Electronics funding for radar, electronic warfare, C4ISR continues to riseStory
August 27, 2018
The defense market for embedded electronics designers continues to be a growth area. While increased use of commercial off-the-shelf (COTS) technology has lowered the cost and therefore the spending in unmanned systems, it is fueling more innovation, especially in small platforms.
The first two years of the Trump administration have seen greater investment in the Department of Defense (DoD) budget, especially in the area of research, development, test, and evaluation (RDT&E), which means more dollars focused on improving U.S. capability in radar, electronic warfare, cyber, C4ISR [command, control, communications, computers, intelligence, surveillance, and reconnaissance], and unmanned aircraft.
According to market analysts from Frost & Sullivan (www.frost.com) these applications are still excellent bets for designers of embedded hardware and software, with growth projected over the next five years as the DoD increasingly leverages open architectures to ease modernization and reduce the long-term life cycle costs of electronics.
Radar continues to be the hottest growth area for military electronics, especially with modernization efforts.
“In 2017, 65 new prime contracts were awarded for a total of $5.97 billion to 19 companies, with Raytheon leading after receiving $2.76 billion in contracts, with their largest being worth $1.5 billion for the transportable radar and sea-based band radar in the same contract,” says Brad Curran, Industry Principal, Aerospace & Defense, Frost & Sullivan. “Joint programs led the highest contract value in 2017, with five contracts totaling $1.98 billion led by ground- and sea-based missile defense. Next is Lockheed Martin, which received $1.8 billion in 2017, the largest being $1.58 billion from the Army for the AN/TPQ-53 Counterfire Target Acquisition Radar for low-rate initial production (LRIP). This radar is for Counter-Rocket Artillery Mortar (CRAM) systems.
The 2019 DoD budget request echoes this data: “It calls for 57 radar line items totaling about $3.70 billion,” Curran continues. “New platforms, repairs, and already programmed replacements/upgrades mean that radar spending will be even higher. Acquisition priorities are covering improvements to proven equipment, new build platforms, modifications, and replacement systems.
“RDT&E is the largest category, with $2.07 billion,” he says. “Procurement is at $1.63 billion, with new platform builds of all types coming on line and current equipment is being upgraded and replaced. The Navy/Marines have largest share of funding at $1.47 billion, due to investments in ship self-defense systems and G/ATOR ground air defense/surveillance/control radar. The Navy also benefits from jointly funded missile defense programs.”
Staying competitive with adversaries in defense funding such as China and Russia is paramount for U.S. forces.
As a result, “R&D funding is being directed toward sensor fusion, open architectures, wideband millimeter wave, nonjammable, high-angular-resolution moving target indication, ground penetrating, and Next-Generation Over The Horizon radars,” Curran says. “Also being developed is cognitive radar, which is based on knowledge-aided computer processing. This solution will enhance detection and target ID in the crowded frequency spectrum and the complex interference and clutter environment.
“Going forward there will be fewer platforms of all types,” he continues. “Future buys will look away from high-end platforms toward proven and reliable designs that afford maximum jointness, mission flexibility, and the capability to be quickly and easily upgraded and integrated as COTS technology matures. Reduced spending growth rates, cuts for immature technologies, and less RDT&E all mean more COTS.” For more on radar from Brad Curran view a webcast titled “Next-Generation Military Radar – Tech Outlook,” here: http://ecast.opensystemsmedia.com/814.
Missile defense radar
“Missile Defense Agency (MDA) contracts are focusing in 2018 on how to track hypersonic weapons with sophisticated radar,” Curran says. “So far this year, there are 38 contracts totaling $3.1 billion, with the biggest one again going to Raytheon for the Patriot Missile System upgrade. The Air Force awarded InDyne (Sterling, Virginia) $417 million for the Solid State Phased Array Radar System (SSPARS) for operations and maintenance.
“Under RDT&E funding, the MDA awarded Raytheon, Lockheed Martin, and Northrop Grumman $4.1 billion over five years to provide autonomous acquisition and persistent precision tracking and discrimination technologies,” he adds. “This goes back to the hypersonic missiles threat from China and Russia. The DoD is tracking so much data more quickly than ever before so they want software that can help make those discriminations for predictive ballistics, track where the missile came from, see where it’s going, and shoot it down.”
