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A Year Of Reflection, Sabre Rattling and Retrenchment By Julian Nettlefold

 

 

 

As the year closes the Editor takes a view on 2019 and what happened during the year.

2019 was a year of Reflection for a number of countries, particularly the UK in considering their national identities and take steps to renew that identity. Brexit dominated our year and its ramifications had a huge impact on budgets as there was a drop in business turnover and activity which resulted in a lower tax take and lower business activity and investment.

The other Brexit effect was a merry-go-round in resignations and new appointments at defence and other departments. Gavin Williamson and Penny Mordaunt had short tenures at Defence which caused considerable delays and changes to policy and the budget particularly due to the refocus on defence issues post-Brexit and the UK’s world standing. This has been escalated by a renewed attack on procurement issues by Dominic Cummins and a refocus on the UK’s place in the world by Boris Johnson, coupled to a huge gap in the defence budget caused by the procurement of Big Ticket items such as F-35 and the Carriers, leaving little for the Army and its chronic lack of capability in armoured vehicles which ahs direct links to the FRES cancellation in favour of the carriers, clearly politically motivated as Dominic Cummings has pointed out. Ben Wallace will instigate a Defence Review but don’t bet on this before the summer at the earliest! Expect more delays, cancellations and changes in the equipment budget in particular.

On the world stage President Trump attempted to walk a fine line between respecting the American public’s desire to withdraw from war zones such as Iraq, Syria and Afghanistan at the same time as retaining enough troops in all those areas to protect US interests and world peace. He was partially successful but drew huge criticism from his generals from withdrawing from Syria, where the troops were quietly reinserted just over the border in Iraq.

Russia continued its campaign of harassment, cyber ops, election interference and assassinations on the streets of Europe at the same time as ramping up the Ukraine situation where a stalemate continues with a strong Russian presence remaining. This has led to NATO reinforcing its troops ion the Eastern European border and upgunning certain systems such as Stryker to meet the Russian threat.

More focus was put on Trump’s attempts to make peace with North Korea and stop its missile launches, which seems to have failed with news last week of some new launches.

Chin is the main focus for the US as it attempts to build up its armed forces and its navy in particular with the launch of its first two carriers and new hypersonic missile developments.

So what happened in 2019?

 

 

 

 

On February 1st CNN announced that US Secretary of State Mike Pompeo announced that the US was suspending the Intermediate-Range Nuclear Forces Treaty, a key pact with Russia that has been a centerpiece of European security since the Cold War.

“Russia’s violations put millions of Europeans and Americans at greater risk,” Pompeo said, adding, “It is our duty to respond appropriately.”

Pompeo, speaking from the State Department briefing room, said the US had provided “ample time” to Russia to return to compliance.

“For years, Russia has violated the terms of the Intermediate-Range Nuclear Forces Treaty without remorse,” Pompeo said.

The suspension, which raises concerns about a renewed arms race with Moscow and has put European allies on edge, goes into effect on Saturday. Pompeo’s announcement starts a 180-day clock to complete withdrawal unless Russia returns to compliance with the 1987 agreement.

President Donald Trump and his senior officials had been signaling for months that they were ready to pull out of the INF treaty, which the US and Europe accuses Moscow of violating since 2014.

“The United States has fully adhered to the INF Treaty for more than 30 years, but we will not remain constrained by its terms while Russia misrepresents its actions,” Trump said in a statement Friday. “We cannot be the only country in the world unilaterally bound by this treaty, or any other.”

(Source: CNN)

BATTLESPACE has covered a number of stories over the past few months indicating a huge rise in nuclear spending by the USA, China and Russia, particularly in the area of hypersonics. As General Sir Richard Barrons said on Radio 4’s Today programme this morning, this can only lead to more instability and a worrying rise in threat levels.

 

 

 

 

On June 20th Iran shot down an MQ-4C Triton. Strait of Hormuz: US official confirms Iranian claim that it shot down US drone on 20 June. On 20 June, an unnamed US official stated that a US Navy MQ-4C Triton drone had been shot down by an Iranian surface-to-air missile (SAM) in international airspace over the Strait of Hormuz.

Earlier, the Iranian state news agency had claimed that its Revolutionary Guard force had shot down a US RQ-4 Global Hawk drone in Iranian airspace near Kuhmobarak in the southern province of Hormozgan on the Strait of Hormuz during the morning of 20 June. No details have been released regarding the type of SAM system employed or the altitude at which the engagement took place. However, both the MQ-4C and RQ-4 are capable of operating up to altitudes of around FL600. Previously, an official US statement on 16 June included an assessment that a modified Russian-made 9K32 Strela-2 (SA-7 GRAIL) man-portable air-defence system (MANPADS) was employed by Iranian forces in an unsuccessful attempt to shoot-down a US military MQ-9 Reaper drone over the Gulf of Oman on 13 June.

The unsuccessful MANPADS engagement of the drone reportedly occurred in between the first and second attacks on two commercial tanker vessels in the Gulf of Oman, which the US and UK have attributed to Iran. According to the US FAA, the most capable variants of MANPADS can pose a threat to aircraft at altitudes up to 25,000 feet AGL. On 16 May, the US FAA issued a NOTAM and background information for the airspace over the Persian Gulf and the Gulf of Oman due to increased political tensions and heightened military activities in the region, stating that “Iran has publicly made threats to US military operations” (KICZ A0015/19). The US FAA has an additional standing NOTAM and background information advising operators to exercise caution when transiting Iranian airspace (FIR Tehran (OIIX)) due to unannounced military activity and missile launches (NOTAM KICZ A0016/18).

Analysis

While the altitude of the US drone when it was engaged by the SAM system has not been confirmed, given the operational capabilities of the MQ-4C Triton – and assuming that was the type downed – it is possible that a high-altitude conventional SAM system was used during the engagement. The confirmed Iranian use of such a system to target a US military drone in-flight over the Strait of Hormuz would be highly concerning as the airspace in the vicinity of this area includes numerous high-traffic ATS routes used by civil aviation operators. In its background information to the NOTAM published on 16 May, the US FAA stated that certain Iranian conventional SAM systems capable at altitudes well above FL260 “have ranges that encompass key international air routes over the Persian Gulf and the Gulf of Oman”.

For example, commercial satellite imagery from late May confirms that Iran has deployed one of its four Russian-made S-300PMU2 Favorit (SA-20PMU2 GARGOYLE) conventional SAM battalions to the Persian Gulf coastal city of Asaluyeh in the southwest province of Bushehr. The SA-20PMU2 has the ability to engage aircraft at altitudes well above FL800 and at ranges out to 120 miles (193 km). In addition to the above, the US National Security Advisor has stated that notable US armed forces deployments to the Middle East region since 16 April were “in response to a number of troubling and escalatory indications and warnings” related to Iranian military and proxy group activity in the Persian Gulf region. Short-notice airspace restrictions for Iranian airspace may be enacted should regional tensions significantly escalate within FIR Tehran (OIIX) portions of the Persian Gulf and/or Gulf of Oman. We continue to assess Iran, to include over-water areas of the Persian Gulf and the Gulf of Oman, to be a MODERATE risk airspace operating environment above FL260 and HIGH risk below FL260; this is being kept under constant review. (Source: Osprey)

This move confirms the main reason for the US reluctance to launch wholesale attacks into Iran. For many years Iran has had the best layered missile defence system in the world and this move proves their point.

Financial markets yoyoed over news of the tariff wars and Brexit and there were a number of important announcements in 2019.

 

 

 

The year kicked off with the much-touted merger of BAE’s and Rheimetall’s UK vehicle interests to form RBSL on January 21st. Rheinmetall and BAE Systems Form RBSL JV Armoured Vehicle Business. Rheinmetall and BAE Systems today announced that they have signed an agreement to create a joint UK based military vehicle design, manufacturing and support business. The new Joint Venture will be headquartered at BAE Systems’ facility in Telford, England and will sustain over 400 jobs in the UK, as well as preserve key technology and engineering skills.

Rheinmetall will purchase a 55% stake in the existing BAE Systems UK based combat vehicles business, with BAE Systems retaining 45%.  The establishment of the new Joint Venture is subject to regulatory approvals which are anticipated to be completed in the first half of 2019. Once the approvals have been completed, the Joint Venture will be known as Rheinmetall BAE Systems Land (RBSL).

