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Colt Reunites Military, Civilian Gun Manufacturing; Lacks Firepower To Aid Lenders

The Hartford Courant

6:49 AM EDT, July 22, 2013

The merger between the gun maker whose Colt revolvers were wielded by Doc Holliday to Theodore Roosevelt and its former military division, which supplies the Army's M4 rifle, is failing to convince bondholders that it will generate enough cash to repay $250 million in debt.

While military supplier Colt Defense's 8.75 percent notes due November 2017 gained 5.5 cents after the West Hartford-based company said on July 15 that it spent about $60.5 million to buy the consumer-oriented Colt's Manufacturing Co., the debt trades at 80.75 cents on the dollar to yield 14.96 percent, almost 14 percentage points more than similar-maturity Treasuries. That's about 4 percentage points higher than the threshold for bonds considered distressed.

Adding a $50 million term loan to help finance the purchase will hurt liquidity by boosting interest expense even as the deal gives Colt Defense access to a broader distribution network for its firearms, according to Standard & Poor's. Colt Defense, which forecasts a flat-to-declining U.S. defense budget for the "foreseeable future" as the military winds down foreign missions, would need more than 70 years to build up enough money to pay off the bonds at its current pace of cash generation.

"The commercial business has done better than we thought, so that'll be a bit of an offset, but still it's not nearly enough to come up with the money to pay off those notes," said Christopher Denicolo, an analyst at S&P whose CCC-rating on Colt Defense bonds indicate they're "currently vulnerable" to non-payment. "One of the ways out would be to do a distressed exchange."

That kind of transaction would amount to a default for bondholders. Some of the biggest investors include Pacific Investment Management Co., whose Pimco Income Fund owns more than 8 percent of the securities, and Chicago Title Insurance Co., according to data compiled by Bloomberg.

Isabelle DeFosses, a spokeswoman at Colt Defense, didn't respond to a request for comment on the company's finances. Mark Porterfield, a spokesman for Newport Beach, Calif.-based Pimco, declined to comment on the holding.

The Colt business traces its roots to an 1836 patent for a revolving cylinder handgun whose firepower greatly exceeded that of flintlock pistols, according to a March 26 regulatory filing that cites a post-Civil War slogan: "Abe Lincoln may have freed all men, but Sam Colt made them equal."

A supplier of small arms to the U.S. military since 1847, Colt has manufactured weapons that, according to the Autry National Center in Los Angeles, once belonged to Holliday, the gunslinger who fought alongside Wyatt Earp in the 1881 shootout at the O.K. Corral in Tombstone, Ariz., and America's 26th president.

While leading the Rough Riders volunteer cavalry regiment in its charge up San Juan Hill in Cuba during the Spanish- American War in 1898, Roosevelt used a model salvaged from the wreck of the USS Maine, which was blown up in Havana earlier that year, according to the National Firearms Museum. That gun was stolen from Roosevelt's former estate in Oyster Bay, New York, in 1990 and recovered 16 years later.

Colt Defense's notes yield the most of any industrial issuer bond in the CCC rating tier due in more than three years, Bloomberg data show. The last U.S. corporate debt of more than $200 million issued with a coupon exceeding the current yield on Colt's securities was from Energy Future Holdings Corp.'s imperiled Texas Competitive Electric Holdings unit, which sold $1.2 billion of 15 percent bonds starting in 2010 and 2011. Dallas-based Energy Future is the former TXU Corp.

The gun maker's total assets of $159 million on March 31 were $162 million less than its liabilities, the biggest deficit since at least 2011, Bloomberg data show. While the company has more than four years to prepare for a maturity that exceeds trailing 12-month cash from operations by more than 30 times, its current finances signal refinancing the bonds may be difficult, according to Noel Hebert of Concannon Wealth Management.

"With negative equity you will have a hard time securing new debt," said Hebert, whose Bethlehem, Pa.-based firm oversees about $250 million of assets. "Funding at 15 percent seems out of the question," though "it is a problem that is a while off, and if you have manic credit markets or manic gun buying, it may not be that big of a deal," he said.

By combining the two companies following a 2003 split, Colt Defense has eliminated the risk that its contract with Colt's Manufacturing to sell commercial firearms to civilian sportsmen and hunters under its namesake brand wouldn't be extended beyond March 2014, according to Moody's Investors Service.

