The Insider

By Ethan Sterenfeld
October 28, 2021 at 11:08 AM

Textron expects some employees will quit their jobs rather than comply with the coronavirus vaccine mandate for government contractors, and the company has accelerated its hiring of new workers, Textron's chief executive officer said today.

"There's no question that we're going to lose some employees because of this," Scott Donnelly said in response to an analyst question on the company's third-quarter earnings call. "It's a curveball we wish we didn't have, but we're managing our way through it."

The Defense Department has come under pressure from contractors over the vaccine mandate, which might lead to workforce and supply chain disruptions. All employees of federal contractors must be vaccinated against COVID-19 by Dec. 8.

"It has created a lot of noise," Donnelly said. "It has not been well received by a pretty sizable portion of our employees."

Textron's revenue for the third quarter grew by 9% compared to the same period a year earlier, on a rebound in commercial aircraft sales, to $3 billion. Net income grew by 61%, to $185 million.

Revenue at Bell, which builds helicopters and tiltrotor aircraft, fell by 3% on lower military revenues to $769 million. Profit for the division fell 12%, to $105 million. Bell delivered nine aircraft to the government in the quarter, the lowest number since the first quarter of 2020.

Bell is 60% done with building its prototype for the Army's Future Attack and Reconnaissance Aircraft competition, Donnelly said.

Textron Systems, which makes a number of ground vehicles and drones, had $299 million in revenue, down 1%. Segment profit increased 13%, to $45 million. The withdrawal from Afghanistan hurt revenue growth in the division, according to the company.

By John Liang
October 27, 2021 at 4:53 PM

Mercury Systems announced today Debora Plunkett, former director of information assurance at the National Security Agency, was elected to the company's board of directors.

Additionally, Mercury announced Chairman of the Board Vincent Vitto has retired from the board effective today, and current director William O'Brien has been appointed as the new chairman.

Plunkett has her own consulting business and is a senior fellow at Harvard's Belfer Center and an adjunct professor of cybersecurity at the University of Maryland, according to a Mercury Systems statement. She also served on the National Security Council during the Clinton and Bush administrations where she developed national cybersecurity policies and programs. Plunkett also serves on the boards of CACI International, Nationwide Insurance and BlueVoyant.

Vitto, the former president and CEO of the Charles Stark Draper Laboratory and former vice chairman of the Defense Science Board, joined the Mercury board in 2006. He was elected board chairman in 2010.

O'Brien, former chairman of Enterasys Networks, has served on Mercury's board since 2008. He spent more than 30 years at PricewaterhouseCoopers.

By Audrey Decker
October 27, 2021 at 4:47 PM

There is a lot of promise in the Navy's unmanned systems and the potential cost savings, but the "devil's in the details" when it comes to unmanned, according to Jason Potter, professional staff member on the Senate Armed Services Committee.

The Senate Appropriations Committee’s draft of the fiscal year 2022 defense spending bill, released last week, recommended cutting funding for the Navy’s LDUUV Snakehead, due to limited deployment opportunities.

The committee is also concerned about the Navy’s Extra Large UUV Orca program due to schedule delays.

“The SAC-D marked both the Orca and the Large [Displacement] Unmanned Underwater Vehicle and both of those have challenges realizing the thing that we want them to be,” Potter said today at a Navy League webinar.

“Orca started out as an urgent need in the 2016 timeframe and it hasn’t been able to do the things, to date, that we need it to do,” Potter said.

The Navy needs to break some of these complex systems down into smaller pieces and understand them first on land before taking them to sea, according to Potter.

Technology that’s ready to go shouldn’t be handcuffed, but time and money shouldn’t be wasted in the process, he added.

There isn’t consensus between the Navy, Congress and industry about the time it takes to develop these unmanned systems in a sustainable and responsible way, said Jen Stewart, senior vice president at WestExec Advisors and previously staff director for the House Armed Services Committee.

“I don’t think that we have, across that whole ecosystem of stakeholders, White House level, [Office of the Secretary of Defense] level, service level, congressional level, industry level, I don’t think we have consensus on those timelines yet,” Stewart said at the webinar today.

By John Liang
October 27, 2021 at 1:59 PM

This Wednesday INSIDER Daily Digest has news on the challenges the defense industry faces in getting its workforce vaccinated against the ongoing pandemic and more.