In addition to managing and growing the existing combat vehicle support business, the intent is for the new Joint Venture to play a major role in the delivery of the British Army’s new Mechanised Infantry Vehicle (MIV) and other strategic combat vehicles programmes. 

While initially focused on these major UK programmes, RBSL will also form an integral part of Rheinmetall’s Vehicle Systems Division and will participate in and contribute to various global military vehicle pursuits and contracts. The combination of Rheinmetall’s military vehicles technology and products with the additional capabilities and products brought to the Joint Venture by BAE Systems, such as Trojan, Terrier, Warrior, military bridging and the AS90 self-propelled artillery system, will create a European market leader in the military vehicle sector.  RBSL will have the potential to create hundreds of additional UK jobs, both in Telford and the wider supply chain.

Ben Hudson, Global Head of Rheinmetall’s Vehicle Systems Division, said: “We are excited about the potential the new Joint Venture holds for Rheinmetall, BAE Systems and ultimately our customers. The combined capabilities of our two great companies will offer our customers a comprehensive portfolio of military vehicles and associated technologies both now and into the future.  We are proud to invest in the UK and expect to substantially grow the current business and the Telford manufacturing facility over the coming years.”

Jennifer Osbaldestin, Managing Director of BAE Systems Land UK business, said: “We are committed to evolving our combat vehicles business so that we better serve our customers’ future interests.  Joining forces with Rheinmetall in the UK provides renewed purpose for our vehicles business and allows us to deliver products, services and technology that help land forces excel in their vital roles. We look forward to working together to ensure the Joint Venture is a trusted supplier to the British Army and our international customers.”

Under the agreement Rheinmetall paid £28.6m for a 55% stake in BAE Systems UK based combat vehicles business.

Rheinmetall Defence is a leading supplier of military vehicles and systems.  Rheinmetall’s businesses in the UK include Rheinmetall Defence UK (RD UK) and Rheinmetall MAN Military Vehicles UK (RMMV UK), and are well-established suppliers to the UK Ministry of Defence (MOD). They support the British military in a number of areas, including vehicle systems, ammunition and technical assistance.

BAE Systems has had a combat vehicle manufacturing and support business in the UK for many decades. Under predecessor companies it manufactured and built the Challenger 2 Main Battle Tank and the Warrior, Terrier and prototypes of the BOXER vehicles. The current business helps the MOD and British Army maintain and upgrade a range of military vehicles and bridging systems. It has annual revenues of c.£60m and employs around 400 people, who are based largely at the company’s Telford facility, as well as at sites in Washington, Filton (Bristol) and Bovington.

The proposed Joint Venture does not include BAE Systems’ munitions and weapons systems businesses or its holding in the CTAI Joint Venture with Nexter.

Albeit not in the exact form predicted by BATTLESPACE last year, the formation of RBSL has been on the cards for some time. Rheinmetall was rumoured to have tried to buy all of BAE’s Land Systems business some years ago but BAE baulked at the price given the write-off requirements on its balance sheet and the inclusion of the strategic and sovereign ammunition business. RBSL gets away from both these problems and forms a very powerful post-Brexit UK land systems business with jobs and IP in the UK. It is good news for the MoD as well as it streamlines and speeds up the Challenger 2 Life Extension Programme (LEP) Programme as it now narrows both bidders into one bid process which saves DE&S money and time. What the final design for C2 LEP will be is not known but it is likely to be more of based on the Rheinmetall solution rather that the BAE, GDUK, Leonardo proposal. Sources suggest that the final solution will be based on utilising the existing Challenger 2 turret with an enlarged bustle to meet the one piece charge requirements for the smooth bore gun, rather than the 2 piece charge currently on Challenger 2, rather than a Leopard 2 A5 solution. A three-man crew, with an autoloader, is believed to have been ruled out due to exiting crew duties and the commander’s workload. Sources suggest that with enhancements made to the existing gearbox and running gear Challenger 2 could well have a life well into 2035.

The perceived losers in this JV are GDUK which had a 33% workshare on the BAE C2 LEP bid and also made an unsolicited bid for an M1A2 SEP V3 turret solution for C2 LEP, Leonardo, who were the sensor provider and Nexter who were looking to supply the smooth bore 120mm to BAE Systems. Another perceived loser is Babcock who were hoping to continue the C2 Support Contract through its Bovington facility, this is likely now to go to the RBSL Telford facility. Pearson Engineering in Newcastle looks well placed to win the turret lift work given their legacy Challenger engineering capability.

On issues of other UK Land Systems Programmes and Army support policy RBSL and Telford now look to be a Centre Of Excellence with MIV being the next target for manufacture and support creating jobs and IP for the UK and an export platform for other Boxer export sales. Other Programmes likely to benefit are the BR90 bridging replacement contract where KMW and BAE were competing. It also brings Rheinmetall into the Warrior WCSP Programme where BAE is running the Safety Case. Another Programme on the cards is the mobile 155mm artillery programme being eyed by Nexter in particular.

What happens next? It is likely that, given the BAE does not like JVs, that once C2 LEP and MIV are under the belt of RBSL that BAE will sell the remaining 45% of the JV and exit the UK Land Business where it has had a torrid time at great expense to BAE Systems Plc shareholders after the 2004 £309m Alvis Vickers acquisition.

On March 25th the FT reported today that a consortium led by private equity groups Apax and Warburg Pincus was set to acquire satellite communications company Inmarsat in a deal that values the UK group’s equity at $3.4bn, the companies said on Monday. Alongside Canada’s CPPIB and Ontario Teachers’ Pension Plan Board, the groups will pay $7.21 in cash per Inmarsat share and will take the entire group private. The offer represents a 27 per cent premium to the closing price of £4.31 per Inmarsat share on March 18. Including debt, the offer values the company at about $6bn. The deal is expected to be completed by the end of the year, pending regulatory approvals.

The group of investors said: “The satellite sector is attractive, with unique characteristics, including long lead times and the need for deep technical expertise, while operators in the sector require strategic management and a long investment horizon”. The group also said Inmarsat was well placed “for growth based on its unique global infrastructure, leading technological and capacity road map and strong spectrum holdings”. But the transaction comes after the satellite business, which will continue to be based in the UK, had struggled to attract investors because of recent poor performance.

EchoStar, for instance, ditched a takeover attempt last year. It emerged last week that the London-listed company had received a non-binding offer from the consortium. Previous interest from EchoStar and Eutelsat has raised hopes of a counterbid for the British company. However the large cash element of the offer has cooled expectations that a rival offer will be placed. JPMorgan Cazenove, PJT Partners and Credit Suisse advised Inmarsat on the potential transaction. (Source: FT.com)

The deal was concluded on December 17th.

 

 

 

On June 9th Reuters reported yesterday that United Technologies Corp was nearing a deal to merge its aerospace business with U.S. defence contractor Raytheon Co and form a new company worth well over $100bn (£79bn), a person familiar with the matter said on Saturday. United Technologies and Raytheon are seeking to pool resources through what would be the biggest merger in the aerospace and defence sectors. United Technologies provides primarily commercial plane makers with equipment such as electronics and communications equipment, whereas Raytheon is a vendor mainly to the U.S. government for equipment in military aircraft and missiles.

 

 

 

The deal would be structured as an all-stock merger of equals because United Technologies would separately spin off its Carrier air conditioning business and Otis elevator division, as it has previously announced it would do, the source said.

If the negotiations between United Technologies and Raytheon are completed successfully, a deal could be announced as early as Monday, the source added, asking not to be identified because the matter is confidential.

United Technologies declined to comment, while Raytheon did not immediately respond to a request for comment.

United Technologies has a market capitalisation of $114bn, but without Carrier and Otis, its value could be less than $60bn, bringing it closer to Raytheon’s market capitalisation of $52bn.

The Wall Street Journal first reported on the potential deal, stating that United Technologies Chief Executive Greg Hayes is expected to lead the newly created company, while Raytheon CEO Thomas Kennedy would be chairman.