Colt's Manufacturing filed for bankruptcy protection in 1992, after losing a government contract to manufacture M-16 rifles and suffering from a four-year strike, according to the company's website. Colt Defense was formed in 2002 and was 53.5 percent owned by Sciens Management, a New York-based manager of alternative investments, as of Dec. 31, according to the March 26 filing.

Sales to commercial and international markets have been the "main growth drivers" as budget pressures in the U.S. threaten domestic military revenue, Jadijhe Adamo, an analyst at Moody's, which rates the 2017 bonds Caa2, a level higher than S&P, wrote in a July 17 report. Sales to the U.S. government currently represent less than 15 percent of total revenue, Adamo said in the report.

Concerns that new U.S. gun-control laws might diminish consumer gun sales after the December massacre at a school in Newtown, Connecticut, are fading, investments in two publicly traded gun makers show. Smith & Wesson Holding Corp. shares have gained 17 percent since Dec. 13, the day before the shootings, while Sturm Ruger & Co. is up 3 percent, following declines after the incident at the Sandy Hook Elementary School.

Freedom Group Inc., which made the gun used in the shootings, was put up for sale in December by Cerberus Capital Management LP and has received several offers, a person familiar with the matter who asked not to be identified because the process is private said this month. Freedom is an amalgamation of Remington Arms Co. and Bushmaster Firearms International.

While sales in the 12 months through March jumped 14 percent to $232.6 million, Colt Defense's total debt is still about 7 times its earnings before interest, taxes, depreciation and amortization, Bloomberg data show. That's more than four times the average leverage level among indebted industrial companies in the S&P 500 index.

"The company's had very weak credit measures for a while now," Denicolo of S&P said. "It's an unsustainable capital structure," and "there may not be the possibility of refinancing when the debt comes due in a few years unless their credit profile improves," he said.

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Defence update
The existing bomber force cannot cope with new challenges indefinitely. As countries like China pursue anti-access strategies and more agile air defenses become available to potential adversaries, the U.S. must recapitalize its aging bomber fleet. Failure to do so could eventually result in major military setbacks, since future enemies will doubtless attack the joint force where it is weakest. Defense analyst Lauren B. Thompson comments in a recent report published by the Lexington Group. .

Bombers have played a vital role in recent conflicts. From the Balkans to Afghanistan to Iraq to Libya, the Air Force’s fleet of long range, heavy bombers has proven highly useful in defeating diverse adversaries. Bombers typically deliver a disproportionate share of the munitions expended in air campaigns, and the advent of precision-guided weapons has enabled them to hit many targets in a single flight — day or night, in good weather or bad.

Heavy bombers are uniquely versatile and cost-effective. The defining features of heavy bombers are long reach and large payloads. These features have allowed them to adapt to changing threat conditions in a way that smaller tactical aircraft — manned or unmanned — could not. For instance, the B-52 bomber debuted as a high-flying nuclear bomber, but later became a low-level penetrator, then a conventional bomber, and today a mixed-use strike aircraft that can launch cruise missiles.

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The newest planes in the U.S. heavy bomber fleet were designed over 30 years ago. The current bomber force is capable but aging. The heavy bomber force includes 76 B-52 Stratofortresses averaging 50 years of age, 63 B-1 Lancers averaging 28 years, and 20 B-2 Spirits averaging 20 years. Each of the bombers can deliver a mixed payload of precision munitions to an unrefueled range of 6,000 miles or greater. The B-52 is the only standoff cruise missile carrier in the fleet, the B-1 is the only supersonic bomber, and the B-2 is the only stealthy bomber. All three are facing age-related issues.

The world has changed in fundamental ways since they were first conceived. The Soviet Union has fallen and China has risen. The information revolution has transformed commerce and culture. Old technologies of mass destruction have spread to new nations, and new technologies have empowered extremists of every stripe. In sum, virtually every feature of the threat environment has changed since America last commenced development of a new bomber. At some point, it will no longer be feasible to deter and/or defeat emerging threats with combat systems designed for another time.