We start off with a deep dive into the defense industry's efforts to get its workforce vaccinated against COVID-19:

DOD under pressure as contractors prep for possible disruptions triggered by vaccine mandate

Major defense companies are bracing for workforce and supply chain disruptions related to the federal mandate requiring all government contractors be fully vaccinated against COVID-19 by Dec. 8.

The National Telecommunications and Information Administration has issued a new analysis of how to execute a fifth-generation wireless technology competition, called a "5G challenge":

NTIA releases analysis ahead of initial '5G challenge'

Industry is concerned the Pentagon will be biased toward large companies and support a single company's variant during a new effort aimed at developing open 5G networks, according to an analysis by the National Telecommunications and Information Administration.

The Navy is holding a "Hack the Machine Unmanned" event:

Navy's unmanned task force to host public hacking event

The Navy's newly formed unmanned task force is asking computer "geeks" to attack the service's unmanned systems in a hacking competition.

The Senate Appropriations Committee in its mark of the FY-22 defense spending bill would cut more than 90% of the Army's requested funding to develop directed-energy variants of the Indirect Fire Protection Capability:

Senate proposes slashing directed energy IFPC funding

A Senate panel has recommended a steep cut to Army plans in fiscal year 2022 to rapidly prototype and test trailer-sized directed-energy weapons, a proposal that if enacted could hobble service plans for laser and microwave protections against cruise missiles and drone swarms.

Air and Missile Defense Radar system and Aegis integration testing at land-based test sites are on track to support shipboard combat system testing:

AMDR Aegis shipboard combat system testing set to start in January

The Navy is set to start shipboard combat system testing of the Air and Missile Defense Radar in January, according to a Navy spokesman.

By Ethan Sterenfeld
October 27, 2021 at 11:58 AM

A sale of roughly 250 M1A2 SEPv3 Abrams tanks to Poland might not be finalized for another two years, General Dynamics' chief executive officer said today.

The two-year timeline would allow the foreign military sales process and other details to be completed, Phebe Novakovic told analysts on the company's quarterly earnings call. The SEPv3 is the newest version of the Abrams tank, which the U.S. Army is currently purchasing.

"This is a powerful system for the Poles to have," she said. At the last earnings call, she highlighted the possibility for increased tank sales in Europe as NATO allies deal with a resurgent Russian threat.

General Dynamics sees potential mid-term combat vehicle sales in the Czech Republic, Denmark, Romania, Switzerland and Spain, Novakovic said. There are other potential growth opportunities in the Middle East.

"In the near term, we are stable internationally, but opportunity-rich in the intermediate period," she said.

Domestic combat vehicle demand is stable, and the company is following the federal budget process, Novakovic said.

Potential domestic combat vehicle growth comes from the Mobile Protected Firepower, a new light tank the Army is buying for infantry units, she said. The Army is expected to choose either General Dynamics or BAE Systems to build the MPF in the third quarter of fiscal year 2022.

General Dynamics reported $9.6 billion in revenue for the quarter ending Sept. 30, up 1.5% from the same period a year earlier. The company had net income of $860 million.

The combat systems unit, which includes the Abrams and Stryker programs, had $1.7 billion in revenue, down 3.1% percent from the same period a year earlier. Operating earnings in the unit increased 2.2%, to $276 million.

The marine systems unit, which builds submarines and destroyers for the Navy, had $2.6 billion in revenue, up 9.6% from a year earlier. Operating earnings in the unit increased by 2.7%, to $229 million.

By Jaspreet Gill
October 27, 2021 at 11:11 AM

BALTIMORE, MD -- The Defense Information Systems Agency is starting a "zero-based review" of its systems and budget portfolio, the agency's director said here today.

The assessment will include a review "of every single program, every single resource, including dollars and positions to make sure that we are aligned with our priorities," Lt. Gen. Robert Skinner said at the AFCEA TechNet Cyber conference. "More importantly, that we understand where the requirement came from [and] how every requirement has changed over the years . . . and where the gaps and shortfalls are."

The review will happen "over the next year," but Skinner did not specify the exact timeframe.

He added one of the areas DISA is focusing on is addressing supply chain cyberattacks, calling it a priority and that the agency is working with its defense industrial base partners as well as the National Security Agency.

By Audrey Decker
October 27, 2021 at 11:09 AM

The Navy's newly formed unmanned task force completed its first manned-unmanned exercise off the coast of Bahrain.

Task Force 59 integrated new Man-Portable Tactical Autonomous System unmanned surface vessels alongside manned maritime vessels during the two-day New Horizon exercise, according to a Navy statement issued yesterday.

