The Insider

By Marjorie Censer
December 1, 2014 at 7:02 PM

The U.S. government has filed a lawsuit against Air Ideal and its owner for allegedly making false statements to the Small Business Administration so that it could be certified as a Historically Underutilized Business Zone company, the Justice Department said today.

The Justice Department alleges that when Air Ideal applied to be a HUBZone company, it misrepresented the location of its principal office and submitted a fabricated lease agreement. It allegedly used the certification to win millions of dollars' worth of contracts with the Coast Guard, Army Corps of Engineers, Army and other government agencies, according to the Justice Department.

The U.S. government filed the suit under whistleblower provisions of the False Claims Act.

By Marjorie Censer
December 1, 2014 at 5:58 PM

Tom Arseneault, chief operating officer of BAE Systems' U.S. subsidiary, will become president of the company's electronic systems sector at the start of next year, the contractor said Monday.

Arseneault, who will retain his COO role, will take over for Dan Gobel, who is set to retire Dec. 31.

Arseneault was named chief operating officer earlier this year; he previously led the company's product sectors, which include both the electronics systems as well as the land and armaments businesses.

By James Drew
November 26, 2014 at 6:34 PM

Although a request for proposals had been expected as early as this month, the Air Force confirmed this week that it is still deciding on the most appropriate acquisition strategy to replace its two VC-25 presidential aircraft, more commonly known as Air Force One.

Service spokesman Ed Gulick told InsideDefense.com Nov. 25 that the service has budgeted for one aircraft buy in fiscal year 2016 for delivery in FY-18, when it will undergo "missionization" and testing.

Gulick said the first fully operational aircraft is due in FY-23. The service had wanted to buy three new presidential aircraft, according to a 2013 sources-sought notice, but the final number is yet to be decided.

"The total quantity is still to be determined, based on capabilities and affordability concerns," he said.

Earlier this month, Inside the Air Force reported that Boeing has firmed up its industry team in anticipation of an RFP release.

The company would not disclose which companies it planned to partner with. The final acquisition strategy could include a single competition for a complete aircraft solution or separate contracts for the airframe procurement and missionization work.

By Jordana Mishory
November 25, 2014 at 8:25 PM

Following the Thanksgiving holiday break, the Senate Armed Services Committee will quickly get back into the swing of things with a hearing on Tuesday, Dec. 2.

Lawmakers will consider the nominations of Robert Scher to be assistant secretary of defense for strategy, plans and capabilities; Elissa Slotkin to be assistant secretary of defense for international security affairs; David Berteau to be assistant secretary of defense for logistics and materiel readiness; Alissa Starzak to be Army general counsel; and Navy Adm. Harry Harris to be the head of U.S. Pacific Command.

By Marjorie Censer
November 24, 2014 at 2:28 PM

United Technologies announced this morning that Louis Chenevert, the company's chairman and chief executive, has retired and it has named Gregory Hayes, UTC's chief financial officer, chief executive and president.

Hayes has worked at United Technologies for 25 years, including the last six as CFO.

By Tony Bertuca
November 18, 2014 at 11:02 PM

Retiring House Armed Services Committee Chairman Buck McKeon (R-CA) today congratulated Rep. Mac Thornberry (R-TX) on receiving a recommendation from the House Republican Steering Committee that he take over as chairman of the panel.

Thornberry is vice chairman of the committee. Rep. Randy Forbes (R-VA) also sought the post.

“The Armed Services Committee will be in the most capable of hands with Chairman-select Thornberry, and so will our armed forces,” McKeon said in a statement. “My heartfelt congratulations to him as he moves into this rewarding -- and challenging -- job."

By Marjorie Censer
November 18, 2014 at 2:53 PM

Alliant Techsystems and Orbital Sciences said Monday that despite the Antares launch failure that occurred last month the two companies still plan to continue their merger.

But the deal, which would combine ATK's aerospace and defense groups with Orbital, has been delayed. The special stockholder meetings slated for Dec. 9 have been rescheduled for Jan. 27.

"Since the [Antares] incident, the companies have conducted a thorough review and analysis of the launch failure and Orbital's proposed recovery plan and long-term competitive position," the two companies said in a press release. "Following this review, ATK's board of directors continues to support the strategic merits of the transaction and recommends that ATK stockholders vote to approve the issuance of shares to Orbital stockholders."

The deal is expected to close in February.

By Tony Bertuca
November 17, 2014 at 7:05 PM

Defense Secretary Chuck Hagel has singled out autonomous systems as a key investment area in the Pentagon's new innovation initiative amid the Army's ongoing efforts to plumb industry for potential unmanned ground vehicle technologies.

