Defense Articles

The Defense Acquisition Regulations System (DARS) Directorate launched the first phase of Procedures, Guidance and Information (PGI), enabling the Department of Defense to more rapidly communicate internal administrative and procedural information to the acquisition workforce. As an online resource, PGI serves as a companion to the Defense Federal Acquisition Regulation Supplement (DFARS) to help acquisition professionals more effectively and efficiently do their jobs. Further, PGI will rapidly assist the acquisition community by providing DoD internal procedures and other information not requiring implementation in the formal regulation.
“The PGI site was actually born out of an initiative to redefine and better focus the content of DFARS,” says Ron Poussard, deputy director of DARS. “However, it has really evolved into a solution for rapidly communicating DoD policy and guidance.”

Historically, DFARS contained both mandatory and non-mandatory acquisition procedures, guidelines, and best practices. DoD recently decided the DFARS should focus only on:

* requirements of law

* DoD-wide policies

* delegations of Federal Acquisition Regulation (FAR) authorities

* deviations from FAR requirements and policies

* procedures having a significant effect beyond the internal operation of DoD

* procedures having a significant impact on the public.

PGI will be fully implemented in two phases. The first phase primarily encompasses the non-regulatory coverage removed from the DFARS. In the future, DARS plans to rewrite PGI in non-regulatory language and to create additional content on specific topics of interest to users. The second phase adds:

* training resources

* supplemental background

* reference information to the Web site.

Logistics Health Inc. announced Tuesday a tax credit package from the state that could effectively double its La Crosse workforce.

The company will receive a tax credit for every new job created, up to a total of $1.75 million, LHI Chairman and CEO Don Weber said.

That, coupled with an expanded federal contract, could mean 350 additional jobs in La Crosse, Weber said.

He hopes the company will employ about 1,000 people within the next few years.

With the state’s investment, LHI could increase the local tax base by $19 million, Gov, Jim Doyle added.

“We are going to return, many times over, that investment to the city and the taxpayers,” Weber said.
The expanded U.S. Department of Defense contract has the potential to take them from the minor leagues to the majors, Weber said.

“It’s not because we’re one of the larger contractors,” he said. “We got this contract because our employees stepped up for six years.”

Details on the defense contract remain under wraps, he said, but could be available this week.

About 80 percent of LHI’s employees are between the ages of 20 and 40, and 38 percent are graduates of one of La Crosse’s three higher education institutions, he noted.

“The challenge is going to be find the talent to grow it here,” Weber said.

The medical records management company was founded in 1999 with about 12 employees.

Its current headquarters at 328 Front St. S. opened in 2006, and a second building now is under construction along the riverfront, It’s possible LHI could grow into a third building by 2009, Weber added,

Once the second LHI building begins operation, the combined contribution to the local tax base will be about $30 million, Mayor Mark Johnsrud said.

After years of cutbacks, work on major defense programs such as the F/A-22 Raptor and the F-35 are bringing much-needed job growth to Southern California’s aerospace industry. (Both have Lockheed Martin Corp. as their prime contractor.)

In Los Angeles County, an estimated 2,200 new aerospace jobs will be created this year, bringing the total to 108,600, according to the Los Angeles Economic Development Corp.

That’s nowhere near the 1986 peak of 289,900 jobs. But it does mark the first year-to-year increase since 1996-1997.

“Aerospace-defense is back but in a different way,” said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp. “We’ve lost most of the assembly lines. But in terms of subcontract work and advanced research and development, we’re still incredibly strong.”

Industry shift

L.A. is no longer a hub for prime contract work on military aircraft. The C-17 and smaller Global Hawk unmanned aerial reconnaissance plane are the only two planes assembled here. The 13,000 workers that once toiled on Northrop’s 21 B-2 Bombers in Palmdale has dwindled to 1,000 maintenance workers.

But after fighter jet programs by Lockheed Martin in Burbank and Rockwell International in El Segundo dried up, what remained were research facilities: Cal Tech, the Los Angeles Air Force Base, NASA’s Jet Propulsion Laboratory. In Palmdale, Lockheed Martin’s Skunk Works and Boeing’s Phantom Works also were kept on.

The decade-long transformation into an R&D hub has shown dividends.

“It’s hard to say somebody planned it,” said Philip Coyle, a senior advisor for the Washington-based Center For Defense Information, a research and policy group. “It just evolved that way. It’s the result of decades of investment in defense science and technology.”

Since the Sept. 11, 2001 terrorist attacks, there’s been a massive increase in defense spending — $382.2 billion for the year ending in September 2003 vs. $328.9 in fiscal 2002.