Although America has encountered unexpected threats in this new age, it continues to enjoy global air dominance. Non-traditional enemies such as the Taliban have lacked the means to challenge U.S. forces in the air, or at sea, or in conventional combat on land, and so have resorted to asymmetric strategies. The legacy bomber fleet and tactical aircraft in the joint inventory have proven highly adaptable to the demands imposed by new kinds of warfare, mainly because there was so little that irregular adversaries could do to deny access to their airspace. As a result, military planners have been under greater pressure to upgrade ground combat systems than their counterparts in the air.

As the long-range bomber force ages, it will gradually come to present an opportunity for rising powers or movements that think they can carve out sanctuaries by denying U.S. air power access to those areas. If they can force U.S. aircraft carriers to remain far away and hold at risk the nearby land bases used by U.S. military aircraft, then the bomber force becomes the sole impediment to their plans short of America launching ballistic missiles. Ballistic missiles will seldom be a cost-effective, proportionate or even credible response to the threats America faces.

Thus, developing a Long Range Strike Bomber that can gradually take over the most demanding missions of America’s fading Cold War bomber force is an indispensable step in preserving the nation’s security through mid-century. A new bomber will strengthen nuclear deterrence by allowing U.S. leaders to hold at risk the most valued assets of aggressor nations with a strike system that can be quickly recalled or retargeted as conditions dictate. A new bomber will enable the joint force to deliver tailored effects against a wide array of conventional threats at distances beyond the reach of tactical air power, in circumstances where reliance on standoff munitions would be either unaffordable or simply unexecutable.

Most importantly, though, a new bomber would be a hedge against the uncertainty military planners face during a period of unprecedented change in human civilization. Having failed to anticipate most of the major threat developments over the last hundred years, it would be foolish indeed for U.S. leaders to think they have a better grasp of the future now that every facet of human experience is subject to simultaneous change. What they can know, though, is that being able to reach anywhere on earth with survivable, versatile air power will continue to be a crucial feature of U.S. military capability. Failure to preserve that capability by developing the Long Range Strike Bomber could have fatal consequences for U.S. warfighters, and many other Americans.

Efforts to buy a new bomber have been repeatedly delayed. When the Cold War ended, the defense department terminated production of the B-2 and ceased development of new bombers for the first time since the 1920s. Plans to pursue a next-generation bomber were delayed by changing threat conditions and the appearance of new technologies that could bolster the performance of aging planes. As a result, the U.S. has not developed a new heavy bomber in three decades.

The Air Force has plans to develop a new bomber. The Air Force has budgeted $6 billion for development of a Long Range Strike Bomber (LRS-B) between 2013 and 2017. The service says it will buy 80-100 aircraft at an average cost of $550 million each, with initial operational capability in 2025. Although details are secret, experts predict the new bomber will be able to operate autonomously in hostile airspace, carrying a mixed payload of precision munitions over intercontinental distances.

Existing strike capabilities must be upgraded as a new bomber is developed. It will take 20 years to develop, produce and deploy LRS-B. During that time, the Air Force must continue sustaining legacy strike aircraft to deter aggression and defeat aggressors. Each of the bombers in the current fleet requires upgrades to enhance connectivity with other friendly forces, expand the range of munitions that can be delivered, and cope with age-related maladies such as metal corrosion.

Failure to develop a new bomber could have fatal consequences.

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Enhanced combat helmet heads to production
July 30, 2013 --
By Jim Katzaman, MCSC Corporate Communications

