INSIDE

PROGRAMS

n U.K.ToUseDefenseSurplusOnCrowsnest,UORs(p.3)

n Flir SystemsUnifiesToExpandInfrared(p.3)

n ThisWeekBeginningOfEndgameInWashington(p.4)

n IndiaPostponesMars Launch(p.5)

n HarrisEyesJTRSMarketWithNewRadio(p.5)

TECHNOLOGY

n BAEGuidedRocket SystemClearedForFastJetUse(p.2)

FORECASTS AND DATA

n SequestrationandU.S.NationalSecurity(pp.6-7)

n Contracts(p.8)

www.aviationweek.com/awin

Daily business intelligence for the global aerospace and defense industry since 1963

Tuesday, October 22, 2013

Army Leaders Say Uncertainty Could Hurt GCV, Other Programs

Final Meads Flight Test Near

PROGRAMS

Continuingfundinguncertaintydueto the government shutdown, se-questrationand funding levels fro-zen at 2012 levels could hurt theGround Combat Vehicle and net-work-centric programs, theArmy’stop uniformed and civilian officialssaidOct.21.

Army Secretary John McHughsaid the cascading issues of thefreeze imposed by a stopgap con-tinuing resolution, sequestrationcuts to the Defense budget andthe recent shutdown of the entireU.S.governmenthavemadeithardto plan and buy things the Armyneeds. Thatuncertaintyhasnega-tivelyaffected485acquisitionpro-

PROGRAMS

Lockheed Martin and its industrypartnersarepreparingforthenextandfinaldevelopmentaltestoftheMediumExtendedAirDefenseSys-tem (Meads),which is designed toprovide360-deg.coveragefromairandballisticthreats.

Theflighttest,set forearlyNo-vember, will include two targets,a QF-4 air-breathing drone anda Lancer tactical ballistic missile(TBM).Thetargetswillconvergeonthe defended area from oppositepositions, stressing the 360-deg.,X-bandfire-controlradar.ThisradarfirsttrackedaTBMinJune.

Oncethetargetsaredetected–one at an “extreme high” and an-other at an “extreme low” altitude

IN BRIEF

SONAR UPGRADE: The U.S. Navyhas awarded BAE Systems Informa-tionandElectronics,Nashua,N.H.,an$11,005,126 contract modification tofabricate, assemble, test and deliverthree AN/SQQ-32(V)4 MinehuntingSonar Set High Frequency Widebandupgrade systems, the Pentagon an-nounced Oct. 21. The AN/SQQ-32Minehunting Sonar was designed fordeepwaterminehunting.Theworkwillbeperformed inHudson,N.H.(78%),East Granby, Conn. (11%), Littleton,Mass.(5%),Nashua(4%),andAustin,Texas(2%),andisexpectedtobecom-pletedbyDecember2015.Fiscal2013otherprocurementNavyfundingintheamountof$11,005,126willbeobligatedattimeofawardandwillnotexpireattheendofthecurrentfiscalyear.TheNavalSeaSystemsCommand,Wash-ington,D.C.,isthecontractingactivity.

GCV,p.2

MEADS,p.2

grams,hesaid.“Whilewe’renotsetatthispoint

to make an announcement abouttheGroundCombatVehicle(GCV),Ifinditdifficulttoenvisionanysig-nificantnumberofourdevelopmen-talinitiativesthatwon’tbeaffected–someverysignificantly.Andsomewewillhavetocancel.Wejusthavetoreprioritize,”McHughtoldanewsconference at the annual confer-enceoftheAssociationoftheU.S.Army(AUSA).

TheGCVprogram, slated to re-place the Army’s Bradley FightingVehicle, has come under fire fromcriticsonCapitolHillandelsewherewho say it should be scrapped in

–thefirecontrolradarwillthende-tectandtrackallfivePAC-3MissileSegmentEnhancement(MSE)inter-ceptorsfiredinadditiontothetar-getsforintercepts.Shouldthefirstinterceptorachieveakillagainsttheballisticmissile,operatorswillcom-mandaself-destructofthesecond.

Protocol calls for a single mis-sile toattack theairbreatherwithtwolaunchedtocountertheballisticthreat, says Marty Coyne, MEADSdevelopmentdirector forLockheedMartin. “You have three missilesrunning away from you and twomissiles coming in,” says GregoryKee,generalmanageroftheNATOMeadsManagementAgency.

