Tag Archives: National Defense

FTC Sues to Block Lockheed Martin Corporation’s $4.4 Billion Vertical Acquisition of Aerojet Rocketdyne Holdings Inc.

Agency Seeks to Prevent World’s Largest Defense Contractor from Eliminating Last Independent U.S. Missile Propulsion Provider

February 1, 2022 – Mike Spillan, Editor

Today, the Federal Trade Commission sued to block Lockheed Martin Corporation’s $4.4 billion proposed vertical acquisition of Aerojet Rocketdyne Holdings Inc, the last independent U.S. supplier of missile propulsion systems. Aerojet supplies advanced power, propulsion, and armament systems, which are critical components for the missiles made by Lockheed and other defense prime contractors.

The agency’s complaint alleges that if the deal is allowed to proceed, Lockheed will use its control of Aerojet to harm rival defense contractors and further consolidate multiple markets critical to national security and defense. This is the agency’s first litigated defense merger challenge in decades.“The FTC is suing to block Lockheed Martin, the world’s largest defense contractor, from eliminating Aerojet, our nation’s last independent supplier of key missile inputs,” said FTC Bureau of Competition Director Holly Vedova. “Lockheed is one of a few missile middlemen the U.S. military relies on to supply vital weapons that keep our country safe. If consummated, this deal would give Lockheed the ability to cut off other defense contractors from the critical components they need to build competing missiles. Without competitive pressure, Lockheed can jack up the price the U.S. government has to pay, while delivering lower quality and less innovation. We cannot afford to allow further concentration in markets critical to our national security and defense.”

The U.S. Department of Defense (“DoD”) reviewed the acquisition and considered the potential impacts of the transaction on national security, the nation’s industrial and technological base, competition, and innovation.

As part this assessment, the DoD facilitated a series of FTC-led interviews with DoD-impacted stakeholders. DoD’s assessment was provided to the FTC for its deliberations and final decision-making.“I deeply appreciate the collaborative relationship between DoD and FTC staff who worked closely throughout this investigation,” said Director Vedova. “The FTC determined that the proposed transaction harms competition for several weapons systems that DoD relies on to defend the nation and there is no sufficient remedy to alleviate those harms.”

Lockheed is the world’s largest defense contractor and a leading missile supplier in a highly concentrated sector. Lockheed, and its U.S missile competitors—Raytheon Technologies, Inc., Northrop Grumman Corporation, and The Boeing Company—act as missile system prime contractors to DoD. These prime contractors are key intermediaries between the U.S. government and the rest of the missile systems supply chain, including the subcontractors such as Aerojet which provide system components to them.

DoD relies on prime contractors to develop, produce, sustain, and source a variety of weapons, including missile systems, hypersonic cruise missiles, and missile defense kill vehicles. Each of these weapons depend on critical propulsion technologies of the type supplied by Aerojet.Aerojet, as a subcontractor, is the last independent U.S. supplier of critical inputs for missile systems, hypersonic cruise missiles, and missile defense kill vehicles. Aerojet and only one other competitor – Northrop Grumman – compete to provide propulsion inputs for missile systems and hypersonic cruise missiles to defense prime contractors.

Aerojet and Northrop Grumman both provide solid rocket motors for missile systems and supersonic combustion ramjets, or “scramjets,” which are air-breathing engines that propel hypersonic cruise missiles. Further, Aerojet is the only proven U.S. supplier of divert-and-attitude control systems that propel missile defense kill vehicles. Lockheed’s proposed acquisition of Aerojet would give Lockheed control over critical propulsion inputs that its rivals require to compete against Lockheed. Specifically, the complaint alleges that the proposed acquisition would give Lockheed the ability and incentive to deny, limit, or otherwise disadvantage competitors’ access to critical propulsion inputs for various weapons systems. The combined firm could disadvantage rivals by affecting the price or quality of the product, the quality of the engineering support, and the schedule and contract terms for developing and supplying it or otherwise disadvantage its rivals.

As a subcontractor, Aerojet also has had access to prime contractors’ sensitive information about technological advancements, cost, schedule, and business strategies. The FTC complaint alleges that post-acquisition, Lockheed would have an incentive to exploit its access to its rivals’ proprietary information to gain an advantage in competitions against them and that the U.S. government, in turn, would be harmed because the cost of missile systems, missile defense kill vehicles, and hypersonic cruise missiles would likely increase, innovation would be lessened, and quality would be reduced, hindering national security and defense interests.

