December 5 Weekly Defense Industry Roundup

Posted by Fred Wellman

OMB, DoD Agree on $523B Budget; Budget Chicken Begins

Colin Clark, AOL Defense. Colin calls this budget chicken because the Administration has sent forth a 2013 budget that takes into account the initial $500 billion in budget cuts dictated by the budget control act but does not address the numbers associated with the sequestration triggered by the Super Committee failure. It’s sort of like throwing down the glove for Congress to see who blinks first. 

Kendal Cites Flawed Army Future Combat Systems as Costly Lesson

Tony Capaccio, Bloomberg. Acting Undersecretary of Defense for Acquisition Frank Kendall spoke this week about the importance of DoD and industry working together to ensure that a realistic program schedule drives development and avoids failures like the Army’s doomed Future Combat System which he worked on at SAIC. He cited the increasing reliance on better affordability studies by DoD to avoid the kinds of mistakes that have seen over one-third of Army acquisition funds spent on programs which were ultimately canceled.

Pentagon Will Not Target Firms’ Profits: Official

Zachary Fryer-Biggs, Defense News. DoD’s Director of Procurement and Acquisition Policy told an audience of investors last week in New York that the department is not looking at targeting defense manufacturers’ profits. Shay Assad made it clear that the department is targeting cost reduction, not necessarily margin reduction, and on many programs their margins may actually go up. Simply put they only care about paying less and not what the margin for the maker is on their end. While this sounds great, the fact is that by driving efficiency and cost reductions it is going to cost manufacturers more to compete and make those changes, so he admits that it will be difficult to do both.

GE, Rolls Royce Stop Funding of F-35 Alt Engine

Dave Majumdar, Defense News. In a surprise announcement on Friday makers of the F136 alternate JSF engine announced they would not continue building the engine on their own as initially planned when DoD ordered a stop work on the effort last year. GE and Rolls Royce recognized that with the current budget climate there was little hope a second engine — regardless of its merits — would ever be funded by Congress or DoD, and have moved on after a year’s long battle.

South America as Growth Market

Matt Valone, Avascent has looked at growth in defense budgets and sees a few bright spots for defense manufacturers in South America. Brazil has seen increasing budgets and is planning to continue as the Olympics near in 2016, with a projected $2 billion in potential opportunity. In addition, Columbia is continuing to outfit its armed forces to finish its fight against FARC guerillas as well as prepare for external threats coming from Venezuela and other countries. Following closely behind, Chile is the fourth largest defense budget on the continent, and has recently moved to acquire additional F-16’s and other major programs. Clearly there are still opportunities abroad.

The week ahead:

Tradeshows: No major tradeshows or conferences of interest this week that we are aware of but Army will beat Navy.

Congress: The full Congress is in session this week.  

Senate Foreign Relations Committee-Hearing (10:00, Thurs, 8 December) Full committee hearing on the nominations of Tara Sonenshine to be undersecretary of State for public diplomacy; and Earl Gast to be an assistant administrator of the U.S. Agency for International Development Witnesses: The nominees testify Location: 419 Dirksen Senate Office Building

House Homeland Security Committee-Hearing (2:00, Tues, 6 December) Counterterrorism and Intelligence Subcommittee hearing on “Jihadist Use of Social Media – How to Prevent Terrorism and Preserve Innovation.” Witnesses: Evan Kohlmann of Flashpoint Global Partners; William McCants, analyst for CNA Analysis & Solutions; and Andrew Aaron Weisburd, director of the Society for Internet Research, testify Location: 311 Cannon House Office Building

House Homeland Security Committee and Senate Homeland Security and Governmental Affairs Committee-Hearing (9:30, Thurs, 7 December) Joint hearing on “Homegrown Terrorism: The Threat to Military Communities Inside the United States.” Witnesses: Assistant Defense Secretary for Homeland Defense and Americas’ Security Affairs Paul Stockton; Jim Stuteville, U.S. Army senior advisor for counterintelligence operations and liaison to the Federal Bureau of Investigation; Army Lt. Col. Reid Sawyer, director of the Combating Terrorism Center at West Point; and Daris Long, father of the late U.S. Army Pvt. William Andrew Long, who was shot and killed in a 2009 terrorist attack on a military recruiting center in Little Rock, Ark., testify Location: House Visitor Center-210, U.S. Capitol