“We feel confident. [This] is an

GCV, fromp.1favor of less costly alternatives than the projected $30billionto$40billionprogramtodevelopandbuild1,904armed tank-like vehicles that can safely transport ninesoldiersunderfire.GCVwassparedthebudgetaxearlierthisyearbyadelayingstrategy thatextended thepro-gram’stechnicaldevelopmentphase.

Other programs will have to have their schedules“stretchedout,”whichMcHughacknowledgedcouldleadtoproblemsofcostsandpossibleNunn-McCurdybreach-es.He said thePentagonwas trying tokeep its invest-ments in science and technology and research and de-velopment“sufficientlyrobust”tokeeplookingforfuturemodernizationbreakthroughs.

“But Ground Combat Vehicle – or name your favor-iteacquisitiondevelopmentalprogram–willbeaffected,”McHughsaid.

Gen.RaymondOdierno, theArmyChiefofStaff,saidtoughdecisionswillhavetobemade.“WeneedtoreplacethehumveeandtheBradley,”hesaid,addingthatcon-tinuinginvestmentalsoneedstobemadeinArmyaviationsystems like the UH-60 Black Hawk and Apache attackhelicopters.“Weneedtomakesurethatinthecomplexenvironmentwe’regoingtooperatein,wehaveanetworkthatenablesustopassinformationveryquicklyanddowntothelowestlevel.Weneedallofthat,butthebottomlineis,wecan’taffordallofthat,”Odiernosaid–.

– John M. Doyle (jmdoyle52@gmail.com)

BAE Guided Rocket System Cleared For Fast Jet Use

TECHNOLOGY Naval Air Systems Command (NA-VAIR) has cleared the BAE Systems APKWS-II guidedrocket system for use on fixed-wing aircraft followingcompletionoftechnologydemonstrationtrials.

NAVAIR reported the results of the trials of the Ad-vanced Precision Kill Weapons System to U.S. CentralCommand(Centcom)followingthecompletionofaJointCapabilityTechnologyDemonstration(JCTD)byNAVAIR’sDirect&TimeSensitiveStrikeWeaponsProgramOffice(PMA-242),whichsawtheweapon,designatedWGU-59B,firedfromtheA-10ThunderboltII,theAV-8BHarrierandtheF-16FightingFalcon.

AccordingtoNAVAIR,CentcomreleasedaMilitaryUtil-ityAssessment(MUA)reportonSept.27,whichconfirmstheweapon’s“performanceandminimizedsafetyofflight

concerns.”NAVAIRsaystheMUAis“anothersteptowardafollow-

onFW[Fixed-Wing]APKWSadditiontothecurrentpro-gramofrecord.”

TheAPKWStakesa2.75-in.unguidedrocketandmodi-fies itwith a guidance system fitted to the nose.Oncefired, fourspring-loadedvanesopenrevealing the laserseekers,whichthenlookforthesplashofalaseronthetarget.Theweaponcanpotentiallybefiredfromanyhe-licopter or fixed-wing aircraft capable of firing 2.75-in.rockets.

ThesystemisalreadyinservicewiththeU.S.MarineCorpsinAfghanistan,whereitisfittedtotheBellUH-1YVenomandAH-1WCobrasservingwiththehelicopterat-tacksquadronsthere.PartoftheJCTDtrialswasdesignedtoprovethattheweaponscouldsurvivetheextremesofhighperformanceflightandstillbe launchedsafelyandaccuratelyfromtheplatform.

– Anthony Osborne (tony.osborne@aviationweek.com)

MEADS, fromp.1incrediblycomplextest.It isatestthathasneverbeenattemptedbefore,”Coynesays.

ThetestwillincorporateuseofbothItalianandGermanlaunchers; they are the same design except the actualtruckholdingthemissionsystems,Keesays.MSEmissilesfromlauncherswillberequiredtoexecutean“over-the-shoulder” maneuver to engage their targets, a featureuniquetoMeads.

TheMeadsdevelopmentprojectbeganasacoopera-tive program with funding from Washington, Rome andBerlin.TheU.S.,however,optedtoendfundingforMeadsafterfiscal2014,effectivelypullingoutoftheproductionprogram.

InitsMeadsoffertoPolandforitsairandmissilede-fense systemprocurement, LockheedMartin is offeringthecountryapartnershippositionontheteam.

