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An United States DoD Spending Report: Analysing the Acquisition of Airframe Structural Components, Historical Revenues, Participants and Forecasts

DUBLIN, Ireland-(Business Wire)-August 13, 2008 - Research and Markets (http://www.researchandmarkets.com/research/019d17/us_department_of_d) has announced the addition of the "US Department of Defense Acquisition of Airframe Structural Components Historical Revenues, Participants and Forecast" report to their offering.

- This report examines six years of U.S. DoD spending in Federal Supply Code (FSC) 1560 Equipment Aircraft Structural

- Companies are grouped into three tiers based upon FSC 1560 revenues over time

- Revenues rose sharply from 2001-2002, and have leveled off at close to $2 billion annually from 2003 to 2006

- The number of reporting locations has skyrocketed, rising from 484 in 2001 to 1,184 in 2006

- DoD has spent a total of $12.3 billion in FSC 1560 from 2001-2006

- It also provides a spending forecast from 2007-2011

- The authors of the report worked from contract action data beginning in 1999 as well as another set of information characterizing DoD FSC 1560 spending from 2001- 2006.

- In its simplest form, airframe structural components markets are similar to commodity trading; through this report the authors looked at macro political, policy and force structure issues to justify a 5-year forecast

FSC 1560 Definitions

- This class includes fabricated system parts that are permanently attached or peculiar to the integral airframe of an aircraft, such as support structural components, spars, ribs, ailerons, stabilizers, bulkheads.

- Includes Flight Control Surfaces; Internal and External Auxiliary Fuel Tanks; Exhaust Systems; Pylons, Trim Tabs; Aircraft.

- Excludes Fitted Covers; Helicopter Rotor Brake System Components; Aircraft Loose Equipment and Alternate Mission Configuration Equipment stored on board the aircraft.

- It is believed that DoD will be forced to allocate more budget to airframe structural components, with actual 2006 spending of roughly $2 billion

forecast to rise in excess of 30 percent by 2011.

- The following are cost escalation drivers from a DoD platform perspective:

— USN F-18 C/Ds will soon be close to 20 years in service. No major corrosion issues are yet apparent, but it is felt that the F-35 will not arrive in sufficient 2013 numbers to enable a rapid retirement. In such a scenario it is envisioned that there will be more orders for F/A-18EFs

— USAF F-15 A and B variants will have to be retired, forcing some front-line F-15Cs to guard units. If the F-15C is to get an AESA radar it would indicate a major structural overhaul is in the works

— If the USAF tanker decision is protested, the Air Force has claimed the subsequent delay would mean the last of the KC-135s would be retired in 87 years, as opposed to the notional 2045 if the tanker decision is not protested. The KC-135 fleet will require massive attention

—There is no planned strategic bomber replacement on the horizon

— In regard to close-air support, the AV-8B Harriers are set to retire, and there is no replacement for the A-10 in the works

A Challenge Among Challenges

"The Air Force effectively is the redheaded stepchild in the budget, just like the Navy is, in the Pentagon. They're just being completely constricted in their capabilities in order to permit DoD officials to deal with what you have to do for Army and Marine Corps ground forces in Iraq and Afghanistan.

"When it comes to money for the Pentagon, we've got to replace everything with a wheel and a wing on it that is currently in theater. What's that going to cost us? Eight hundred billion? A trillion dollars? We've got a military that's at war and a country that's not at war. We don't have an industrial base that's at war either,"

- Although sensational in its scope, this quote underlies the uncertainty lawmakers and uniformed leaders face in addressing airframe readiness and

budget issues. If Tauscher's comments are only half true the consequences for budget and platform availability could be grave in the period of only four or five years.

Combat Air Power War Footing Puts Airframes Into Unknown Fatigue Territory

- Combat intensity in Iraq and Afghanistan has resulted in dramatic increases in sorties and hours flown for attack, tanker and airlift fleets

- Tanker sorties climbed from 12,787 in 2006 to 14,613 in 2007, with the number or receivers moving from 42,083 to 73,174 in the same timeframe

- For airlift fleets, the marked increase comes in the forms of supplies airdropped, with 2 million pounds in 2005 climbing to 6.7 million pounds in 2007

-The steep rise in Close Air Support sorties with delivery of a major munition reflects the realities on the ground in Afghanistan as well as a more aggressive U.S. force posture. CAS sorties by their nature require maneuver on ingress and egress; there are substantial stresses on the airframe in certain parts of this flight envelope

Key Topics Covered:

- FSC 1560

- McDonnell Douglas

- The Boeing Company

- Northrop Grumman

- Sikorsky

- L-3

- Bell Helicopter Textron

- Lockheed Martin

- Rohr Incorporated

- Amfuel Cells and Coated Fabrics

- Cyclone Aviation Products