Ares: A Defense Technology Blog

Defense Acquisition 101

In Defense Acquisition 101 the first lesson might be that it's all a giant mess. But if you really want to know how the system works and doesn't work, Secrecy News has uncovered a brand new report on the whole system put out June 4 by the Congressional Research Service.

CRS sums up the problems.

The complexity of this system of systems combined with the magnitude of personnel, activities and funding involved in its operation can result in problems, including inefficient operations, fraud/waste/abuse, and inadequate implementation or enforcement of the myriad laws and regulations that govern it.

--Catherine MacRae Hockmuth

It's All Greek to Us

An Alaska Native Corporation company with an undetermined address has won a potential five-year, $250 million award from the U.S. Special Operations Command for linguist and translation services worldwide.

Now, for all we know, Shee Atika Languages LLC is perfectly capable of providing U.S. special operators with the language-related support they need to defeat al Qaeda and other terrorists in far-flung places like Iraq, Afghanistan, the Horn of Africa and the Philippines. But mid-Maine's SunJournal.com, which reported at length about the award, couldn't get in contact with the company and couldn't even get a good fix on its address while one reader says they've left town.

U.S. Technology? No Thanks

The only way to resolve technology access and U.S. government export restrictions imposed by ITAR is by “not including any U.S.-sourced technology into our products,” the President of the Aerospace and Defense Industries Association of Europe (ASD) said yesterday.

Charles Edelstenne, who is also CEO of France’s Dassault Aviation (manufacturer of the Rafale fighter and the Falcon family of executive jets), said that the U.S. ITAR rules will continue to be a factor in every area of business for Europe’s aerospace and defense companies.

In the context of space programs, steps are already being made towards completely excluding U.S. input in order to stay clear of the ITAR restrictions, adds Francois Gayet, the permanent Secretary-General of the ASD.

(Photo: Eurofighter Typhoon of the British Royal Air Force. Europe's aeronautics industry is doing well, says the ASD. Credit: Rolls-Royce Aerospace Defence)

Cranes, Food Service ... Oh Yeah, and LCS

Most aerospace companies take pains these days to stress how hard they are focusing on their “core” businesses. So the Manitowoc Co. was something of an anomaly during the aerospace presentations at a recent Bank of America investor conference in New York. The Wisconsin shipbuilding company was a major partner on a Lockheed Martin-built prototype for the U.S. Navy’s shallow-water Littoral Combat Ship (LCS) program. But Manitowoc CEO Terry Growcock didn’t even get to the LCS until the 27th slide in his presentation. Taking precedence were the company’s booming crane business – a beneficiary of the hot construction market in China - and its food service operation.

So why did the LCS take a back seat to cranes and fruit juice dispensers?  One reason may be that the Navy last month canceled a second ship the Lockheed Martin team was building due to soaring costs (a separate two-ship LCS order from General Dynamics was not changed). But it may just be that shipbuilding really isn’t all that important to Manitowoc anymore – the company generates 90% of its sales from the other businesses.

That inevitably led to a question from an investor on why the company bothers to keep the 105-year-old maritime unit. Growcock offered a cautious defense, maintaining that the unit was good for shareholders and didn’t require huge capital investments. But he left the door open to a sale down the road. “We’re not emotionally tied to any of our businesses,” he said.

--Joseph C. Anselmo

Fleeing Cheyenne

If you could see them under those green eye shades, it appears congressional auditors at the Government Accountability Office are raising their collective eyebrows over NORAD and U.S. Northern Command plans to get off Cheyenne Mountain.

NORAD and NORTHCOM, which are run by the same U.S. combat commander, last year announced they would "replicate" themselves into Peterson Air Force Base, Colo. The move allegedly would save up to $200 million annually - although GAO wonders how they think so - and help the cousin commands work together better, supposedly. 

The (Not) $69 Billion Contractor

Defense experts agreed – the digital slicing and dicing simply didn’t make sense. An Aerospace Daily & Defense Report analysis of data from the National Institute of Computer-Assisted Reporting (NICAR) showed the number-one Pentagon expense for 2006 was for “architecture and engineering services” – some $70 billion worth, nearly four times the amount spent for the next biggest bill for fixed-wing costs. Loren Thompson of the Lexington Institute echoed the concern that the expenses likely included items not normally associated with architecture and engineering services. “Honestly, I don’t know what to make of that,” he said. “It doesn’t match up with any budget planning.” Indeed it didn’t. And it matched up even less under further investigation.

USCG to LM/NG: We want our money back

Coast Guard Rear Adm. Gary Blore, who oversees the service's much-maligned Deepwater recapitalization program, says the service formally informed a Lockheed-Northrop joint venture yesterday that it rejects eight failed 123-foot patrol boats.

The letter of revocation triggers the official Coast Guard effort to get money back on the erstwhile boat-lengthening and upgrade effort. Their high-profile  implosion spearheaded an overhaul of the 25-year,  $24 billion modernization effort, now set to see further cost increases and other schedule issues.

At a House homeland security subcommittee hearing May 17, Blore told lawmakers that DHS officials were ending their own discovery phase to determine how much could be requested back from Integrated Coast Guard Systems.

--Michael Bruno

Bomb Team Lousy With Money

The Joint Improvised Explosive Device Defeat Organization, or JIEDDO, which was created to coordinate research into technology to defeat IEDs in Iraq and Afghanistan is apparently not very good at balancing its checkbook.

The Stars & Stripes reported over the weekend that JIEDDO is running out of money and has less than $50 million available to fund new projects. According to funding documents supplied to Congress, JIEDDO has only spent about $60 million of the $1.9 billion it received at the beginning of fiscal year 2007.  JIEDDO chief Retired Gen. Montgomery Meigs told the newspaper that the rest has been committed to the services, who manage the contracts. The result is a "cash flow problem," the newspaper reports.

The Market Has Softened

Walt Havenstein, the president of BAE Systems’ fast-growing U.S. subsidiary, sure knows how to keep a secret. In an interview just 10 days ago, Havenstein downplayed a question about his company making acquisitions. “The market cap on some of these companies is at all-time highs,” he told Aviation Week & Space Technology Editor-in-Chief Anthony L. Velocci, Jr., and Senior Business Editor Joseph C. Anselmo. “We see some little acquisitions, but the big acquisition activity is going to have to wait for a little softening of the market.”

Apparently that softening didn’t take long.

This morning, BAE announced a $4.5 billion deal to acquire Armor Holdings, a Florida-based manufacturer of tactical wheeled vehicles and armor systems for vehicles and individuals. The deal had been in the works since early this year, Havenstein said in a media conference call. He indicated that the talks were initiated by Armor Holdings but declined to comment further. If approved, the deal – which includes a purchase price of $4.14 billion and the assumption of $388 million in Armor Holdings debt -- would add more than $3 billion to BAE’s annual sales and make the company the Pentagon’s sixth largest contractor. BAE’s last major purchase in the U.S. was the $4.2 billion acquisition of United Defense Industries, which closed in mid-2005. In his interview with Aviation Week, Havenstein also waved off speculation about the possibility of BAE merging with a major U.S. defense contractor. “I know people have talked in the past about a big bang – a big merger – but to the best of my knowledge there’s nothing we’re considering now,” he said.

--Joseph Anselmo

Who Are these Guys?

Ares took note of the Center for Security Policy's "occasional paper" on the evils of EADS a few days ago. Now a curious little site called TeamJCA, which exists to lambaste the European company, has linked (and selectively quoted) Michael Bruno's story - but not my fisking of the CSP's diatribe, which among other things managed to link EADS to both Nazis and Communists in a single paragraph.