Washington previously paid 58% of the share of thework,withGermanyoffering25%andItalytheremaining17%.

During a recent set ofmeetings inWarsaw, theU.S.

government cleared Polish officials to receive technicaldatathathadpreviouslyonlybeenavailabletothepart-nernations.

IfMeadswinsinPoland,thecompanyhopestobaseasystem integration laboratory (SIL) in Poland,mirroringthecapabilityalreadyresidingintheU.S.

Washington’sdecision“providestheopportunityforPo-landtoliterallyjumptothefrontoftheline,”Coynesays.

Lockheedofficialssaythereareatleast20nationspro-curingairandmissiledefensesinthecoming10-15years.

Oncethecurrentdevelopmentmoneyrunsoutinfiscal2014,programofficialshopetogetpermissionfromItalyandGermanytousethedatafromtheforthcomingtrialtolookatother,simulatedintegratedinteractions,Coynesays.

Thenexttestwillincludeintegrationworkatahigherlevelusingdatafromtheforthcomingtestasabaseline,Coynesays.

These tests would take place at Practica di Mare AirBaseoutsideRome.

– Amy Butler (abutler@aviationweek.com)

COPYRIGHT©2013PENTON

OCTOBER22,2013•PAGE2MARKET BRIEFING

OCTOBER22,2013•PAGE3MARKET BRIEFING

COPYRIGHT©2013PENTON

U.K. To Use Defense Surplus On Crowsnest, UORs

PROGRAMS The U.K. defense ministry says itwill use a £1.8 billion ($2.46 billion) budget surplus tobring theCrowsnest helicopter-borne radar system intoearlierservice.

Secretary of State for Defense Philip Hammond saidthemoney,theresultofdefenseunderspendinginfiscal2012-2013, would also be used to bring several urgentoperationalrequirementspurchasedforAfghanistanintothecorebudget.

Thiswillallowthemtobeutilizedaftercombatopera-tionsarecompletedinlate2014.

Thedepartmentspent£37.7billionof its£39.5billionbudgetin2012-13,defenseministryaccountsshow.

InawrittenanswertotheHouseofCommons,Ham-mond said: “The funding carried forward from financialyears2012-13to2013-14and2014-15willbeusedtofundarangeofmilitarycapabilities,includingbringingUrgentOperationalRequirements(UORs) fromAfghanistan intothe core program, Future Force 2020 priorities such asbringing Crowsnest into service earlier than previouslyplanned,andthesignificantinvestmentwearemakingincyber.”

ThecontroversialCrowsnestprogram,whichhasnowenteredacompetitiveassessmentstage,aimstoprovideanorganicairborneearlywarningcapabilityfortheU.K.RoyalNavy’s fleetofQueenElizabeth-classaircraft car-riers.ItwouldreplacetheWestlandSeaKingMk7scur-rentlyusedinthatrole.

They are due to retire in 2016.Ministry officials had

originally budgeted for the system to become availablein2022,twoyearsafterthecarrierswereduetobecomeoperational,adecisionwhichmembersofparliamentonadefensecommitteesaidcould“constrain”wheretheshipscouldoperate.

AspreviouslyreportedbyAviationWeek,navyofficialshavebeenworkingtomovetheintroductionoftheCrows-nestcapability forwardbyup to twoyears, retainskillsandcapabilitiesdevelopedbyitsSeaKingMk7crews,andreducewhatwouldhavebeenafour-yeargapincapabilitydowntoalittlemorethantwoyears.

ThalesU.K.isofferingthecurrentSearchwaterradars,butinamodernizedformreinstalledintotheMerlinMk2.LockheedMartinisofferingitsVigilancemissionsystem,usingapoddedradar fittedtopylonsontheMerlinandsourcedfromeitherIAIEltaorSelexES.

OfficialswillnotsaywhichUORsarebeingtargetedforentryintothecorebudget,althoughboththeBritisharmyandRoyalAirForce(RAF)haveanumberofUORstheyareeagertoretain.

The British army has already decided it wants tokeepitsSTKineticsWarthogtrackedall-terrainvehiclesand reportedlyuse themtosupportRoyalArtilleryUAVoperations.

