December 19 Weekly Defense Industry Roundup

Posted by Fred Wellman

McChrystal to Chair Board of New Siemens Federal Business

Marjorie Censer, Capital Business, Washington Post. Former Afghanistan commander retired Gen. Stanley McChrystal has been tapped as chairman of the board of directors for the new Siemens federal business entity, Siemens Government Technology. This is another move in the German company’s move into the U.S. market with a move of its U.S. operations to Washington D.C. McChrystal has had a very lucrative post-retirement career unaffected by the controversy surrounding his firing after negative comments from his staff about the administration. He now runs his own leadership consulting firm, is one of three senior advisers to the administration’s ‘Joining Forces’ campaign, and serves on the boards of JetBlue Airways and Navistar.

Pentagon’s First Female Policy Chief Quitting

Robert Burns, Associated Press. In a surprise move Monday Michelle Flournoy, Undersecretary of Defense for Policy, announced her resignation from the job to spend more time with her family. Flournoy is the highest ranking female in Pentagon history and is widely respected for her intellect and skills working in the difficult environment of the Pentagon. Her husband is Assistant Secretary of the Department of Veterans Affairs and they have young children that she wishes to spend more time with before making her next professional move. Rumors were swirling immediately about possible future jobs on the National Security Council or Obama campaign.

Congress Approves $662-Billion Defense Spending Bill

Kathleen Hennessey, L.A. Times. The Congress passed the 2012 defense authorization bill after threats of veto by the president on controversial provisions surrounding the handling of terror suspects in the United States and abroad. In the bill are a number of changes for the DoD, including the addition of the chief of the National Guard bureau as a full member of the Joint Chiefs of Staff, over the strident objection of the entire JCS and administration. Long a goal of the powerful National Guard lobbying groups, the JCS will now not just be service-based but also component-based. The balance is altered in ways that we will have to figure out for years to come. The move was a pure political stunt. Also in the bill is a cap on spending on services contracts at 2010 levels for the next two years, which industry was strongly against as an arbitrary limitation on government flexibility.

Booz Allen Could Be On the Hunt

Marjorie Censer, Washington Post. As big defense conglomerates go, Booz Allen Hamilton has been one of the least acquisition hungry of the bunch. That might be changing based on recent comments by company leadership indicating a strong debt payoff, giving the option to seek out new opportunities. There is a lot of movement due to the market softening in the U.S. for strong companies with cash on hand to find new opportunities to build their portfolio. Expect a lot more talk in the near future as more companies start actively looking of ripe targets to scoop up.

JSF-What’s Really Happening

Bill Sweetman, Aviation Week Ares Blog. The F-35 program was subjected to a Quick Look Review with results turned in to the JSF program director last month. The results leaked last week through the Program on Government Oversight and they are striking in the concerns on the development of the aircraft. Worries include a recommendation to slow down the concurrent production program so testing can be done to improve serious issues with the skin of the aircraft and other structural worries found in the report. Sweetman has a thorough examination of the QLR findings. The full report is available here (PDF):

F-35 Joint Strike Fighter Concurrency Quick Look Review:

A Hard Homecoming

The Economist. This is a pretty good roll up of the jobless numbers, and a more honest approach to the problem of new veteran unemployment than we have seen lately. There has been a strident and hyperbolic tone to the discussions of veteran unemployment in the last month or two. The fact that veterans as a full subset of American society actually have a lower unemployment rate than the national average, and even so called post-9/11 veterans are about 2 percentage points higher than the national average is getting lost in the national push on veteran unemployment. Where it gets ugly is this month’s 18-24 year old rate of 37.9%, which is running almost double their peer group among non-veterans. This is where the issue is most ugly and where help is needed for veterans, but it is not an easy resolution. Most at that age have not completed much if any college, and the skills they have gained in the military are typically not transferable. Resolving the challenge will not be easy in spite of multiple efforts underway.

The week ahead:

Tradeshows: No major tradeshows or conferences that we are aware of this week or next.

Congress: The full Congress is essentially in recess this week, however, there will be pro forma sessions to avoid recess appointments by the President. The House must vote on the payroll tax extension bill passed by the Senate on Friday. There are no hearings scheduled at all.

Fred Wellman with General Petraeus in Iraq
Fred Wellman, President ScoutComms, brings us his weekly review of defense industry news via The Scout Report. Fred served over twenty years as an Army officer in both aviation and public affairs. You can follow Fred on Twitter @ScoutComms.

This entry was posted on Monday, December 19, 2011 11:44 am

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