After successful stringent tests that program experts say well exceeded initial requirements, the Marine Corps is getting ready to field its new enhanced combat helmet. In the first quarter of fiscal 2014 the first of thousands of ECHs will be issued to warfighters bound for deployment.
The collaboration with the Army dates from March 2009 when the Corps received an urgent requirement, which stated that the Corps needed to produce a helmet with enhanced ballistic protection from selected small-arms ammunition and fragmentation. The Navy joined the program the following year.
Meanwhile, the ECH had to maintain all other characteristics of the Marines’ lightweight helmet and Army’s advanced combat helmet. The new helmet also had to be compatible with other components of infantry combat equipment such as body armor systems, protective goggles, night vision equipment and a camouflage fabric helmet cover.
The new requirement proved to be a tall order that was met several times, despite test protocol criteria made even more stringent as tests proceeded, according to project managers.
“This is the only helmet that has been tested and passed using [Director of Operational Test and Evaluation] protocols,” said Deidre Hooks, ECH team lead at Marine Corps Systems Command.
MCSC took the lead, with the Army’s input, in conducting ECH tests driven by DOT&E’s test protocol criteria. MCSC is the Department of the Navy’s systems command for Marine Corps ground weapon and information technology systems. It is also the Marine Corps commandant's agent for acquisition and sustainment of warfighting systems and equipment.
Following the DOT&E protocols was a challenge because test criteria changed from a binomial – or pass-fail – standard to one based on statistical confidence, according to Kathy Halo, ECH lead engineer.
“One of the biggest challenges was the change in statistical methodology in the midst of the helmet testing,” Halo said. “Our program was the first test subject for DOT&E’s new approach.”
In typical equipment test and development, successful first-article testing certifies the product meets standards detailed in the original statement of work. This leads to a contract award that starts initial production. This leads to full-rate production with successful acceptance testing and fielding.
Even before the pass-fail ECH tests were complete, DOT&E introduced a new statistical protocol. Under these criteria, the ECH had to attain a 90 percent probability with 90 percent confidence that the helmet will not be penetrated, according to Col. Mike Manning, program manager for Infantry Weapons Systems at MCSC.
Having passed first-article tests using DOT&E’s original criteria, the ECH team turned around and proved through additional testing that the helmet could meet the revised standards, Hooks said.
After these repeated successes, there was yet another first-article test, prompted as the vendor prepared for low-rate initial production.
“We identified anomalies on the production line after the final first-article test was complete,” Manning said. “We fixed it, and now we’re ready for production. We met every requirement of every test we’ve been asked to meet. I'd wear the ECH in a heartbeat."
The colonel cited several benefits that arose from the ECH development and testing.
“We provide value for the taxpayer by buying helmets only for warfighters being deployed,” he said. “The new DOT&E protocol also taught us many lessons on how to proceed on helmet production.”
Halo said the final ECH, soon to be fielded, is a marked improvement over current headgear.
“This helmet is above and beyond,” she said. “It was tested and passed using the old standards as well as the new DOT&E protocols. The ECH surpasses anything we’ve had before.
“The ECH fully exploits the latest lightweight material technology, ultra-high molecular-weight polyethylene materials,” Halo said. “It provides increased small-arms ballistic protection above what is currently provided by the lightweight and advanced combat helmets.”
Hooks added that the most important factor is the increased confidence of the warfighters who know they will enter battle with the highest-quality protection.

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Natick develops holster for M320 grenade launcher
July 25, 2013

By Bob Reinert, USAG-Natick Public Affairs


NATICK, Mass. (July 25, 2013) -- When the M320 40 mm grenade launcher began replacing the M203 in 2009, it put a new and more lethal weapon into the hands of the Soldier.

There was one question, however. How would he or she best carry it?

An equipment specialist with Product Manager Soldier Clothing and Individual Equipment, or PM SCIE, is trying to answer that question. Darren Bean has been working at the Natick Soldier Systems Center since November 2012 on the M320GL Holster Soldier Enhancement Program, or SEP.

The detachable M320, named one of the Army's top 10 inventions of 2009, comes equipped with a sling to carry it when not mounted to the M4 carbine or M16 rifle, according to Bean.

"It was a one-point sling, so (the weapon) was kind of bouncing around," Bean said. "If you went down to the ground, you were dragging it through the dirt. Most people felt that protection was needed at some level because they were just getting dragged in the dirt and pounded on."

Some Soldiers began looking for a better solution than the sling for the M320, which weighs seven pounds with the butt stock.

"They decided they wanted to be able to put it in a holster rather than just shove it in their ruck sack," Bean said.

The SEP allowed the purchase of enough holsters to equip a brigade combat team. He said the "buy-try-decide" concept allows the Army to test the functionality of equipment without spending a lot of time on research and development.

Bean found three commercial vendors who make M320 holsters, so PM SCIE acquired 167 of each.

"They're of varying design," Bean said. "All three of them were very different from each other."

One model includes pockets for grenades but is bulky. Another is more streamlined but offers less protection for the weapon. The third is a cross between the other two.