According to the complaint, the proposed transaction could impact research and development as well as innovation into the future, which is vital to ensure that the U.S. remains a leader in these technologies. As an independent supplier, Aerojet has the incentive to allocate its research and development funds based on the potential return the funds would generate regardless of which prime contractor it is supporting.

The complaint further claims that, post-acquisition, the combined firm would be incentivized to allocate Aerojet investment dollars for the combined firm’s benefit alone, which could stifle innovation.

The Commission vote to issue the administrative complaint (a public version of which will be available and linked to this article as soon as possible) and to authorize staff to seek a preliminary injunction was 4-0.The FTC will file a complaint in the U.S. District Court for the District of Columbia seeking a Preliminary Injunction to stop the deal pending an administrative trial. The administrative trial is scheduled to begin on June 16, 2022.

Lockheed Martin To Develop New Missle Defense Laser System

The Missile Defense Agency, a part of the Department of Defense, awarded Lockheed Martin a nine month, $25.5 million contract extension to continue development of its Low Power Laser Demonstrator (LPLD) missile interceptor concept. This program, awarded Aug. 31, builds on a 2017 contract to develop an initial LPLD concept.

Lockheed Martin’s LPLD concept consists of a fiber laser system on a high-performing, high-altitude airborne platform. LPLD is designed to engage missiles during their boost phase – the short window after launch – which is the ideal time to destroy the threat, before it can deploy multiple warheads and decoys.

Over the course of this contract, Lockheed Martin will mature its LPLD concept to a tailored critical design review phase, which will bring the design to a level that can support full-scale fabrication.

“We have made great progress on our LPLD design, and in this stage we are particularly focused on maturing our technology for beam control – the ability to keep the laser beam stable and focused at operationally relevant ranges,” said Sarah Reeves, vice president for Missile Defense Programs at Lockheed Martin Space.

“LPLD is one of many breakthrough capabilities the Missile Defense Agency is pursuing to stay ahead of rapidly-evolving threats, and we’re committed to bringing together Lockheed Martin’s full expertise in directed energy for this important program.”

Lockheed Martin expands on advanced technology through its laser device, beam control capabilities, and platform integration – ranging from internal research and development investments in systems like ATHENA to programs such as LANCE for the Air Force Research Laboratory.

Continued LPLD development will take place at Lockheed Martin’s Sunnyvale, California campus through July 2019.

As a proven world leader in systems integration and development of air and missile defense systems and technologies, Lockheed Martin has already delivered the U.S. several high-quality missile defense solutions that protect citizens, critical assets and deployed forces from current and future threats.

The company’s experience spans directed energy systems development, missile design and production, hit-to-kill capabilities, infrared seekers, command and control/battle management, and communications, precision pointing and tracking optics, radar and signal processing, as well as threat-representative targets for missile defense tests.

U. S. Nuclear Weapons Facility Locked Down Briefly

Employees at the United States’ primary nuclear weapons facility were briefly told to “shelter in place” Tuesday, when a suspicious vehicle in a parking lot triggered an emergency response.

The incident at the Pantex Plant in Amarillo, Texas occurred just before noon (1800 GMT), when a routine inspection identified “a potential concern with a vehicle,” the National Nuclear Security Administration (NNSA) said in a statement.

“As a precaution, all employees were sheltered in place.”

Police were called and authorities closed roads around the facility for about an hour while officials investigated.

“After searching the vehicle, it was determined there were no prohibited items or explosives, and the emergency event was resolved without incident,” the NNSA said.

The plant is operated by government contractors and is the nation’s primary one of six facilities for the assembly and dismantlement of nuclear weapons.

A recording on the plant’s phone system said it was operating normally after what was initially described as a “security event.”

Crash Grounds All F-35 Stealth Fighters

The Pentagon grounded the global fleet of F-35 stealth fighters Thursday so that engineers could conduct urgent inspections following the first ever crash of the costliest plane in history.

Preliminary data from a Marine Corps F-35B that was completely destroyed in a South Carolina crash last month showed a potential problem with a fuel tube, officials said.

“The US services and international partners have temporarily suspended F-35 flight operations while the enterprise conducts a fleet-wide inspection of a fuel tube within the engine on all F-35 aircraft,” said Joe DellaVedova, a spokesman for the F-35 program.