House Oversight and Government Reform Committee-Hearing (10:00, Thurs, 7 December) National Security, Homeland Defense and Foreign Operations Subcommittee hearing on “Oversight in Iraq and Afghanistan: Challenges and Solutions.” Witnesses: TBA Location: 2247 Rayburn House Office Building House Foreign Affairs Committee-Hearing (2:30, Thurs, 7 December)

Think tanks and other news events:

CSIS-Schieffer Series Dialogue – Securing Cyberspace in the 21st Century (5:30 PM, Tues, 6 December) Description: A discussion on the challenges of cybersecurity. Participants:  Gen. (Retired) James Cartwright (Harold Brown Chair in Defense Policy Studies, CSIS), James Andrew Lewis (Director and Senior Fellow, CSIS), Ellen Nakashima (Washington Post National Security Reporter), Moderated by Bob Schieffer Location: B1 Conference Center, Center for Strategic and International Studies, 1800 K Street, NW, Washington DC, 20006

CSIS – Military Strategy Forum: The Future of America’s Expeditionary Force in Readiness (9:00, Weds, 7 December) Registration Required. Assistant Commandant of the Marine Corps General Joseph Dunford gives a keynote address on the future of U.S. Ground forces followed by a panel discussion from a distinguished group of former military leaders and policy experts.  Breakfast will be served. Participants: Thomas Donnelly, American Enterprise Institute, Andrew Hoehn, RAND Corporation, Lieutenant General Robert Blackmanm, U.S. Marine Corps (Ret), Lieutenant General James Dubik, U.S. Army (Ret) , Nathan Freier (Moderator), Center for Strategic and International Studies Location: B1 Conference Center, Center for Strategic and International Studies, 1800 K Street, NW, Washington DC, 20006

The Jamestown Foundation – The Fifth Annual Terrorism Conference: “Al-Qaeda After Bin Laden (8:30, Thurs, 8 December) Registration necessary cost $100 The Foundation hosts a daylong series of panels and discussions with multiple luminaries in the study of terrorism with a focus on what comes next in the global fight on terror organizations now that Bin Laden is dead. Participants: General (Retired) Michael Hayden, Former Director of Central Intelligence, Eric Schmitt and Thom Shanker, New York Times and a host of other leaders in the studies of terrorism. Location: National Press Club Grand Ballroom, 529 14th St. NW, Washington DC

The Atlantic Council – Security and Partnership in an Age of Austerity (9:00, Fri, 9 December) RSVP with name and affiliation necessary [email protected] Much analytic work has been done in the Washington policy community on how the United States military can weather this new era of defense austerity, but little analysis has focused on how the United States can strengthen US and international security by bolstering existing alliances and forging new partnerships. Chairman of the Joint Chiefs General Martin Dempsey will address this important topic in his conversation with David Ignatius just days after returning from consultations in London with UK political and military leadership. Continental breakfast will be served. Participants: General Martin Dempsey, Chairman of the Joint Chiefs, David Ignatius, Washington Post Opinion Writer Location: Corcoran Ballroom, 2800 Pennsylvania Avenue, NW, Washington DC

Wreaths Across America Arlington Wreath Laying (8:30 AM, Sat, 10 December) This year marks 20 years that Wreaths Across America has decorated Arlington Cemetery and other national cemeteries across the country with thousands of Christmas wreaths.  Worcester Wreaths are bringing a record 100,000 wreaths and expect massive crowds at Arlington. If you have never participated in this event we can’t recommend it enough. It has become a Wellman family tradition each year. Bring hot chocolate and check out the guide at the link above.

Army vs. Navy Football  (2:30 PM, Sat, 10 December) CBS will be broadcasting America’s Game as the Army team attempts to finally end one of the longest losing streaks in the history of this 112 year football tradition.  This year’s game is in Washington D.C. instead of the usual Philadelphia venue.  We will be reporting live from the game! Go Army, Beat Navy! Participants:  Fred Wellman and 2.2 million Service members world-wide Location: FedEx Field, Landover, MD

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 05, 2011 9:08 am

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