Top DOD buyer signals globalization is reality; tanker contract might come Feb. 25
Two top Defense Department officials today (Feb. 16) told a conference sponsored by Aviation Week magazine that the contract award for the KC-X could be made by the end of the month.
The buzz in Washington is that it will be after the stock market closed on Friday, Feb. 25.
The statements by the DOD officials are summed up nicely in this Defense News article.
At the same Aviation Week conference, the Pentagon’s top buyer, Ashton Carter, repeated remarks he made a week earlier at the Cowen & Co. aerospace and defense investors’ conference February 9. At the Cowen event, the headlines to come out of it were remarks made by Boeing CEO Jim McNerney about the prospect of proceeding with an all-new replacement for the 737.
The headline that did not come out of it was from a speech presented by the Pentagon’s top buyer, Ashton Carter. Elements of his speech did, indeed, make news. However, buried in his speech as the last topic were his comments about globalization and procuring key defense systems from non-US companies.
Is this laying the groundwork for selecting the EADS North America KC-45 tanker in the KC-X competition? DOD Buzz picked up on this, too, but well down its story.
Perhaps this is too much “Kremlinology” but carefully read his remarks:
In the industry that supports these international security efforts, we likewise simply cannot avoid or wall ourselves off from globalization. Depending on the program, from a few percent to much more of the value-added in defense goods and services is sourced overseas – mostly to companies that serve as subcontractors to U.S. primes and that provide, for example, a particular specialized part. Sometimes that is where the best technology or best value can be found, and when it is, we owe it to the warfighter to do so. Globalization of our market is not an option – it is a reality. Our utilization of, for lack of a better term, “non-heritage” firms is essential for nearly all of the systems upon which we rely. We are committed to continue opening our markets while at the same time striking the appropriate balance with security concerns. Just as we have opened our markets to the leading firms from around the world, we urge our partner nations to do likewise. Exports obviously strengthen our industry’s competitiveness, but they also enhance our security – and international security – when they build the capacities of international partners. We are doing our part by implementing President Obama’s reforms of our antiquated export control regulations and procedures, and we expect our efforts will result in increasingly open and fair competitions around the globe.
To summarize, our goals in the new era for our defense industry are:
- A strong, vibrant, and financially successful defense industry,
- Structural change largely through market forces but adjusted where the interests of the taxpayer and warfighter require,
- Preserving and enhancing competition,
- Equal attention to the health of smaller and mid-sized companies, spinouts, new entrants, and service providers,
- Encouraging open entry into the defense marketplace, and
- Full advantage taken of the opportunities of globalization
Here is Ashton Carter’s speech, from the Cowen conference. The Aviation Week remarks were essentially identical.