RAF commanders want to retain both the GeneralAtomicsMQ-9Reaper unmanned aerial systemand theBeechcraftShadowR1intelligencegatheringaircraft.TheShadowisbasedontheKingAir350ER,fiveofwhicharenowinoperationalservice.

A single 350ER has been purchased for training use,pendingpossibleconversionintotheShadowconfiguration.

– Anthony Osborne (tony.osborne@aviationweek.com)

Flir Systems Unifies To Expand Infrared

PROGRAMS Flir Systems is pushing toward agoal of “infrared everywhere” by combining its defenseandcommercialmarketaccessandtechnology,accordingtonewpresidentandCEOAndrewTeich.A14-yearveteranofthecompany,TeichmovedintohiscurrentjobinMay.

ThetrajectoryofthermalimagingwillbesimilartothatofGPS,TeichpredictedOct.21attheAssociationoftheUnitedStatesArmy’sAnnualMeeting&Exposition.WithGPS,commercialapplicationsprovided farmorevolumethan themilitarycouldsupportandconsequentlydrovelower costs,which in turnallowed themilitary to equipeverysoldierwithGPS.Today,hesays,thermalimaging“isonapathfromdualusetobroadercommercialization,”withFlir’slowest-pricethermalcamerahavingbrokenthe$1,000costbarrier.

One example of interaction between the commercial

andmilitarymarketsisdrivervisionenhancement(DVE)systemsforvehicles.“Thereisaneedfor20,000-30,000militaryDVEsystems,butweship100,000systemsayearforBMWs,AudisandMercedes,withautomaticdetectionof pedestriansor animals,” Teich says.Military systems“cost$13,000-$15,000,withnoautomaticdetection.Wecanreducethatcostbyafactoroffourorfiveandaddfunctionality.”

Flirwillretainitsgovernment/militaryandcommercialmarketing organizations, but is moving to integrate itstechnologydevelopmentoperations.(Thecompany’sde-fenseproductsare“commerciallydevelopedandmilitaryqualified”ratherthanbeingfundedindevelopmentbythecustomer.)

Teich sees that asanessential step tomeeting suchfutureneedsasaubiquitoushelmet-mountedthermalim-agerfordismountedtroops.“Thekeyenableriscost,andthesearesilicondevicesandthebasisofcostisvolume.Ifthemilitaryistheonlydriver,thecostwillnevercomedown.”

– Bill Sweetman (william.sweetman@aviationweek.com)

OCTOBER22,2013•PAGE4MARKET BRIEFING

COPYRIGHT©2013PENTON

This Week Beginning Of Endgame In Washington

PROGRAMS This week marks the beginning oftheendgameforhowWashingtonwilldealwithbudgets,taxes, entitlements and other federal spending throughnextyear,aslawmakers,lobbyistsandtheirconstituentsandclientsrushtoinfluencetheoutcomesofanewroundofbipartisanspendingnegotiationspeggedfortheendof2013.

Nomatterwhether a so-called grandbargain canbestruck, the fact thatanotherofficial roundofCongress-wide negotiations is happening at all will have a deter-minanteffect. That is because there is alreadyaques-tionofwhethertostickwiththe2011BudgetControlActand itsDamoclesswordofannualsequestrationcuts.IfnoRepublican-DemocraticdealisreachedbyDec.13onCapitolHill,pertheOct.16stopgapfundinganddebtceil-inglaw,thenitwouldatleastrepresentadoublingdownonthestatusquo.

Butoptimismoverachievingchangestothe2011lawandsequestration isnothigh,and industryandagencyproponentsseemtogetdailyremindersofwhy itcouldtakeapoliticalmiracletoundothebudgetlaw’scapsanddisciplinaryactions.

‘Greatly missed’

OnOct.19CongresslostoneofitslegendarydefensehawkswhenRep.BillYoung(R-Fla.)died.Younghadbeenapowerfuldefenseappropriatorforyears,andheisbeinghailedonbothsidesofthepoliticalaisleassomeonewhodeeply cared about military personnel and matters. “Hewill be greatlymissed for hiswillingness towork acrosstheaisleandhisadvocacyforveterans,”saidpoliticallyop-posedRep.RosaDeLauro(D-Conn.)“Aveteranhimself,hewasagreatchampionforourmenandwomeninuniform.”

