Adios, 2020! Here are people, programs, and budgets to watch for in 2021...

After such a difficult year, let’s look ahead to 2021, shall we? With the new administration arriving on Jan. 20, the year’s first few months will bring Senate confirmation hearings for top Pentagon positions.

President-elect Joe Biden has said he will tap Lloyd Austin, a retired Army general, as defense secretary. But there have been no announcements about the other 59 officials who need the Senate’s assent: service secretaries, undersecretaries, and the rest.

There are a lot of former Obama administration officials with their names reportedly in the mix. Still, there hasn’t been as much as a whisper about other billets, including undersecretary for acquisition and sustainment and undersecretary for research and engineering — two positions of keen interests to Global Business Brief readers.


You’ve reached the Defense One Global Business Brief by Marcus Weisgerber. This is our last newsletter for 2020 as we throttle down for the holidays. It’s been a challenging year for most, so I appreciate you continuing to read week after week. And about “Global Business Brief”: we’ll be changing its format in 2021, giving the newsletter its first major overhaul since we launched in July 2016. Look for version 2.0 in your inbox on Jan. 7, under the name Defense Business Brief. And keep sending along your tips and feedback to or @MarcusReports. Check out the GBB archive here, and tell your friends to subscribe!

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Biden’s Budget 

In the absence of news, we’re sticking by our way-too-early predictions of flat defense spending, at best — especially with Congress on the verge of passing another coronavirus stimulus package, this one totalling nearly $1 trillion. If Republicans retain control of the Senate, expect lesser cuts. If Democrats take control after two early-January Georgia runoffs, expect deeper cuts as they focus on priorities other than defense. 

In the meantime, the Trump administration last week released what it calls the “FY 2022 Fiscal Planning Framework,” a blueprint for what it calls the Pentagon’s top spending priorities. It’s an unusual attempt by a lame-duck administration to shape the next budget, and may become an important reference for congressional Republicans when they review Biden’s fiscal 2022 budget proposal. Typically, an incoming administration sends its first budget plan to lawmakers a few months later than the more typical February delivery. That gives incoming officials time to make changes and fund its priorities across government. Expect new Biden administration priorities to include climate change, pandemic panning and bio defense. Where else might the Biden Pentagon team add money? 

“I expect to see a significant drive upward in R&D spending,” said Tara Murphy Dougherty, CEO of Govini, a decision science company supporting the defense industry. “I think they're going to look to rebalance as much as possible into investments in emerging technologies, and R&D spending.”

There are areas where the Pentagon has to spend money, like for troops and civilian pay and benefits and projects like the expensive Columbia-class submarine, which will replace Ohio-class submarines as the sea leg of the nuclear triad.

“What are you left with in the trade space? It's not that much,” Dougherty said. “If you've got to divvy that up among priorities that include climate change now — in addition to core defense missions — it's just that the trade space gets really small.”

Of note, the Trump fiscal 2022 budget plan eliminates the war budget, known as overseas contingency operations. It also aligns more money for the Navy and takes money away from the Army and Air Force.

Congress has sent the fiscal 2021 National Defense Authorization Act to Donald Trump’s desk, but the president threatened to veto it because it does not repeal an unrelated law that protects social media companies. 

As we hit send on this newsletter, Congress is reportedly close to passing a $1.4 trillion spending bill that would fund the government in 2021.

What Are Austin’s Priorities? 

We know that Michèle Flournoy, long considered the SecDef-in-waiting, is a huge believer that technology, like artificial intelligence and machine learning, could be game-changing for the military. So what does Lloyd Austin think? Short answer: we don’t know. As an Army four-star general, Austin shied away from the press. In 2016, he joined the board of United Technologies, and has served on the board of Raytheon Technologies since UTC and Raytheon merged in April. We may at last hear more about his view of the military’s future in January, when the Senate is expected to hold his confirmation hearing.

Updating the National Defense Strategy. Regardless of the election results, the Pentagon, per law, was going to have to update its 2018 NDS in 2022. As you well know, the current version brought a frame of “great power competition” between the U.S. and China and Russia.

Programs to Watch

The Army will once again try to replace the Bradley with a new vehicle called the Optionally Manned Fighting Vehicle. The bidders: General Dynamics Land Systems, Germany’s Rheinmetall (teamed with Textron Systems) and BAE System (teamed with Elbit Systems of America). The competition is expected to be whittled down to two contractors next year.