For political reasons, defense program work is notorious for being spread out across the 50 states. But other factors have given Los Angeles an outsized share of the pie, offsetting losses on the commercial side of the business.

One factor is the presence of Northrop Grumman, the major defense player that’s been winning significant roles in virtually every new defense program.

The other is an infrastructure that, despite lean times, never really went away.

“There’s a unique aerospace manufacturing capability that exists here in the Southland and always has,” said Gene Price, chief executive of Brek, which draws 70 percent of its $24.8 million in annual revenues from defense and aerospace work.

“Most of the service-related support services — painting, parts processing, metal cutting, metal forming — is here. If my company was in Nevada or Arizona, I’d have to come to L.A. because those types of services are not readily available there,” Price said.

The Raptor will employ 250 L.A.-area subcontractors and suppliers, accounting for 65 percent of the plane’s contents.

Plans call for 18 Raptors to be constructed this year, up from seven last year, while the first Joint Strike Fighter test model will begin production by the end of the year while systems engineering and design work is in full steam.

Defense spending on aerospace production and research, concentrated in Georgia, Florida and Alabama, accounts for $8.7 billion of the $20 billion in military contracts awarded to the region as a whole. Rather than creating new jobs, however, these contracts will mostly serve to retain jobs.

Technology and communications expenditures could breathe new life into the struggling high-tech industry, which is especially important in Florida. Information technology, biomedical technology, modeling, simulation and training industries, and plastics industries have “attained critical mass” there, according to Business Florida, along with the aviation, aeronautics and defense industries. Aviation and aerospace industries alone generate more than $15 billion in annual sales in Florida. According to one research study cited in the Real Estate Journal (published by the Wall Street Journal), technology-related jobs account for $16.8 billion in wages annually, far outstripping the impact of tourism, which provides $9.6 billion each year.

In Tennessee, a state hard hit by the waning domestic apparel industry, an infusion of more than $1 billion in defense contracts to 2,000 companies will be a significant help. Apparel employment there has halved since 2000.

Contractors across the region will benefit from construction stimulus. In 2001 the Southeast received $1.7 billion of the $10.5 billion allocated for military construction in the nation as a whole. Analysts expect spending on military construction to increase slightly each year through 2005, helping to offset regional downturns in commercial construction that threaten to continue throughout 2003.

In addition, a 4.4 percent pay increase for armed services personnel will add to discretionary income and boost retail spending.

Defense spending remains important in the Southeast

The Southeast, which claimed about 16 percent of the nation’s direct expenditures for defense in 2002, has historically relied on military spending as an economic spur. In 1996 the Southeast was the third-largest regional recipient of defense contracts, behind only the Western and Mid-Atlantic states.

Cuts in defense spending in the late ’80s and early ’90s compelled manufacturers to turn military capacity toward civilian production. For example, global positioning systems have been widely adapted for civilian use in navigation and agricultural equipment, some shipyards building naval vessels turned to producing pleasure boats, and some airplane manufacturers producing military planes switched to making corporate jets. While the orientation of traditionally defense-oriented industries shifted, the clusters of technological expertise and skilled labor remain intact and have drawn defense contractors back to the region. Georgia in particular has benefited, moving from eighth nationally in the amount of defense contract dollars received in 1996 to fifth in 2001. Florida moved from fifth to fourth in 2001.

Although Louisiana, Mississippi, Alabama and Tennessee receive considerably fewer defense dollars than Florida and Georgia, military spending is nonetheless an important factor in these states’ economies.

Aviation struggles despite defense demand

The Lockheed Martin plant in Marietta, Ga., one of the region’s largest benefactors of defense spending, landed a $4 billion contract to produce 40 C-130J aircraft for the Air Force and 20 KC-130J aircraft for the Marines. However, the six-year contract will not produce any new jobs at the plant; rather, it will ensure that the plant’s 7,000 employees retain their jobs, according to a Lockheed spokesperson.

The story is similar to what’s going on elsewhere in the nation. Setbacks from the combined effects of terrorism and SARS as well as curtailed travel during the war with Iraq have cut commercial aviation production dramatically. Companies that would normally expand their facilities and workforce in response to the added demand of defense contracts currently have excess capacity. So instead of adding employees, the defense business is helping to forestall layoffs and shutdowns by contractors.

Boeing’s contract to assemble a missile interceptor in Huntsville, Ala., will also help maintain the status quo, providing jobs mostly for its existing employees. The Arrow 2 interceptor, developed jointly by the United States and Israel, will be produced along with the earlier Avenger system. Although Avengers are still being manufactured for export, demand is flagging. Thus, Arrow 2 production will fill the gap. Boeing employs about 2,600 people in the Huntsville area on various NASA and military projects.