Royal Navy Buys OPV to Patrol Falklands for GBP 30M

Procurement Innovation

The U.K. Ministry of Defence today awarded a GBP 30 million contract to build a brand new warship to VT Group. The new Offshore Patrol Vessel (OPV) is being acquired under an innovative Public-Private charter, including a logistic support contract that guarantees over 300 days at sea per year. Meeting that benchmark currently requires two Castle class ships; in contrast, the OPV is estimated to save over GBP 2 million in support costs over a seven year period. Production will begin in June, and the new OPV is scheduled to enter service in 2007.

China’s Defense Budget Prepares for Double-Digit Growth

Red flag to a
bull defense market

Reuters reports that China is likely to announce yet another year of double-digit growth in its defense budget in the next week, with expectations hovering in the 10-12% range. Officially, defense spending grew about 11 percent last year over 2003, hitting CNY 211.7 billion ($25.6 billion). Still, many experts believe that China’s real defense expenditures are two to four times higher than official figures, as items like arms procurement and military R&D are often placed in other budgets.

The only thing the experts seem to agree on is the inability to derive a solid spending figure, but growth rates are impressive. Signs of recent modernization include purchases from Russia of SU-30 fighter jets, Kilo-class submarines, and destroyers. China has also produced as many as 700 short-range missiles, most of which are believed to be aimed at Taiwan. In related developments, both Japan and Taiwan are undertaking reviews of their future defense plans. Japan and the United States are also opposing European Union plans to lift a 16-year-old arms embargo on China. Defense News: China To Boost Military spending as it Eyes Taiwan.

China Arms Embargo Controversy Will Have Domestic Ripples

The heart of the matter

The U.S. campaign to dissuade Europe from lifting its arms embargo against China is bearing some fruit in Britain, where many suppliers consider the USA to be an important customer. Nevertheless, European Union is expected to lift its partial arms embargo before June 2005, when Luxembourg turns over the EU Presidency to Britain. Dual-use items and other low-profile military equipment are already cleared for sale by the EU. U.S. government officials, as well as Congress, have made it clear that retaliaton against European companies would follow if the ban is lifted, changing the contracting and procurement environment in America. Aviation Week & Space Technology: End to Chinese Arms Embargo Concerns British

Slower Growth for India’s Defence Budget

India’s military budget will increase by 7.8% to 830 billion rupees ($19 billion), a figure far below its original figures and one that is causing some analysts to question whether India’s list of military modernization programs can be sustained. Recent high profile acquisitions have included the Phalcon radar system from Israel for $1.1 billion, the Admiral Gorshkov aircraft carrier from Russia for $1.5 billion, and 66 Hawk jet trainer planes from Britain for $1.45 billion. The country is currently looking for 126 new jet fighters to replace an accident-prone fleet of Russian-built MiG-21s, six new submarines from France, an anti-missile system from the United States, and rocket launchers from Russia. Analysts point out that India’s Congress-led government came to power last May on a ticket that emphasized services for the poor, and received support from four communist parties. Many analysts see the coming budget as a sign of a shift in priorities. Defense News: Indian Analysts Disappointed With 7.8 Percent Defense Hike.

Outsourcing to India: Is Aerospace Next?

Made in…?

ExpressIndia reports that India is poised to become a key outsourcing hub for global aerospace and missile companies, including France-based MBDA missile systems, BAE and Rolls-Royce, Lockheed Martin, Northrop Grumman, and others. Perhaps “offshoring” is a better word, since the functions being sent abroad are components rather than entire processes or design/ manufacture efforts.

An indication of the growing importance of Bangalore’s aerospace potential can be gauged from the fact that during a recently concluded Aero India 2005 air show – billed as the largest in South Asia – deals worth more than $1.2 billion were signed between Indian and foreign aerospace firms.

UPDATES:

• Rolls Royce set up a subsidiary.

C-130J Program Attacked by Watchdog Groups

C-130J Hercules

The C-130J Hercules medium transport aircraft is already slated for cuts in the proposed 2005 budget. Recently, a series of watchdog groups have added fuel to the fire by coming out against the C-130J: Taxpayers for Common Sense (TCS), Military Money Project (MMP), the Project On Government Oversight (POGO), and the National Taxpayers Union (NTU). A series of government reports have identified various issues with the program, including subsystem reliability, software, defensive features, and its relative cost vs. the inflation-adjusted figures for older C-130 versions. POGO’s C-130J archive summarizes the case being made by opponents of the C-130J program, and adds numerous links to relevant news items.

The C-130J is a modification of the C-130H, undertaken by Lockheed Martin at company expense, with intended sales to the United States and various foreign markets. Key aims include reducing the life-cycle cost of the tactical airlift fleet, an emerging Air Force concern.

ITT Avionics Wins 2 ECM Contracts Worth $62M

B-52

ITT Avionics of Clifton, NJ won a pair of electronic countermeasures (ECM) contract modifications this week: a $13,995,655 modification related to the F/A-18 E/F Super Hornet, and a $48,229,597 modification for upgrading the B-52H bomber’s ECM systems. The Super Hornet award modifies a previously awarded firm fixed price contract (N00019-04-C-0074) to exercise an option for more spares of the AN/ALQ-214(V)2, a self-protection radio frequency [radar et. al.] jammer for tactical combat Navy aircraft. Work is expected to be completed in July 2008, and The Naval Air Systems Command, Patuxent River, Md. is the contracting activity. The B-52H award provides for the AN/ALQ-172(V) ECM system, part of the Group B components of the ECM improvements to B-52H aircraft. At this time, $36,172,197 of the funds has been obligated and work will be complete by February 2009. The Headquarters Warner Robins Air Logistics Center, Robins Air Force Base, GA is the source of this contract (# FA8523-05-C-0013).

Booming Market for Security-Cleared Employees

Workers with U.S. security clearances are in demand, and a backlog is making them even more valuable. It can take up to two years for an individual to receive a security clearance, and more than 400,000 candidates await clearances; in an effort to bring down this backlog, responsibility for clearance investigations recently has been handed from the Defense Security Service to the Office of Personnel Management. Unsurprisingly, Internet-based job boards like ClearanceJobs.com are becoming important links in the procurement chain. Open positions can be found in nearly every country with a U.S. military presence, including Iraq and Afghanistan. Source: National Defense Magazine, March 2005

DSR Wins $10M Contract for New-Tech Periscopes

Virginia-class SSN

Digital System Resources (DSR), Inc., Fairfax, VA, received a $10,017,241 firm-fixed-price, cost-plus-fixed-fee, non competitively procured contract for fabrication, integration, test and delivery of 7 photonics mast workstations (PMWs). The PMWs are part of the photonic mast electronic imaging system that will display sensor data, replacing conventional periscopes on Virginia Class submarines. Work will be performed in Fairfax, Va., and is expected to be completed by August 2011. The Naval Sea Systems Command, Washington, DC, is the contracting activity (N00024-05-C-6244). [DoD]

U.K. Prevention of Terrorism Bill Outlines Priorities

On February 22nd, The Home Office introduced and published the Prevention of Terrorism Bill 2005. Alongside publication of the Bill the Home Office has placed in the libraries of the House of Commons and House of Lords four Papers which the Government hopes will aid discussion and debate on the issues. The contracting community may be especially interested in Paper Four – International Terrorism: Protect and Prepare, which lays out a number of high-level priorities for improved domestic security. Cryptome: U.K. Prevention of Terrorism 2005 Bill Briefings