“This marked the first time [Naval Forces Central Command] integrated USVs with manned assets at sea in the U.S. 5th Fleet area of operations. New Horizon was also the first time for NAVCENT’s integration of USVs with manned assets at sea alongside partner forces,” according to the release.

The exercise featured the Mantas T-12, a small USV used for intelligence, surveillance and reconnaissance.

The Navy established Task Force 59 in early September to put more unmanned systems above, on and below the sea.

Small-scale exercises will help Task Force 59 prepare for International Maritime Exercise 22, a large-scale exercise taking place early next year.

By Briana Reilly
October 27, 2021 at 10:02 AM

General Atomics is the second company to win a $17 million contract for developing an unmanned Off-Board Sensing Station, setting up a later competition with fellow awardee Kratos for a follow-on deal down the line.

The latest award announcement from the Defense Department, which came Tuesday, covers General Atomics' research and development for the OBSS, with work set to be performed in Poway, CA, and completed by Oct. 31, 2022.

A contract was also awarded to Kratos this week for the effort, aligning with the Air Force Research Laboratory’s solicitation from February that stated two companies would be given awards for the one-year base effort.

After that initial contract, both General Atomics and Kratos will vie for a 15-month, follow-on flight demonstration deal, worth $31 million. Work under that agreement would be completed by Jan. 31, 2024, the DOD notice shows. Including that option, the award’s total value is $49 million.

The initial awards were the result of a competitive solicitation that saw seven offers, according to the notice.

By John Liang
October 26, 2021 at 2:18 PM

This Tuesday INSIDER Daily Digest has news from Lockheed Martin's quarterly earnings call and more.

Lockheed Martin executives discusses the company's most recent quarterly earnings this morning:

Lockheed says F-35 production re-baseline contributed to projected 2021 revenue drop

Lockheed Martin is projecting a 2.5% drop in 2021 revenue, due in part to a re-baseline of the F-35 Joint Strike Fighter's production plan.

Initial operational test and evaluation for the Air Force's HH-60W Combat Rescue Helicopter program will take place a little later than originally expected:

Air Force expects to begin HH-60W IOT&E in early 2022

The Air Force is poised to enter initial operational test and evaluation for its HH-60W Combat Rescue Helicopter in early 2022, a service spokeswoman says.

While the T-7 trainer aircraft may be able to meet most of the Air Force's needs, Gen. Mark Kelly said during a Mitchell Institute event this week that there may be new requirements for size, weight and power, sensor, fuel and weapons computing capability:

New USAF tactical trainer likely to have different SWAP, sensor requirements than T-7, ACC says

The head of Air Combat Command said today that a future advanced tactical trainer that has the flexibility to serve as a surrogate fighter aircraft may call for different requirements than the T-7 Boeing is currently building to replace the aging T-38.

Brig. Gen. John Rafferty said the long-range precision fires cross functional team that he leads is working with U.S. Army Pacific and U.S. Indo-Pacific Command to hammer out in early 2022 the range capability of a next-generation surface-to-surface missile:

Army closing in on new objective PrSM requirement, range now classified

The Army is getting ready to lock in a requirement for an extended-range variant of its Precision Strike Missile and is moving to shroud the reach of the planned weapon -- which service leaders previously discussed openly -- in secrecy, a determination that will codify the scope of the competition for industry and keep potential adversaries, such as China, guessing about the precise offensive potential of U.S. ground units.

Air Combat Command chief Gen. Mark Kelly spoke during a Mitchell Institute event this week:

ACC commander doesn't anticipate E-7 within next two years

The head of Air Combat Command doesn't anticipate the Air Force would receive the Boeing E-7A Wedgetail this year or next if the service moves forward with buying the aircraft as a replacement for its aging E-3 Sentry fleet.

By Briana Reilly
October 26, 2021 at 12:55 PM

Lockheed Martin is now projecting its acquisition of Aerojet Rocketdyne will close in the first quarter of calendar year 2022, rather than the fourth quarter of this year, as previously expected.

CEO Jim Taiclet told investors during a quarterly earnings call today that the deal "continues moving through the regulatory approval process" as officials await the federal nod they anticipated would come before the close of this year.

The company’s news release unveiling the Q3 financial results note Lockheed's preliminary 2022 outlook doesn't incorporate the pending acquisition, adding that "changes in circumstances may require the company to revise its assumptions, which could materially change its current estimate of 2022 net sales, business segment operating margin, and cash flows."

