Morning Coffee: Defense Industry Faces Future Challenges

Morning Coffee is a robust blend of links to news around the internet concerning the Naval Air Station Patuxent River economic community. The opinions expressed here do not necessarily reflect those of the Leader’s owners or staff.

The 2013 Top-Performing Companies (TPC) study suggests that the aerospace/defense industry is prospering but a closer look reveals large challenges in the years ahead for both the commercial and defense sectors, according to Aviation Week. An analysis shows they have grown leaner and made other beneficial financial adjustments. The 60 publicly traded companies listed in the TPC reported last year profit gains averaging 9.6 percent. However, research and development spending on future technology has been reduced and half of the world’s 10 highest-ranked defense contractors saw defense-related revenues decline. Profit growth in the face of flat or declining revenue is unsustainable and defense contractors must find or create new and improved mechanisms for revenue growth, says the study.

The House Armed Services Committee (HASC) approved legislation last week that prevents the DoD from retiring a nuclear aircraft carrier, according to The Hill. The measure directed the Pentagon to fuel and overhaul the USS George Washington in 2015 to extend its service life another 25 years.

The Hill also reports the HASC approved legislation to provide $52 billion to the Pentagon’s cybersecurity operations. The legislation fully funds the Pentagon’s initiatives on counter-terrorism, counter-proliferation, defense intelligence, irregular warfare, and cyber operations and also includes $5.1 billion for US Cyber Command.

The HASC committee took steps last week to protect tobacco sales on military bases and ships in response to Navy plans to eliminate tobacco purchases at exchanges and at sea, reports the Military Times. In 2012, NavSec Ray Mabus labeled tobacco as “the most avoidable public health hazard in the Navy and Marine Corps.” Commissaries on Navy bases currently do not sell tobacco products.

A Government Accountability Office (GAO) audit indicates only one federal government employee lost their job due to sequestration cuts, according to the Washington Times. Sen. Tom Coburn, (Okla.-R) said the audit shows concern over sequestration impact on jobs was overstated. The report also showed nearly every agency or department affected by sequestration canceled or limited bonuses and overtime and cut travel and training. Almost half offered employees early retirement or bonus payments to get them off the books.

The Military Times interviewed Veterans Affairs Secretary Eric Shinseki who promised “swift and appropriate” punishment for employees involved with medical appointment delays and  coverups at VA hospitals. Mr. Shinseki said, “I want veterans to know that the VA is here to care for them” and urged patience for investigators to fully uncover and report on the problems.

The F-35’s computerized logistics system isn’t fully functional, but it will be able to support three F-35s on their first overseas trip for two UK air shows this summer, reports the Chicago Tribune. Lockheed had to redesign the ALIS system that will serve as the management “backbone” for the global fleet of F-35s after Navy investigators discovered a cyber vulnerability, but a top Pentagon official is now “very confident” the F-35 logistics system will work.

The Navy announced Thursday that it is selling the former USS Saratoga for a penny, reports CNN. The ship is the second carrier in two years to be sold for one cent for dismantling and recycling. The 56,000-ton Saratoga was commissioned in 1956 and saw action off North Vietnam in 1972 and 1973. A third flattop, the former USS Constellation, is also expected to be sold for scrap soon according to a Navy statement.

Lockheed Martin has been named as a contractor on a Navy contract worth $1.26 billion to build a new fleet of helicopters used to transport the president, reports WBNG. Lockheed and its partner, Sikorsky Aircraft Corp., will construct a fleet of 23 presidential helicopters, known as “Marine One.”