Two Companies Off the Radar Screen Team Up to Launch ORBCOMM Satellites
Sierra Nevada Corporation (SNC) is a privately owned company on the edge of many technologies, including small satellite manufacturing, space system development, hybrid propulsion, ISR (intelligence, surveillance and reconnaissance), sensor systems, electronic warfare, and air traffic control. Employing roughly 2,000 and with revenues of approximately $700 million, this woman-owned business headquartered in Sparks, Nevada has had a 45-year history of growth and entrepreneurship—yet has stayed off the radar screen of many defense industry analysts. The stealthy nature of this company began to change in mid-2008, when it was selected to be the prime contractor for ORBCOMM’s second generation mobile telecommunications satellites, managing a team that included Boeing, ITT, and Microsat Systems. The initial ORBCOMM contract was for 18 satellites, and included an option for up to 30 additional satellites. The initial order was reportedly worth $117 million. In December 2008, SNC acquired SpaceDev for $38 million, adding nearly 200 employees and considerable innovative space technology and proven space products to its portfolio. In that same month, SNC received the 2008 David Packard Excellence Award and announced it was joining a team participating in the Google Lunar X Prize race to the moon. Meanwhile, another company, SpaceX was jumping into the spaceship development business with both feet. Founded in 2002 by internet entrepreneur (and billionaire) Elan Musk, SpaceX aims to reduce launch costs by a factor of ten. Headquartered near Northrop Field in Hawthorne, CA, SpaceX developed (and successfully launched) its own “Falcon” rocket. On July 15, 2009 a Falcon rocket successfully delivered Malaysia’s RazakSAT into orbit. On September 3, 2009 these two small, entrepreneurial, companies announced that they had agreed to work together to launch the 18 ORBCOMM satellites. SNC will manage the development and build of the satellites, and SpaceX will launch them via an upgraded version of its Falcon spaceship. By placing its launch orders with SpaceX, SNC is showing a great deal of trust. Although there SpaceX has recorded a recent launch success, its history is limited. Its most important commercial launch, the British Hylas 1 satellite, was recently switched to Arianespace. Thus, successfully launching 18 ORBCOMM satellites will establish SpaceX’s credibility as a launcher of commercial satellites, and will validate SNC’s judgment as a manager of commercial satellite systems. A failure will significantly damage both companies. We wish them both the best, and look forward to hearing more about these two companies, now that they are both on our radar screen.
Honeywell Aerospace Loses CEO and CFO
 On Sept. 3, 2009 New Jersey-based Honeywell International reported that two highly placed executives were departing its Aerospace unit. Rob Gillette (Aerospace CEO) left to take the helm of First Solar, a multi-billion dollar manufacturer of solar and photovoltaic modules. Like Honeywell Aerospace, First Solar is based in Arizona. Mr. Gillette will be replaced by Tim Mahoney, formerly Chief Technology Officer. In the same release, Honeywell announced the departure of Aerospace CFO, Bob Hau, who will be joining Lennox International, a Texas-based manufacturer of heating and cooling equipment, as its CFO. Why did the two depart the successful Aerospace unit? At $11 billion in annual sales, the Aerospace unit accounted for roughly 34% of total Honeywell International sales, but also accounted for nearly half of the conglomerate's bottom-line earnings, according to The Wall Street Journal's MarketWatch column. Aviation Week quotes a Wall Street analyst as saying, "Opportunities for further promotion at Honeywell were limited in the medium-term." The analyst notes that the departures allow each executive to "step into full CEO and CFO roles." In other words, each of the executives had hit their ceiling at Honeywell. No matter how talented or what results they created, there was no room at the top for them. Assuming this explanation can be taken at face-value, it seems a shame that the Corporate compensation committee couldn't have found a creative way to retain these two executives. Given the current economic pressures and potential Aerospace/Defense industry downturn, one would have thought Honeywell International would need all the talent it could find, and would not be able to easily replace these two executives.