The updated timeline comes as the company lowered its 2021 revenue expectations by 2.5%, to roughly $67 billion, and executives warned next year's could drop to $66 billion.

Still, Taiclet outlined multiple areas of growth for the company, including through existing programs, competition for new awards and ongoing work on six hypersonics programs. Once testing and evaluation activity wraps up, he said, "multiple programs are expected to enter production between 2023 and 2026."

He also identified work in "significant classified development programs," with those areas transitioning to production in the same 2023-2026 timeframe.

"Based on hypersonics, classified programs, programs of record like CH-53K and others, we do believe that we'll have a rebound to meaningful growth in 2023 and beyond, but again that's also dependent on a number of factors including the budget and such," Taiclet said.

By Briana Reilly
October 26, 2021 at 10:20 AM

The Air Force has awarded Kratos a $17 million contract for research and development of an unmanned Off-Boarding Sensing Station -- a platform the company’s president and CEO has said "could ultimately be as significant and transformational to Kratos as we expect Valkyrie to be."

The award, which the Defense Department announced Monday and includes design, development and flight demonstration, with work to be completed by Oct. 31, 2022, was the result of a competitive solicitation that saw seven offers, according to the notice.

Kratos President and CEO Eric DeMarco told analysts during an earnings call in August the OBSS solicitation was “very, very competitive,” as he described the potential “transformational” nature of the platform for the company, likening it to the stealthy, affordable XQ-58 Valkyrie drone.

But at the time, he declined to share details about the effort, labeling it only as “an attritable, low-cost system” and saying the “program has legs.”

Kratos’ news release today described the OBSS as “an affordable, highly modular conventional takeoff and landing jet-powered” unmanned aerial system. Kratos’ vehicle, it added, combines “innovating manufacturing techniques” that boost officials’ ability to “provide significant performance for sensor extension missions,” as well as effectively extend the weapons bay for manned aircraft.

The description builds on past details the Air Force Research Laboratory included in a call for OBSS proposals in February, which described an aircraft variant that's "designed for limited life in terms of years, not decades, with no depot maintenance and limited field maintenance considerations," and would feature a design and manufacturing that “will incorporate scalable and responsive manufacturing technologies.”

The contract includes an additional $31 million option, with work under it to be completed by Jan. 31, 2024, the DOD notice shows. Including that option, the award’s total value is $49 million.

By Ethan Sterenfeld
October 26, 2021 at 10:02 AM

The Senate Appropriations Committee proposed cutting funding for the accelerated acquisition of the Army's Indirect Fire Protection Capability Increment 2 prototypes in a draft of its fiscal year 2022 spending bill.

Senate appropriators would provide $163 million for IFPC Increment 2, a $71 million reduction from the $234 million the Army included in its budget request. The draft bill described the requested amount of prototype purchases under an Other Transaction Agreement as “early to need.”

Dynetics won the competition last month to build IFPC Increment 2, also known as Enduring IFPC, which will provide a kinetic defense against cruise missiles. Dynetics beat Rafael’s Iron Dome system, which Congress had previously forced the Army to buy as the first increment of IFPC.

Of the Army’s IFPC request, $151 million would have gone to development, integration and manufacturing for Increment 2. The $71 million cut proposed in the Senate bill would apply to that part of the program.

The Army plans to field a battery of 12 IFPC Increment 2 launchers by the end of FY-23, while prototyping and development continues on the system. According to the current schedule, a milestone C decision and the beginning of low-rate initial production could come in FY-24.

Dynetics and the Army have declined to discuss the system’s performance in a shoot-off this year against the Iron Dome. Army officials have emphasized that the shoot-off and the selection were about the system’s ability to talk to the service’s Sentinel radar and Integrated Air and Missile Defense Battle Command System, not its current ability to intercept threats.

Iron Dome systems that the Army has already bought cannot communicate with the service’s radars and command-and-control systems.

In its own version of the FY-22 defense spending bill, the House Appropriations Committee proposed a smaller cut to IFPC development. That bill, which was released before Dynetics won the competition, would have given $221 million for IFPC, a $13 million reduction from the Army’s request.

By John Liang
October 25, 2021 at 1:28 PM

This Monday INSIDER Daily Digest has news on the E-7A Wedgetail program, a delayed flight test of the Airborne High Energy Laser and more.

