Vendors upgun for AUSA; How spies target US firms; Elbit's plans for growth; and more.

Since his return to the Pentagon on Jan. 20, Defense Secretary Jim Mattis has pushed to make the U.S. military more lethal. From the looks of weapons on display at this week’s Association of the U.S. Army conference defense companies have heard that message loud and clear.

Walking around the massive exhibit halls in Washington, D.C, many of the tanks, armored trucks, helicopters and drones that make more-or-less annual appearances at this giant conference seemed to have more guns, rockets, sensors, and countermeasures. And companies were eager to highlight new technologies meant to increase their crews’ self-protection and lethality.

Take Elbit System’s Iron Vision system which promises “360-degree real-time situational awareness through closed hatches.” Cameras and sensors installed on the outside of an armored vehicle pass imagery to the interior, where they are projected on a soldier’s helmet visor. Essentially, it allows soldiers to see through the walls of the vehicle in all directions. Elbit officials say they have successfully tested the the technology on a Stryker vehicle.

“We have unique capabilities in fusing that sensor image, stitching it all together and providing a seamless 360-degree vision through a visor-projected imagery on the helmet,” said Raanan Horowitz, president and CEO of Elbit Systems of America. “This is going to change how soldiers fight from within the vehicle without losing their situational awareness, without losing their ability to control the weapons and to really conduct warfare.”

Sound familiar? Iron Vision is similar to the F-35 Joint Strike Fighter’s Distributed Aperture System, which allows pilots to “see” through their planes.

Picking Up the Pace

No secret that the military wants new weapons faster; patience appears to have vanished for decade-long development projects. So in the field of military electronics and software, executives and employees have begun comparing updates to their radios and other systems to updating your smartphone. And we’re finally starting to see companies make software that works and plays well with software and electronic equipment built by others.

“There’s a huge inflection point in the industry,” said Todd Probert, vice president, Mission Support and Modernization at Raytheon, chatting about a new intelligence processing and distribution system that the company has developed. “Things have to change. Things are changing. Things are changing at the speed of software.”

“If you go look at a missile, you look at an airplane, that’s changed literally on 10-year cycles. This is changing right before our eyes. We’re having to adapt.”


You’ve reached the Defense One Global Business Brief by Marcus Weisgerber. Thanks to everyone who came out to the Watergate for our second Global Business Briefing, featuring with Michael Strianese, chairman and CEO of L3 Technologies. Missed it? Catch the video here. And as always, send your tips, feedback and random thoughts to or @MarcusReports. Check out the Global Business Brief archive here, and tell your friends to subscribe!

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Securing the Supply Chain

This week’s reminder that defense firms routinely come under cyber attack is the news that a defense contractor in Australia had its network breached, allowing hackers to steal data about the F-35 Joint Strike Fighter and P-8 maritime patrol plane. Michael Strianese, chairman and CEO of L3 Technologies, shed some light on a concern that gets less press these days: traditional espionage.

“We’ve had espionage cases that we have helped prosecute in our own factories,” Strianese said Wednesday in an interview at the Defense One Global Business Briefing. “People do manage to get themselves hired and have a little shopping list of things they want and all of a sudden you find a new employee at the plant at midnight with a thumb drive.”

The CEO said that front companies attempting to acquire U.S.-only technology are often busted attempting to smuggle equipment across the northern border.

“They go try to drive it out through Canada,” he said. “It’s kind of funny because we catch them every time.”

L3 has worked worked with the feds to prosecute people who try to steal U.S. data. He touted multiple awards given to the company by the Defense Security Service for its work catching these criminals and spies.

I asked how often this happens. “It happens routinely. It’s not every week, but it happens,” Strianese said. “There’s a whole other world out there that’s looking to steal our stuff.”

But that doesn’t stop attempts. One time, Strianese said, L3 refused to sell avionics to a China who demanded an “absurd” deal. “You want to buy it, you can buy it, but no special terms,” he said. “I’ll give you the terms I’ll give my best customer.” Within the next month, he said, that business unit experienced a “massive cyber attack,” he said. “They didn’t get anything,” Strianese said, but “the whole network was destroyed.”

Air-gapping is a big part of L3’s anti-theft strategy. The company keeps no any drawings or intellectual property on computers connected to the Internet, he said. “Sometimes the gold old safe works a lot better than some of the electronic garbage,” he said. “You just take the drawings, roll them up and put them in the safe and shoot anybody that comes on the plant that doesn’t belong there.”

One-on-One with Elbit Systems of America CEO

Elbit System of America came to the United States 25 years ago to work on the F-16 program. Now with nearly 2,000 employees here, the Israeli company has a diverse workload in defense, homeland security, and commercial aviation. At AUSA, I spoke to president and CEO Raanan Horowitz about Elbit’s current projects and future aspirations.

Q. With the Trump administration’s increased focus on border security, do you seen any potential there?

A. We have one of the main contracts for putting technology on the border. We definitely are executing a program and talking to that customer. The issue of the border and controlling the border is not new. Definitely this administration has put more emphasis on taking full control of the border. I think that we are part of the solution and we see ourselves as part of the future solution. We think technology is a key contributor there. We recognize in some cases you have to use a combination of physical barriers and technology and that’s our specialty.