Raytheon, maker of the Tomahawk and the Patriot missile systems, and other U.S. military contractors are expected to benefit from strong global demand for fighter jets and munitions as well as higher U.S. defence spending in fiscal 2020, a lot of it driven by U.S. President Donald Trump’s administration.

However, Pentagon spending is projected to slow down after an initial boost under Trump. A deal with United Technologies would allow Raytheon to expand into commercial aviation, which does not rely on government spending like the defence sector.

Conversely, United Technologies could benefit from reducing its exposure to commercial aerospace clients amid concerns over the rise of protectionism in international trade. The International Air Transport Association, which represents about 290 carriers accounting for more than 80% of global air traffic, cited these concerns earlier this month, when it said that the industry is expected to post a $28bn profit in 2019, down from a December forecast of $35.5bn.

United Technologies has said it is on track to separate Carrier and Otis in the first half of 2020, leaving the company focused on its aerospace business through its $23bn acquisition of Rockwell Collins, which was completed in 2018, and the Pratt & Whitney engines business.

Chinese Scrutiny

Chinese authorities scrutinized United Technologies’ Rockwell Collins acquisition heavily, given its footprint in that country’s market. This resulted in the deal closing in November 2018, as opposed to the third quarter of that year, which the companies initially targeted.

Trade tensions between the United States and China were blamed at least partly by analysts for that delay, and it is not clear whether the deteriorating relations between the world’s two largest economies could also weigh on the Raytheon deal.

United Technologies and Raytheon appear to have little overlap in their businesses, an argument the companies could make once U.S. antitrust regulators start scrutinizing their merger. However, major commercial aerospace companies, such as Boeing Co and Airbus SE, as well as the U.S. Department of Defense, have been known to use their significant purchasing power to seek concessions from their suppliers.

The deal with Raytheon could put pressure on General Electric Co, which also competes with United Technologies for commercial aerospace clients, to seek scale. It could also push other defence contractors, such as Lockheed Martin Corp, to explore expanding their commercial businesses.

Last year, military communication equipment providers Harris Corp and L3 Technologies Inc announced an all-stock merger that, once completed this summer, will create the sixth-largest U.S. defence contractor.

United Technologies was previously a bigger player in the defence sector. But in 2015, it agreed to sell Sikorsky, the maker of military helicopter Black Hawk, to Lockheed Martin for $9bn.

The mergers in the US majors continues apace. Will this merger trigger further consolidation in the industry? There are rumours of mergers in Europe as well with recent rumours by Leonardo suggesting deals in the offing. Thales looks to be changing it business model to concentrate on AI and software related businesses which could trigger a sale of its defence unit to Safran. Will this demerger of its aerospace business trigger a merger with Rolls-Royce and Prat & Whitney at a time when Rolls is suffering from performance issues with its Trent 1000 engines and will require a big investment to fund the next range of engines which are expected to be electric drive.

On June 14th CGI Group made a Recommended Cash Offer For Scisys Group Plc.

 

 

 

Recommended Cash Offer For Scisys Group Plc By CGI Group Holdings Europe Limited, a wholly-owned indirect subsidiary of CGI Inc. to be implemented by way of a scheme of arrangement under Chapter 1 of Part 9 of the Companies Act 2014.

• CGI Inc. (“CGI”) and SCISYS Group plc (“SCISYS”) have reached agreement on the terms of a cash offer, unanimously recommended by the SCISYS Board, pursuant to which CGI Group Holdings Europe Limited (“Bidco”), a wholly owned indirect subsidiary of CGI, will acquire the entire issued and to be issued ordinary share capital of SCISYS.

• Under the terms of the Acquisition, SCISYS Shareholders will be entitled to receive:

for each SCISYS Share 254.15 pence in cash (the “Consideration”)

• The Acquisition values the entire issued and to be issued ordinary share capital of SCISYS at approximately £78.9m.

• The Acquisition represents a premium of approximately:

• 24.6 per cent. to SCISYS’ Closing Price of 204.00 pence on 13 June 2019 (being the last practicable date prior to the publication of this Announcement);

• 43.7 per cent. to SCISYS’ volume weighted average Closing Price of approximately 176.89 pence over the six month period ended on 13 June 2019; and

• 47.0 per cent. to SCISYS’ volume weighted average Closing Price of approximately 172.91 pence over the twelve month period ended on 13 June 2019.

• The Consideration is in addition to the payment of the final dividend of 1.73 pence per SCISYS Share for the period to 31 December 2018 approved by SCISYS Shareholders at the annual general meeting on 6 June 2019 (the “Declared Dividend”), which will be paid on 26 July 2019 to holders of SCISYS Shares who are on the register of members at the close of business on 28 June 2019.

• If any dividend or other distribution (whether in cash, assets, shares or other securities of any member of the SCISYS Group) is authorised, declared, made or paid in respect of the SCISYS Shares on or after the date of this Announcement, other than the Declared Dividend, Bidco reserves the right to reduce the Consideration by the aggregate amount of such dividend or other distribution.

• Commenting on the Acquisition, Mike Love, Chairman of SCISYS, said:  “The Board of SCISYS is unanimously recommending this deal to shareholders, viewing it as a wholesale endorsement of the success SCISYS has achieved to date.  We believe SCISYS and CGI are highly complementary businesses sharing similar values and are confident that the combination will enable SCISYS to benefit from CGI’s size, strength and global reach.”

Commenting on the Acquisition, George Schindler, President and CEO of CGI said: “CGI’s offer to merge its operations with those of SCISYS is aligned to our Build and Buy strategy, providing opportunities to expand our industry depth in space, defense, government and media in the UK and Germany. SCISYS’ industry-leading expertise and IP-based services and solutions will provide an opportunity to globalise certain platforms utilizing the broader CGI geographic footprint and client relationships.”

Scisys caught the Editor’s eye earlier in the year as ‘one to watch,’ and as announced, the Editor bought some shares. (See: BATTLESPACE UPDATE Vol.21 ISSUE 05 04 February 2019 BUSINESS NEWS, Shares in Scisys marked up). At the Earnings brief last Friday June 7 CEO Klaus Martin Heidrich was tight lipped when the Editor suggested that the company could be a bid target rather than one on the acquisition trail. He said that given the mix of industries, space, defence and media, that they wouldn’t be a bid target! The Editor sent an email after the brief asking if he would be a candidate for BATTLESPACE Businessman of the Year 2020. When no reply came the Editor sent a reminder and Klaus replied saying. “Sorry for responding only now. I am extremely busy this week and will be back to you and to Ken next week.”  Now we know why!

The deal was concluded on December 19th.

In June, Space News reported that the L3, Harris merger proceeding after Justice Department ruling.

 

 

 

 

Harris Corp. and L3 Technologies said June 21 that their merger has the regulatory approvals needed to close following a Justice Department decision.

The Justice Department stipulated that Harris Corp. divest its night vision business for the merger to proceed. Harris Corp. and L3 Technologies are the sole suppliers of a critical component used in military grade night vision systems, raising concerns that the combined company would monopolize the technology.

The Justice Department simultaneously filed a civil antitrust lawsuit June 20 to block the merger as originally proposed, and a settlement that would see Harris Corp.’s night vision business separated from the combined company.

Harris announced in April it would sell its night vision business to the U.S. division of Israeli defense and technology company Elbit Systems for $350 million in cash. In a June 21 statement, Harris and L3 reiterated that plan. 

“The merger, as originally structured, would have given the combined company a monopoly over image intensifier tubes, an essential component in night vision devices used by the United States military,” Makan Delrahim, assistant attorney general of the Justice Department’s Antitrust Division, said in a statement. “Today’s settlement will ensure that our armed forces continue to benefit from competition for a mission critical component that soldiers operating in low-light environments rely on every day.”

Harris and L3 supply space technology for numerous commercial and military programs. L3 builds spacecraft sensor payloads, launcher avionics and travelling wave tube amplifiers used in telecommunications satellites. Harris provides unfurlable antennas, hosted payloads, and launched a cubesat in November that could open the floodgates for constellation production, particularly for classified buyers.

Harris on June 21 received an $18 million contract modification to build L- and S-band antennas for the Air Force Satellite Control Network.