Bean put the holsters in the hands of a dozen Soldiers from the 75th Ranger Regiment at Fort Benning, Ga., who went through a set of standardized tests in mid May. The Soldiers filled out surveys after the testing.

The testing was to make sure it was realistic to go forward, Bean said.

"Now we can actually test them with an entire brigade," he added.

Each one of the holsters has had small issues, according to Bean.

"None of them have performed necessarily any better than the other ones," Bean said. "They all have some small things that need to be tweaked."

Soldiers of the 10th Mountain Division (Light Infantry) from Fort Drum, N.Y., the 86th Infantry Brigade Combat Team of the Vermont National Guard, and Soldiers in Afghanistan are currently evaluating the holsters. The Consumer Research Team at the Natick Soldier Research, Development and Engineering Center will collect data. PM SCIE officials will then make a recommendation to the Maneuver Center of Excellence at Fort Benning by the beginning of fiscal year 2014.

"The need is there, for sure," Bean said. "I think the end state of this will be that they will say, 'Yes, we need a grenade launcher holster for this when we use it in the stand-alone mode.'"

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Army extends Global Information Grid network to company level, below
July 29, 2013

By Amy Walker, PEO C3T ABERDEEN PROVING GROUND (July 29, 2013) -- As the U.S. mission in Afghanistan changes and forces conduct more dispersed operations, new tactical communications equipment for vehicles at the company level will help extend the network over vast distances to keep Soldiers connected and commanders informed.

Currently installed on mine-resistant, ambush-protected all-terrain vehicles, as part of the Army's mobile Warfighter Information Network-Tactical, or WIN-T, Increment 2 network, the Soldier Network Extension, or SNE, will extend the network down to the company level for the first time. With this "extension," company formations can now be geographically dispersed across large distances, away from their battalion headquarters, and still retain the network connectivity and situational awareness needed to command from disparate locations.

"Having the SNE down at the company level facilitates the dissemination of real-time situational awareness throughout the entire maneuver brigade combat team formation by restoring lower tactical internet (TI) radio networks, sometimes limited by distance or terrain features," said Lt. Col. Lamont Hall, product manager for WIN-T Increment 2. "It's critical to keep those lower TI radio networks connected into the network and ensure commanders can see and understand what is happening on the battlefield."

The SNE's extension capability will benefit the Army as the U.S. mission in Afghanistan changes to a support role in helping the Afghans secure their country. As coalition forces reduce their presence, forward operating bases and fixed sites once used to access the network are being dismantled. As part of the mobile WIN-T Increment 2 network, the SNE for the first time provides lower echelons with the mission critical network reach-back to the Army's Global Information Grid, the worldwide set of interconnected equipment and services that enable Soldiers to access the information they need, when they need it.

The SNE's Combat Net Radio extension takes advantage of the vehicle's on-the-move satellite communication, or SATCOM, systems to help keep lower TI radio networks connected, even when they are blocked by terrain features such as mountains. It also extends these lower TI radio networks, which include the Soldier Radio Waveform, Enhanced Position Location Reporting System, and Single Channel Ground and Airborne Radio System. The virtually unlimited distance of the SNE's on-the-move SATCOM capabilities enables select elements to extend their data links as far as the mission requires.

Positioned at the company level, the SNE can help pass critical information from lower echelons up to higher headquarters, and vice versa. This two-way flow of information provides commanders at all levels with real-time situational awareness, decreasing the time it takes to make decisions and improving the foundations on which those decisions are made.

The WIN-T Increment 2 SNE also provides company-level Soldiers with advanced collaboration and on-the-move situational awareness tools once only available at higher echelons, providing agility to their operations. Company commanders on the move can now collaborate with voice phone calls, hold battle update briefs, access email over the Army's secret network and exchange planning files and documents. They can also use a chat room, one of the Army's primary forms of battlefield communications.

"By giving me [the SNE] you are enabling me to do a lot more work on my own from wherever I am," said Capt. William Branch, a company commander for 2/1 AD. "Before I had to go to the company or to the battalion [command post] to access those services. Now I can access them right from my vehicle. Giving me those services is enabling me and my platoon leaders to do a much better job and operate within my commander's intent."