Hagel's new Defense Innovation Initiative will include a Long-Range Research and Development Planning program that will help identify "breakthroughs" in the fields of robotics, autonomous systems, miniaturization, big data and advanced manufacturing like 3-D printing.

"We all know that DOD no longer has exclusive access to the most cutting-edge technology, or the ability to spur -- or control -- the development of new technologies the way we once did," Hagel said Saturday at the Reagan Defense Forum in Simi, Valley, CA.

"So we will actively seek proposals from the private sector, including from firms and academic institutions outside DOD's traditional orbit," he continued.

Deputy Defense Secretary Robert Work will chair a new Advanced Capability and Deterrence Panel aimed at executing the initiative.

"The Defense Innovation Initiative will shape our programs, plans, and budgets," Hagel said. "As the initiative matures over time, I expect its impact on DOD's budget to scale up in tandem," he continued. "It will put new resources behind innovation but also account for today's fiscal realities by focusing on investments that will sharpen our military edge even as we contend with fewer resources."

Meanwhile, the Army is looking for technologies to create small, lightweight autonomous ground vehicles that can detect and defeat improvised explosive devices, explore and map underground tunnels, and detect and clear mines, according to a recent Federal Business Opportunities website announcement (Inside the Army, Nov. 17).

Maj. Gen. Robert Dyess, the Army's director of force development (G-8), said last month that the service is committed to getting autonomous vehicle technology off the ground.

"Once we have these requirements, they're still going to compete for funding within the realities of a shrinking defense budget, and we'll rely even more on our industry partners to leverage commercial technology development, and gradually introduce autonomy into units to gain soldier trust and confidence," Dyess said Nov. 4 at an Association for Unmanned Vehicle Systems International conference in Arlington,VA (ITA, Nov. 10).

The Army's newest operating concept -- "Win In A Complex World" -- also highlights the importance of autonomous ground vehicles.

"The Army clearly recognizes the enormous potential for increased autonomous behaviors in unmanned ground systems to become true team members augmenting our soldiers in the manned-unmanned team,” according to the new concept.

By John Liang
November 14, 2014 at 8:57 PM

Late last month, Inside the Navy reported that a small team had been chartered to propose a five-year plan for the service's new attack submarine program -- dubbed SSN(X) -- which will come online in 2034 in lieu of the eighth block of the Virginia-class submarine:

Rear Adm. David Johnson, program executive officer for submarines, said Oct. 23 at the Naval Submarine League's annual symposium in Falls Church, VA, that an analysis of alternatives will begin for SSN(X) in 2024.

"2034 may seem far off but the design and research community needs to take action now," Johnson said. "We need to estimate the environment the SSN(X) is going to live in out in the 2050 time frame."

Johnson said it is important to determine what technologies will be necessary to counter the future threat. His team will have nine years to identify, develop and demonstrate any significant long lead technologies, he added.

"We're going to start concept studies to explore capability cost and tech trade space, identify potential candidate technologies in the S&T community early enough to sufficiently mature."

SSN(X) will emphasize integration and interoperability especially with off board systems. The next-generation attack submarine will also take into account cybersecurity, Johnson said.

We now have the briefing slides Johnson used that day. View them here.

By John Liang
November 13, 2014 at 7:42 PM

Inside the Navy recently reported on the Navy's acquisition chief describing steps the service is taking to minimize costs on the Virginia Payload Module as directed by the most recent appropriations act:

Sean Stackley, assistant secretary of the Navy for research, development and acquisition, sent a report to the four defense committees on Sept. 14 outlining a cost containment strategy for the Block V VPM design. Inside the Navy reviewed the report.

"The act directs the Navy secretary to create a separate budget line item to enable additional congressional oversight and increase transparency into the costs of the VPM," the report reads.

The 2014 Appropriations Act provided $59.1 million for VPM development. If the Navy fails to submit a bi-annual report to Congress the agreement fences $20 million of that money.

Cost projections for non-recurring engineering are about $744 million in calendar year 2010 dollars, which is below the service's objective cost of $750 million. The current estimate for the VPM for the lead ship is about $423 million in CY-10 dollars, a figure that is below the $425 million objective cost. The $318 million cost of the VPM for follow-on ships is below the objective cost estimate of $325 million in CY-10 dollars.

We now have that report.

By John Liang
November 13, 2014 at 4:20 PM

Check out InsideDefense.com's newest topic area, Defense Business Alert. Subscribers can bookmark this page for all the latest news on defense industry deals, trends and people, spearheaded by Defense Business Editor Marjorie Censer.