Harris and L3 said their approximately $34 billion merger is now set to close June 29. The merger remains on track to close around the time forecasted in October when first announced despite the Justice Department scrutiny. The company will take the name L3Harris Technologies, Inc, and will trade on the New York Stock Exchange as LHX.

Harris CEO Bill Brown said May 1 that he still expects L3Harris Technologies will reach $3 billion in free cash flow in three years.

On September 15th Reuters reported that sources suggest that KKR is to sell or float German defence supplier Hensoldt. Private equity firm KKR (KKR.N) is preparing for a stock market flotation or sale of German defence supplier Hensoldt in a potential 2bn euro (£1. bn) deal, people close to the matter said.

 

 

 

 

The buyout group has in recent weeks listened to bankers present options for exiting its investment, including a listing of 20-30% on the stock exchange or a sale to a defence group or private equity business next year, they said, adding KKR was expected to hire an adviser soon to help arrange a deal.

KKR declined to comment.

The investor bought Airbus’s (AIR.PA) defence electronics business for 1.1bn euros in 2016 and later rebranded it Hensoldt, naming it after a 19th century German maker of binoculars and telescopes. The business comprises military sensors, electronic warfare equipment, avionics and optronics. It employs 4,400 staff and has annual sales of 1.1bn euros.

Hensoldt has said it intends to double its revenues by 2022, benefiting from an expected European military spending spree.

Hensoldt’s high-tech cameras are used in products including Tornado fighter jets that fly surveillance missions over Syria and Iraq, while it also supplies radars for Eurofighter jets as well as periscopes for submarines and Leopard and Puma tanks.

The company also supplies identification systems for combat jets, night vision devices, radars for civil air traffic control and systems for civil and military efforts to counter drones.

Hensoldt is set to benefit from equipping the new Franco-German fighter jet, currently Europe’s largest defence project, which will replace Eurofighter and Rafale jets from 2040.

The group is also expected to pitch for contracts to supply the German navy’s new multi-purpose combat ship 180 and the German army’s new missile defence system.

This is an interesting move coming at a time of consolidation in the defence companies across the world following on from the L3/Harris merger. Certainly in optics and EO/IR there is strong competition from Chin and Israel in particular. EO/IR technology is on the cusp of new technology developments with SWIR coming into the mix and longer range HD systems and cores being launched at DSEI next week. These systems require big investments and KKR may see this as befitting a different structure.

It has beefed up its radar division with the acquisition of Kelvin Hughes and has been winning good orders.

Who would bid for Hensoldt if it isn’t floated? In earlier years it would fit very well with FLIR who has both EO/IR and radar segments, but FLIR is looking more to AI and drone acquisitions. Thales is looking at technology acquisitions and Leonardo is reported to be looking at European consolidation. The most likely bidder would be Safran which has the money and the technology to bid for Hensoldt to create a European optics/radar powerhouse to rival US, Chinese and Israeli companies such as Elbit. It could also trigger further consolidations and sales, perhaps the Thales optics unit could follow? Elbit has already gobbled up the former ITT night vision division.

On August 1st Defense Daily reported that Mercury Systems [MRCY] on Tuesday said it has agreed to acquire American Panel Corporation (APC) for $100 m in cash, adding the development and manufacture of military and commercial aerospace display systems to its C4I business. Mercury said the deal is expected to close in the current quarter. Georgia-based APC had $36m in sales for the one-year period that ended in June. APC makes tactical displays for military aircraft, land systems, maritime systems and commercial aerospace.

 

 

 

The company’s products are installed on F-35, F-15, F-16 and F/A-18 fighter jets, the Army’s AH-64 Apache attack helicopter, M1A2 Abrams battle tank, Stryker

wheeled vehicle and Bradley Fighting Vehicle. Mercury announced the pending purchase of APC in conjunction with the release of its fourth quarter fiscal 2019 financial results.

The company said its focus on acquisitions is to build “capabilities and scale in the C4I market.”

Mark Aslett, Mercury’s president and CEO, said on the company’s earnings call that the APC “will add a scalable display platform to our C4I business.” He said that APC will complement previous acquisitions that were focused on avionics processing.

“Acquiring APC adds unique capabilities to our growing avionics platform and positions us to play a larger role in military digital convergence,” Aslett said. He also said the acquisition will allow the company to “compete for large avionics opportunities.”

Mercury reported fourth quarter sales of $177m, up 16 percent from a year ago, driven mainly by acquisitions. Organic growth was 3 percent. Net income increased 27 percent to $12.8m, 25 cents earnings per share (EPS).

For its fiscal year 2019, sales increased 33 percent to $654.7m. Organic revenue rose 12 percent. Net income increased 14 percent to $46.8m (96 cents EPS). (Source: Defense Daily)

The Editor has worked with American Panel for two years developing new opportunities for the company. This is a smart move by Mercury as it comes at a time when new long-range targeting systems and thermal cores require better definition 10 Bit displays, as supplied by American Panel, to give better target definition. American panel has a long standing 25 year R&D agreement with LG in Korea.

The military vehicle market remained a key focus again in 2019 where in the UK the long-awaited 8×8 requirement was at last settled on April 2nd with a sole-source award to Boxer. The order for Boxer was signed on November 20th.

 

 

 

 

 

The UK MoD announced today that a contract worth £2.8bn has been signed to provide state-of-the-art Boxer 8×8 armoured fighting vehicles to the British Army.

The Defence Secretary has announced that the army will receive more than 500 Boxer 8×8 high mobility, network-enabled armoured vehicles to transport troops onto the frontline.

The vehicles will form part of the Army’s Strike brigades, new units set up to deploy rapidly over long distances across varied terrains.

Defence Secretary, Ben Wallace, said: “Our men and women of the Armed Forces deserve to have the best equipment to do their job. The Boxer vehicle is a leader in its field and I look forward to it arriving in units from 2023.”

Its been a long journey but at last, after 28 years, the British Army has the 8×8 vehicle it requires for battlefield mobility. The Boxer is undoubtedly the right choice for the British Army in terms of mobility and supportability and, together with the industrial package headed by RBSL, the BAE Systems, Rheinmetall Company, will bring the required industrial participation and export opportunities from the UK.

On June 21st The US Army approves JLTV Full-Rate Production. Dr. Bruce Jette, Assistant Secretary of the Army for Acquisition, Logistics and Technology, approved the Joint Light Tactical Vehicle (JLTV) program’s transition into Full-Rate Production yesterday.

 

 

 

 

The approval follows an Army decision in December 2018 to begin fielding the new platform with the Army’s 1st Brigade, 3rd Infantry Division, Fort Stewart, Georgia, in April. The 1-3 ID became the Army’s first unit equipped with JLTVs in April 2019, after receiving more than 300 vehicles.

Fieldings to the Ordnance School, Fort Lee, Virginia, the 84th Training Command, Fort McCoy, Wisconsin, the Marine Corps’ School of Infantry-West at Camp Pendleton, California, as well as the School of Infantry-East, Camp Lejeune, North Carolina, have also been completed.

“Thanks to tremendous teamwork across two services on requirements, resources, program management, testing, and other areas, this is a great modernization success story. JLTV shows how teams focused on stable requirements, mature technologies and the right incentives can deliver meaningful capability advancements in a cost-conscious way,” said Jeffrey White, Jette’s principal deputy. 

The JLTV family of vehicles is designed to restore payload and performance that were traded from light tactical vehicles to add protection in recent conflict, giving commanders an improved protected mobility solution and the first vehicle purpose-built for modern battlefield networks.

“Getting an improved capability into the hands of Soldiers and Marines has been our team’s driving focus throughout this program, “said Michael Sprang, Project Manager, Joint Program Office, Joint Light Tactical Vehicles. “They are why we do what we do, and I’m so proud of the hard-working team that brought us to this point.”

“We are also grateful for Soldier feedback on new features and enhancements,” he continued. “The Soldiers of the 1st ABCT, 3rd Infantry Division provided valuable input on enhancements such as increased situational awareness, reduction of system noise, a troop seat kit, and a companion JLTV trailer. Their assessments helped bring us all to a successful Full-Rate Production decision.”

