo Pacific region to the entire world, the PACIFIC International Maritime Exposition will become the INDO PACIFIC International Maritime Exposition from 2022. Initially, there will be a new timing. Instead of the previously planned PACIFIC dates in August 2021, INDO PACIFIC will now, in the wake of COVID 19, initially be held during May 2022.
“In consultation with the Royal Australian Navy, the INDO PACIFIC International Maritime Exposition will now be held in Sydney during May 2022, instead of August 2021 as previously planned for PACIFIC. Precise dates will be announced shortly. Once the aftermath of the pandemic has been transitioned, it is intended that AMDA’s expositions will resume their normal biennial cycle, with INDO PACIFIC returning, after 2022, to regular timing in the latter half of odd-numbered years.”
Keep safe and healthy everyone.
Armada International / Asian Military Review