NORTHROP SEES BIG FUTURE IN SPACE That's one of the takeaways from last week's earnings call for the first quarter of 2018. As industry consultant James McAleese of McAleese & Associates put it: Investors are watching Northrop's performance in the Air Force B-21 bomber, the F-35 Joint Strike Fighter and NASA's James Webb Space Telescope. Meanwhile, CEO Wes Bush "hungrily eyes new cash-cow franchises" in the space sector: One is the $63 billion ground-based strategic deterrent (a new intercontinental ballistic missile to replace Minuteman 3). Another is a new Air Force "Overhead Persistent Infrared Imaging" constellation that will replace the SBIRS missile warning system.
Northrop appears ready to challenge Lockheed for the SBIRS follow-on, but chose to stay out of the $10 billion GPS 3 satellite competition. It was a "clear decision to preserve 'maximum pricing firepower' for upcoming competitions," McAleese said in an email to clients. The company will focus on programs it knows it can win, and will bid aggressively to beat Boeing for the GBSD contract and Lockheed in the missile warning satellite competition.
CEO Bush is positioning Northrop to dominate in programs associated with "existential" threats," says McAleese, in reference to strategic deterrence, contested-space and missile defense. That is reflected in the fact that 28 percent of its portfolio is classified. Northrop is "seething over poor program execution on NASA James Webb Space Telescope" but is hopeful that once the Orbital ATK deal closes it will propel its stock prices and catapult its "win-rates" in military space (future SBIRS would be Northrop payloads on Orbital buses.) The nearly $9 billion Orbital ATK acquisition is expected to close in the second quarter of 2018. McAleese notes that Northrop is currently "captive-subcontractor" to Lockheed on both the SBIRS and AEHF satellite communications programs "where annual sales are shrinking."
THORNBERRY TARGETS DOD SUPPORT AGENCIES House Armed Services Committee Chairman Mac Thornberry is once again pressing the Pentagon to cut overhead costs to free up money for modernization. A potential target? The Defense Information Systems Agency, along with other six other agencies that the chairman and others view as redundant. DISA is responsible for, among other things, the procurement of commercial satellite bandwidth. "Did you know that in the Department of Defense there are 60 chief information officers at the SES level?" Thornberry said at a recent news conference. "Is it any wonder that we have a challenge in getting our IT act together?"
His bill is called "Comprehensive Pentagon Bureaucracy Reform and Reduction Act." It is expected to be be in the HASC version of the Fiscal Year 2019 National Defense Authorization Act. His goal is to cut administrative costs in DoD by 25 percent, potentially saving $25 billion over several years. DISA would be gone by 2021. U.S. Its duties would be taken over by U.S. Cyber Command.
SPACE A BIG FOCUS OF NDAA REFORMS Just because the Space Corps has been put on the back burner pending the completion of an independent study doesn't mean Strategic Forces subcommittee Chairman Mike Rogers is done reorganizing military space. On the FY-19 bill: Forming a sub-unified space command under U.S. Strategic Command and a new numbered Air Force for space. What does all of this mean? You can read it here.
GAO WARNINGS ON LAUNCH COSTS National security space launches have gotten more expensive over the past two decades. The cost of 20 Air Force programs analyzed by the Government Accountability Office grew by $32.6 billion, almost all of which occurred in the past five years and is attributable to the EELV program. Modernizing for the future is not going to be easy. In 2019, the Air Force plans to award contracts to two or more companies for a combined total of approximately 25 launches to occur from 2022 through 2026. "Implementing a strategy to support multiple providers may prove challenging. … Providers will have to rely more heavily on conducting civil government and commercial launches, which have historically been difficult to predict."
ROPER ENTHUSED ABOUT SPACE "It's one of the cool parts of this job," said Will Roper, assistant secretary of the Air Force for acquisition, technology and logistics. "I'm very happy to see a lot of creative thinking in space right now." The plan over the next several months is to complete a reorganization of the Air Force Space and Missile Systems Center. The immediate test for the reorganized SMC will be to start developing a constellation of missile warning and surveillance satellites to replace the Space Based Infrared System. The future missile warning system will be a "pacesetter" for learning to speed up traditional acquisitions.
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