By Marjorie Censer, Inside Defense
March 14, 2017 -- The chief executive of Leonardo DRS says the competition to provide the Air Force’s next-generation trainer showcases the increased globalization of the defense industry.
Bill Lynn, who also previously served as deputy defense secretary, told Inside Defense last week the T-X trainer program represents a major opportunity for Leonardo DRS, the U.S. subsidiary of Italian company Leonardo.
Leonardo DRS last year announced plans to partner with Raytheon on the program, but the pair backed out in January. Shortly after that announcement, Leonardo DRS announced it would participate solo, pitting the company against Boeing, teamed with Swedish company Saab, and Lockheed Martin, partnered with Korea Aerospace.
Leonardo DRS’s trainer proposal is based on the Aermacchi M-346 trainer, which Lynn described as a "proven system."
"We think, with the structure we now have with the bid, that we can meet the Air Force's desire for low cost," Lynn said in an interview from Leonardo DRS’s Crystal City office. "It's a more streamlined bid, there's no question. There's fewer layers, less overhead."
He said the unexpected teaming changes mean the company has to move faster -- but he doesn’t foresee a problem.
"We have to put together the bid in less time than we would have had originally, but at the end of the day, you have to put together a compliant bid and hit March 30, and we think we can do both," Lynn said.
He said the program would be sizeable for Leonardo DRS. "It's larger than anything else we have," he said. "It would change Leonardo's profile in the U.S. -- there's no question."
Lynn also argued the competitive field pursuing the T-X reflects the increasingly international nature of the defense industry.
"All three of the major competitors in the T-X have foreign-sourced technology," he said. "We're going to build that plane and the engines and everything else in the U.S. It's American jobs, but, to get the best technology, you've got to look more broadly, globally."
At the same time, Lynn added, defense contractors are increasingly pursuing commercial technology for the same reason.
"To be successful in the defense market means bringing the best technology to the military," he said. "If that technology's coming from the commercial sector, you have to figure out how do I gain access to that technology and then integrate it into my military products. . . . This is a five- or 10-year trend, not a 12- or 18-month trend."
Yet, Lynn said the commercial market has proven challenging for the industry.
"It does not look like our market," he said. "We have to figure out can we adapt or how do we adapt or do you not adapt, do you team with somebody in the commercial market?"
He said Leonardo DRS is seeking to fund its own research, but is also looking to outside partners. The company last week announced it will buy Daylight Solutions, which makes quantum cascade laser products, for $150 million.
"The integration of laser and sensor systems developed by the two companies can be used in a variety of dual-use applications, including aircraft survivability products and medical and industrial applications, including imaging for cancer diagnostics and chemical detection," Leonardo DRS said in its announcement.
"They have a significant defense business but they also have a scientific and medical business," Lynn said of Daylight Solutions. "This is one of these crossover technologies, so we see that that brings both sides of the equation into DRS."
He also told Inside Defense he expects the defense industry to benefit from increased defense spending.
"I think we're definitely going to see growing defense budgets," he said. "I think we troughed . . . in 2015, and we've started back up. I think the big issue, more than the numbers, is: Can we succeed in repealing the Budget Control Act?
"I think that that has been an inhibitor to the numbers, but, more than that, it makes it very difficult for the Department of Defense to do long-term planning because you've been adjusting on a one- and two-year basis," he continued. "So it's hard to look out three, four and five years, as you need to with longer-term modernization programs, and then that has a second-order impact in industry because it's hard to make [research and development] investments if you don't know where your principal customer is going."