|
Tin Whiskers: We May be On Our Own
A six year-old directive from the European Union to eliminate lead from coatings and solders, in order to move toward environmentally safer electronics manufacturing, may lead to problems for NASA and the U.S. Defense industry. The culprit: so-called "tin whiskers"-- what NASA calls "electrically conductive, crystalline structures of tin that sometimes grow from surfaces where tin (especially electroplated tin) is used as a final finish." It is the lead in solder and coatings that prevent these whiskers, which can otherwise lead to short-circuits and catastrophic failures. The European Union enacted legislation in 2003 known as the Restriction of certain Hazardous Substances (RoHS) and Waste Electrical and Electronic Equipment (WEEE) Directives, which set June 2006 as deadlines for electronic equipment suppliers to eliminate most uses of lead from their products
According to a recent article in National Defense magazine , the U.S. Missile Defense Agency alone has documented $1 billion in catastrophic damage to satellites, missiles, and other defense equipment. The removal of lead from solder and coatings may lead to a dramatic increase in such failures. According to the article, almost 100 percent of DOD electronics have tin-lead components. Even though the United States does not mandate lead-free solder, the Pentagon and its contractors source electronics from a global supply chain, and many suppliers are based in Europe or other countries that are moving toward European standards, such as Japan and South Korea. In order to meet quality standards, DOD contractors will need to modify any lead-free commercial and COTS components, which will increase costs. The article estimates cost increases from 50 to 200 percent. The article quotes an industry source as stating that lead-free assemblies performed poorly when compared to systems that utilized tin-lead solder, meaning that performance may degrade even as costs increase.
The "tin whiskers" phenomenon is not new. NASA reports that it was first observed in the 1940s and 1950s and has been under study since that time. Although the whisker-forming mechanism is still not well understood, NASA recommends use of a conformal coat of Arathane 5750 may reduce the risk of electrical short circuits resulting from tin whiskers. It will be important for NASA and DOD contractors to address this issue, by both evaluating their suppliers for the use of lead-free solder and coatings and by developing appropriate mitigation strategies.
FAR Case 2008-016: Proposed Rule Implements OMB Direction to Get Serious About Past Performance Reporting
We previously discussed recent OMB guidance that directed Federal agencies to get serious about reporting contractor past performance information into the Past Performance Information System (PPIRS). On September 2, 2009 the FAR Council published in the Federal Register a proposed FAR revision that would provide guidance to Contracting Officers regarding how and when to report contractors that have been terminated for default or have been determined (by the Contracting Officer) to have submitted defective cost or pricing data. There is not much more to be said regarding the proposed rule changes, except that they affect several parts of the FAR, including Parts 8, 12, 15, 42, and 49. The central language change is at 42.1503(f), which would read "Within 10 days after a contracting officer determines that a contractor has submitted defective cost or pricing data, or a termination for cause or default notice has been issued or any subsequent conversions or withdrawals have been issued, agencies shall ensure information related to these issues are provided for inclusion in PPIRS." As a general matter, we applaud the Government's newfound focus on recording contractor past performance information and then subsequently using that information to evaluate future offers. That said, it is a poorly kept secret that certain large contractors cannot be kept from winning contract awards in the name of "national security". Previous suspensions from contract awards have proven to be paper tigers; and the Government has all be but admitted that Boeing, Lockheed Martin, and others are too big to be debarred. For example, were Northrop Grumman Newport News Shipbuilders to be debarred, who would build the nation's nuclear aircraft carriers? There's only one place in America that has the capability to build such ships, and thus it is a practical impossibility to debar the shipyard (though of course the Department of Justice can make their lives miserable and the cost of doing business expensive). So it won't be the top-tier contractors who are affected by this rulemaking exercise; instead, it will be the smaller and mid-tier contractors. See the proposed rule here. Comment on the proposed rule here.
|
One organization that fosters such DOD-Industry partnerships is the National Defense Industrial Association (NDIA). NDIA has sponsored an Industrial Committee on Program Management (ICPM) for several years. The ICPM mission statement is as follows: 
