Bloomberg Businessweek Tony Capaccio February 28, 2012
Lockheed Martin Corp., the No. 1 U.S. defense contractor, is the first company to have payments withheld under a new Pentagon rule intended to correct deficiencies with internal systems that track cost, schedules, accounting and purchases, according to the Defense Department.
The Pentagon will withhold about $1 million a month in billings from Lockheed’s aeronautics division until the unit fixes longstanding shortcomings with its cost and schedule tracking system, Shay Assad, the Pentagon’s director of pricing, said today in an interview.
The money will be paid once the deficiencies are fixed, he said. The Pentagon today informed Lockheed’s Fort Worth, Texas- based aircraft unit that the withholding will start in March with billings made under a new production contract of about $4 billion for as many as 30 F-35 fighters, Assad said. The funds held back will amount to 2 percent of billings instead of the maximum 5 percent, he said.
That’s because Lockheed was deemed to have submitted an adequate corrective action plan, which is now under review by the Pentagon’s Defense Contract Management Agency, Assad said. The agency manages the new rule for Pentagon contracts.
“This is a step that’s available to the customer under the terms of the contract,” Joe Stout, a spokesman for Bethesda, Maryland-based Lockheed, said in an e-mailed statement
From GovConExec News September 6, 2011
The Veterans Affairs Department awarded spots on a $12 billion contract to modernize IT operations to 14 firms, including Booz Allen, CACI, HP and Harris.
DynCorp International, PAE Group, SAIC and Tetra Tech, among others, were added to a five-year, $10 billion IDIQ contract from State Department’s Bureau of International Narcotics and Law Enforcement Affairs to provide worldwide civilian police and criminal justice assistance.
The U.S. Army selected Northrop Grumman Technical Services, Inc., L-3 Communication Services, Inc., Mission Essential Personnel, CACI Premier Technology Inc., and DynCorp International and AECOM’s joint venture Global Linguist Solutions to compete for task orders on its $9.7 billion defense language interpretation translation enterprise contract.
The U.S. Army awarded 16 contractors a place on a $997 million contract for force protection measures. Awardees include DRS, ITT, SAIC, Northrop Grumman, Lockheed Martin, BAE, Ideal Innovations, among others.
Bloomberg Aug 16, 2011
Nine of the biggest names in the U.S. defense industry receive more than 70 percent of their revenue from the federal government and have the most to lose in the budget cuts approved by Congress this month, according to data compiled by Bloomberg.
For these defense contractors, it’s a replay of the 1990s, when the Cold War ended and the Pentagon slashed spending by a third. For government contractors in all industries, however, the stakes are significant.
“For some companies, the consequences are going to be large,” said Peter Morici, former chief economist at theInternational Trade Commission and a business professor at the University of Maryland. “They’re going to have to sell to the private sector, and that’s not going to be easy for them.”
When it raised the debt limit earlier this month, Congress cut $917 billion in spending over the next decade. A special congressional panel is expected to convene in September to try to identify another $1.5 trillion of cuts.
The hardest-hit group probably will be the defense industry, which received the biggest chunk of the $532 billion in federal contracts last fiscal year, a sum that exceeds the budgets of the five largest states combined.
Nine companies with a market capitalization of $1 billion or more receive at least 70 percent of their revenue from the U.S. government, according to data compiled by Bloomberg:ManTech International Corp. (MANT), Booz Allen Hamilton Holding Corp. (BAH),Northrop Grumman Corp. (NOC), Raytheon Co. (RTN), CACI International Inc.,Lockheed Martin Corp. (LMT), Oshkosh Corp. (OSK), Harris Corp. and General Dynamics Corp. (GD) Three of those — ManTech, Booz Allen and Northrop Grumman — count on the federal government for more than 90 percent of their revenue
U.S. contractors with almost $2 billion worth of counter-narcotics business in Afghanistan will get more scrutiny than they faced for work completed in Latin America over the past decade, government officials said.
The Washington Post June 26, 2011
DynCorp International, Lockheed Martin, Raytheon, ITT and ARINC, which are working with the Defense and State departments on anti-drug efforts in Afghanistan, performed similar work in Latin America with inadequate competition and little oversight, according to a report by the majority staff of a Senate Homeland Security subcommittee and a previous investigation by the Pentagon’s inspector general.
