Tracking early-payment cash; Some defense firms hiring; Virtual SOF conference; and more...

Updated on May 5 to include figures for Raytheon Technologies' payments to small suppliers.

The large defense firms getting early payments from the Pentagon need to provide information about how they’re passing the funds quickly to suppliers, particularly smaller ones at risk of going under during the coronavirus pandemic, the head of defense acquisition said Thursday morning.

“I believe that the major primes are flowing down — they have committed — but I always like to trust, yet verify,” Ellen Lord said. “I encourage all of those companies to be as transparent and forthcoming as they can be because we have a responsibility to the taxpayer as well as the mid-tiers and the small companies to make sure that actions we take at the prime level do go down all the way through the chain. However, I need to rely on CEOs of major primes to come forth with that data.”

Lockheed Martin, for example, has already sent more than $256 million in early payments to its suppliers, and has pledged to send a total of $450 million. 

Here’s what else we know about some other big companies:

  • BAE Systems: “From the outset, we’ve recognized that our supply chain would play a vital role in our ability to operate through this global pandemic,” Caitlin Hayden, a BAE Systems spokeswoman said in an emailed statement. “As we receive accelerated cash payments from our customers, we are directly flowing that cash to our suppliers. Based on the actions we’ve taken so far, we expect approximately $100 million of incremental cash is reaching our supply chain.”
  • Boeing CEO David Calhoun said on Wednesday’s earnings call that the company is “accelerating some progress payment receipts with the help from our defense customers.” At press time, the company did not provide specifics about how much money it has accelerated to suppliers, but emailed this statement: “Boeing is working with suppliers to develop mitigation plans that can allow them to continue operations. Some steps include making adjustments to progress payments and allowing delivery in place and early delivery, among others.”
  • General Dynamics CFO Jason Aiken said on the company’s quarterly earnings call Wednesday that “as of last week, we had received approximately $55 million in accelerated payments from our customers and advanced almost $300 million to our suppliers on an accelerated basis.
  • Huntington Ingalls Industries: The company has accelerated roughly $55 million to its suppliers, spokeswoman Beci Brenton said in an email.
  • L3Harris Technologies said it would accelerate “more than $100 million in payments to small business suppliers nationwide.”
  • Northrop Grumman is accelerating about $30 million per week expecting its total “will exceed $200 million,” CEO Kathy Warden said on Wednesday’s earnings call.
  • Raytheon Technologies: "We have already dispersed over $350 million in accelerated payments, which is the full amount that we’ve received to-date from the recent progress payment increase from our DoD customers," spokeswoman Michele Quintaglie said in an email. "We have also partnered with the SBA to help suppliers to better understand how to access government stimulus programs, and we continue to evaluate on a case-by-case basis other support mechanisms to help our suppliers.”
  • Textron: At press time, the company did not provide specifics about how much money it has accelerated to suppliers.

Should the companies send us the data, we’ll update tallies above.

Welcome

You’ve reached the Defense One Global Business Brief by Marcus Weisgerber. It’s day 52 in the home office, not that I’m counting. Send along your tips and feedback to mweisgerber@defenseone.com or @MarcusReports. Check out the Global Business Brief archive here, and tell your friends to subscribe!


From Defense One

Boeing Defense to Surpass Commercial Side For First Time In More Than a Decade // Marcus Weisgerber

But that's no cakewalk as new Air Force One and KC-46 tanker eat into the company's cash.

Global Defense Spending Decline Expected As Nations Deal with Coronavirus  // Marcus Weisgerber

Experts see domestic projects taking priority over national security in the coming years.

Artificial Intelligence Outperforms Human Intel Analysts In a Key Area // Patrick Tucker

A Defense Intelligence Agency experiment shows AI and humans have different risk tolerances when data is scarce.


Lockheed, Northrop Hiring as Boeing Cuts Workers

While the coronavirus pandemic has affected every company in one way or another, each company has unique circumstances. Defense-heavy Lockheed Martin seems to have the least trouble of the big firms, although as we reported last week, supply chain issues are expected to delay F-35 Joint Strike Fighter deliveries. What’s amazing is the company has hired more than 1,700 employees at a time when U.S. unemployment has topped 30 million, and has help-wanted ads out for another 4,000 positions.

Northrop Grumman is also hiring. “We are actively recruiting for 10,000 open positions and we hired more than 3,500 people in the first quarter, which included more than 1,300 new hires in March,” CEO Warden said Wednesday during the company’s quarterly earnings call with Wall Street analysts. Meanwhile Boeing plans to cut 10 percent of its 160,000 person workforce as coronavirus has crippled the airlines and world travel.

Other COVID Effects on Business  

Closed companies: Out of 10,509 companies tracked by the Defense Contract Management Agency, 93 are closed, down from 106 last week — “with 141 companies having closed and reopened, up 73 from last week’s number of 68,” Lord said Thursday. “This is the first time we have seen reopening numbers larger than the number of closures,” she said. Out of 11,413 companies tracked by the Defense Logistics Agency: “437 are closed with 237 having closed and reopened, up almost 100 companies from last week,” Lord said.

Sectors of concern: Aviation supply chain, shipbuilding and small space launch.

Global supply chain concerns: While she did mention suppliers by name, Lord said there have been “positive results” from the U.S. asking Mexico to reopen its defense suppliers. The Pentagon is also watching coronavirus-related developments in India. “”India has mandated closure of businesses, which is impacting defense sector primes. India is a major defense partner, and we hope they can all stay safe while transitioning back to an operational status,” Lord said.

Virtual SOF Conference Next Week

The National Defense Industrial Association has moved its weeklong SOFIC conference online, in what could become the norm for large defense conferences for the foreseeable future. Instead of just streaming speaker presentations, NDIA is trying to replicate many of the event’s valuable networking sessions by linking companies up with U.S. Special Operations Command program managers. “We’re going to learn from it,” Hawk Carlisle, the NDIA CEO and retired Air Force general, said in an interview this week. With large in-person events on hold indefinitely, NDIA, which holds dozens of defense-focused events around the country each year, is looking at ways to possibly hold hybrid events, with some people in attendance and others attending virtually.

Sen. Cotton Wants $42B to Counter China

The Arkansas Republican wants to buy more submarines, fighter jets, cruise and hypersonic missiles, armored vehicles and missile defenses. Cotton released a full wishlist here, under a statement that began: “This comprehensive package brings to bear the full resources of the federal government to ensure the Chinese Communist Party (CCP) pays a steep price for its criminal coverup of COVID-19. This package will help thwart CCP military aspirations to dominate the Indo-Pacific region and to intimidate its neighbors. The United States must dramatically step up investment for military infrastructure, weapons, and other assets in the Indo-Pacific region to further compete effectively with China.”

NGA Lists Tech Priorities

The National Geospatial-Intelligence Agency says it needs technology in these areas: advanced analytics and modeling; data management; modern software engineering; artificial intelligence and future of work. More here.

Making Moves

  • Former U.S. Director of National Intelligence James Clapper has joined the executive board of the Center for Ethics and the Rule of Law at the University of Pennsylvania’s Carey Law School.
  • Former principal deputy DNI Sue Gordon has been named a strategic advisor to AI firm Primer. Brett McGurk, former special presidential envoy for the global coalition to defeat ISIS, has also joined the company as an independent board director.
X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.