Rapid Fire: 2010-07-30

• Incredible Shrinking Budgets: Facing tightening defense budgets at home, European defense firms are looking to expand into service and support work and overseas markets.

• Profits Take Off: Britain’s BAE Systems and France’s Thales both posted substantial profit increases in the first half of 2010 compared to the same period in 2009.

• But Not for Everyone: Raytheon reported a steep 57% decline in second-quarter profit to $208 million from $489 million in last year’s second quarter, due mainly to the cancellation of a GBP750 million contract with the UK Border Agency. Raytheon release.

• No We Didn’t: Rosoboronexport, the Russian state arms export agency, denies a report by the Russian business daily Vedomosti that it agreed to sell 2 S-300 PMU2 Favorit air defense battalions to Azerbaijan.

• Train Wreck: An independent panel [PDF] warns that a US national security “train wreck in coming” because of aging equipment, inadequate training of US military personnel, and a declining US naval fleet. It’s headed by former Clinton Defense Secretary Perry and former Bush National Security Advisor Hadley, and was set up to review the Quadrennial Defense Review process.

• C-17 wreck. Crash at Elmendorf in Alaska kills 4.

• US Army replacing good old TNT with BAE’s MX-101 formulation in artillery.

• Northrop Grumman lifts a pair of 195,000 pound diesel backup generators into the future USS Gerald R. Ford supercarrier, which is now 11% complete.

• Common Ground?: Center-left Progressive Policy Institute analyst Arkedis finds common ground with Republicans on the need to reform the US defense budget process.

Rapid Fire: 2010-07-29

• Free Fall: Boeing reports a 21% drop in second-quarter profits, but still beats dismal Wall Street estimates. Boeing release

• Sideways: European lawmakers and defense experts are calling on the European Commission to investigate allegation of corruption in awarding of side deals for major weapons systems.

• Dispensable Deterrent? The private Royal United Services Institute questions need for UK to maintain its nuclear-armed missile submarine force on patrol at all times, proposes alternative force structures. Full report [PDF]

• Sikorsky’s X2 compound helicopter flies at 225 knots / 259 mph / 417 kmh, breaking the Lynx’s 216 knot speed record on its way to an envisioned 250 knot test later in 2010. A new Light Tactical Helicopter simulator will help potential customers envision what that kind of tilt-rotor class speed via simpler systems could mean.

• Trust, but Verify: A US State Department report cites Russian compliance issue with international agreements restricting chemical and biological weapons. Full report [PDF]

• Green Accord: US DoD signs agreement with US Energy Department to cooperate on clean energy programs, including renewable energy, alternative fuels, efficient transportation technologies, smart grids, and mobile/deployable power systems.

• Boeing’s Phantom Ray stealth UCAV will head to NASA’s Dryden Center aboard NASA’s shuttle carrier.

• JAGM battlefield strike missile prototypes have begun government test firings.

• South Africa discovers that maintaining its 4 Super Lynx 300. Mk64 naval helicopters costs money.

• GE gets $7 million R&D contract to develop silicon-carbide-based solid-state power switches for USAF aircraft.

KSS-II: South Korea Orders 6 More U-214 AIP Submarines

Sohn Won-Yil & Nimitz

Bolts put 3 boats out of action in 2010. (July 21/10)

The German Type 214 was selected by Korea over the French/Spanish Scorpene Class that has been ordered by Chile, India, and Malaysia. Some would argue that U-214s are the most advanced diesel-electric submarines on the market, with an increased diving depth of over 400 meters, an optimized hull and propeller design, ultra-modern internal systems, and an Air Independent Propulsion (AIP) system that lets the diesel submarine stay submerged for long periods without needing to surface and snorkel air.

South Korea ordered its first 3 KSS-II/ Type 214 boats in 2000, which were assembled by Hyundai Heavy Industries. The Batch 2 order will add 6 more of the 65m, 1,700t boats, effectively doubling the ROKN’s number of modern submarines. The latest development is a $16 million order for Saab electronic systems for the 2nd batch of 214 submarines…

Rapid Fire: 2010-07-28

• Beat the Street: Lockheed Martin, L-3 Communications surprise Wall Street by posting stronger than expected second quarter revenues and profits. Lockheed Martin release | L-3 release [PDF]

• Show Me the Money?: US DoD is unable to account for 95% of the $9.1 billion in Iraqi oil money that the US was going to use for rebuilding Iraq’s infrastructure, a report by the US Special Investigator for Iraq Reconstruction concludes.

• Deja Vu: During the first official French visit to Vietnam since the 1954 Battle of Dien Bien Phu, the French defense minister says his country is helping its old colony modernize its military equipment through the sale of radar, helicopters and transport aircraft.

• India’s P-8i Sea Control Aircraft completes final design review with Boeing, freezing design.

• Tiger, Tiger, Tiger: An advisory panel to the Japanese prime minister recommends the island nation take a more assertive stance in its defense posture, including preparing for “contingencies” on the Korean Peninsula and Taiwan Straits and small-scale invasions.

• Case for Competition: Lexington Institute’s Thompson makes the case for keeping competition in a consolidating US defense industry.

• Armageddon: Proposed US legislation would create a US Commission on Planetary Defense to track and defend against Earth-bound asteroids … Is Bruce Willis still available? Or better yet, Liv Tyler?

Rapid Fire 2010-07-27: Prithvi 2

• Keeping the Edge: US should ensure Israel maintains its qualitative edge in armaments when it approves arms sales to Israel’s Arab neighbors – such as F-15s to Saudi Arabia – the Israeli defense minister tells the Washington Post during his US visit.