WIN-T Increment 2 is being fielded as part of the Army's capability sets, or CS. CS 13 is the first of these fully-integrated fielding efforts, which are scalable and tailorable in design to support the changing requirements of current and future missions. CS 13 includes radios, satellite systems, software applications, smartphone-like devices and other network components that provide connectivity from the stationary command post to the commander on the move to the dismounted Soldier. WIN-T Increment 2 is the tactical communications network backbone that binds the capability sets together. The situational awareness and network extension capabilities of the WIN-T Increment 2 SNE provide a vital link to the CS 13 architecture.

WIN-T Increment 2 improves upon the network's first increment, which began fielding in 2004, by providing Soldiers with high-speed, high-capacity voice, data and video communications, accessible on the move. It utilizes both satellite and line-of-sight capability for optimum network connectivity and bandwidth efficiency, and its self-healing capability automatically reroutes blocked links so information gets through. Other WIN-T Increment 2 configuration items include the Point of Presence, or PoP, which is installed on select vehicles at battalion and above, and enables mobile mission command.

A few years ago it may have taken several hours or even days for the brigade commander to see and understand the details that his patrols had seen on the battlefield. But now the commander can talk to his leaders on a conference call while on the move inside a networked PoP or SNE vehicle. They can share information and share what they are seeing on the battlefield in real time, said Col. Sam Whitehurst, commander of the 3rd Brigade Combat Team, 10th Mountain Division, during recent training exercises in preparation for his unit's possible deployment to Afghanistan.

"The quicker and more responsive we are in sharing information, [the more] it allows me to gain situational understanding," Whitehurst said. "That speed and that ability to quickly share information is critical."

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Hagel: Budget cuts will shrink pay, benefits and force
By Andrew Tilghman
Staff writer Military times
Defense Secretary Chuck Hagel for the first time on Wednesday offered details of how today’s budget cuts will impact the military over the next decade, suggesting the Army and Marine Corps force levels could drop to historic lows, the Navy’s carrier fleet will face reductions and the some fighter jet squadrons will be permanently eliminated.

Military pay and benefits also could take a big hit in the form of smaller pay raises, reduced housing allowances, cuts to overseas cost-of-living adjustments, and limits on access to military health care for younger retirees.

Hagel outlined the conclusions of the strategic review he launched in March after taking over the Pentagon’s top job just as the long-term budget cuts known as sequestration were taking effect across the force.

He said the proposals obviously remain open to further debate on Capitol Hill and internal analysis at the Pentagon, yet suggested they offer a window on the future if Washington fails to reach a new, broad-based federal budget agreement and lift the mandatory, automatic spending cuts required under current law.

“Many will object to these ideas — and I want to be clear that we are not announcing any compensation changes today,” Hagel told reporters at the Pentagon. “But a sequester-level scenario would compel us to consider these changes because there would be no realistic alternative that did not pose unacceptable risk to national security,” the secretary said.

The Pentagon has been examining several budget scenarios, and some changes may take effect even if the sequester-level spending caps are lifted. Hagel said his review concluded that “we could still execute the priority missions determined by our defense strategy” while dropping the Army’s active-duty end strength from a current target of 490,000 down to “between 420,000 and 450,000.”

And “the Air Force could reduce tactical aircraft squadrons — potentially as many as five — and cut the size of the C-130 fleet with minimal risk.” Hagel said.

Hagel also outlined the more severe cuts that might be required under the assumption that Congress reaches no new agreement and the budget cuts on the books today, which amount to a roughly 10 percent cut across the board, remain in effect.

That could mean dropping the total number of active-duty soldiers down to “between 380,000 and 450,000 troops,” he said. For the Marine Corps, end strength could fall from today’s target of 182,000 down to “between 150,000 and 175,000,” Hagel said.

For the Navy, the number of carrier strike groups could be dropped from today’s 11 to “eight or nine.” And the Air Force would be forced to retire some of its older bomber aircraft, Hagel said.

“The basic trade-off is between capacity — measured in the number of Army brigades, Navy ships, Air Force squadrons and Marine battalions — and capability, our ability to modernize weapons systems to maintain our military’s technological edge,” Hagel said.

Hagel said options that maintain a larger force structure would require canceling many modernization programs, slowing the growth of cyber programs and cutting special operations forces. He appeared to signal a preference for reductions to manpower rather than modernization, saying “cuts on this scale would, in effect, be a decade-long modernization holiday.”

