Defense Business Brief: Northrop seeks cash for B-21; L3Harris signs partnership with AWS; Raytheon might sell flight control business; and a bit more.
Northrop Grumman is angling for extra cash from the Pentagon to make up for high inflation and pandemic-related economic pressures when it finalizes a deal for the next batch of B-21 bomber aircraft later this year.
CEO Kathy Warden told a Berstein investors conference that the company is also taking a number of additional steps to offset what could be $1.2 billion in losses from building B-21 aircraft over the decade.
“We are working every lever we have to minimize the impact that we saw when we took a forward look late last year on those production lots,” Warden said.
Northrop first disclosed in a January SEC filing that it might take a loss building the B-21. The Air Force is expected to sign fixed-price contracts for the five low-rate initial production (LRIP) batches of aircraft.
“Principally due to the company’s latest estimate of the impact macroeconomic factors may have on our cost to complete the LRIP options, as well as ongoing discussions with our suppliers and our customer, we now believe it is reasonably possible one or more of the LRIP options could be performed at a loss and the range of such loss across the five LRIP options is between $0 and $1.2 billion,” the company said then.
Warden last week said Northrop is “engaging with the government to address inflation broadly.”
Congress appropriated $1 billion for the Pentagon to pay companies for inflationary issues; however, officials have not signaled how they will distribute it.
Boeing has sought similar relief from high inflation and other pandemic-related issues that have led to billions of dollars in losses building two new Air Force One aircraft.
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China is outpacing the world in “high-impact research” of 20 of 23 key defense-and-security-related technologies, including hypersonic weapons, electronic warfare, and underseas tech, according to a new Australian Strategic Policy Institute report. The technologies are a key part to the AUKUS pact between Australia, the United Kingdom and the United States.
“But in technologies such as autonomous systems operation technology, advanced robotics, adversarial AI-reverse engineering, protective cyber and quantum sensors, the collective strength of the AUKUS countries shifts this picture and, together, they take the global lead,” the ASPI said in a statement.
The Australian think tank set up a website that allows users to compare where countries rank against one another in more than 40 areas.
“In some technology areas, China's lead is so great that no aggregation of countries exceeds its share—highlighting the importance of the accelerating effect of greater collaboration between like-minded partners,” the think tank said.
Raytheon Technologies is considering selling its flight controls business to France’s Safran in a deal that could be worth $1 billion, Bloomberg reports. After Bloomberg published the article, Safran acknowledged the talks. “Following information in the press, Safran confirms that it is in discussions with Raytheon Technologies for the potential acquisition of certain flight control and actuation activities … within the scope of a competitive process,” the company said. “At this stage, it is not possible to evaluate the chances of reaching any agreement, nor is it possible to be specific about terms and conditions.” Last year, Raytheon Technologies CEO Greg Hayes said the company would look to divest “a couple of businesses” within its Collins Aerospace division “that I think don't fit.”
L3Harris Technologies has entered a partnership with AWS to go after Pentagon joint all-domain command and control business. The companies plan to “produce and demonstrate advanced networking and sensor fusion capabilities across a distributed battlespace,” they said in a statement. “I think that's just a great combination and an example of how we try to work with partners and companies that are somewhat software-centric,” L3Harris CEO Chris Kubasik said at the Bernstein inventors conference last week. L3Harris and AWS “are pursuing innovative projects that will provide the military with near-real time access to diverse datasets.” Kubasik signaled that the agreement between L3Harris and AWS would help the Pentagon move quicker. “I think we're kind of shaking things up,” he said.
At the same time, the Software in Defense Coalition—a consortium of leading defense tech startups and small businesses—is calling on Congress “to actively support policies that enable small businesses to engage with the Pentagon.” In a letter to the leaders of Senate and House Armed Services committees, the leaders of 25 companies argue that “software will shape the nature of deterrence and military readiness” in an era of strategic competition.
“The urgency to empower our defense and national security apparatus across all domains with the best and emerging technology is a strategic imperative to protect lives and secure America and our allies,” the group wrote. “We stand ready to serve the Department of Defense and warfighters by providing the best technology to sustain the United States’ intelligence and security advantage.” Read the entire letter here.
In other commercial-defense teaming news, Palantir and Jacobs are expanding a partnership “focused on leveraging Palantir's AI capabilities to commercialize new AI solutions spanning critical infrastructure, advanced facilities, supply chain management and more.”
Meanwhile, U.S. Special Operations Command awarded Palantir an up-to-$463 million deal “to deliver technology solutions to support enterprise capabilities.”
The venture arms of Lockheed Martin and Raytheon are investing in Fortify, “a full-stack materials science and additive manufacturing company,” the startup announced. “This strategic investment will enable Fortify to expand its capabilities and accelerate the development of its groundbreaking Digital Composite Manufacturing (DCM) platform,” according to the release.
Leidos named Amy Davis, former deputy chief for the National Security Agency’s Office of Security and Counterintelligence, senior vice president and chief security officer.
Helicon Chemical, a company that specializes in rocket and missile propellants, named retired Navy Adm. Bill Moran to its board of directors.
Draper named Suzanne Jones, formerly of BAE Systems, its vice president of business winning. In the position, Jones will “restructure Draper’s capture and proposal processes to support the company’s future growth.”
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