Here is a sample of the coverage you can expect to see on this page:

As Budgets Shrink, Defense Industry Thinks Global

A more global marketplace would help the defense industry better weather shrinking budgets and preserve competition, industry executives argued Wednesday, but it will not be easy to fully accomplish.

Defense Industry Observers Predict Change Following Election

With a Republican-controlled Congress set to take over early next year, government contractors are readying for change -- but are less certain of the details.

CRGT Set To Grow Under New Ownership

A contractor that got its start designing and operating the web portal Army Knowledge Online is poised to get a lot bigger.

Following Vectrus Spinoff, Exelis Promises Focus On Growth

In the three years since Exelis split from ITT, there have been plenty of changes, including a new name and logo. But the most significant change came in September, when Exelis spun off its mission systems unit into a new company called Vectrus.

Hale: Booz Allen Job Offers Opportunity To Continue Public Service

Months after retiring as Pentagon comptroller, Robert Hale has joined Booz Allen Hamilton as a fellow who will serve as an adviser to the contracting giant.

Analysts: Engility Deal Could Provide M&A Momentum

Defense industry analysts and consultants agree that Engility's $1.1 billion deal to purchase TASC is a significant move -- but it's not yet clear whether it could trigger more large acquisitions in the near future.

By John Liang
November 12, 2014 at 9:33 PM

The Senate Appropriations Committee earlier today held a hearing on the U.S. government's efforts to fight the Ebola epidemic in West Africa.

Among the witnesses was Assistant Defense Secretary for Special Operations and Low-Intensity Conflict Michael Lumpkin, who in his prepared testimony thanked lawmakers for approving the obligation of up to $750 million of the $1 billion reprogrammed from overseas contingency operations funding to the Pentagon's Overseas Humanitarian, Disaster, and Civic Aid Program, and outlined additional money he said the Defense Department needs to continue the fight:

This obligation authority has provided DoD the ability to deploy a joint task force to the region and rapidly undertake logistical, engineering, training, laboratory testing, and other support missions that are helping to turn the tide of this terrible epidemic.

I would also like to highlight the necessity and urgency of the resources sought by the President in his Emergency Appropriations Request for Ebola of last week. Of the $4.64 billion for immediate needs to combat this epidemic, the Department seeks $112 million that will provide immediate funding for Defense Advanced Research Projects Agency (DARPA) initiatives to develop technologies aimed at providing immediate, temporary immunity against Ebola while vaccines are developed. Additional initiatives are working to foster technologies to curtail the development timelines of these same vaccines.

By Marjorie Censer
November 11, 2014 at 2:25 PM

Reporting for the first time as a separate company, Vectrus, which spun off from Exelis earlier this year, said sales in its most recent quarter dropped to $301 million, down nearly 14 percent from the same period a year ago.

The company said declining troop levels in Afghanistan took a toll on its sales. Quarterly profit fell to $2 million, down from $19 million in the same three-month period in 2013.

Ken Hunzeker, the contractor's chief executive, said the results were anticipated given the military drawdown of operations in Afghanistan. The company has recently won a contract to provide IT support services to the Army Corps of Engineers -- though the award is now under protest -- and a contract to support day-to-day base operations and maintenance at bases in Turkey and Spain.

By Marjorie Censer
November 10, 2014 at 3:09 PM

DynCorp International's parent company on Monday reported that the contractor's sales in its most recent quarter plummeted nearly 30 percent to hit $540 million, a decline the company said was driven by the "continued drawdown of U.S. forces in Afghanistan and delays in new business awards."

The company reported a quarterly loss of $71.5 million, steeper than the $33.1 million it lost in the same three-month period a year earlier. DynCorp attributed the loss to revenue declines, impairment charges and a charge related to a contract dispute.

The greatest decline in revenue was in the company's DynLogistics segment, which the company said was a result of lower sales on a logistics program because of troops departing Afghanistan.

By Marjorie Censer
November 10, 2014 at 3:07 PM

A former Navy Military Sealift Command contractor was sentenced to 96 months in prison and ordered to forfeit $212,000 late last week for his role in a bribery scheme to win military contracts, according to the Justice Department.

Scott Miserendino earlier this year pleaded guilty to one count of conspiracy to commit bribery and one count of bribery. Starting in November 2004, the Justice Department alleged, he and a former program manager started a bribery scheme that lasted five years and netted more than $265,000 in cash.

Also sentenced late last week was Timothy Miller, the co-founder of a government contracting company that won business through the scheme, the Justice Department alleged. Miller was sentenced to 24 months in prison, ordered to forfeit $167,000 and fined $25,000. He pleaded guilty earlier this year to providing illegal gratuities to Miserendino and the program manager, Kenny Toy.