This analysis was first available to Bloomberg Government subscribers.
Opportunities for companies that maintain military aircraft are likely to expand as Pentagon procurement programs for new aircraft such as the Navy’s MQ-25 tanker drone or the Army’s Future Vertical Lift helicopter face delays.
The Air Force on March 7 said that delivery of its KC-46 tanker aircraft, built by Boeing, was likely to slip from October 2018 to spring 2019. The MQ-25 Advanced Carrier Aviation program and the Army’s FVL helicopter are taking longer to field than planned, and older aircraft are likely to remain in use for years, requiring maintenance.
Delays and rising costs in advanced aircraft development programs are not unusual, though the problem may be getting worse. The Defense Department takes about 16.5 years to go from statement of need to initial operating capability, Undersecretary of Defense for Research and Engineering Michael Griffin said on March 7. Efforts to speed the process are having limited success. These trends are significant for many contractors.
Although the opportunities to serve as the prime contractor on the development of new military aircraft are limited to a small number of large companies, vendors that provide maintenance, logistics support, and training will have more chances to win business.
Navy Drone Deployment Slows
The Navy’s MQ-25A Stingray unmanned aerial tanker project, previously described as a rapid acquisition program for the department, now won’t be integrated into the air wing until 2026, according to the U.S. Naval Institute.
Navy budget documents from the fiscal 2018 request state that the MQ-25 “is expected to provide an Initial Operational Capability to the fleet by the mid-2020s.” In the fiscal 2019 request, the Navy may have pushed that date back somewhat to 2026.
A report by USNI in June 2017 indicated that the Chief of Naval Operations wanted to accelerate the MQ-25 program and get it onto the decks of the USS Dwight D. Eisenhower and George H.W. Bush aircraft carriers “as early as 2019.” But the MQ-25 program has gone through major changes: In 2016 its focus was shifted from a strike aircraft to one that would perform refueling, intelligence, reconnaissance, and surveillance missions.
Army’s Next Helo Also Delayed
Army budget documents seem to show that the Army’s next helicopter, the Future Vertical Lift program, is also slowing down. Its fiscal 2018 budget documents state that “the Army will award an Engineering and Manufacturing Development (EMD) contract to complete development and testing of the most cost effective system before entering the Production and Deployment phase in the FY 2029 timeframe.”
The fiscal 2019 document says “the Army will award an Engineering and Manufacturing Development (EMD) contract to complete development and testing of the system before entering the Production and Deployment phase in the FY 2030 timeframe.”
The Air Force indicates that it will not be replacing some of its aircraft anytime soon. According to the service, its future bomber fleet will use the still-secret and under development B-21 Raider being built by Northrop Grumman Inc.—as well as the venerable B-52 Stratofortress made by Boeing Co.
The first models of the B-52s flew in 1954. According to General Robin Rand, the commander of Global Strike Command, “With an adequate sustainment and modernization focus, including new engines, the B-52 has a projected service life through 2050, remaining a key part of the bomber enterprise well into the future.” To put it in some perspective, the pilot of the last B-52 in the Air Force inventory has not been born yet.
Part of a Trend?
All of these aircraft program delays and extensions follow delays in the Pentagon’s largest program ever, the F-35 Lightning II fighter jet made by Lockheed Martin Corp. As Bloomberg reported last year, the estimated price of the F-35 went up and the plans to purchase the aircraft were extended from 2038 to 2044. The aircraft is expected be flying until 2070. According to the Congressional Research Service, the F-35 first grew out of a program that began in 1993. Some of those last B-52 pilots may have sons and daughters that will fly the last F-35s.
Why It Matters
According to Bloomberg Government data, in fiscal 2017 the Department of Defense spent $7.9 billion on contracted aircraft maintenance. The top company was L3 Technologies Inc., which is not an aircraft builder. Other companies that don’t build aircraft, such as DynCorp International Inc. and Redstone Defense Systems, were also in the top 10, along with aircraft builders Northrop and Boeing.
Given the aging state of DOD’s aircraft fleet, maintenance costs will inevitably increase as replacements for the current inventory come slowly. That will likely lead to a variety of aircraft maintenance requirements among military services for the foreseeable future. Just as the future pilots of today’s aircraft haven’t been born yet, the maintainers and supporters of those same airframes have yet to enter the world.
(Robert Levinson is a senior defense analyst with Bloomberg Government.)
If you’re not a client, and would like to see BGOV in action, click here to request a demo.