Air Combat Command chief Gen. Mark Kelly spoke this morning at a Mitchell Institute event:

ACC commander doesn't anticipate E-7 within next two years

The head of Air Combat Command doesn't anticipate the Air Force would receive the Boeing E-7A Wedgetail this year or next if the service moves forward with buying the aircraft as a replacement for its aging E-3 Sentry fleet.

A laser flight test on an AC-130J aircraft has been delayed a year:

SOCOM: Flight test for AC-130J laser slips to FY-23

Defense officials are looking to flight test the Airborne High Energy Laser on an AC-130J Ghostrider in fiscal year 2023, a U.S. Special Operations Command spokeswoman told Inside Defense this week, pushing back the planned demonstration by a year.

The Government Accountability Office has publicly released a couple of bid protest decisions regarding the Navy's Next Generation Jammer-Low Band program:

Navy won't re-open NGJ-LB competition despite GAO recommendation

The Government Accountability Office has sustained another protest Northrop Grumman filed against the Navy's decision to award L3Harris Technologies a contract for the Next Generation Jammer-Low Band Capability Block 1.

Document: GAO decisions on NGJ-LB protests

A bunch of companies showed off their mobile cannon wares at the recent AUSA conference:

Massive truck-mounted cannons deploy to convention hall, take aim at Army next-gen program

Three defense contractors from Europe and the Middle East deployed to Washington, DC, their respective 155 mm howitzer variants mounted on trucks for display at a convention center, all hoping to catch the attention of U.S. government officials who are contemplating options for replacing towed cannons that are now deemed vulnerable to counter-battery fire against an advanced adversary such as Russia or China.

Raj Iyer, the Army's chief information officer, spoke at a recent virtual C4ISRNET event:

Army CIO: Culture change needed for digital transformation

A digital transformation in the Army and the implementation of Joint All-Domain Command and Control requires cultural changes in the military more than technological advances, according to Raj Iyer, the Army's chief information officer.

By Tony Bertuca
October 25, 2021 at 5:00 AM

Senior defense officials are scheduled to appear on Capitol Hill this week.

Monday

The Air Force Association hosts a discussion with the chief of Air Combat Command.

Tuesday

The House Appropriations defense subcommittee holds a hearing on Defense Department workforce development.

The Senate Armed Services Committee holds a hearing on the security situation in Afghanistan.

Thursday

The Senate Armed Services Committee holds a hearing to consider nominations for the Defense Department’s chief information officer and deputy under secretary of defense for personnel and readiness.

The House Armed Services readiness subcommittee holds a hearing on deport modernization.

By John Liang
October 22, 2021 at 2:19 PM

This Friday INSIDER Daily Digest has news on the Navy's Next Generation Jammer-Low Band program, the Army's mobile cannon efforts and more.

The Government Accountability Office publicly released a couple of bid protest decisions regarding the Navy's Next Generation Jammer-Low Band program:

Navy won't re-open NGJ-LB competition despite GAO recommendation

The Government Accountability Office has sustained another protest Northrop Grumman filed against the Navy's decision to award L3Harris Technologies a contract for the Next Generation Jammer-Low Band Capability Block 1.

A bunch of companies showed off their mobile cannon wares at the recent AUSA conference:

Massive truck-mounted cannons deploy to convention hall, take aim at Army next-gen program

Three defense contractors from Europe and the Middle East deployed to Washington, DC, their respective 155 mm howitzer variants mounted on trucks for display at a convention center, all hoping to catch the attention of U.S. government officials who are contemplating options for replacing towed cannons that are now deemed vulnerable to counter-battery fire against an advanced adversary such as Russia or China.

Raj Iyer, the Army's chief information officer, spoke at a virtual C4ISRNET event this week:

Army CIO: Culture change needed for digital transformation

A digital transformation in the Army and the implementation of Joint All-Domain Command and Control requires cultural changes in the military more than technological advances, according to Raj Iyer, the Army's chief information officer.

The Navy's Large Displacement Unmanned Underwater Vehicle program could see a funding cut, if Senate appropriators have their way:

Senate appropriators recommend cutting funding for Navy's LDUUV

The Senate Appropriations Committee wants to cut funding for the Navy's Large Displacement Unmanned Underwater Vehicle phase 2 contract.

Defense Secretary Lloyd Austin said a new climate change document released this week "lays out a path to incorporate" climate change security considerations into DOD's strategic planning:

DOD releases new Climate Risk Assessment

The Defense Department today released its Climate Risk Assessment as a "first step towards inclusion of the security implications of climate change across the DOD enterprise."

Document: DOD's new Climate Risk Assessment