The JLTV program remains on schedule and on budget to replace a significant portion of the Army’s High Mobility Multipurpose Wheeled Vehicle fleet. The JLTV comes in two variants and four mission package configurations: General Purpose, Close Combat Weapons Carrier, Heavy Guns Carrier, and a Utility vehicle. The U.S. Navy and Air Force also plan to field JLTVs in much smaller quantities.(Source: US Army)

The UK is still considering its JLTV buy with Oshkosh reporting in September that negotiations continue as to the final specification.

On October 4th the Rheinmetall Lynx 41 was disqualified from the Bradley replacement competition. Defense News reported tonight that he US Army has disqualified Raytheon and Rheinmetall’s bid for the Optionally Manned Fighting Vehicle prototype competition, Defense News has learned.

 

 

 

 

 

The OMFV is meant to replace the service’s Bradley Infantry Fighting Vehicle. The Army’s plan was to choose a winner after two companies deliver 14 prototypes each for evaluation, with replacement of Bradleys happening in 2026.

The Army would not comment on the disqualification and said in a statement sent to Defense News that the solicitation for the OMFV prototyping effort closed on Oct. 1 and “we are now in the competition sensitive Source Selection Evaluation process.”

The service noted in the statement that it “remains committed to rapidly execute the Optionally Manned Fighting Vehicle program,” its number two modernization priority.

But multiple sources have confirmed that the bid — Rheinmetall’s Lynx 41 Infantry Fighting Vehicle — was disqualified and the bid sample, the only one in existence, remains in Germany at the company’s facility in Unterluss.

The Army required the competitors to deliver a bid sample — a full-up working vehicle — to Aberdeen Proving Ground, Maryland, by Oct. 1.

The Lynx has left the Rheinmetall compound several times before, notably to travel to be unveiled in Paris at Eurosatory in June 2018 and again at the Association of the U.S. Army’s annual conference last fall. Raytheon and the Rheinmetall announced at AUSA that they would partner on the OMFV program and submit Lynx as its offering.

The disqualification of the team means that General Dynamics Land Systems’ offering is the only vehicle remaining in the competition.

According to sources, no other company submitted. Hanwha, a South Korean defense company, was interested in competing but chose not to participate, multiple sources claim.

Industry sources have said that several companies who wanted to compete or submitted bids had asked for extensions, roughly 90 days in the case of Rheinmetall, to meet requirements.

According to multiple sources, potential bidders expressed concern to the service that meeting the requirements, the timeline and a combination of the two wasn’t possible.

What snarled Rheinmetall, for instance, according to sources, was the timeline it needed to get approvals from the local municipal government to transport the vehicle by tractor trailer or rail and then via air.

Sources said that the company had requested a four-week extension to deliver the vehicle to Aberdeen and also offered to hand over the vehicle to the Army under lock and bond in Germany by the Oct. 1 deadline and both were denied.

But a larger issue, multiple sources conveyed, was the clear differences between what the Army acquisition community and what Army Futures Command wanted to do. Sources confirmed that the acquisition side of the house was willing to agree to extensions, for instance, but AFC, who is in charge of rapid requirements development and prototyping efforts ahead of programs of record, insisted the Army must adhere to the schedule.

Industry also expressed concern to the Army over the roughly 100 mandatory requirements, with just six tradeable ones, expected to be met over 15 months using non-developmental vehicles.

Brig. Gen. Ross Coffman, who is in charge of Next-Generation Combat Vehicle (NGCV) modernization efforts, said at the Defense News Conference in September that he was confident the requirements set for OMFV are appropriate and had no plans to change them.

Presently, the OMFV competition is on hold due to a congressionally mandated continuing resolution that prevents the effort from kicking off. The Army had planned to begin the $378m program in the first quarter after taking receipt of the bid samples at the start of the new fiscal year.

As the Army enters its competition to build prototypes to replace the Bradley, Australia is running a similar effort and recently downselected to two competitors: Rheinmetall’s Lynx and an offering from Hanwha. GDLS was competing but did not make the final cut. Australia laid out just five mandatory requirements for its competition.

GDLS has not yet detailed its offering for OMFV but said it was “purpose built” for the U.S. Army.

(Source: Defense News)

Will OMFV follow GCV to the scrapheap for the US army to think again? It looks that way tonight, unless GD can hold its nerve!

This decision underlines the concerns expressed in our Feature due to be released on Monday but which can be viewed on the BATTLESPACE website now.

The Perennial Problem of MTBF, Power-To-Weight Ratios and Mobility vs. Protection Return To Haunt APC Manufacturers By Julian Nettlefold

In space the news was dominated in the US by the formation of the Space Force and by other countries befing up their space industries and in the UK where the main focus was on the Skynet 6 requirement.

In December Defense News reported that the competition to run the ground elements of a new British military satellite communications network reaches its first major milestone Dec. 20 with interested bidders due to return a request for information from the Ministry of Defence.

 

 

 

 

Information on just who has responded to the MoD’s pre-qualification questionnaire is scarce following the department’s decision to impose a nondisclosure agreement on bidders for the ground station element of the Skynet 6 satellite communications program. The program aims to boost British capabilities in the sector out to 2040 and beyond.

The ministry clamped down on bidders publicly declaring an interest in the program but only after clearing Serco to publicly name its team on Nov. 5, the day the pre-qualification questionnaire was released.

Nobody is saying quite why the change of mind happened but a screwup seems to be the most likely explanation.

British-based services company Serco announced it was teaming with Lockheed Martin, IT specialist CGI and satellite operator Inmarsat to bid for what is known as the Service Delivery Wrap portion of Skynet 6.

The names of other contenders are a matter of speculation for the moment but Airbus Defence & Space, BT, US satellite and communications specialist Viasat and a Babcock partnership with Boeing are expected to be among the major contenders for the deal.

Of the companies in question, only Boeing confirmed that it was participating in the race. Serco declined to provide any more details than were included in their press announcement.

The MoD is expected to name up to four contenders to be issued with an invitation to negotiate by early spring next year.

This is, of course, subject to any changes imposed by the new Conservative government’s upcoming defense review, which among other things is focusing heavily on the MoD’s procurement record.

With military space figuring positively in the Conservative manifesto, some issue experts think the sector will be largely immune from cuts, though not everyone agrees.

The MoD announced it was to go ahead with the Service Delivery Wrap contest at the DSEI exhibition in London in September.

Speaking at the show, Julian Knight, head of networks at the MoD’s Information Systems and Services organisation (ISS) said, “This competition is a significant opportunity for industry to work at the very heart of our program – delivering improved flight and ground operations.”

“We are seeking an innovative partner that will ensure effective and consistent defense satellite communications and will look to continually maximize performance and value for money,” said Knight.

Airbus is the current incumbent ground station operator, having run the capability as part of a long-running Skynet 5 satellite private finance initiative providing beyond line of sight communications for the British military.

Serco already supplies many of the personnel running the Skynet 5 ground stations under a contract to Airbus.

The ground station element of Skynet 5 comes to an end on Aug. 31, 2022. The winner of the Service Delivery Wrap contest is scheduled to commence work in 2021, starting with a one-year transition phase.

With an overall program value in the vicinity of £6bn, Skynet 6 is a key part of a rapidly growing interest in military space by the armed forces and the new Conservative government.

The MoD and Airbus have been in protracted negotiations over the supply of a single satellite known as Skynet 6A to provide assured capacity to the British military as the Skynet 5 spacecraft start to age.

But faced with the possible delay in the delivery of the satellite, the MoD’s top civil servant, Stephen Lovegrove, revealed in late October that to keep the program on track the two sides were working on a deal to purchase long-lead items ahead of a full contract signature. Those discussions continue.

Britain wants the satellite in service by 2025 to bridge any capability gap ahead of a new generation of spacecraft expected to start entering service in 2028 as part of the Skynet 6 program, known as Enduring Capability.

That component will determine future system architectures, followed by provision and operation of satellites and ground infrastructure starting around 2028.

The Enduring Capability requirement is expected to start moving forward soon and will likely attract the attention of suppliers like Airbus, Boeing, Lockheed Martin and Viasat. All the US companies are growing their space presence in the U.K. (Source: Defense News)

The radar and sensor market was dominated by numerous stories outlining developments in Counter-UAV systems, particularly in the light of the yet to be solved Gatwick UAV intrusion incident.