The contractors should expect new accountability measures at State and the Pentagon, as well as heightened scrutiny from Congress, as the United States seeks to stabilize the government in Afghanistan, where drug trafficking generates as much as $100 million a year for the Taliban, officials said.
“Many of the things we’ve been doing in Afghanistan, it’s not reinventing the wheel — we’ve been doing it in Colombia for a decade, and with many of the same contractors,” said Laura Myron, a spokeswoman for Sen. Claire McCaskill (D-Mo.), chairwoman of the subcommittee.
McCaskill is to convene a hearing this week on Afghanistan contracting, at which she’ll address the counter-narcotics work, Myron said in an e-mail.
Noel Brinkerhoff, David Wallechinsky All Gov June 15, 2011
Lindsay Goldberg is a private equity firm based in New York City. The firm focuses on leveraged buyouts and growth capital investments in middle-market companies in sectors like consumer products, commodity based manufacturing, energy services, business services, financial services, energy transmission and waste disposal.
Lockheed Martin acquired PAE in 2006, which provided services that supported military readiness, peacekeeping missions, personnel recruitment and training, and disaster relief services. The acquired unit then became a part of the Information & Technology Services segment of the company.
Post-acquisition, the company undertook numerous steps to improve its business, build a leadership team and sharpen operations. However, following a thorough assessment, on June 2, 2010, the company decided to divest this unit. The divestiture is grounded in the fact that the services demanded by PAE’s consumers fail to resonate with the long-term business strategy of the company.
Lockheed Martin is the largest U.S. defense contractor with a platform-centric focus that guarantees a steady inflow of orders with a leveraged presence in the Army, Air Force, Navy and IT. Also, the company’s focus on debt repayment, an ongoing share repurchase program and an increasing dividend will continue to shore up shareholder return.
However, we believe that budget deficits and political uncertainty make future defense budgets vulnerable to cutbacks. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds to our long-term Neutral recommendation on the stock. Read more at Zacks Investments
“This is a lot like kangaroo court justice,” said Mr. Furlong
WASHINGTON — A senior Pentagon official broke Defense Department rules and “deliberately misled” senior generals when he set up a network of private contractors to spy in Afghanistan and Pakistan beginning last year, according to the results of an internal government investigation.
The Pentagon investigation concluded that the official, Michael D. Furlong, set up an “unauthorized” intelligence network to collect information in both countries — some of which was fed to senior generals and used for strikes against militant groups — while masking the entire operation as a more benign information operations campaign.
The inquiry concluded that “further investigation is warranted of the misleading and incorrect statements the individual made” about the legality of the program, according to Col. David Lapan, a Pentagon spokesman.
Reached by telephone on Thursday, Mr. Furlong was angry about the conclusions of the investigation, saying that nobody from the Defense Department ever interviewed him as part of the inquiry.
“This is a lot like kangaroo court justice,” Mr. Furlong said.
He said that his work had been approved by a number of senior military officers in Afghanistan, and that he had never misled anyone about what he was doing.
“They only talked to one side, and those are the people running for cover,” he said.
Defense Secretary Robert M. Gates ordered the investigation after The New York Times reported on the existence of the network in March. The inquiry was carried out by Michael Decker, a top aide to Mr. Gates for intelligence issues.
The results of the Pentagon investigation are classified, and Defense Department officials gave few specifics about the accusations.
Mr. Furlong, a senior Air Force civilian official, has been barred from his office in San Antonio for several months. The Air Force inspector general is conducting a separate investigation into the matter, to determine whether Mr. Furlong broke any laws or committed contract fraud.
Pentagon rules forbid the hiring of contractors as spies. Military officials said that when Gen. David H. Petraeus, then the top commander in the region, signed off on Mr. Furlong’s operation in January 2009, there were specific prohibitions against intelligence-gathering, including hiring agents to provide information about enemy positions in Pakistan.
The contractors were supposed to provide only broad information about the political and tribal dynamics in the region — called “atmospherics” — and “force protection” information that might protect American troops from attack, the officials said.
But some Pentagon officials said that over time the operation appeared to transition into traditional spying activities.
Mr. Furlong’s network, composed of a group of small companies that used agents deep inside Afghanistan and Pakistan to collect intelligence on militant groups, operated under a $22 million contract run by Lockheed Martin.