“For electronic warfare (EW) applications, there were 58 contracts awarded in 2017 totaling $2.7 billion,” Curran notes. “These included tech such as RF countermeasures, infrared countermeasures, etc. While ground-based EW funding dropped off, naval applications really picked up. For example, the Navy AN/SLQ-32 electronic warfare upgrades under the Surface Electronic Warfare Improvement Program (SEWIP) Block 2 netted Northrop Grumman about $566 million as the leader for 2017. Harris and Lockheed Martin were next, as each got $240 million then Sierra Nevada was fourth with $235 million. Lockheed Martin also has funding for AN/SLQ-32 upgrades totaling at least $100 million.”
It’s not all Raytheon and Lockheed Martin, however, as “BAE Systems also received funding for their radar warning receivers, commonly known as fuzz busters,” he continues. “In total, there are 18 companies getting prime EW contracts, most involving many components. RF countermeasures totaled about $1 billion over 32 contracts.”
“The total for C4ISR systems is about $73.1 billion for 2017,” Curran says. “The reason that it’s higher is because I included combat systems, such as the Aegis system, as well as other ground- and sea-based missile defense content. I also included the Army’s $8.2 billion contract for Chemical, Biological, Radiation, Nuclear, and Explosive (CBRNE) solutions that are detection-based to stop terrorists, for example. It is a huge contract, with about 178 bids received.
“The Army also has a contract for $7.4 billion to a variety of companies, that’s five years, at $1.48 billion a year to provide knowledge-based services for C4ISR-related requirements,” he continues. “They are looking to get their C4ISR in order to improve survivability, especially after Russia demonstrated its capability in the Ukraine to coordinate EW systems with artillery attacks. That was deeply concerning for all U.S. forces. That big chunk of funding will help make sure all U.S. C4ISR systems work together and ensure that we have options. They need to better manage the frequency spectrum, vastly improve EW capability, and move toward integrating RF and EW into a new form of digital attack operations.”
Growth is modest compared to other years. “C4ISR has a CAGR of about 3 percent, with about 1,232 new prime contracts awarded in 2017,” Curran says. “The CAGR is lower because there is a push to buy more commercial technology that reduces cost, such as COTS hardware and software, cloud computing solutions, mobile networks and devices of all kinds, etc. At the same time, the DoD is also improving capability on the enterprise side, which leverages commercial computing technology and cybersecurity.
“Within the FY2019 DoD budget, C4ISR funding totaled about $41.2 billion with 636 line items,” he continues. “This is for nonclassified content, of which a good portion will go to the new B-21 bomber. So if you add classified, you get to about $67.3 billion.”
“Cyber is a different category and harder to measure,” Curran says. “In 2017 we saw $3.7 billion spent on cyber outright, but that is not exactly accurate, as all enterprise solutions, C4ISR line items, have about five to ten percent of their funding spent on cyber. Cyber is across everything.”
Unmanned aircraft growth has slowed some for the larger platforms due to many being built out and because of more effective use of COTS technology.
“For military unmanned aircraft I have about 3 percent CAGR, but that does not include the 2019 budget OCO which could add another 2.7 percent,” says Mike Blades, Research Director, North America for Frost & Sullivan. “The unmanned systems market is becoming more cost effective as the technology – electronic payloads and smaller drone aircraft – are coming down in price and in size. DoD wants smaller logistical footprints that can stay longer in the air for persistent surveillance missions.
“Reducing labor costs also factor into this trend,” he continues. “For example, it takes nearly 150 Combat Air Patrol personnel to maintain several (three to four) MQ-9 Reaper aircraft, from the launch and recovery crew, takeoff and landing operators, the analysts, etc. Going with smaller drones with smarter onboard technology can greatly reduce labor costs.”
Procurement may have slowed but RDT&E funding has increased. “Research funding is also being pumped into solutions such as MUM-T [manned/unmanned teaming], AI, drone swarming, data links, etc. Reduced SWaP with added capability factors into all of these,” Blades says. “RDTE funding for unmanned aircraft nearly doubled to $4.2 billion, while procurement dropped slightly, from $2.85 billion to $2.1 billion. Of the $6.28 billion requested, about two-thirds is for RDT&E. One caveat with the increased RDT&E funding: Much of it is taken up by the B-21 bomber. R&D is increasing, as a lot of platforms are already decided upon.
