L3Harris at 1; DoD, COVID & Congress; Japan stops Aegis Ashore, and more.

One year ago, the Paris Air Show was in full swing. European companies were touting joint development of new fighter jets and hypersonic missile projects. Defense heavyweights Raytheon and United Technologies had announced they would merge; L3 Technologies and Harris were about to close their own merger.

A lot has changed in a year. But one of L3Harris’s divisions, at least, is ahead of where it planned to be. 

“We’re ahead of the metrics that were set out as part of the deal for revenue margin and, even in the challenging economic time that’s impacted some of our business, we’re still forecasting 3 to 5 percent organic growth,” said Dana Mehnert, president of L3Harris Technologies’ Communications Systems business. “Most importantly, I think that the team’s really come together with energy and a focus on our mission and our customers — it is so much stronger than we had with either company working alone.”

Overall, L3Harris has hired 6,400 employees in the past year, bringing total employment to about 48,000. More than a thousand of the new hires work for Mehnert’s 8,600-strong Communications Systems, one of the company’s four business segments.

Since March, just under half of L3Harris’ people have been working from home. That wasn’t an option for most of the workers in Mehnert’s 8,600-person, manufacturing-heavy division.

“I would have never thought we could have done it, but I’ve been amazed at how the teams have rallied [and] how effective they’ve been on maintaining development schedules on complex waveforms and new products,” he said of so many employees working from home.

In some instances, it’s meant getting creative and coming up with new ways to accomplish bureaucratic tasks. A few months ago, a travel ban prevented Defense Contract Management Agency officials from coming to a Londonderry, N.H., factory to inspect the first batch of U.S. Army’s next-generation night-vision goggles.

“[The] teams came up with a great way to basically put high-resolution cameras on the back of the goggles, and then through some software apps, go through virtual acceptance and then allow the DCMA inspector to actually see what they would normally see by wearing the ENVG-B system on their head,” Mehnert said. “Through that we’re able to take acceptance on the initial system.”

It’s been one of several manufacturing issues that have popped up as L3Harris, like other companies, figures out how to operate amid the pandemic.

“Throughout all of this and with half the workforce working from home, not only have we kept the wheels on the bus, but I think we thrived and continue to grow and meet our objectives and our development of schedules and, most importantly, support our customers,” Mehnert said.

Like other firms, there have been supply chain disruptions, particularly in getting parts from countries like Mexico and India.

“We’ve been able to work through that with a lot of partnering with our customers, and haven’t really missed any significant shipments because of it, but it’s been a huge effort,” Mehnert said. “We’ve put a lot of the engineers into the supply chain, to work side by side with our supply chain professionals.”

Mehnert attributes the company’s agility throughout coronavirus to its commercial business model.

“We absolutely could not have done this if we didn’t have a commercial business model and we weren’t used to managing this global supply chain on an ongoing basis and dealing with some of the commercial crises that we’ve had to deal with in the past,” he said.

Welcome

You’ve reached the Defense One Global Business Brief by Marcus Weisgerber. 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

Chinese Students Are Key to US National Security, Eric Schmidt Says // Patrick Tucker

Google CEO-turned-DoD advisor pushes back on notion that turning them away will keep American safer.

New Space Strategy Is Heavy on ‘Winning,’ Light on Details // Patrick Tucker

The first major update in nine years set out more forceful goals, but leaves gaps.

Pentagon Starts Bailing Out Companies That have Lost Business Due to Coronavirus // Marcus Weisgerber

The Defense Department is sending millions of dollars to keep companies afloat, and more deals are expected.


Watch Defense One’s Latest Events

The fifth annual Defense One Tech Summit, which was all virtual this year, wrapped up today. Videos of each session are here (scroll to the bottom of the page). You can watch a session I moderated Wednesday about the Pentagon’s hypersonic weapons development. Panelists include Mark Lewis, the Pentagon’s director of defense research and engineering for modernization; Rebeccah Heinrichs, senior fellow at the Hudson Institute; and Tom Karako, senior fellow in the International Security Program and director of the Missile Defense Project at the Center for Strategic and International Studies.

Bonus: On Monday, I led a discussion about coronavirus and its impact on global defense budgets, arms sales and the global supply chain. Edward Ferguson, minister counselor for defense at the U.K. Embassy in Washington, talked about how COVID-19 is affecting weapons work. 

“Those projects that are labor-heavy are struggling around some of the stay-at-home orders,” Ferguson said. 

Certain companies and employees working on critical projects have been given exemptions so they keep working. That includes U.K. companies working on U.S. projects, including the F-35 Joint Strike Fighter. 

“It’s really a case of monitoring it,” he said. “We absolutely assume there is going to be some delay to some of our important programs, including submarine build, for example. But, we just managed to roll out HMS Audacious, our latest hunter-killer submarine out of the factory. So, things are still moving. They’re moving slightly slower. We’ll keep monitoring it.” 

Watch the session here.

