March 4 Weekly Defense Industry Roundup

Posted by Fred Wellman

Spending Cuts Threaten Military Town’s Businesses

Parija Kavilanz (@ParijaKavilanz), CNN Money. There are ten thousand stories about sequester and its effects this week. The bottom line is that it was officially put into effect by executive order on Friday evening directing some $85 billion in cuts across a wide swath of the federal government by September. But the real effect is already being felt by small businesses like those highlighted in this story in Colorado Springs where orders for everything from cotton rags to maintenance on aircraft have all been cut back putting jobs and entire companies at risk. The next big fight will be the actual 2013 defense budget and the debt limit debate that will face another showdown with a March 27th date. Most observers think Congress is going to let sequester go into effect as elements of both parties actually like the cuts for various reason. Even brand new Secretary of Defense Hagel is signaling it’s not the end of the world now. The chance to come up with a deal anytime soon is unlikely until the end of March as part of grand compromise designed to avert a government shutdown.

Pentagon F-35 Program Chief Lashes Lockheed and Pratt

Jane Wardell (@TheJaneWardell), Reuters. In a remarkable outburst while visiting Australia last week, the head of the Joint Strike Fighter program office, Air Force Lt. Gen. Christopher Bogdan, eviscerated lead contractor Lockheed Martin and engine maker Pratt Whitney. Bogdan said neither contractor has been acting like companies who want to work with DoD for forty years but instead like they are “getting ready to sell me the very last F-35 and the very last engine and are trying to squeeze every nickel out of that last F-35 and that last engine.” Bogdan was in Australia trying to keep that country signed on to the program as yet another engine issue grounded the aircraft briefly last week. Both manufacturers pushed back immediately rolling out statements highlighting their efforts to work with the military. The fact is the most expensive weapons system in history is struggling to get off the ground, literally, as the largest cuts to defense in decades kick in and those are two realities sure to lead to problems in the next couple of years. It will be surprising if the Marine version of the aircraft isn’t cut and more countries don’t drop out of the program.

Air Force Awards Light Air Support Contract

U.S. Air Force Release. After a series of stops and starts including completely returning to the drawing board and issuing a new RFP last year, the Air Force has awarded U.S. based Sierra Nevada a $427 million contract to build light attack aircraft for the Afghan air force. The Brazilian manufacturer Embraer’s Super Tucano will be built in Jacksonville, Fla. with two aircraft a month to be delivered starting in September 2014. No protest is expected this time from Hawker Beechcraft which lost the last version of the contract and puts Embraer in the unique position of being a growing defense manufacturer in these times of austerity. The propeller powered Super Tucano has found a niche with so-called “frontier” countries as an easy to operate and maintain attack aircraft for supporting ground troops and has placed the company better known for its regional jets as one of the defense firms to watch in the future.

Pentagon Plans to Ask for Base Closures

Kate Brannen (@k8brannen), Politico. It looks like DoD hasn’t given up the fight to shut down excess infrastructure and plans to ask Congress for another two rounds of Base Realignment and Closure committees. The idea was shot down just last year but with new budget cuts digging in its clear that maintaining unneeded bases as huge numbers of standing forces are cut. Outgoing Defense Secretary Panetta told a meeting of governors of department plans to approach Congress for a round in 2015 and another in 2017 in an announcement sure to cause hand wringing among Congressional representatives, local officials, and business leaders across the country as it did back in 2005.

Pentagon Unveils Plan to Tap Potential of Mobile Devices

David Alexander, Reuters. The Pentagon is moving forward with pieces of its previously announced “mobile strategy” last spring to better leverage the over 600,000 mobile devices currently in use across the Defense Department. Under the plan announced last Tuesday a “platform agnostic” system will be developed to enhance the security features of commercial devices and allow secure and classified information to be shared among mobile devices. The idea is that even personally purchased devices will be able to go to a secure store and download the needed software and applications to make their devices secure and join DoD’s networks. No timeline has been announced by manufacturers and application developers have been given requests to submit their ideas on implementing the pieces of the program.

War Is Hell on Veterans’ Job Prospects: Fed Paper

Lucia Mutikani, Reuters. Neither the business cycle nor demographic differences between new veterans and civilians adequately explains the disparity in veterans’ unemployment, write two Federal Reserve economists in a new paper. The difference in training between wartime deployments and peacetime deployments means new veterans have skill sets that are not well matched to civilian jobs. Long, multiple deployments have also meant fewer opportunities to gain new skills or train the force in more transportable skills. The economists also write that the psychological effects of war and deployments also cannot be overlooked in employment. Of course PTSD is the factor many in the civilian world point to when it comes to veterans’ employment, but other effects of military service certainly play a role in what jobs veterans take, enjoy, and keep.

The week ahead:

Tradeshows and Conferences: 

HELI-EXPO 2013, Las Vegas, NV (Mon-Thu, 4-7 Mar) The largest helicopter tradeshow in the world kicks off today in Las Vegas. Over 20,000 industry professional and pilots will descend on 1.5 million square feet of exhibit space. No doubt the effects of sequestration and an increasingly unmanned fleet will be topics of many discussion. Helicopter Association International puts on the show.

Congress: Both chambers are in session this week.