Adm. James “Sandy” Winnefeld, the vice chairman of the Joint Staff, also said the Pentagon is leaning toward a spending strategy that “edges slightly, probably, toward capability” rather than manpower and capacity.

Other personnel cuts under consideration include ending subsidies for defense commissaries, restricting the availability of unemployment benefits for out-of-work veterans and eliminating civilian pensions for retired military personnel serving in civilian government service, Hagel said.

Cuts to the Pentagon buracracy are also in the works, regardless of whether the bundget crunch is lifted. Hagel said he wants to slash his own staff, the Joint Staff and the services’ headquarters staffs by about 20 percent during the next five years.

Questions remain about whether the Pentagon will have enough money to execute the strategic “pivot” to Asia that was oulined as a key component of the new national defense strategy in 2011.

“Under the worst case ... it would be very challenging to implement that as it was originally conceived,” said Christine Wormuth, deputy undersecretary of defense for strategy, plans and force structure, at a news briefing Wednesday.

So far, Congress has limited the Pentagon’s flexibility in finding cost savings. For example, the Defense Department wants to launch a new round of base closures to reduce overhead costs and also to limit troops pay raises next year. Congress has refused to support those measures.

Hagel suggested lawmakers are making the budget crisis worse. “Opposition to these proposals must be engaged and overcome, or we will be forced to take even more draconian steps in the future,” the secretary said, adding that the proposals he outlined are “not crying wolf.”

Hagel’s comments came the day before two top Pentagon officials, Deputy Secretary of Defense Ashton Carter and Winnefeld, are scheduled to testify on Capitol Hill about the strategic review on Thursday.

Winnefeld emphasized that final decisions about Pentagon spending policy will be developed during the annual budget process later this year.

“We’re teeing up choices. We haven’t made those choices,” he told reporters Wednesday.

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AgustaWestland declines to bid for US presidential helicopter
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By: ZACH ROSENBERG WASHINGTON DC 10:14 29 Jul 2013 Source: flight Global

Manufacturer AgustaWestland will not bid for the US VXX programme to replace the presidential helicopter fleet, despite winning a previous competition, says the company.

The Anglo-Italian company's derivative of the AW101 military transport helicopter won a 2005 contest to replace the aged Sikorsky VH-3s currently used for presidential transport, teamed with Lockheed Martin. The resulting VH-71 Kestrel was cancelled after skyrocketing costs led the procurement to become a political issue after the 2008 presidential election.


AgustaWestland

"After a comprehensive analysis of the final RFP [request for proposal], dated May 3, 2013, we determined that we were unable to compete effectively given the current requirements and the evaluation methodology defined in the RFP," says AgustaWestland, which had teamed with Northrop Grumman for the new requirement. "There are fundamental proposal evaluation issues that we believe inhibit our ability to submit a competitive offering, and that provide a significant advantage to our likely competitor. The decision to withdraw was most difficult, as we believe we have the best, most suitable aircraft for the president."

The company declined to specify which changes to the RFP resulted in the no-bid decision, but requirements in the 2013 document generally called for a smaller, less-capable helicopter than the previous round.

Companies were allowed a comment or objection period after the release of the draft RFP in November 2012. But no objections or protests have been filed with the US Navy or the Government Accountability Office. "If they've had any issues, certainly there's been plenty of opportunity for them to bring it up," the navy says.

Connecticut-based manufacturer Sikorsky appears set to be the only bidder for the contest with a variant of the S-92, which it company had unsuccessfully bid in the previous round. Sikorsky did not respond to immediate queries.

Rival bidders for the US Air Force's combat rescue helicopter requirement also opted against contesting that deal late last year, effectively leaving the way clear for a version of Sikorsky's MH-60 Black Hawk.

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Senate strikes Super Tucanos, Mi-17s from appropriations bill
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By: STEPHEN TRIMBLE WASHINGTON DC 23 hours ago Source: Flight Global

The US Senate appropriations committee has passed a $594 billion defence spending bill for fiscal year 2014 that eliminates funding to buy Sierra Nevada/Embraer Super Tucanos and Mil Mi-17 transport helicopters for Afghanistan's military.

