Air Force Spending Likely to Heat Up in Arctic: Defensive Line

The Department of the Air Force has outlined a new Arctic Strategy designed to implement guidance of the Defense Department’s 2019 plan, according to a July 21 announcement. This week’s edition of Defensive Line, a weekly column by Bloomberg Government, looks at the ways the plan may affect defense contractors.

A New Strategy for the North

The majority of domestic defense spending supporting the new Arctic strategy will be performed in Alaska.

The Air Force wants to transform the Arctic into “a secure and stable region where U.S. national interests are safeguarded, the homeland is protected, and nations address shared challenges cooperatively,” according to the strategy. The Air Force is the most engaged of the military services in the Arctic with an increasing number of combat forces and a variety of early warning sites.

The strategy confirms that the sparse infrastructure and the harsh weather conditions make the environment the greatest challenge facing military forces in the region. As a result of climate change, the environment is changing: Permafrost is thawing and reduced sea ice is accelerating coastal erosion, which is affecting military installations such as runways. This could drive requirements for new, more resilient construction and in some cases could force the relocation of some facilities.

At the same time, the thawing is making certain natural resources easier to extract and increasing ship traffic in the region, increasing the probability that the military may have to engage in disaster response and rescue operations. More planning and exercises to better prepare for these types of operations are likely.

Arctic Contract Activity

The new strategy says the Air Force will enhance its missile defense surveillance system and “improve domain awareness through new technologies ranging from over-the-horizon radar to space assets.”

The Air Force relies on surveillance and early warning assets in the region, including the COBRA DANE radar system, which provides real-time missile data, and the new Long Range Discriminating Radar at Clear, Alaska, which provides persistent long-range tracking of missile threats.
From the beginning of fiscal 2016, Raytheon Technologies Corp. has received more than $250 million in obligations for the COBRA DANE radar.

The Air Force also recognizes that its three main communications capabilities in the region — satellite communications, high-frequency radio, and long-haul terrestrial systems — are in need of improvement. Since fiscal 2016, the Defense Department has spent more than $300 million on contracts for work in the C4ISR market performed in Alaska.

The Air Force is also seeking to project more military power in the Arctic. In April the Air Force began the deployment of what will eventually be 54 F-35 Joint Strike Fighters to be based at Eielson Air Force Base in Alaska. These fighter aircraft will complement the capabilities of the F-22 Raptors the Air Force Reserve operates out of Joint Base Elmendorf-Richardson in Anchorage.

The Air Force provides also access to the Arctic region via ski-equipped LC-130 aircraft. and it plans to modernize transport methods by advancing recapitalization and exploring “modernization of existing and emergent polar mobility platforms that are critical for reaching remote areas.”

According to Bloomberg Government data, the Pentagon’s contract spending in Alaska has increased to $1.8 billion in fiscal 2019 from $1.2 billion in fiscal 2016.

The top contractors in fiscal 2019 include Arctic Slope Regional Corp. ($359 million), Chugach Alaska Corp. ($118 million), and AECOM ($95 million).

The Space Force Factor

The new Space Force also plans to enhance its capabilities in the Arctic by leveraging new technologies and modernizing existing assets, according to the strategy.

Since fiscal 2016 the U.S. Space Force (formerly Air Force Space Command) has spent more than $300 million on contracts in support of Thule Air Base in Greenland, home to the 12th Space Warning Squadron, which provides missile warning, missile defense, and space surveillance capabilities. Bloomberg Government shows 12 upcoming potential opportunities for work at Thule in the next 12 months, valued at more than $400 million.

The strategy also discusses new Space Force investments in “capabilities to mitigate and predict environmental disturbances unique to the Arctic region,” and states that “the Air and Space Forces will collaborate with interagency partners to address understudied areas and expand meteorological coverage including terrestrial and nascent air and space surveillance systems.” The Space Force has spent more than $300 million on a satellite weather sensor made by Ball Corp. More investments of this type are likely in the future.

Look North

High-level documents such as the new Arctic Strategy don’t necessarily translate immediately into more spending on various programs. But they do signal service priorities and guide those who are developing service requirements, plans, and ultimately budget requests to Congress.

Investments in the Arctic will compete for resources with all other Department of the Air Force requirements and there are always trade-offs because resources are finite. But the new strategy, coupled with the advent of the Space Force and increased Russian activity in the Arctic region, provide a foundation arguing for increased investment. Those companies that can provide everything from cold weather equipment to enhanced C4ISR capabilities to early warning radars and satellite-based sensors would be well advised to cast their eyes northward in search of new opportunities.

Note: The Defensive Line is a weekly column focusing on the issues and trends in defense and national security that analyzes implications are for federal contractors.

To contact the analyst: Robert Levinson in Washington, D.C. at rlevinson@bgov.com

To contact the editors responsible for this story: Daniel Snyder at dsnyder@bgov.com; Jodie Morris at jmorris@bgov.com