Young served around 10 years in the Army NationalGuard,andwhatbetterplacetoseethelegacyhehelpedleavebehind than in thepeopleandprograms featuredthis week at the Association of the U.S. Army’s annualsymposiumattheDistrictofColumbia’sconferencecen-ter. Through Oct. 23 practically every grade, rank andmissionwillbespotlighted–whetheractive, reserveorGuard.

ButtheAUSAsymposiumwillbejustoneofmanyven-uesthisweekfordefensecognoscentitomullbudgetun-certaintyaroundtheBeltway.ThePrecisionStrikeAssoci-ation’sPrecisionStrikeTechnologySymposiumrunsOct.22-24inLaurel,Md.TheForeignPolicyInitiative’sannual

forumistakingplaceOct.22attheAndrewMellonAudito-riuminWashington.Andfinally,theNationalCommissionontheStructureoftheAirForcecontinuestohavemeet-ingsinnearbyArlington,Va.,Oct.24-25.

There isalsoaction in theHouseofRepresentatives,despitetheSenatebeingoutuntilOct.28,andelsewherearoundthecapitalcity.OnOct.21Maj.Gen.FrankMcK-enzie,theMarineCorpsrepresentativetothePentagon’sQuadrennialDefenseReview,wassettodiscussthefutureoftheCorpsas itdevelopsanewforcestructureundersequester-typebudgets.McKenziewassettospeakattheindependentCenterforStrategicandInternationalStud-ies(CSIS).

Shipbuilding plan

Another think tank, the Stimson Center, on Oct. 22hostsitsownBrianFinlay,aswellasHenrySokolskiofthe Nonproliferation Policy Education Center and MarkStokesoftheProject2049Institute,todiscuss“Secur-ingtheNuclearEnterprise:WhatDoPastNuclearCrisesTeachUs?”

TheHouseArmedServices tacticalairand land forc-essubcommitteeconvenesahearingon the impacts tomilitaryacquisitionandweaponssystemsfromthestop-gapmeasurefundingthegovernmentuntilJan.15,2014,alongwithsequestrationbudgets.

TheRussianambassador to theU.S.,SergeyKislyak,hasapublicconversationwithStevenPiferoftheBrook-ingsInstitutionattheRussianembassyonbilateralrela-tionswiththeU.S.

Andlater,RichardBurtofGlobalZeroandClarkMur-dockofCSISdebate anarms control push to eliminatenuclearweaponsoverthelongtermatthethinktank.

OnOct.23,theHouseArmedServicesseapowerandexpeditionaryforcessubcommitteeexaminestheNavy’s30-yearshipbuildingplan,especiallyinlightofnewlyre-strictedbudgets.

OnOct.24theHouse’shomelandsecuritycommitteemarksup several relativelyminor bills regardingTrans-portationSecurityAgencyacquisition, “aviationsecuritystakeholderparticipation,”andhomelandsecuritycyber-security“bootsontheground.”

Downtown,therespectedCenterforStrategicandBud-getaryAssessmentswillhostapressbriefingtoreleaseitslatestreport,“ChaosandUncertainty:TheFiscal2014DefenseBudgetandBeyond.”

Ending the week’s events on Oct. 25, the libertarianCatoInstitutehostsapaneldiscussiononthreatpercep-tionandU.S.nationalsecurity.

– Michael Bruno (michael.bruno@aviationweek.com)

November 13-14, 2013 Phoenix, AZ

Strategic Priorities in a Sequestration Era. Learn which programs are being affected and where government is likely to place its bets.

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Harris Eyes JTRS Market With New Radio

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COPYRIGHT© 2013byPenton.Allrightsreserved.Noneofthecontentofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmittedinanyformorbyanymeans (electronic,mechanical, photocopying, recordingorotherwise)withoutthepriorwrittenpermissionofthepublisher.Availableinonlineandemaileditions.

Vol.247•No.16

PROGRAMS

In the wake of the Joint Tactical RadioSystem’s(JTRS)troubles,HarrisCorp.istesting a company-funded communica-tionsdevicedesignedtolinkhelicopters,unmannedaircraftandsoldiers.

The so-called Harris Airborne Multi-channel Radio (HAMR) is based on thecompany’s Falcon III multi-band hand-heldradioandisproductionready,saysJeffPerry,vicepresidentofbusinessde-velopmentatHarris.HAMRisdesignedtooperatetwochannelsofwidebandcom-munications, capable of sending largedatapackets,includingfull-motionvideocraved by commanders in Afghanistan.