The bill follows similar moves by the House of Representatives, which approved its version of the defence bill on 24 July. The Senate version now must come before the full chamber for a vote, and any differences between the two bills must be worked out with the House chamber in a conference committee. But Congress is very close to eliminating two key programmes aimed at bolstering the capabilities of Afghan security forces before the planned US drawdown beginning next year.

Both programmes have been highly controversial with US-based defence contractors and within the acquisition bureaucracy of the Pentagon.


Embraer

The Super Tucano contract was awarded by the US Air Force in February after a gruelling, three-year acquisition process. Beechcraft had proposed the AT-6 to win the 20-aircraft light air support contract, and vowed to appeal to Congress to prevent Super Tucano sales from spreading beyond Afghanistan. Sikorsky, meanwhile, lobbied against the Mi-17 deal, which was also the target of a critical report by the military's inspect general.

Despite these cancellation threats, the appropriations bill passed by the Senate fully funds a range of aircraft development and production programmes sought by the US armed services. These include the USAF's long range strike bomber and Boeing KC-46 tanker, and the navy's next-generation jammer and Northrop Grumman MQ-4 Triton unmanned air system. Production programmes that received full finding in the proposal are the Boeing AH-64 Apache and CH-47 Chinook helicopters, the Lockheed Martin C-130J, the Boeing P-8A, the Nothrop E-2D and the Bell Boeing MV-22.

The Senate appropriations committee also approved the Pentagon's requested F-35 purchase, but limits funds in FY2015 "to maintain focus on developmental testing and software deliveries".

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Boeing receives $2bn contract to build 13 P-8As
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By: STEPHEN TRIMBLE WASHINGTON DC 05:23 1 Aug 2013 Source: flight global

Boeing will start building 13 more P-8A Poseidons under a $2.04 billion contract awarded on 31 July by the US Navy.

Deliveries from the fourth lot of low-rate initial production will raise the service's total fleet to 37 aircraft by the end of fiscal year 2016.

The USN plans to buy 117 of the 737-800-based maritime patrol and anti-submarine warfare aircraft to replace its current Lockheed P-3C Orions.


US Navy

Boeing's contract also includes funds to buy long-lead parts to build 16 P-8As in the first lot of full-rate production, which is scheduled for award next year. The company says it has now received firm orders for 37 aircraft from the USN, and delivered 10 of these.

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Boeing approves one more year of C-17 production on anticipated demand
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By: STEPHEN TRIMBLE WASHINGTON DC 01:34 1 Aug 2013 Source: flight global

Boeing has started building as many as 12 more C-17 airlifters in anticipation of signing new orders from international customers, possibly extending the Long Beach, California production line by more than a year.

The company's second quarter earnings report filed with the US Securities and Exchange Commission notes that as of 30 June $620 million is obligated in inventory and potential termination liabilities for the next batch of aircraft.

The note confirms that Boeing leadership decided in the second quarter to continue building C-17s beyond the aircraft already on contract for delivery through September of next year.

"As in the past, Boeing is investing company funds on long-lead components to protect the continued affordable production of C-17 aircraft in anticipation of additional orders from international customers," the company says in a statement to Flightglobal.

Boeing has confirmed orders to continue building C-17s into the third quarter of 2014. If it builds all 12 C-17 as unsold "white tails", production could continue into the fourth quarter of 2015, based on current output of 10 per year.

Boeing says it is in discussions with a range of new and existing customers, although previous reports have linked the C-17 to additional orders from India and Australia and possible new orders from Saudi Arabia and Singapore.

The C-17's supply chain is already starting to build the unclaimed hulls, as production system requires an 18-month lead time for early parts and materials.

David Kornblatt, chief financial officer and executive vice president of Triumph Group, which owns C-17 supplier Vought, said in a recent teleconference with analysts that production has already begun on the next batch of aircraft.

"Now we've been given authorization to go ahead and build airplanes," Kornblatt says. "What we hear from [Boeing] is that they're confident that the next [block of 10 aircraft] is going to get sold."

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TerraN_EmpirE said:

So far everyone who has options for More C17's has taken options for C17's. It's a hot Seller and looks like a top performer to.

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At Nellis AFB

At Charleston AFB

At Aviano AFB

At Elmendorf AFB unimproved airstrip​