Defense Business Brief: Flat military spending; Defense exports fall 17 percent; Expensive armored Suburbans, and more.
Be prepared for flat defense budgets in the coming years, Raytheon Technologies CEO Greg Hayes said at a Morgan Stanely investors conference this week. Defense officials told Hayes “to plan for relatively flat budgets adjusted for inflation, which is essentially what we had been expecting to hear,” during a meeting at the Pentagon, he said. Funding for weapon modernization ”remains a priority,” Hayes said, adding: “The defense outlook is not the draconian outlook that people originally had thought of when Biden was elected almost a year ago now.”
Meanwhile, Boeing’s annual market forecast predicts “a $9 trillion market over the next decade for aerospace products and services that Boeing addresses.” Of that, about $2.6 trillion is in the defense and space market. “These large, stable markets have enduring demand driven by geopolitical and security challenges,” the report states. “This spending projection continues to reflect the ongoing importance of military aircraft, autonomous systems, satellites, spacecraft, and other products for national and international defense, with 40 percent of expenditures expected to originate outside of the United States.”
Defense exports fell 17 percent between 2019 and 2020, according to a new Aerospace Industries Association report. Defense exports, which include military aircraft, space systems, missiles, and other equipment, totaled $13.7 billion.
The Congressional Budget Office estimates that the Navy’s latest 30-year shipbuilding plan—which calls for a fleet of 398 to 512 manned and unmanned vessels—would cost taxpayers between $25 billion and $33 billion annually. The Navy has spent an average of $23 billion annually on shipbuilding projects over the past five years.
While we’re talking about money, the Government Accountability Office estimates that the Pentagon is pretty good at preparing and operating under continuing resolutions: funding measures that freeze spending at the prior year’s level. The Pentagon has started 11 of the past 12 fiscal years under a CR—2019 being the only year lawmakers approved an appropriations measure before Oct. 1. GAO did find that military acquisitions slowed and fewer civilian personnel were hired during a CR. Read the whole report here.
Budget bonus: “While today’s U.S. military is near its smallest size since the end of World War II in terms of active-duty end strength, personnel costs are at a historic high—surpassed only by the height of operations in Iraq and Afghanistan,” Seamus Daniels from the Center for Strategic and International Studies writes in a new report about military personnel costs. “Left unaddressed, high personnel costs may limit resources for Department of Defense.”
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From Defense One
Milley’s China Calls During Trump Defeat Were ‘Lawful,’ Conveyed Reassurance, Pentagon Says // Tara Copp,Jacqueline Feldscher: Some Republicans are seeking his ouster, but the Joint Chiefs chairman is the first to serve a guaranteed four years.
Five Ways 9/11 Changed the Defense Industry // Marcus Weisgerber: More outsourcing, more services contracts, more generals on corporate boards—and that's just for starters.
The Marines Are Copying the Air Force's Efforts to Counter Online Disinformation // Brandi Vincent: Meanwhile, the Army is trying to get inside perpetrators' OODA loops.
Boost Defense Spending? Congress Owes Us a Better Explanation // Billy Ostermeyer: The proposed 2022 budget plus-ups add to a long history of hiding flimsy arguments behind dramatic rhetoric.
The U.S. Should Get Serious About Submarine Cable Security // Justin Sherman: Three trends are accelerating risks to underwater cables’ security and resilience.
Will Congress Ever Repeal Its Post-9/11 War Authorizations? // Jacqueline Feldscher: The passage of two decades since the Sept. 11 terror attacks might be a “wake-up call” for lawmakers.
Tell Us Why Small Businesses Can't Get Contracts, Pentagon Asks // Courtney Bublé: The department has met its goals in that area, but is looking to do even better.
Australia Will Get Nuclear-Powered Subs In New Partnership With US, UK // Jacqueline Feldscher: Dubbed AUKUS, the new security partnership will increase focus on the Indo-Pacific.
Conference COVID update: If you’re attending the Air Force Association’s Air, Space & Cyber conference next week, you now must show proof of vaccination or a negative COVID-19 test if you want to attend in person. That’s a change from previous guidance which said attendees needed to simply attest to being vaxxed or having negative test in the prior 72 hours. Another change since last week: Vaccines are now required for everyone attending next month’s Association of the U.S. Army annual meeting. And the National Defense Industrial Association announced this week that it’s requiring vaccines for its Precision Strike Technology Symposium at Johns Hopkins next month.
UAV Factory, which is owned by private equity firm AE Industrial Partners, has acquired drone maker Jennings Aeronautics.
Weekend reading: The Arms Control Association has a new report titled: Understanding Hypersonic Weapons: Managing the Allure and the Risks. “Some claim that hypersonic weapons will strengthen conventional deterrence by leveling the playing field with adversaries who are also developing—and have already deployed—hypersonic weapons. Still others argue they will create instability between nuclear-armed nations by increasing fears of a disarming attack and by fueling a dangerous arms race,” the report states.
Leonardo is overseeing the construction of a test laboratory for the next-generation Tempest fighter jet being developed by the U.K. and other European allies. “The programme will see the partners completely overhaul a commercial airliner, turning it into a flying laboratory for combat air technology. On board, scientists and engineers will test futuristic sensors and communications for the Future Combat Air System that the UK and its international partners are developing to fly into service in 2035.” A concept image of the lab, named Excalibur after King Arthur’s sword, shows a modified Boeing 757 with a fighter jet nose cone.
Using an airliner to test fighter jet electronics is nothing new. Lockheed Martin did this with its F-22 CATFish, a modified 757, and F-35 CATBird, a modified 737. China also has a modified Tupolev Tu-204C that’s believed to be used as a flying lab for its J-20 stealth fighter.
The State Department awarded GM Defense a $36.4 million contract to develop new armored Suburbans for the U.S. government. The company “will create a purpose-built Heavy-Duty (HD) Suburban, building 10 vehicles over the next two years.” That’s about $3.6 million per vehicle. By comparison, an Army general purpose Joint Light Tactical Vehicle costs about $280,000. The Suburbans will have “a new and unique body-on-frame chassis and suspension, designed to specifically support increased government vehicle performance requirements with a higher payload capacity and greater ground vehicle weight.”
Boeing has appointed former Bush administration staffer Ziad Ojakli executive vice president of government operations, effective Oct. 1. He replaces Tim Keating, who left the company in June.