General Dynamics is also competing against BAE to build the Army a new light tank called the  Mobile Protected Firepower. The Army is not expected to choose a winner until 2022, but the Army will start getting soldiers’ feedback about the competing tanks next year.

The Missile Defense Agency’s Next Generation Interceptor — which would replace the current Ground Based Interceptors in Alaska and California — is one of the largest. MDA is planning to choose two contractors for development work. Three teams, one led by Northrop Grumman, one Lockheed Martin and one Boeing are competing.

The U.S. Air Force is expected to choose a winner in the Three-Dimensional Expeditionary Long-Range Radar, also known as 3DELRR, competition for a new control and warning radar. The Air Force earlier this year terminated Raytheon’s contract for the new radar following project troubles. Now, Northrop Grumman, Lockheed Martin and CEA Technologies, an Australian firm, are competing for the new contract.

The Navy last week said the Next Generation Jammer Low Band, new electronic attack pods for the Navy and Australian EA-18G Growlers, can enter the engineering manufacturing development phase, Flight Global reports. Northrop Grumman is competing against L3Harris Technologies, but as Cowen & Company analyst Roman Schweizer pointed out in a November note to investors, L3Harris (a group from legacy Harris Corp.) is also on the Northrop team. A winner is expected to be chosen in “late 2020,” according to the Navy.

The Army’s Future Long-Range Assault Aircraft, known as FLRAA, a competition between Textron’s Bell and a Lockheed Martin-Boeing team. The Army is not expected to choose a winner until 2022, but it plans to “complete requirements derivation, trade-off analysis, and preliminary conceptual design work to help inform the Army on the requirements, acquisition strategy, and program processes” in 2021.

Defense leaders are expected to decide whether the F-35 Joint Strike Fighter program can enter full-rate production, something that would allow the Pentagon to sign a multiyear buy, which could potentially drive the price down. Also, we’ll be looking to see if the Pentagon and Lockheed Martin are able to ink a long-term F-35 logistics deal.

The future makeup of the nuclear arsenal, the balance between future weapons with existing weapons is likely to arise. With so many research projects happening right now — think hypersonic weapons — it’ll be interesting to see if and how the Pentagon transitions those to formal programs of record. We’ll be watching projects like the Air Force’s Skyborg drone, 5G, Next Generation Air Dominance and the aforementioned hypersonic programs. We’ll also be keeping an eye on space, where the bulk of contracts these days are classified.

Industry Moves

We’ll be watching how companies recover from the coronavirus pandemic. COVID-19 hit companies with large aerospace businesses much harder than those that largely rely on military contracts. Still, just about everyone experienced workforce and production disruptions. We’re expecting to hear in the coming days how many F-35 Lockheed Martin delivered in 2020, a key indicator 

The big defense prime contractors have been accelerating payments to smaller suppliers at the beginning of the pandemic. We’ll see how long that continues, particularly as, hopefully, the pandemic subsides in 2021.

L3Harris Technologies will celebrate its second birthday on June 29. Per the original plan, company President and COO Chris Kubasik is supposed to become CEO and current Chairman and CEO Bill Brown is expected to transition to being solely chairman. 

As we mentioned last week, mergers and acquisitions have been hot. We’ll be looking to hear the Biden administration’s position on M&A, especially among the prime contractors.

Will General Dynamics sell Bath Iron Works? The Maine shipyard, which has struggled to build Arleigh Burke-class destroyers on schedule and on top of that had its union workers walk off the job for two months, wasn’t even mentioned by company executives during General Dynamics third quarter earnings call in late October. On a July earnings call, in the middle of the strike, CEO Phebe Novakovic called the work stoppage “immaterial” to the company’s second quarter financial results. Bath was among the shipyards not chosen to build the Navy’s new frigate — that deal went to Fincantieri Marinette Marine. Trump administration officials — who announced the Navy’s new 30-year shipbuilding plan last week — call for second speeding up plans to hire a second company to make the new frigates. Perhaps a frigate, and a new owner, is in the shipyard’s and its future.

The Future of the In-person Trade Show

So far, it doesn’t look like any in-person trade shows are going to happen in the immediate future. The annual Surface Navy Association symposium in January will be all virtual. The Air Force Association announced its annual February conference in Orlando would be virtual. As will the Association of the U.S. Army’s annual March conference typically in Huntsville, Alabama. Right now, the Reagan National Defense Forum, which was delayed form December, is still on the calendar for March in Simi Valley. The Navy League has moved its annual Sea-Air-Space conference from April to August, as have organizers of the Space Symposium. And the Paris Air Show isn’t coming back until 2023.