Company officials boast that HAMRwilloperateat100timesthespeedoflegacynarrowbandsystems.

Indevelopingtheradio,Perrysaysthecompanywantedittobe“likeyouarego-ingdownandbuyingacommercialmod-el”fortheArmycustomer,simplifyingthetestingandprocurementprocess.

LegacyHAMRsystemsare inusebysoldiersaroundtheworld,and thenewHAMRsystemisinteroperablewiththoselegacymodels.

Thecompanyisdemonstratingthera-dioatthisweek’sAssociationoftheU.S.ArmysymposiuminWashington.– Amy Butler (abutler@aviationweek.com)

OCTOBER22,2013•PAGE5MARKET BRIEFING

India Postpones Mars LaunchPROGRAMS

The launchof India’s firstMarsorbiter,scheduled for Oct. 28, has been post-ponedforaweekduetoroughweatherinthePacificOcean,aseniorspacesci-entist says. “Theweather in the southPacificOceanhasslowedthingsdownasmovementoftwoIndianships,carryingterminalsonboardtotracktherocketaf-teritislaunched,wasdelayedduetobadmeteorologicalconditions,”IndianSpaceResearchOrganization(ISRO)ChairmanK.Radhakrishnansays.

Thetwoships–NalandaandYamuna– left Visakapatnam in south India onSept.15andwereexpectedtostopatSuva in Fiji.While Yamuna reached itsintended destination on time, NalandaisexpectedtoreachFijithisweek.Bothshipswillthenhavetotraveltotheirre-spectivelocationstotracktherocket.

“Thepicturewillbecomeclearerinthenextfewdays,”Radhakrishnansays.

Whileoneshipwilltracktheignition,theotherwillcapturethesatellite’ssepa-rationandpassthedatainalmostrealtimetotheIndialaunchcontrolcenter.

AnewlaunchdatewillbeannouncedonOct.22,ISROspokesmanD.P.Karniksays.Themissionwas initiallyexpectedtobeginonOct.28,boostedbythePo-larSatelliteLaunchVehicle(PSLV),whichwas also used for the Chandrayaan-1Moonmission.ThelaunchwindowisopenbetweenOct.28-Nov.19,Karniksays.

Sincetherocket’strajectoryisdiffer-ent, ISRO’sgroundstationswillnotbeabletotraceitsmovement.SoateamofISRO’s satellite communication-naviga-tionexpertswillbeworkingforthenextthreemonthstokeeptrackofinforma-tionrelayedbythetwoshipsonthelaststageandthespacecraft’sejectionintospace.Meanwhile,thespacecraft’sinte-grationwiththelauncherhasbeencom-pletedandtheheatshieldwillbeclosedinacoupleofdaysaftertests.

“Everything is progressing normallywiththepreparationsoftherocketandthesatellite,”Karnikadds.

Oncelaunched,theMarsmissionwillorbit theEarthfor25daysbeforeem-barkingonanine-monthvoyagetotheredplanet.Plansarebeingmadetoin-sertthesatelliteinanorbitaroundMarsonSept.22,2014.

The unmanned satellite, christened“Maangalyaan,”will study the thin Mar-tianatmospheretodeterminethepos-sibleexistenceandsustainabilityof lifeandfocusonclimate,geology,andoriginandevolutionoftheplanet.Itsestimat-edcostisabout4.5billionrupees($80.7million).

NASAhas reaffirmed itssupport forthemission.TheNASA/JPL(JetPropul-sionLaboratory) isprovidingcommuni-cationsandnavigationhelpwithitsdeepspacenetworkfacilities.

– Jay Menon (jaymenon68@gmail.com)

COPYRIGHT©2013PENTON

OCTOBER22,2013•PAGE6MARKET BRIEFING

COPYRIGHT©2013PENTON

INDUSTRY DATA

Sequestration and U.S. National Security

• Combination of sequester cuts with internal cost growth in personnel and overhead and inefficient acquisition will halve combat forces by 2021.

