Navy modernization, security, COTS trending at AFCEA West

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February 28, 2017

Every month the McHale Report will host an online roundtable with experts from the defense electronics industry ? from major prime contractors to defense component suppliers. Each roundtable will explore topics important to the military embedded electronics market. This month we discuss trends in U.S. Navy commercial-off-the-shelf (COTS) procurement trends, Navy computing requirements, and market outlooks with rugged computing exhibitors from the AFCEA West show in San Diego this month, which attracts a number of U.S. Navy attendees.

This month’s panelists are: Jason Wade, President, ZMicro; Mike McCormack, President of Chassis Plans; Ben Sharfi, CEO of General Micro Systems; and Robert Haag, Vice President of Sales and Market of Crystal Group.

MCHALE REPORT: The AFCEA West show, held earlier this month in San Diego, has a strong U.S. Navy presence. What military design trends did you see at the event? What was the buzz?

WADE: There’s a definite uptick in the attendance of the show participation. There seems to be a lot of excitement about what’s going in the Navy. You can tell that the Navy is putting forward a much stronger focus and emphasis on support of IT and security and that was definitely a theme that we picked up on.

Just on an aside, military software has historically been a functional software with a sort of bare bones user interface. So, it’s interesting to see companies at the show that are bringing the design approach into it. They’re bringing in the usability that people are expecting from an everyday iPhone experience into, for example, the situation room.

MCCORMACK: Security is very important, especially at the server level where you see zero client technology being so popular. In a way it’s retro back to the time when the big “dumb” terminal units ruled the market in the 70s and 80s. Today the zero client’s are essentially “dumb” terminals that mirror what is on the server, but they are totally secure as nothing is stored on them, so no data is at risk of falling into enemy hands or the ability to download on a thumb drive, making them very popular for secure tactical operations. They are as secure as the network they plug into.

The Navy and the U.S. government, as a whole, also want systems made in the U.S. for security, traceability, and export requirements. They are not going to get that type of assurance from parts that originate in Taiwan or China.

SHARFI: What I’ve seen at the show is a lot of naval communication network solutions, mass storage solutions, and secure networking, which has become a big issue.

HAAG: At AFCEA West, we were party to an increasing volume of "we need smaller, lighter weight, more processor intensive" capability conversations. As an example, we were pleased that our carbon fiber embedded and rack mount products received a lot of customer excitement as we demonstrated significant weight savings in many of our products. As the U.S. Navy continues to expand their communication, weapons and capability global needs, it was also clear that worldwide support and reducing life cycle costs continue to be focus areas for the Navy.

MCHALE REPORT: How do U.S. Navy requirements differ from those of the other services when it comes to electronics procurement?

MCCORMACK: The difference comes down to the difference in MIL-STD’s required for Navy ships that will not have the same shock and vibration requirements as other branches of the service. The Navy is also focused strengthening its cybersecurity in its deployable networks both for ships and Special Operations.

SHARFI: The big difference between the Army and Navy is that the Army is renewing everything, not just modernizing. Modernizing is retaining the basic chassis and basic equipment infrastructure architecture, while upgrading the processor. These are incremental upgrades and the Navy does a lot of them. For example, the chassis for the Navy Q-70 program, deployed 18, 19 years ago is still deployed, but the Navy has basically removed the old tech out of it, such as displays, storage, etc. and replaced it with modernized solutions.

While the Army is more into renewal, renewing taking out the old chassis/box and bringing in an entire new one – with new processor, new cabling, new everything. Due to budget constraints that have been well publicized recently, the Navy can’t afford to do that for most applications.

WADE: The Navy is different because a ship is a very different kind of platform than say a vehicle or aircraft in terms of area and power requirements. A ship is kind of its own portable city as it’s going around, so it’s able to set up and handle the infrastructure differently than other branches of the military because it has that the ability to create a kind of centralized IT. That’s not how other branches do it on airborne or ground-based operations because they can’t. Instead, they do a distributed network.

HAAG: The unique environment of vessel borne operations creates a challenge for Navy electronic procurement. These vessels operate autonomously at sea requiring systems to withstand harsh environments. Therefore, the requirements are very stringent regarding temperature, shock and vibration, humidity and mold for example.