Q. Does this new Army buying command better position Elbit for U.S. military work?

A. Before I can relate specifically to what the initiative the [Army Chief of Staff] Gen. [Mark] Milley put forth, I would need to study it more and understand more of the details. But I will tell you that I do think that he’s focused on the warfighter and user. I think that’s a very positive thing for the soldier and for companies like Elbit that have that kind of a focus. I think the Army continues to look for ways to allow the introduction of new capabilities, new solutions in a quicker way. Part of what is hindering that is the overall budgeting process and the fact that you have programs of record that basically consume the vast majority of the budget. Part of the discussion that we’re having with the Army, [and] also as part of industry associations and dialog with the Defense Department and all of the services is what can we do in order to facilitate quicker introduction of new capabilities and new solutions.

Q. Can you give me a snapshot of where the company is now and a five-year outlook?

A. We’ve been very successful the last 25 years expanding our portfolio. We have a business model that combines technology that we import from Israel…with U.S. organic capabilities both on development and production and sustainment to bring innovative solutions to the U.S. market. I think what we’re seeing actually with everything that’s…happening these days and where the Army is pushing, I think there is going to be an increased need for solutions, such as the solutions we provide. We’re a world leader in helmet-mounted display systems…of the flagship programs being the F-35 helmet-mounted display system that we do together with our partner Rockwell Collins. These days we’re taking that technology and bringing it to armored vehicles [like Armor Vision mentioned above].

A big push by [Gen. Milley] here is long-range precision fires. We are the largest provider in this country for semi-active laser seekers. We are investing a lot in additional capabilities. Addressing the issue of how you do precision firing in denied GPS environments…that will allow the Army and the rest of the U.S. military to overcome some of those challenges.

Here at the show we’re debuting our loitering munition. That’s actually an area that we see in the future a lot of need because of the ability to have munitions loiter in a specific area, ready to be armed and be used. The ability to bring the munition back if you are not using it. We see that as an emerging area.

We’re investing a lot in long-range targeting. We’re one of the world leaders in laser designators and long-range targeting. Out target designators are used on the Marine Corps AH-1Z attack helicopters and Air Force AC-130 Gunships. We have them on various ground systems. We’re looking to expand because that’s one of the areas in which…from a lethality perspective trying to make every platform a sensor and to be able to use it to designate targets and to guide munitions. There’s a lot of different things that we are doing that I see in the next five years are going to come to fruition.

As the Army is thinking about operating in a more contrasted environment, where threats are coming from different ranges and from different sources from the ground and from the air, they are recognizing their need to improve their missile warning capability and their threat detection capability. We’re one on the only companies in the world that have deployed these kinds of technologies, infrared-based missile warning systems on platforms in real combat situations. There’s a growing appetite to take a look at what we have and to really adapt it. All in all I see a lot of opportunities for us.

Q. Tell me about this new loitering munition?

A. It’s a combination of an unmanned aerial vehicle equipped with a warhead. It can actually be launched either from a rail or a standard launch tube. It can loiter in the area. The specific parameters of endurance and all of that is dependant on how big the warhead is. You can decide when to arm it. The unique feature of what we have here, which is different than a cruise missile is you can command it to come back. The potential is, the unit can launch it ahead, it can look for targets and it can provide the lethality and protection that you need.

Q. Has anyone purchased it yet?

A. We have an international launch customer that has purchased it and we are beginning production deliveries to that customer. We have had significant interest from other customers and here in the U.S. some interest. Part of what’s going to have to happen is the overall [operations concept] in the U.S. still has to be developed.

Ukrainian Firms Look for US Partners

This year saw the AUSA debut of Ukraine’s defense industry, which has for years routinely appeared at arms shows in Europe and the Middle East. Aside from showing off some weapons it builds, firms were looking to partner with U.S. firms as they look to diversify their military arsenal for mostly Soviet-era weaponry. “We are here and we are interested in creating a joint ventures on some common projects with U.S. companies, which can be mutually beneficial to both sides,” Roman Romanov, director general of Ukroboronprom, Ukraine’s defense industry, said through a translator during a presentation at AUSA. Romanov displayed a slide of “joint projects” between American firms and Ukraine. Among those listed: Honeywell, a supplier for Antonov aircraft and Allison Transmission for Ukrainian armored vehicles.

M&A Deal of the Week

Tech firm Polaris Alpha (not to be confused with ATV maker Polaris Industries) announced it acquired Solidyn Solutions, a Denver-based firm specializing in “satellite mission management, command and control systems, virtualization and cloud computing, information assurance, and large-scale data processing systems.”

Making Moves

  • Another defense industry executive has been tapped for a top Pentagon post. President Trump plans to nominate John Rood, to be undersecretary for policy. Rood is the senior vice president of Lockheed Martin International. He was previously Raytheon’s vice president of U.S. business development. He served more 20 years in government, at the State Department, National Security Council and Defense Department, according to the White House. If confirmed by the Senate, Rood would join Deputy Defense Secretary Pat Shanahan and Ellen Lord, undersecretary for acquisition, technology and logistics as former industry executives in top Pentagon posts.
  • The White House also said Trump would nominate Bruce Jette to be the Army’s acquisition chief.
  • Todd Ernst has been named Raytheon’s vice president of corporate development to succeed Michael Cody, who is retiring after serving more than eight years in the role at the company.
  • The National Defense Industrial Association has named retired U.S. Air Force Col. Wesley Hallman, most recently chief liaison for the service with the House of Representatives, its senior vice president of policy.
  • Accenture Federal Services has named retired Army Maj. Gen. George Franz, U.S. Army (former ops director for U.S. Cyber Command) to lead its business initiatives across the defense and security markets.