He added that suspect fuel tubes would be removed and replaced. If good tubes are already installed, then those planes will be returned to operational status.

Inspections were expected to be completed within 24 to 48 hours.

According to Pentagon figures, 320 F-35s have been delivered globally, mainly to the US but also Israel and Britain, as well as other partner countries.

Britain said the Pentagon measure did not affect all of its F-35s, and that some flying missions had been “paused,” not grounded.

“F-35 flight trials from the aircraft carrier HMS Queen Elizabeth are continuing and the program remains on schedule to provide our armed forces with a game-changing capability,” a British defense ministry spokesman said.

– ‘Ready and prepared’ –

The Israeli military said it was taking additional precautions and conducting tests on its version of the F-35, known as the F-35I.

But if the planes are “required for operational action, the F-35I aircraft are ready and prepared,” a statement read.

On September 28, a Marine Corps F-35 crashed in South Carolina. The pilot survived after ejecting.

The incident occurred only one day after the US military first used the F-35 in combat, when Marine Corps jets hit Taliban targets in Afghanistan.

On Wednesday, Defense News reported that Defense Secretary Jim Mattis had ordered the Air Force and Navy to make 80 percent of the fleet of key fighters, including the F-35, mission capable within a year.

The order sent ripples through the Pentagon, where officials have for years bemoaned a general lack of readiness for key equipment.

Launched in the early 1990s, the F-35 program is considered the most expensive weapons system in US history, with an estimated cost of some $400 billion and a goal to produce 2,500 aircraft in the coming years.

Once servicing and maintenance costs for the F-35 are factored in over the aircraft’s lifespan through 2070, overall program costs are expected to rise to $1.5 trillion.

Proponents tout the F-35’s radar-dodging stealth technology, supersonic speeds, close air support capabilities, airborne agility and a massive array of sensors giving pilots unparalleled access to information.

But the program has faced numerous delays, cost overruns and setbacks, including a mysterious engine fire in 2014 that led commanders to temporarily ground the planes.

China Refuses U. S. Warship Visit As Trade War Accelerates

China has pulled the plug on a US warship’s scheduled visit to Hong Kong, and scrapped plans for a top admiral to meet with his US counterpart in Washington, officials said Tuesday.

The moves come as trade tensions soar between Beijing and Washington, which this week enacted new tariffs against China covering another $200 billion of its imports.

The USS Wasp, an amphibious assault ship, was due to visit Hong Kong next month. Lieutenant Colonel David Eastburn, a Pentagon spokesman, said the Chinese had scrapped the visit.

“Thes Chinese government did not approve a request for a US port visit to Hong Kong by the USS Wasp,” Eastburn said.

“We have a long track record of successful port visits to Hong Kong, and we expect that will continue.”

China’s decision comes after Beijing recalled a top admiral who was visiting the US.

A US defense official told AFP that Vice Admiral Shen Jinlong, who commands the People’s Liberation Army Navy, attended a naval symposium in Rhode Island last week.

Following the event, he was planning a visit to Washington that would have included meetings at the Pentagon with his US counterpart, Chief of Naval Operations Admiral John Richardson.

“We were informed that Vice Admiral Shen Jinlong has been recalled to China and won’t conduct a visit with Admiral Richardson,” Eastburn said.

Last week, Washington placed financial sanctions on the Equipment Development Department of the Chinese Defense Ministry, and its top administrator, for its recent purchase of Russian Sukhoi Su-35 fighter jets and S-400 surface-to-air missile systems.

Beijing responded by summoning the US ambassador to China, Terry Branstad, to lodge an official protest, while the Chinese military expressed “strong indignation and resolute opposition” to the sanctions.

United in their resentment of America’s global influence, China and Russia have sought in recent years to tighten up their ties and this month conducted weeklong joint military drills in Moscow’s largest ever war games.

Further inflaming tensions, the US State Department said Monday it was set to approve a $330 million sale of military aviation parts to the self-governing island of Taiwan.

Beijing sees Taiwan as part of its territory awaiting unification, and is deeply suspicious of the island’s relations with the US.

China expressed “strong dissatisfaction” on Tuesday over the planned sale and urged Washington scrap the contract.

Beijing has been incensed by recent warming ties between Washington and Taipei, including the State Department’s approval of a preliminary license to sell submarine technology to the island.