MCHALE REPORT: How does the Navy approach COTS procurement compared to the other services?

SHARFI: It’s more about custom-off-the-shelf these days rather than commercial-off-the-shelf as customers rarely buy a product for defense applications without modifying it slightly for their particular mission or program. Some new programs, however, are getting away from slightly modified COTS as they go to a quarter or half ATR box, where nothing is a slightly modified standard. Instead, the small-form-factor (SFF) boxes we see getting deployed meet the program’s requirements for SWaP-C but are still considered by the DoD’s definition as ‘COTS,’ because they are being developed on the supplier’s nickel, not the government’s.

Often to fulfill COTS procurement requirements, primes will set up requirements for a particular application then go to a COTS supplier with their specs to build a product custom from the ground up. The supplier will then build it with their own money, and then offer it as a standard COTS product. Now, once that prime gets its contract, it has an open bid for the COTS solution. In this scenario, the vendor that developed the product using their own IRAD [internal research and development dollars] in hopes of winning the contract probably has a better chance of securing the contract. If they win the award, then the prime and the government have possibly “funded” COTS technology procurement. However, let’s be clear, the COTS vendor invested significant money up-front with no guarantee of success. Whether that is ok or not, I will leave up to the reader.

WADE: One way the Navy is different is that it’s a much larger purchase. Consider the CANES [Consolidated Afloat Networks and Enterprise Services] program, the Navy’s next generation tactical afloat network. They’re committing to large-scale purchases so that they can achieve lots of commonality across their ships. So, the purchases are significantly larger. Typically, the Navy wants to have common architectures as much as possible throughout programs. Whereas other branches of the military are more program-centric, i.e. one program will use one set of equipment while another program will use a different set of equipment. In contrast, the Navy may want everyone to use certain computers, so to establish a common platform they will have a program like CANES that purchases computers that will get deployed across all Navy programs. They had another program, CEDS (common enterprise display), where they selected the display and that went across the programs.

MCCORMACK: Within the Navy it is application driven. Some with extreme requirements might not use COTS, but for the most part when it comes to Navy rugged computing they leverage modified COTS, for example taking a company’s standard COTS product and tweaking it for a specific mission or program.

HAAG: The Navy attempts to procure common parts at the highest LRU (line replaceable unit) available. The expected result is to reduce the number of different LRUs in the supply chain. COTS items could be a whole system while other COTS items are components in a system. Unique requirements for shipboard operations do require developmental engineering to house COTS assemblies.

MCHALE REPORT: How do you see the U.S. Navy market and DoD market as a whole trending as we start 2017?

WADE: There is excitement about what’s going on in the industry and the start of the year. The buzz is kind of reflecting the increasing level of confidence in naval and military spending and there are new technologies that are emerging.

MCCORMACK: I think the climate is moving toward one of more investment in military electronics technology, which will be good for the economy. They need to allocate more funding just to maintain and sustain current programs and that is good for this industry. Everyone I speak with is busy and the current administration is forecasting an increase in the 2017 budget.

SHARFI: The market for military embedded computing and electronics is trending upward. One Navy program that is highly accelerated for new production in 2018 is the DDG-1000 [the Navy’s next-generation guided-missile destroyer]. Ships and destroyers are also coming in for retrofit, with the Navy moving forward more quickly on modernization than other services.

In the overall DoD market, we are also seeing increased activity in Army and Air Force Special Operations and manned/unmanned team programs. But the real money is in large ground vehicle procurements and always has been, which is why the JLTV [Joint Light Tactical Vehicle] program is so promising.

Going forward, the Trump administration will breathe new life into the DoD industry not only with increased procurement and research and development budgets, but with an increased focus on small businesses. I’ve been asked to sit on a Trump administration committee that will focus enabling small and medium sized businesses to be more involved in winning DoD contracts and in the long run creating more jobs. It’s an exciting time and General Micro Systems is thrilled to be a continued part of it.

HAAG: While we are still in a Continuing Resolution (CR) environment, we know the number of program starts is limited. That said, we still see growth in these markets as capabilities are expanded on current platforms and life cycles continue to expand on multiple DoD platforms. We will continue to partner with the U.S. Navy and our other DoD customers to help them limit end of life and obsolescence challenges while also investing in leading edge technologies required to support many DoD applications.