• On Target: India successfully shot down a modified Prithvi 2 ballistic missile with a supersonic interceptor AAD missile, developed by the government’s Defence Research and Development Organisation, as part of a test of the country’s ballistic missile defense system.

Fort Gillem Fading, but Criminal Investigation Will Expand

In July 2010, Odyssey International in Lancaster, PA received a $7 million firm-fixed-price contract for an addition to the existing Criminal Investigation Division lab at Fort Gillem, GA. Work will be performed in Fort Gillem, GA, with an estimated completed date of Jan 27/12. Bids were solicited on the World Wide Web, with 6 bids received by the U.S. Army Engineer District in Savannah, GA (W912HN-10-C-0044).

New construction will include additional space for the latent prints lab, trace evidence testing lab, serology/DNA lab, and other facilities to support their expanded future mission. Odyssey will also provide modernize energy monitoring and control systems connection and building information systems, including a mass notification system, fire protection system, and an intrusion detection system. Supporting facilities will include self-contained heating and cooling units; electrical, water, sewer, and gas services; along with other basics like paving, curb and gutter, storm drainage, accessibility for people with disabilities, site improvement and landscaping. “Anti-terrorist measures” will include laminated glass that doesn’t become a lethal hazard in explosions, a lesson from the Oklahoma City bombing.

Fort Gillem currently houses the 3rd MP Group (CID) Headquarters of the US Army Criminal Investigation Command, and will apparently continue to do so. Per the USA’s clever Base Realignment And Closure process, nearby Fort McPherson will close, and Fort Gillem will be downgraded to a military enclave near Atlanta by Sept 15/11.

NAVAIR Orders 7 Zephyr Ultra-Long Endurance UAVs

Zephyr Flight

QinetiQ’s Zephyr is a very high-flying, ultra-light solar powered UAV designed to break existing flight length records. It’s one of the contenders in DARPA’s Vulture program, which eventually expects to field an aircraft whose flight length will be measured in years.

The platform also attracted the independent interest of the Naval Air Warfare Center Aircraft Division in Lakehurst, NJ. In May 2009, they issued a $44.9 million cost-plus-fixed-fee contract to QinetiQ North America in Arlington, VA for 7 Zephyr UAVs and 1 ground station. Work will be performed in Farnborough Hampshire, United Kingdom, and is expected to be complete in May 2014. This contract was competitively procured via a Broad Agency Announcement (N68335-09-C-0194).

The DefenseLINK release cited “up to 3 months continuous operation” as the performance goal, which matched DARPA’s Phase 2 goals. On the other hand…

• Zephyr, and NAWCAD [NEW]
  
• Contracts & Key Events [NEW]
  
• Additional Readings [NEW]
  

Rapid Fire 2010-07-26: Ballistic Iran

• Going Nuclear?: US, South Korea hold naval exercises, involving 20 ships and submarines and 200 aircraft, despite North Korea’s threat to use its “nuclear deterrent.”.

• Is that a Missile in Your Pocket?: A senior Iranian military commander claims that the country has the capability to mass produce ballistic missiles. To see what ballistic missiles Iran might have, check out this Council on Foreign Relations backgrounder.

• Getting Kinky: According to an industry survey by AlixPartners, kinks in the global supply chain, such as the inability of OEMs to integrate Tier 1 and Tier 2 suppliers, will continue to hurt the global aerospace and defense markets.

Sector Outperforms: Grant Thornton Lookback on Defense M&A 2009

Guest Article by Ian Cookson

If 2008 can be characterized as a year in which private equity buyers battled to acquire aircraft component manufacturers, then 2009 was a time of strategic acquirers fighting to secure defense technologies.

2009 was a relatively strong year for mergers and acquisitions. Defense technology saw a 6% increase in M&A activity in 2009 with a particularly strong second half of the year. This contrasts with M&A activity as a whole, which showed a 9% decline in the number of U.S. transactions across all sectors. M&A activity is likely to continue as the DoD, shaped by the 2010 QDR, shifts away from “big iron” and focuses on high-demand, low density assets such as unmanned aircraft, cyber security, and Command, Control, Communication, intelligence, Surveillance and Reconnaissance (C3ISR) technology. Defense contractors and government IT providers, mirroring these shifts in spending priorities, are actively looking to acquisitions to enhance their capabilities. Earnings for our defense IT company index rose 8% (EBITDA) during the year, and defense electronics company earnings rose 5%…

Rapid Fire: 2010-07-23

• Wireless Through Steel: BAE’s new technology has big potential for submarines, nuclear power plants, armored vehicles, and more.

• Eastern Allure: Defense industry execs are seeing unprecedented levels of interest in military aircraft from Middle Eastern and Asian countries.

• Droid in Coming: Raytheon is working with Google to develop an Android smartphone for battlefield use.

• MOKSYS: BAE Systems announces EUR 57 million contract from Slovakia for a mobile military voice/data/images communications system.

• Getting Serious: To put some teeth into the UK’s recent warnings to industry about costs, the UK defense procurement chief is scheduling cost-cutting talks with 11 of its top suppliers.

• Out of Joint: A US DoD panel is recommending that the US Joint Forces Command and DoD’s Networks and Information Integration directorate be shut down to save money.

• Ramping up F-35 fighter production requires more than machines – it requires process changes as well. BAE reports.

• Herculean Feat: The New Zealand Ministry of Defence is close to finalizing a deal with L-3 Communications to get the long-delayed upgrade of the Air Force’s C-130 Hercules transport aircraft back on track.

• Too Many Belgian Waffles?: Estimating that 60% of its soldiers are overweight, the Belgian Army has launched a service-wide diet program.