End of Reagan(1988)

End of Bush(1992)

End of Clinton(2000)

End of GW Bush(2008)

Middle of Obama(2012)

2021(projected)*

Change(1988-2021)

Total Base Budget Authority - No Sequester (billions of constant $) $553 $483 $418 $545 $561 $487 -11.9%

Active Duty Personnel (K) 2,209 1,880 1,449 1,474 1,481 1,280 -42%

Reserve and Guard Personnel (K) 1,158 1,135 865 843 846 803 -30.7%

DoD Civilian Personnel (K) 1,090 1,006 698 707 800 766 -30%

Active Commissioned Ships 573 471 341 282 285 235 -59.0%

Carriers 15 15 10 10 10 7 -53.3%

Army Divisions (active) 20 20 10 10 10 6 -70.0%AF Fighter/Attack (total active inventory) 3,027 2,000 1,666 1,521 1,493 1,157 -61.8%

*Assumptions based on similar #/% reductions as prior periods combined with public statements by service chiefs

Sources: FY 2014 President’s budget (adjusted to remove OCO), future year projections adjusted into constant dollars, DMRR, Air Force Magazine, Service Testimony, USAF and USN FY 2014 Long Range Inventory and Funding Plans

Co

mb

at F

orc

es

Sequestration and Troop Levels

Source: Bipartisan Policy Center, www.bipartisanpolicy.org

Personnel Cost Growth Unchecked by Sequester

• Sequester does not curtail the dramatic growth in per-capita cost of military and civilian personnel.

• The cost of personnel has almost doubled since 2000.– DoDisspending$110Bmoreforaforcethatisalmost10%

smaller(1.5Mactivedutyatthetimevs.1.4Mtoday).

• Fully-Burdened costs of active duty:– FY2013=$384K

OCTOBER22,2013•PAGE7MARKET BRIEFING

COPYRIGHT©2013PENTON

INDUSTRY DATA

Sequestration and U.S. National Security

20 10 10 6

3

3 3 3

Army

USMC

End of Reagan

• The combination of sequester cuts and unaddressed cost increases will erode force readiness, stall modernization, and reduce the fighting forces by at least 50% by 2021.

2789 1666 1493 1157

1988

Ground Divisions End of Sequester

AF Fighter/Attack

558 331 275 228

10 10 7 Carriers

1988 2000 2012 2021

Ships

Naval Combatants -330 ships; 15 Carriers to 7 Carriers

-1,632 aircraft

-14 divisions

15 Carriers

Sequestration and Troop Levels

Source: Bipartisan Policy Center, www.bipartisanpolicy.org

Personnel Cost Growth Unchecked by Sequester

• By 2021, the personnel, health care, and defense-wide costs will consume 100% of the budget without reform to current cost trend.

• O&M costs per active-duty: 1980=$55K 2001=$105K2010=$211K

FY2012 FY2021

- Modernization - Readiness - Force structure

- O&M / Defense wide costs - Health care costs

- Personnel costs

MARKET BRIEFING

COPYRIGHT©2013PENTON

Selected aerospace and defense contracts for the week of Oct. 17-18, 2013.

Oct. 17, 2013

NAVYGeneral Atomics, San Diego, is being awarded a$51,997,981not-to-exceedorderagainstapreviouslyis-suedBasicOrderingAgreement(N68335-11-G-0003)fortheprocurementofAdvancedArrestingGearequipmentrequiredtostanduptheRunwayArrestingLandingSite(RALS) in support of CVN-78 testing. RALSwill enabletheNavy to runarresting simulationswith liveaircraftpriortoemployingthoseaircraftonboardship.Inaddi-tion,RALSwill enable theNavy to troubleshoot issuesfound during certification and deployment of CVN-78.TheworkwillbeperformedinSanDiego,(65%);Tupelo,Miss.(15%);Boston(10%);Philadelphia(5%);Newark,N.J. (2.5%) and Dallas (2.5%), and is expected to becompleted inOctober2016.Fiscal2013otherprocure-ment,Navycontractfundsintheamountof$25,479,010will be obligated at time of award, none of which willexpireattheendofthecurrentfiscalyear.TheNavalAirSystemsCommand,PatuxentRiver,Md.isthecontract-ingactivity.

ARMYDynCorp International LLC, Falls Church, Va., wasawardeda$72,264,323modification(P00024)toaprevi-ouslyawardedcost-plus-fixed-fee,multiyear,foreignmil-itarysales(FMS)contract(W91CRB-10-C-0030)topro-vidementoringandtrainingservicesfortheAfghanistanNationalArmyacrossmultiple locations inAfghanistan.This FMS contract is in support of Afghanistan. Fiscal2014procurement funds in theamount of $36,132,161arebeingobligatedonthisaward.TheArmyContractingCommand,RockIsland,Ill.,isthecontractingactivity.