“While it’s not exactly a build-to-spec environment for industry, the funding is trending more toward RFPs where a little money is given to several competitors to build something to test against each other – with the winner getting the contract. Essentially, pick a few finalists and then have a fly-off,” he explains.
Nano and micro UASs
“Nano and micro unmanned aerial system (UAS) platforms are getting more attention for missions such as personal reconnaissance (one troop or small group),” Blades says. “Urban environments and loitering munitions or LMAMS are ideal applications for this type of platform. An example of a nano drone would be the Black Hornet helicopter from FLIR Systems. [Editor’s note: FLIR acquired the 1.3-kilogram UAS designer Prox Dynamics (FLIR) in 2016.] (Figure 1.)
Figure 1: (BlackHornet PRS) The Black Hornet PRS from FLIR Systems provides the nonspecialist dismounted soldier with immediate covert situational awareness, according to FLIR Systems.
“The DoD is also looking to leverage current small UAS capabilities across platforms and across applications such as having the small Black Wing UAS shoot from a submarine,” he notes. “Raytheon also has a cool sensor they shoot into hurricanes and are now developing into LMAMS.”
“One program focusing on nano drones is the Soldier Borne Sensor, an Army program with about $25 million in funding,” Blades adds. “SBS plans to procure more than 1,000 nano drones in 2019. Nano and micro drones really have no clear definition. I suppose a nano/micro category would be less than two kilograms.”
“The Global Hawk is still flying missions and getting upgrades due to the Broad Area Maritime Surveillance (BAMS) mission,” Blades says. “Combatant commanders have them and don’t want to give them up. In the FY 2019 request there was $71.6 million for BAMS D upgrades – that’s for four aircraft. BAMS is a specific type of Global Hawk that only account for 4 platforms. There are millions more in upgrades to the overall Global Hawk program.
“The DoD sees a need to extend manned aircraft platforms for decades, with rumors swirling that they want the B-52 to last a century,” he says.
FMS and unmanned
“Regarding Foreign Military Sales (FMS) for unmanned systems, it’s hard to forecast due to an inconsistent trade policy and price concerns,” Blades says. “As the trade policy keeps fluctuating, it makes it difficult for friendly nations to get drones.
“There is also an affordability challenge, as many countries feel the U.S. platforms are too expensive and foreign competition is getting better,” he explains. “While a Russian or Chinese system may only be 80 percent as effective as the U.S. aircraft, that becomes acceptable if the price is low enough. NATO countries are becoming motivated to develop their own capability in-house to save money and avoid the trade challenges.”
The U.S. is making some efforts to ease the acquisition process in this case. “One thing that may help is a change in U.S. policy that in effect changes the speed requirements so that drones are labeled as missiles, making it easier to acquire U.S. drones in that category,” Blades notes. [Editor’s note: This comes under the U.S. Department of State’s Missile Technology Control Regime (MTCR) Category 1 that lumps together missiles and drones. The change would essentially lessen restraints on drones that don’t fly at missile speeds.]
“There are going to be more opportunities for FMS sales, but no guarantee as to who will get them,” he says. “It boils down to cost and opening up the trade policies with friendly nations.”
“Sales for the counter-UAS market for 2018 is at about $400 million to date with disclosed U.S. government contracts,” Blades says. “It could likely near $1 billion as we are two thirds through the year.”
For extensive information on the counter-UAS market, listen to the McHale Report podcast with Mike Blades titled “Deciphering the counter-UAS market:” http://mil-embedded.com/8490-podcast-deciphering-the-counter-uav-market/.
“There are interesting innovations being developed for counter-UAS operations such as laser weapons or high-power microwave counterweapons that essentially fry the drone’s electronics,” he continues. “In some scenarios, you don’t want to shoot at it in case it is laced with something and will blow up. Military counterdrone solutions – The Blighter/Liteye AUDS and CACI Skytracker are two examples of this – look for multiple ways of mitigation.”