In October it was reported that the Gatwick drone-incident police report raises more questions than it answers.

 

 

 

 

In a statement released early on 27 September 2019, the Head of Operations Command for Sussex Police in the UK published the Force’s findings into the Gatwick Drone incident of last December, concluding that:

• The incident was “a serious and deliberate criminal act designed to endanger airport operations”

• There were 129 reports of drone sightings, of which 109 were from “credible witnesses” including a pilot, airport workers and airport police

• The incidents were ‘grouped’ across the three days, with 12 distinct incidents, six of which included two drones operating simultaneously

• The timing of each incident and modus operandi showed that the offender(s) had detailed knowledge of the airport and its operation

However, the Force has now ceased any further activity, following an extensive criminal investigation, which with support from national expertise, identified, researched and ruled out 96 people ‘of interest’.  We understand that the case has not been closed, however.

The circumstances of the incident and sequence of events continue to leave us puzzled, and many of the questions are not addressed, let alone resolved.  For example, the drone sightings varied in length but lasted as between seven and 45 minutes, witnessed by an average of 10 people per event.  How was it possible that none of the (credible) witnesses were able to track the drone back to its point of launch/land?  An airfield is large installation, but without the clutter of buildings of a city centre.  How did the Command and Control process not successfully establish contact (by visual or aided means) with the drones and subsequently track them?  Why is there no detail of how the drones were behaving – were they hovering, flying fast in a straight line, carrying out evasive or unpredictable manoeuvres? Why have none of the ‘credible witnesses’ come forward to the public or sold their story to the media?

There are simple processes and procedures that all security staff and operations staff should have training and awareness of. Our work shows that you don’t need everyone to be experts in countering drones, but you DO need staff to understand what a drone looks and sounds like, and most importantly, what to do. Simple steps of how to respond, how to keep visual contact, and how to report what they see would do much to improve counter-drone security.

While we all acknowledge that there is no silver bullet answer to counter-drone problem,  we consider that the best options available combine the implementation of counter-drone systems technologies in detection and defeat (as discussed in one of our earlier articles), with improvements in processes focussed on reporting, decision-making and Command & Control (C2) and a people-focussed track which would include training and education, rehearsals and exercises, from security staff to Boards of Directors.  Implementation of such systems required efficient command chains, with specific authorisations and authorities, with near-perfect interfaces between security and police forces.  The act of bringing down a potentially hostile drone over a congested area is not something to be taken on lightly, nor without the legal backup to do so. (Source: www.unmannedairspace.info)

Once again Sussex Police fail to solve what looks like a very simple crime! Enough said!

On April 9th the UK MOD launched a £2m competition for proposals to tackle the future threats of Unmanned Aerial Systems (UAS). The competition, run by the Defence and Security Accelerator (DASA), the MOD’s innovation hub, will seek robust and cost-effective next-generation solutions to the risks posed by hostile UAS.

 

 

 

 

 

 

The MOD is looking to develop new defensive capabilities which draw upon autonomous decision-making mechanisms and networked sensing systems capable of detecting, tracking, identifying and defeating hostile UAS over complex and varied environments.

Defence Secretary Gavin Williamson said, “As the security threats from hostile drones are evolving at pace, it’s critical that our armed forces benefit from the very latest technology to stay ahead. This competition will draw on the brightest and best of our defence industry to find innovative solutions that will ensure we are protected in the years to come.”

The competition is the latest stage in Defence Science and Technology Lab’s (Dstl) ongoing research programme into Countering UAS which has been running for ten years.

This programme has included the extensive research, testing and evaluation of the counter-UAS technology currently employed by the MOD, including the landmark series of ‘Bristow’ trials with industry in 2013, 2015 and 2018.

Dstl’s Principal Engineer, David Lugton said, “Hostile UAS is a challenging threat in many different ways and requires cutting edge technology and well-thought-out system approaches to counter it effectively. Through this competition we are looking to inspire and develop a range of solutions to mitigate the threat posed by UAS now and in the future. Among the technologies we’re looking for, we’d be interested in those which can detect and track multiple threats simultaneously, with minimal human oversight, and against a broad spectrum of UAS types. We’re also interested in Counter-Unmanned Air Systems which can overcome the challenges posed by line of sight blockages, collateral, and ones which can link systems together to improve understanding of the local “drone air picture”.”

Today’s call is focused on tackling the challenges of current and future UAS capabilities, in particular:

• Next-generation Counter-UAS technology – new technological solutions to provide robust and cost effective sensing and defeat options.

• Flexible Counter-UAS technology – programmes capable of bringing counter-UAS technologies together and linking with other surveillance systems and cooperative drone awareness systems.

• Countering Future UAS Systems – developing capability to detect and mitigate threats from UAS acting autonomously, in swarms and in highly congested airspace.

Phase 1, which will deliver proof of concept of the proposals, will be worth approximately £800k and is scheduled to take place from July 2019 to March 2020. The total funding for the competition is expected to be at least £2m, split over multiple phases.

James Gray, Managing Director for Raytheon UK Cyber and Intelligence said, “We welcome this initiative from the Ministry of Defence. December’s drone shutdowns at Gatwick and Heathrow have made it absolutely clear that the dangerous use of unmanned systems is a challenge for the UK both at home and abroad, and this is a timely call for action. Raytheon is already developing integrated counter drone technologies including drone-detecting radars, cyber effectors, high-energy lasers and high power microwaves that disrupt and disable the threat. We are fully committed to working with the UK to further secure its place as a global leader in defence and security.”

This is a smart move by the UK MoD and will keep the UK in the forefront of C-UAV technology. This development will also gloss over the embarrassment caused by the cack handed manner by which Chris Grayling and Sussex Police handled the Gatwick incident. Companies expected to bid for this will include, the AUDS Team of Blighter, Chess Dynamics and ECS, collectively or as separate entities, Raytheon UK, Thales, Leonardo from the UK; Leonardo DRS, Liteye, Northrop Grumman, Echodyne, SAIC from the US; Robin Radar from the Netherlands; Droneshield from Australia; Rheinmetall and Diehl from Germany; Elbit, Rada and Rafael from Israel. A research firm estimates the global drone market will be worth $17bn by 2025. While the benefits of drones are numerous, so are the risks. In the wrong hands, drones could easily become weapons or illegal surveillance systems. As drones become more prevalent in our global airspace, it’s critical that we develop solutions to safeguard against threats.

On July 18th USS BOXER downed an Iranian UAV using new C-UAV technology from Raytheon.

 

 

 

 

 

Statement From Chief Pentagon Spokesperson Jonathan Hoffman on USS Boxer. Statement from Chief Pentagon Spokesperson Jonathan Hoffman on USS Boxer: At approximately 10 a.m. local time, the amphibious ship USS Boxer was in international waters conducting a planned inbound transit of the Strait of Hormuz. A fixed wing unmanned aerial system (UAS) approached Boxer and closed within a threatening range. The ship took defensive action against the UAS to ensure the safety of the ship and its crew. (Source: US DoD)

At approximately 0530Z on 18 July, the USS Boxer US Navy Destroyer reportedly employed its on-board electronic warfare (EW) system to down Iranian military drone via electromagnetic interference (EMI) operating in-flight over airspace near the Strait of Hormuz. The US has indicated that the Iranian drone was downed at a range of approximately 0.6 miles (1km) after ignoring multiple calls to stand down threatening the safety of the USS Boxer and its crew. Background information regarding Iran from the US FAA and an associated NOTAM for FIR Tehran (OIIX) remains valid through 9 September (KICZ A0016/18). The NOTAM indicates that there remains a continued ‘risk’ to US civil aviation operations over FIR Tehran (OIIX) due to a lack of deconfliction between military activities in Iran and civilian flights. The US FAA background information highlights the following as concerns in the airspace over Iran: unannounced military activities, GPS interference, EMI activity, heightened Iranian air defence ‘sensitivity’, Russian air and naval cruise missile strikes into Syria along with Iranian military ballistic missile launches. Regional tensions have significantly escalated in wake of the 20 June US drone shoot-down by Iran coupled with the US downing of the Iranian drone on 18 July, though the situation remains fluid and subject to change. EMI and/or GPS interference and from military activity represents a notable civil aviation safety-of-flight concern. Extended duration re-routing of civil aviation to airports in the country, within Iranian airspace or over the Persian Gulf, Strait of Hormuz and Gulf of Oman remains an increasingly likely scenario in the near-term.