Raytheon IDS, Andover, Mass., was awarded a$17,328,258 modification (P00004) to a previouslyawarded cost-plus-fixed-fee, multiyear, option-includ-ed, foreign military sales (FMS) contract (W31P4Q-13-C-0111) forrepairandreturnservices insupportofPatriotmissileparts.ThisFMScontractisinsupportofIsrael,Kuwait,Taiwan,Japan,SaudiArabia,Korea,Neth-erlandsandtheUnitedArabEmirates.Fiscal2013pro-curementfundsarebeingobligatedonthisaward.TheArmyContractingCommand,RedstoneArsenal,Ala., isthecontractingactivity.

Oct. 18, 2013

ARMYAkima Construction Services LLC, Laurel, Md.,(W912DY-14-D-0001); Ayuda Management Corpora-tion,Broomfield,Colo.,(W912DY-14-D-0002);FutureNet

CONTRACTS

Group Inc., Detroit, Mich., (W912DY-14-D-0003); Ma-ChisKawvIIILLC,Kinston,Ala.,(W912DY-14-D-0004);NorthWindNeuSecurityServicesLLC,IdahoFalls,Ida-ho, (W912DY-14-D-0005); Security Construction Ser-vices Inc., Hudson, Mass., (W912DY-14-D-0006); andZieson Construction Co LLC, Topeka, Kan., (W912DY-14-D-0007); were awarded a firm-fixed-price, option-includedcontractwithamaximumvalueof$80,000,000toprovidedesign,buildandconstructioncapabilitiesforAccessControlPointconstructionandequipmentinstal-lation. Performance location and fundingwill be deter-mined with each order. The bid was solicited throughtheInternet,with29bidsreceived.TheArmyCorpsofEngineers, Huntsville, Ala., is the contracting activity.(AwardedOct.7,2013)

AIR FORCEUnited Launch Services LLC, Littleton, Colo., wasawardeda$939,085,130cost-plus-incentive-feemodifi-cation(P00002)withcost-plus-fixed-feeandfirm-fixed-pricecontractlineitemnumbersunderapreviouslyex-istingcontract(FA8811-13-C-0003)forfiscal2014EELVLaunchCapability for theDelta IVandAtlasV familiesof launch vehicles. The contract modification is for alllaunch capability effort to include mission assurance,programmanagement,systemsengineering,integrationofthespacevehiclewiththelaunchvehicle,launchsiteandrangeoperations,andlaunchinfrastructuremainte-nanceandsustainment.TheworkwillbeperformedatLittleton,Colo.,VandenbergAFB,Calif.,andCapeCanav-eral,andwillbecompletedbySept.30,2014.Thisawardis the result of a sole-sourceacquisitionwithonlyoneoffer solicitedand received. Fiscal 2013 in theamountof$294,314,145wasobligatedattimeofaward.LaunchSystems Directorate, Space and Missile Systems Cen-ter, LosAngelesAFB,Calif., is the contractingactivity.(AwardedOct.1,2013)

General Atomics Aeronautical Systems Inc., Pow-ay, Calif., was awarded a maximum $377,400,000 not-to-exceed delivery order, undefinitized contract award(0050)onanexistingfirm-fixed-pricecontract(FA8620-10-G-3038)forfiscal2013MQ-9Reaperproduction.Con-tractorwillprovide24MQ-9Block5Reaperaircraft,ship-ping containers, initial spares and support equipment.TheworkwillbeperformedinPowayandisexpectedtobecompletedbyJuly29,2016.Thisawardistheresultofasole-sourceacquisition.Fiscal2013aircraftprocure-mentfundsintheamountof$305,000,000,fiscal2012standardequipmentprocurementfundsintheamountof$3,800,000,andfiscal2012sparesprocurementfundsintheamountof$68,600,000arebeingobligatedattimeofaward.AirForceLifeCycleManagementCenter/WIIK,Medium Altitude Unmanned Aircraft Systems, Wright-PattersonAFB,Ohio, 45433 is the contracting activity.(AwardedOct.15,2013)

OCTOBER22,2013•PAGE8MARKET BRIEFING

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