Joint House and Senate Hearings:

House and Senate Veterans’ Affairs Committees (10:00 PM, Tue 5 Mar) Joint House and Senate Committees on Veterans’ Affairs to receive Legislative Presentation of the Veterans of Foreign Wars Witnesses: TBD Location: G50 Dirksen

Joint House and Senate Veterans’ Affairs Committees (10:00 AM, Wed 6 Mar) Joint House and Senate Committees on Veterans’ Affairs to receive Legislative Presentation of Multiple Veteran Service Organizations (VSOs) Witnesses: TBD Location: 345 Cannon


House Armed Services (10:00 AM, Tue 5 Mar) The Posture of the U.S. Pacific Command and U.S. Strategic Command Witnesses: General C. Robert Kehler, USAF, Commander, U.S. Strategic Command, Admiral Samuel J. Locklear, USN, Commander, U.S. Pacific Command

Location: 2118 Rayburn

House Armed Services (10:00 AM, Wed 6 Mar) The Posture of the U.S. Central Command, U.S. Special Operations Command, and U.S. Transportation Command Witnesses: General William M. Fraser III, USAF, Commander, U.S. Transportation Command, General James N. Mattis, USMC, Commander, U.S. Central Command, Admiral William H. McRaven, USN, Commander, U.S. Special Operations Command Location: 2118 Rayburn

House Veterans’ Affairs Subcommittee on Oversight and Investigations (1:30 PM, Wed 6 Mar) Waiting for Care: Examining Patient Wait Times at VA Witnesses: TBD Location: 334 Cannon

House Armed Services Subcommittee on Military Personnel (2:00 PM, Wed 6 Mar) Update on Military Suicide Prevention Witnesses: Lieutenant General Howard B. Bromberg , USA, Deputy Chief of Staff G-1, United States Army, Ms. Jacqueline Garrick, LCSW-C, Acting Director of the Defense Suicide Prevention Office, Department of Defense, Lieutenant General Darrell D. Jones, USAF, Deputy Chief of Staff for Manpower, Personnel and Services, United States Air Force, Lieutenant General Robert E. Milstead , Jr., USMC, Deputy Commandant, Manpower & Reserve Affairs, United States Marine Corps, Dr. Jerry Reed , Jr., PhD, MSW, Director, Suicide Prevention Resource Center, Vice Admiral Scott R. Van Buskirk , USN, Deputy Chief of Naval Operations, Manpower, Personnel, Training, and Education, United States Navy Location: 2212 Rayburn

House Armed Services (10:00 AM, Thu 7 Mar)  The Posture of the U.S. Northern Command and U.S. Southern Command Witnesses: General Charles H. Jacoby Jr, USA, Commander, U.S. Northern Command and North American Aerospace Defense Command, General John F. Kelly, USMC, Commander, U.S. Southern Command Location: 2118 Rayburn


Senate Armed Services (9:30 AM, Tue 5 Mar) Oversight hearing to receive testimony on U.S. Central Command and U.S. Special Operations Command in review of the Defense Authorization Request for Fiscal Year 2014 and the Future Years Defense Program. Witnesses: General James N. Mattis, USMC, Commander, U.S. Central Command, Admiral William H. McRaven, USN, Commander, U.S. Special Operations Command Location: 216 Hart

Senate Armed Services (9:30 AM, Thu 7 Mar) Oversight hearing to receive testimony on U.S. Africa Command and U.S. Transportation Command in review of the Defense Authorization Request for Fiscal Year 2014 and the Future Years Defense Program. Witnesses: General Carter F. Ham, USA, Commander, U.S. Africa Command, General William M. Fraser III, USAF, Commander, U.S. Transportation Command Location: 106 Dirksen

Think tanks and other news events:

Heritage Foundation: Cyber Warfare: How Conflicts in Cyberspace Are Challenging America and Changing the World, Washington, DC (12:00 PM, Tue 5 Mar) Description: The author will present his new book which provides an overview of cyber conflict issues and offers an analytical foundation for thinking about cybersecurity law and policy questions. He will review a wide range of cyber issues including malicious software, encryption, hardware intrusions, privacy and civil liberties concerns as well as other critical aspects to this expanding menace as it continues to develop on the international stage. RSVP online. Participants: Paul Rosenzweig, Author Location: 214 Massachusetts Ave NE, Washington, D.C. 20002

American Security Project: National Security and the DOD: 2025, Washington, DC (3:00 PM, Wed 6 Mar) Description: Two leading Congressmen from the House Armed Services Committee – from both parties – will lay out their views, and discuss what the Department of Defense requires leading up to 2025, and how it can be reformed in order to meet the challenges & seize the opportunities. RSVP to [email protected]. Participants: Representative Adam Smith, (D-WA09) and Representative Mac Thornberry, (R-TX12) Location: 2325 Rayburn House Office Building, 45 Independence Ave SW, Washington, DC

George C. Marshall Institute: Investing in National Security Space In An Age of Austerity, Washington, DC (10:00 AM, Thu 7 Marc) Description: A discussion on the impact of sequester and budgetary austerity on national security space programs and the framework proposed in a study by the George C. Marshall Institute. RSVP to [email protected]. Participants: Robert Butterworth, President, Aries Analytics, Todd Harrison, Senior Fellow, Center for Strategic and Budgetary Assessments, John Sheldon, Fellow, The Marshall Institute, Jay Gullish, Director, Space & Telecommunications, Futron Corporation Location: TechAmerica, 601 Pennsylvania Avenue NW, Suite 600, Washington, D.C

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, March 04, 2013 8:42 am

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