Analysis

On 21 June, the US FAA issued an updated NOTAM for Iranian airspace (FIR Tehran (OIIX)) covering the Persian Gulf and Gulf of Oman which prohibits US civil aviation operators from conducting flight operations over these areas at all altitudes until further notice (KICZ A0019/19). The NOTAM follows the downing of a US military RQ-4A drone over the Gulf of Oman via Iranian conventional surface-to-air missile (SAM) system engagement on 20 June and the attempted shoot-down of a US military MQ-9 drone over the Gulf of Oman by Iran via unsuccessful manportable air defence system (MANPADS) engagement on 13 June. The assessed Iranian use of a conventional SAM system capable at altitudes well above FL260 and MANPADS capable below FL260 to engage US military drones in-flight over the Gulf of Oman coupled with US EW system employment to down an Iranian military drone via EMI over the Strait of Homuz is highly concerning as the airspace in the vicinity of these areas of FIR Tehran (OIIX) includes numerous high-traffic ATS routes used by civil aviation operators. There remains a significantly increased likelihood of additional short-notice near-term airspace restrictions; similar to the US FAA NOTAMs above, being enacted for Iranian airspace within FIR Tehran (OIIX) portions of the Persian Gulf, Strait of Hormuz and/or Gulf of Oman by EASA along with the UK, French and/or German civil aviation authorities. We continue to assess southern Iran, to include over-water areas of the Persian Gulf, Strait of Homuz and the Gulf of Oman, to be a HIGH risk airspace operating environment at all altitudes; this is being kept under constant review. We continue to assess the remainder of northern Iran to be a MODERATE risk airspace operating environment above FL260 and HIGH risk below FL260.  (Source: Osprey)

On March 21st it was announced that the UK MoD would order 5 Australian “Wedgetail” Early Warning Radar Aircraft. The E-7 fleet will replace the current Sentry aircraft and ensure the continued delivery of the UK’s Airborne Early Warning and Control (AEW&C) capability. Named “Wedgetail” by the Australian Department for Defence, the E-7 aircraft can fly for long periods of time and manage the battlespace from the sky.

 

 

 

 

 

The MOD hopes that the E-7 will provide a technological edge in an increasingly complex battlespace, enabling British ships and aircraft to track and target adversaries more effectively.

“This deal also strengthens our vital military partnership with Australia,” said the UK’s Defence Secretary Gavin Williamson. “We will operate state-of-the-art F-35 jets and world-class Type-26 warships, and this announcement will help us work even more closely together to tackle the global threats we face.”

Chief of the Air Staff, Air Chief Marshal Sir Stephen Hillier, welcomed the deal, saying “Today’s announcement about the procurement of five E-7 ‘Wedgetail’ Airborne Early Warning and Control aircraft is excellent news for both the RAF and wider Defence. This world-class capability, already proven with our Royal Australian Air Force partners, will significantly enhance our ability to deliver decisive airborne command and control and builds on the reputation of our E3D Sentry Force. Along with Defence’s investment in other cutting-edge aircraft, E-7 will form a core element of the Next Generation Air Force, able to overcome both current and future complex threats. The new fleet will be able to track multiple airborne and maritime targets at the same time, using the information it gathers to provide situational awareness and direct other assets such as fighter jets and warships.”

The E-7 is a proven aircraft that is currently in-service with the Royal Australian Air Force and has been used on operations in the battle against the Islamic State in Iraq and Syria.

The E-7 is based on a standard Boeing 737 NG airliner modified to carry a sophisticated Northrop Grumman active electronically-scanned radar. This can cover four million square kilometres over a 10-hour period.

Modification of the aircraft will be carried out in the UK, sustaining over 200 highly skilled jobs at Marshall Aerospace and Defence Group in Cambridge, and there will also be opportunities for British suppliers to be involved in future training and support arrangements.

This announcement builds on a growing military capability and industrial relationship between the UK and Australia, after the Australian government selected the British Type 26 design for its future frigate.

The Boeing 737 AEW&C is a twin-engine airborne early warning and control aircraft. It is lighter than the 707-based Boeing E-3 Sentry, and mounts a fixed, active electronically scanned array radar antenna instead of a rotating one. It was designed for the Royal Australian Air Force (RAAF) under “Project Wedgetail” and designated E-7A Wedgetail.

The 737 AEW&C has also been selected by the Turkish Air Force (under “Project Peace Eagle”), the Republic of Korea Air Force (“Project Peace Eye”), and the United Kingdom, and has been proposed to Italy and the United Arab Emirates. (Source: U.K. MoD/http://www.warfare.today)

There were a number of key procurements announced during 2019.

On September 12th Babcock Team 31 was selected as preferred bidder for UK Type 31 frigate programme.

 

 

 

 

Babcock Team 31 has been selected by the UK Ministry of Defence (MOD) as the preferred bidder to deliver its new warships. Led by Babcock, the Aerospace and Defence company, and in partnership with the Thales Group, the T31 general purpose frigate programme will provide the UK Government with a fleet of five ships, at an average production cost of £250m per ship.

Following a comprehensive competitive process, Arrowhead 140, a capable, adaptable and technology-enabled global frigate will be the UK Royal Navy’s newest class of warships, with the first ship scheduled for launch in 2023.

At its height the programme will maximise a workforce of around 1250 highly- skilled roles in multiple locations throughout the UK, with around 150 new technical apprenticeships likely to be developed.  The work is expected to support an additional 1250 roles within the wider UK supply chain.

With Babcock’s Rosyth facility as the central integration site, the solution provides value for money and squarely supports the principles of the National Shipbuilding Strategy. It builds on the knowledge and expertise developed during the Queen Elizabeth aircraft carrier modular build programme.

The announcement follows a competitive design phase where Babcock Team 31 was chosen alongside two other consortia to respond to the UK MOD’s requirements. 

Work on the fleet of five ships will begin immediately following formal contract award later this financial year, with detailed design work to start now and manufacture commencing in 2021 and concluding in 2027.

Archie Bethel, CEO Babcock said: “It has been a tough competition and we are absolutely delighted that Arrowhead 140 has been recognised as offering the best design, build and delivery solution for the UK’s Royal Navy Type 31 frigates.  Driven by innovation and backed by experience and heritage, Arrowhead 140 is a modern warship that will meet the maritime threats of today and tomorrow, with British ingenuity and engineering at its core. It provides a flexible, adaptable platform that delivers value for money and supports the UK’s National Shipbuilding Strategy.”

Arrowhead 140 will offer the Royal Navy a new class of ship with a proven ability to deliver a range of peacekeeping, humanitarian and warfighting capabilities whilst offering communities and supply chains throughout the UK a wide range of economic and employment opportunities.

A key element of the Type31 programme is to supply a design with the potential to secure a range of export orders thereby supporting the UK economy and UK jobs. Arrowhead 140 will offer export customers an unrivalled blend of price, capability and flexibility backed by the Royal Navy’s world-class experience and Babcock looks forward to working closely with DIT and MOD in this regard.

Arrowhead 140 is a multi-role frigate equipping today’s mariner with real-time data to support immediate and complex decision-making.

The frigate is engineered to minimise through-life costs whilst delivering a truly leading-edge ship, featuring an established, proven and exportable combat management system provided by Thales.  

Victor Chavez, Chief Executive of Thales in the UK said: “Thales is delighted to be part of the successful Team 31 working with Babcock and has been at the forefront of innovation with the Royal Navy for over 100 years. With the announcement today that Arrowhead 140 has been selected as the preferred bidder for the new Type 31e frigate, the Royal Navy will join the global community of 26 navies utilising the Thales Tacticos combat management system. Thales already provides the eyes and ears of the Royal Navy and will now provide the digital heart of the UK’s next generation frigates.”

Babcock will now enter a period of detailed discussions with the MOD and supply chain prior to formal contract award expected later this year.

