Aerospace & Defense Update
General Dynamics’ subsidiary, Gulfstream Aerospace Corporation, announced two new Gulfstream business jets, the G500 and the G600 aircraft. The updated aircraft are more efficient and can travel farther distances than their predecessors at faster speeds. The list prices of the aircraft are $43.5 million and $54.5 million, respectively, and include state-of-the-art technology including the active control sidesticks and the next-generation enhanced vision system. Both of these new aircraft feature wide cross-sectioned cabins and will have a capacity of 19, with multiple living spaces. Some of the suppliers for the new aircraft include Pratt and Whitney Canada, for the PW800 series engine, Honeywell, for the avionics touchscreen display, and Esterline, for the overhead panel. Deliveries for the G500 are expected to begin in 2018 with the G600 trailing by about 12 to 18 months, entering service in 2019.
This past week at the Association of the U.S. Army (“AUSA”) annual meeting, it became evident that Army leaders are optimistic about the future for acquisition reform. The increased focus on competition and attention from Congress are both signs that reform will, in fact, begin to happen. Technology, in particular, will be a major target for increased competition. For example, the forecasted plan is to get a request for proposals on the street very quickly for manpack radios and then to run all qualified proposals through operational tests. The goal is to drive competition with these updated processes in order to ultimately increase innovation in all that the Army does. Furthermore, in order to identify programs that require update, the new Army Warfighter Assessments annual war game will test new technologies and concepts and promises to stimulate rapid change for years to come. The next conference of the season will be the National Business Aviation Association (“NBAA”) Conference, held from October 21st to 23rd.
Government Technology Solutions Update
In an effort to implement the Government Accountability and Transparency Board’s recommendations, the Federal Acquisition Regulations (“FAR”) Council has set an October 1, 2017 deadline for Federal agencies to begin using the Procurement Instrument Identification (“PIID”) numbering system. Use of PIID will be required for all contracting actions after the effective date and will be a unique government-wide identifier for a minimum of 20 years. The 13 to 17 alpha and / or numeric sequence will convey the contracting office, the fiscal year of award or action, and the type of contract or vehicle. This effort by the PAR Council is an attempt to achieve consistent and accurate procurement data across the Federal government.
The Council of Inspectors General (“IG”) analyzed a sample of 77 commercial cloud contracts across 19 civilian agencies worth approximately $1.6 billion and found that the majority failed to implement federal requirements and best practices. All contracts did not follow specifications recommended in the federal cloud computing guidelines and best practices, while 59 of the 77 systems were not compliant with the Federal Risk Authorization and Management Program (“FedRAMP”). As a result of these findings, the Council of IG recommended to the Office of Management and Budget that agencies create a plan to enforce FedRAMP compliance, use standardized contract clauses when adopting cloud computing technologies, establish process and reporting mechanisms, and conduct routine reviews of agencies.
Textron, Inc. (Up 10.4%) – Shares were up this week after the Company announced that it will open a larger service center at Paris-Le Bourget Airport in order to perform maintenance and modification work for Europe’s Beechcraft, Cessna, and Hawker aircraft owners.
Rolls Royce (Down 10.3%) – Shares were down this week after the Company warned that revenues may fall as trade sanctions against Russia take effect.
Novaria Group acquired “substantially all” of the assets of Weatherford Aerospace, a provider of aircraft wing skins and unique services related to aerospace products. Terms of the deal were not disclosed.
View Systems, Inc. to merge with Potomac River Group LLC, a provider of specialized technical support services to the U.S. Federal Government. Terms of the deal were not disclosed.
G.E. Capital Aviation Services Limited to acquire Milestone Aviation Group Limited, a lessor of helicopters. The deal is worth an estimated $1.78 billion.