State Department OKs $1.46B in Arms Sales

While on the subject of foreign military sales, the U.S. State Department this week cleared two major arms deals, one to Canada and the other Ukraine. The Canada deal, potentially worth $862 million, includes AIM-9X Sidewinder missiles, Active Electronically Scanned Array radars Joint Standoff Weapons and other equipment for the Royal Canadian Air Force’s F/A-18 Hornets. The Ukraine deal — with up to $600 million — includes 16 Mark VI Patrol Boats and related equipment. “The proposed sale will improve Ukraine’s capability to meet current and future threats by providing a modern, fast, short-range vessel,” the Defense Security Cooperation Agency, the arm of the Pentagon that oversees foreign military sales, said in a Wednesday statement. “Ukraine will utilize the vessels to better defend its territorial waters and protect other maritime interests.”

Pentagon Seeking More Cash in Next Coronavirus Stimulus Package?

We already knew the Pentagon was expecting to ask for “tens of billions of dollars” to reimburse defense firms for COVID-19-related expenses, but it also appeared there’s a camp inside the White House pushing for additional Pentagon cash in the next coronavirus stimulus package. Conservative radio host Hugh Hewitt wrote in a Washington Post oped this week that the White House is considering a $40-plus billion defense package in the next coronavirus stimulus package. The money would largely go toward weapons specifically designed to counter China, as well as $12 billion for companies that have had their businesses impacted by coronavirus, Hewitt writes. Another $6 billion would go toward preventing China from investing in the defense industrial base. The rest would go toward buying F-35 Joint Strike Fighters, ships, submarines and hypersonic missiles, he writes. Recall, Sen. Tom Cotton, R-Ark., has been pushing a $43 billion defense package to counter China.

GAO Upholds Navy IT Award

The Government Accountability Office on Wednesday denied Perspecta’s protest of the Navy’s choice of  Leidos for its $7.7 billion Next Generation Enterprise Network contract. “We’re pleased the protest was dismissed and are hitting the ground running, having used this time to expand our preparations for immediate program execution and success,” Gerry Fasano, president of Leidos Defense Group, said in an emailed statement. “Through this contract Leidos will support the important mission of the U.S. Navy and U.S. Marine Corps by unifying and fortifying existing networks with the best technologies.” Last week, GAO denied a protest of the contract by General Dynamics Information Technology.

Boeing Pushes International Super Hornet Sales

Boeing this week delivered the first two of 78 F/A-18 Super Hornet in new Block III configuration to the U.S. Navy this week. Compared to the regular Super Hornet, the “Block III” has an advanced cockpit, larger fuel tanks, can fly for 10,000 hours (4,000 more than the Super Hornet), is less detectable by radar and better networking equipment that allows the plane to share more data. But the company is focusing on five overseas fighter jet competitions as it looks to keep its St. Louis production line moving in the decade to come. In a call with reporters this week, executives signaled out contests in Canada, Germany, Finland, Switzerland and India. “The five big competitions … represent an opportunity for order quantities over 400 aircraft,” Thom Breckenridge, vice president of international sales at Boeing Strike, Surveillance & Mobility said Wednesday. 

New Sikorsky-Boeing Helicopter Hits Speed MIlestone

THe SB>1 Defiant helicopter flew at 205 knots last week, working closer to the U.S. Army’s goal of 230 knots, aircraft makers Sikorsky and Boeing said on Tuesday. Here’s a video of the flight. The SB>1 is competing against the Bell V-280 tiltrotor to replace the Army’s venerable Black Hawk.

Japan Stops Aegis Ashore Deployment

Japanese Defense Minister Taro Kono told reporters that the government has suspended the deployment of two Lockheed Martin-made land-based radar sites that would be used to track incoming North Korean missiles “due to technical issues as well as cost,” Reuters reports. Instead, the country would instead rely on Aegis-equipped ships for missile defense. Defense News reports that “the main technical issue was the need to ensure that the rocket boosters of the interceptor missiles, which are used to accelerate the missile to supersonic speeds following their launch, will fall on its designated areas following separation from the missile.” Raytheon Technologies makes the SM-3 interceptors.

Speed Reads

Company Sells Navy Subpar Steel: That’s according to the U.S. Justice Department, which said Kansas City-based Bradken “produced and sold substandard steel components for installation on U.S. Navy vessels” for years. The company agreed to pay $10.9 million and the Associated Press reports that one employee has been charged with “major fraud against the United States.” More here.

SIPRI Nuke Yearbook: The Stockholm International Peace Research Institute has released its  Yearbook 2020, which finds “that despite an overall decrease in the number of nuclear warheads in 2019, all nuclear weapon-possessing states continue to modernize their nuclear arsenals.” Read the report here.

Space Strategy: The Pentagon Wednesday released a new “Defense Space Strategy” that “identifies how DoD will advance spacepower to enable the Department to compete, deter, and win in a complex security environment characterized by great power competition.” As my colleague Patrick Tucker writes, “the new strategy is heavy on goals and light on details.” More here.

Making Moves

Pentagon Deputy Comptroller Elaine McCusker is resigning, effective June 26, the Defense Department said Wednesday. The White House pulled McCusker’s nomination to be comptroller after it became public that she questioned the White House freezing aid to Ukraine last year. 

Logan Jones, previously of Boeing HorizonX, has been named general manager of SparkCognition Government Systems, the newly created government and natsec-focused artificial intelligence company.

General Electric named John Slattery to head GE Aviation replacing David Joyce.

Close [ x ] More from DefenseOne