U.S. Defense Secretary Jim Mattis released a memo on January 31 providing initial guidance for strengthening the armed forces through an FY17 budget amendment, the FY18 budget request, and the FY19-FY23 Future Years Defense Program. The memo is a direct response to a memorandum on rebuilding the U.S. armed forces, released by the president on January 27. Mattis outlines a three-phase approach: improve warfighter readiness; achieve program balance by addressing pressing shortfalls; and build a larger, more capable, and more lethal joint force. Those objectives are centered around the completion of the FY17 budget process, and the release of the next two budget requests.
By Matthew Beres, Forecast International.
Welcome to the Forecast Roundtable Podcast. Forecast Roundtable brings together expert analysts, industry professionals, and government officials to discuss the latest issues in the aerospace and defense markets. Produced at the Forecast International headquarters, Forecast Roundtable offers unique and in depth insight and discussion on any range of topics from geopolitics to aerospace and defense markets. Topic suggestions are welcome. Continue reading
The following is a list of the Top 200 U.S. Government Contractors in fiscal year 2015 ranked by the total amount of contract funds awarded. In FY2015, the U.S. Government awarded a total of $439.0 billion in contracts down 1.5 percent from $445.8 billion in FY2014. Of the $439 billion in total contract funds, $273.7 billion, almost 62 percent, were awarded by the Department of Defense (DoD).
Canada’s new Liberal government released its first defense budget in March, and the spending plan portends a continued struggle for the military’s troubled acquisition system. The budget plan estimates that defense spending will total CAD18.6 billion in the 2016/17 fiscal year (April 1 to March 31), which is about CAD578 million less than projected under the previous Conservative government’s 2015 budget plan. Planned spending of CAD19.5 billion in 2017/18 would actually be higher than the CAD18.7 billion figure contained in last year’s budget, but that increase hides a more alarming issue. Namely, the 2016 budget takes some CAD3.7 billion worth of procurement funding allocated for large-scale projects in the 2015/16 to 2020/21 timeframe, and defers it to beyond 2020. Continue reading
U.S. Defense Secretary Ash Carter offered a preview of the Pentagon’s FY17 budget request on February 2, but offered relatively few concrete details. The request will total $582.7 billion, which includes the base budget and funding for Overseas Contingency Operations. The only individual appropriation title that was mentioned was Research, Development, Test and Evaluation, which will receive $71.4 billion, up from $69.8 billion in FY16. Continue reading
Alcoa’s strategy of expanding its operations in downstream markets has reached its zenith with the announcement that the company will split in two by mid-2016.
Over the past few years, Alcoa has been building up its aerospace business via acquisitions in order to capture a greater share of this booming market. Traditionally, the company has focused on its upstream businesses, primarily aluminum and alumina. However, with a glut in aluminum markets brought on by increased Chinese exports, the company decided to break its operations into two publicly traded corporations. Alcoa’s traditional business, which also includes better-performing bauxite and alumina, will retain the Alcoa name. The new “value-add” company has yet to be named. Continue reading
Canada’s Liberal Party has ended nearly a decade of rule under Prime Minister Stephen Harper and his Conservatives, a change that does not bode well for Lockheed Martin’s F-35 Joint Strike Fighter. The Liberals, led by Justin Trudeau, won a majority government with 184 seats in Parliament, meaning they will not have to form a coalition with the leftist New Democratic Party, which won 44 seats. The Conservatives held on to 99 seats, while the Bloc Quebecois took 10 seats and the Green Party just one. In the previous election in 2011, when the Conservatives formed a majority, the NDP actually beat out the Liberals to become the official opposition party for the first time ever. The latest election represents a shift to the center, carrying with it a number of significant defense policy changes.
The Canadian Department of National Defence has responded to media claims that the future Canadian Surface Combatant (CSC) program is in trouble, but the government’s effort to assuage concerns is of little consolation. The CSC is a planned class of ships that will replace Canada’s Halifax class frigates and Iroquois class destroyers. CTV News recently obtained internal planning documents that said the CSC is at “very high risk” of running over budget and behind schedule and of lacking skilled manpower. It also said that there is a high risk the CSC will fail to provide the necessary capabilities. The document warned that the program “may be unable to deliver the optimal number of ships with the capabilities necessary to meet operational requirements.” Statements like these are a significant concern for a costly project to replace the bulk of the Royal Canadian Navy’s might. Continue reading
The Royal Canadian Navy recently hired a barge to transport fuel into the Arctic for two of its maritime coastal defense vessels on patrol in the northern waters. The barge was also used to resupply the ships, according to service officials. The Navy has also been utilizing a Chilean Navy supply ship to resupply its west coast fleet, spending CAD6 million for 40 days of access to Chile’s Almirante Montt over the summer. Canada is working on a similar agreement with Spain to support the east coast fleet later in the year. Why is Canada going through all of this effort to utilize outside resources to supply its own fleet? The answer is simple – Canada no longer has supply ships to do the job. Continue reading
Ottawa has announced a plan to provide the military with sustained annual budget growth of three percent beginning in 2017, providing a cumulative CAD11.8 billion in additional spending through 2026. Previously, the government had planned budget growth of around two percent per year during that time. Under the revised plan, the defense budget will have increased by CAD2.3 billion by 2026, according to budget documents. The move is an attempt to offset recent cuts shouldered by the military as the government slashed expenditures to eliminate the deficit. The government has finally balanced the budget after many years of deficits, announcing a projected CAD1.4 billion surplus in 2015. However, the defense increases may not be enough to offset the damage that has already been done to the military, if the government is even able to follow through with the plan at all.