One of the companies used a group of American, Afghan and Pakistani agents overseen by Duane Clarridge, a Central Intelligence Agency veteran best known for his role in the Iran-contra scandal. Mr. Clarridge declined to be interviewed.
Officials said that the contractors delivered their intelligence reports via “Hushmail,” an encrypted e-mail service, to an “information operations fusion cell” at a military base at Kabul International Airport. There, the reports were put into classified military computer networks and used either for future military operations or intelligence reports.
The contractors continued their work for weeks after Mr. Gates ordered the investigation, sending dozens of reports to the fusion center. The Pentagon finally let the contract lapse at the end of May.
Colonel Lapan said the investigation concluded that Pentagon rules governing intelligence operations needed to be more clearly defined and that “better coordination and de-confliction of both intelligence and information operations is required by staffs at all levels.” Please see the original article here
By AUGUST COLE at WSJ
MONROVIA, Liberia—Lockheed Martin Corp. became the nation’s No. 1 military contractor by selling cutting-edge weaponry like the F-35 Joint Strike Fighter.
Its latest contribution to the U.S. arsenal: training prosecutors in Liberia’s Justice Ministry.
The U.S. government has hired the defense contractor to test an emerging tenet of its security policy. Called “smart power,” it blends military might with nation-building activities, in hopes of boosting political stability and American influence in far-flung corners such as Liberia.
U.S. officials are concerned that nations imperiled by poverty and political strife could spark regional conflicts and foster terrorist networks. Defense Secretary Robert Gates says the problem posed by failing states “is in many ways the ideological and security challenge of our time.” Read the full story here
Raytheon Co., Marlborough, Mass., is being awarded a $28,144,958 firm-fixed-price modification to a previously awarded contract (N00039-08-C-0115) for eight Submarine High Data Rate Antenna Systems. Work will be performed in Marlborough, Mass. (69 percent) and St. Petersburg, Fla. (31 percent), and is expected to be completed by December 2010. Contract funds will not expire at the end of the current fiscal year. This contract was not competitively procured because Raytheon developed the submarine antenna under contract N00039-04-D-0033, which was competitively awarded Oct. 23, 1996. The Space and Naval Warfare Systems Command, San Diego, Calif., is the contracting activity. See all contracts awarded at Veterans Today
KABUL — NATO-led forces have recovered the remains of three American military contractors from the wreckage of a U.S. Army reconnaissance plane that crashed two weeks ago in the rugged mountains of northeastern Afghanistan, the military said Tuesday.
The Army C-12 Huron twin-engine turboprop had been missing since it crashed Oct. 13 while on a routine mission in Nuristan province, a Taliban insurgent stronghold. The plane went down less than two weeks after insurgents overran a coalition outpost the same province, killing eight American troops in one of the war’s deadliest battles for the U.S.
NATO said in a statement that the crash is “under investigation, though hostile action is not believed to be the cause of the crash.”
Thomas Casey, a spokesman for Lockheed Martin Corp., confirmed that the three dead men — a pilot, co-pilot and technician — were American citizens working for Lockheed Martin subcontractors.
They were employed under a Lockheed Martin contract for “counter-narcoterrorism” operations, Casey said.
U.S. forces spokesman Col. Wayne Shanks said the crew were the only ones aboard when the craft went down without giving off any distress signals.
“We just lost contact,” Shanks told The Associated Press.
Nuristan has been the site of the two deadliest battles of the war for U.S. forces, including the Oct. 2 attack in the province’s Kamdesh outpost and a July 2008 raid that killed nine American soldiers at an outpost in Wanat area.
The NATO-led mission is planning to withdraw troops such isolated strongholds to focus on more heavily populated areas as part of a new strategy to protect Afghan civilians.
Shanks said the plane was on a mission for NATO-led forces at the time, but he gave no other details. Casey said only that it was a surveillance mission.
The pilot and co-pilot worked for a company called Avenge Inc., while the technician was employed by a contractor called Sierra Nevada Corp., Casey said.
The military said a UH-60 helicopter traveling to the crash site four days later “experienced a strong downdraft and performed a hard landing” nearby. The helicopter’s crew members were rescued, and the chopper was stripped of sensitive and useable parts and destroyed to keep insurgents from salvaging anything in the wreckage.