On September 16th the Australian LAND 400 Phase 3 downselect contenders were announced. Australian Defence Minister, Linda Reynolds and Defence Industry Minister, Melissa Price have officially confirmed the two downselect contenders for the Army’s multi-billion LAND 400 Phase 3 program.

 

 

 

Defence Connect can tonight confirm the selection of Hanwha Defense Australia and Rheinmetall Defence Australia as the two successful downselection contenders in the Army’s multi-billion dollar investment to replace Army’s current fleet of mobility and reconnaissance vehicles.

The LAND 400 Phase 3 Program will replace the M113 Armoured Personnel Carriers providing the Army with an advanced, world-class Infantry Fighting Vehicle capability, both options will provide the Australian Army with a range of capabilities, namely:

• Hanwha Defense Systems AS21 Redback: The AS21 will include the capability to integrate active protection systems into an evolved turret system, the Redback will, like its BAE competitor, be capable of hosting a crew of 11 (three crew, eight troops), a top road speed of 70km/h, cross country speed of 40km/h, an operational range of 500 kilometres, with an armament consisting of a 40mm autocannon and a single 7.62mm coaxial machine gun.  

• Rheinmetall Lynx KF-41: The Lynx KF41 will include the capability to support a crew of 12 (three crew, up to nine troops), have a max road speed of 70km/h, a road range of more than 500 kilometres, with an armament consisting of the Lance 2.0 30-35mm autocannon, a 7.62mm coaxial machine gun and a variety of additional close-in weapons systems.

Defence Minister, Linda Reynolds said, “These advanced vehicles will provide new levels of protection, firepower, mobility and enhanced communications. This project will deliver Australia a brand-new, cutting edge capability. But we will also ensure we are well placed to work together with industry, to grow and develop the capability over the course of its life.”

Minister Reynolds added, “When fully delivered the LAND 400 Program will allow Army to successfully sustain mounted close combat operations against emerging and future threats, as part of an integrated Australian Defence Force. I thank all tenderers for their significant effort and the resources invested in supporting Phase 3 of this project.”

Defence Industry Minister, Melissa Price welcomed the announcement and stressed the importance of Australian Industry Content in the multi-billion recapitalisation program, saying the program provides an exciting opportunity for Australian industry to contribute to building and maintaining these new Infantry Fighting Vehicles. 

“Just as with the Phase 2 Combat Reconnaissance Vehicles, Australian industry involvement and Australian workers are vital to this project. Phase 3 is another important opportunity for Australian industry to deliver leading-edge technology for our Australian Defence Force,” Minister Price explained. 

Further to this, Minister Price explained, “During the testing-phase Defence will work with the shortlisted tenderers to ensure small and medium enterprises across Australia have the opportunity to showcase their capabilities. The two companies have been assessed as offering vehicles that are best able to meet the requirements of the Army while providing value for money for Defence.”

“However, if at any stage of this process there is a need, Defence can invite other tenderers to participate in the shortlist – to make sure we deliver the capability we need to the Army and the best value for the Australian taxpayer.” she added finally. 

LAND 400 Phase 3 is a $10-15bn Army program which will recapitalise Army’s Vietnam-era M113 Armoured Personnel Carrier (APC) force, with a combination of a tracked Infantry Fighting Vehicle (IFV) and tracked APC.

The Risk Mitigation Activity will commence later this year. Following its completion, Defence will undertake a final detailed evaluation of the shortlisted tenders. A decision on the preferred tenderer to supply the Phase 3 capability will be presented to Government for consideration in 2022.

The selection of Hanwa is the sign of a growing trend for the selection of Asian solutions for APCs against the incumbents, hence the MoU agreement announced between ST Engineering and Rheinmetall. BAE’s CV90 was the loser in this contest, which may mean the closure of the line with Haaglunds concentrating on upgrades for the existing fleet? Good news for Rheinmetall which is already well established in Australia flowing its Boxer win.

On October 28th the Pentagon announced an F-35 fighter jet deal with Lockheed. Bloomberg reported that Lockheed Martin Corp. and the Pentagon announced a final agreement on a long-awaited contract for the next-generation F-35 jets that would be the biggest yet, according to three people familiar with the decision. The purchase of the stealthy F-35 for U.S. and allied militaries is likely to be valued at about $34bn for 478 fighters.

 

 

 

 

The deal concludes years of discussions aimed at lowering the price for the advanced fighter to about $80m for some variants, while guaranteeing production stability for Lockheed’s largest source of profit, said Bloomberg Intelligence analyst Douglas Rothacker.

“It’s a big positive for the company,” he said. “It’s a huge show of support from the government that they’re going to extend a contract of this size for their most important weapons program.”

Falling production costs will open up additional international sales opportunities for the F-35, Ken Possenriede, chief financial officer for Bethesda, Maryland-based Lockheed Martin, said during the company’s Oct. 22 earnings call. Lockheed is on track to hit the $80m target in production lot 13, he said, about the middle of the multiyear contract.

Lockheed rose as much as 1.3% to $375.45 Monday after Bloomberg reported that the so-called block buy talks were concluded. The stock had advanced 42% this year through Friday, double the gain of the S&P 500.

The latest agreement brings to about 978 the number of U.S. and allied jets on contract out of a planned total of at least 3,100. The jet is still months away from the completion of rigorous combat testing against the toughest Russian and Chinese threats.

Officials disclosed earlier this month that a formal “full-rate” production decision would be delayed as much as 13 months until the tests are complete, using a high-fidelity simulator that’s still not running.

The F-35 has faced years of delays and cost overruns. The long-term cost of operating and supporting the fleet of fighters over more than six decades has increased to $1.196trn, according to the Pentagon’s latest cost assessment of major projects. (Source: News Now/Bloomberg)

Detail of Order for 114 F-35

28 Oct 19. Lockheed Martin Corp., Lockheed Martin Aeronautics Co., Fort Worth, Texas, is awarded a $7,027,643,109 modification to a previously awarded firm-fixed-price, fixed-price-incentive-firm-target, cost-reimbursable contract (N00019-17-C-0001). This modification provides for the procurement of 114 F-35 aircraft for Air Force, Marine Corps and Navy; non-Department of Defense (DoD) participants, and Foreign Military Sales (FMS) customers. Specifically the modification procures 48 F-35A aircraft for the Air Force, 20 F-35B aircraft for the Marine Corps, nine F-35C aircraft for the Navy, 12 F-35A aircraft for the government of Norway, 15 F-35A aircraft for the government of Australia, and eight F-35A and two F-35B aircraft for the government of Italy. The above U.S. aircraft quantities are inclusive of fiscal 2019 (Lot 13) plus up aircraft. In addition, this modification adds scope for the Air System Diminishing Manufacturing Sources integration, software data loads, critical safety items, red gear, non-recurring engineering, recurring engineering and the Joint Strike Fighter Airborne Data Emulator. Work will be performed in Fort Worth, Texas (57%); El Segundo, California (14%); Warton, United Kingdom (9%); Cameri, Italy (4%); Orlando, Florida (4%); Nashua, New Hampshire (3%); Baltimore, Maryland (3%); San Diego, California (2%); Nagoya, Japan (2%); and various locations outside the continental U.S. (2%), and is expected to be completed in March 2023. Fiscal 2019 aircraft procurement (Air Force, Marine Corps and Navy); non-DoD participants; and FMS funds in the amount of $7,027,643,109 will be obligated at time of award, none of which will expire at the end of the current fiscal year. This modification combines purchases for the Air Force ($2,812,512,346); Marine Corps ($1,297,487,314); Navy ($612,389,812); non-DoD participants ($2,243,321,947); and FMS ($61,931,690) customers. The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity.

Well that’s it, the end of another action packed year in defence! I would like to thank our sponsors Qioptiq, Exensor, Millbrook, Oshkosh Defense, Oxley, Viasat, Blighter, Arnold Defense, Spectra, Meggitt Training Systems, The British Robotics Seed Fund and American Panel for their continued support and all our loyal band of subscribers, many of whom have been with us for over 20 years!

We look forward to working with you in 2020 and may we wish you a very Happy Christmas and a prosperous New Year.

The first issue of 2020 will be on January 6th.

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