UAS payloads, radar best bets for military electronics market
"Uncertainty" best describes the current outlook for the U.S. military market, with the next president's positions still somewhat unclear, as is the nation's future defense outlook.Regardless of inertia or doubt in Washington, military program managers and industry engineers must continue to keep the current defense electronics systems in air, ground, and sea platforms running efficiently to ensure continuing military readiness. Moreover, key radar, unmanned, electronic warfare, and other systems must still be modernized. All of this means that opportunities still exist for embedded electronics suppliers.
Sustainment environments in the Department of Defense (DoD) community mean there are few new programs demanding an avalanche of funding; most dollars are targeted to keeping the current systems running via upgrades/modernizations until more funding comes down the road. These modernizations – often for systems such as radar platforms; unmanned sensor payloads; electronic warfare (EW) systems; and command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR) – leverage open architecture designs, say market analysts in the defense industry.
“There have not been any big changes and there are definitely fewer platforms these days,” says Brad Curran, Aerospace and Defense Industry Principal at Frost & Sullivan, in an interview before the election. “The FY 2017 DoD budget request was not much different than the year before, where President Obama and his team kind of punted the ball down the field. My guess is that if Hillary Clinton wins it will be more of the status quo and a smaller force and if Donald Trump wins, we will see a pretty sharp spike in Special Operations forces, but will still overall have a smaller force.”
One area that looks to be steady with upgrades and new contracts is the military radar market. “For 2015 there were $2.50 billion in new radar contracts awarded with 64 new awards,” Curran says. “This is slightly down from the $2.95 billion awarded in 2015. So far in 2016, through August 15, $821 million in new military radar contracts have been awarded.”
Leading the way, as always, “in 2015 was Raytheon, which had $871.5 million in Army, Navy, and Air Force contracts,” Curran continues. “Lockheed Martin came in at $426 million in contracts, led by its Long-Range Discrimination Radar for the Missile Defense Agency and the Army’s AN/TPQ-53 radar. Northrop Grumman had $480.8 million in radar contracts in 2015 led by its G/ATOR [Ground/Air Task Oriented Radar] work and also the Counter-Rocket, Artillery, and Mortar (C-RAM) Intercept for the Army, which is a neat program as it helps combat small shells and also serves as a counter-unmanned aerial vehicle system. (Figure 1.)
“Boeing also won $340.6 million in 2015 contracts, with the biggest one focused on modernizing the radar systems for the entire F-15 fleet of aircraft,” he adds.
Radar, like many other application areas, is not receiving much research, development, testing, and evaluation (RDT&E) attention in the DoD’s FY 2017 budget request.
“While funding for radar has not been coming so much for RDT&E, there have been a number of service contracts awarded and there is still quite a bit of procurement happening,” Curran notes. “Raytheon continues to sell Patriot radars and is enhancing the Navy’s Relocatable Over-the-Horizon Radar. Harris also won a $70 million contract in May from the Navy to provide 42 COTS [commercial off-the-shelf] precision approach radar systems for the Army, Navy, and Air Force. Another interesting radar system in development is Lockheed Martin’s Silent Knight terrain following/terrain avoidance radar for Special Operations applications.”
China’s increasingly aggressive actions in the Asia Pacific region are also forcing U.S. military planners to take a look at upgrading their maritime missile-defense and radar capability.
“Another strong area for radar modernization is in maritime systems, as the U.S. looks to upgrade its missile-defense capability in the Pacific and that of its allies like Japan and South Korea,” Curran says. “The Navy also continues to modernize the Aegis Combat System in the fleet, as well as Aegis Ashore. The Navy wants to ensure that their ships in the Pacific can defend themselves against incoming anti-ship missiles.”
Radar outlook – long-term
“Looking ahead, how the U.S. deals with laser-based weapons, power-based weapons, and hypersonic missiles from a radar perspective will also be important as our adversaries develop these threats,” Curran says.
“A big decision will also have to be made fairly soon regarding the replacement of the Patriot radar, as it is getting pretty long in the tooth,” he adds. “There has been system development and incremental improvements to the current system, but some say – to deal with new technology and new threats – it will need to be replaced. It’s also not a guarantee for Raytheon that they will win the replacement contract, as Northrop Grumman and Lockheed Martin are going to look to make bids as well.”
“Radar modernizations are also opportunities for COTS suppliers, as you have to use COTS on signal processing capability, high-performance FPGAs, and now gallium nitride (GaN) technology, which is becoming essential on the RF and microwave side of radar systems,” Curran says.
Another military application area dependent on GaN technology and innovations in embedded signal processing is EW.
The total EW funding in the FY 2017 budget request increased to $3.75 billion from the FY 2016 DoD budget request of $2.9 billion, Curran says. “The total number of new contracts awarded for EW in 2015 was 61. In 2014, the EW segment was at about $2.75 billion, with 67 contracts.
“For EW operations, a good bit of funding still goes toward Cold War near-peer adversary operations,” he continues. “For example, whenever the Russians overfly U.S. ships they paint us [target the ships with their radar] and we gather electronic intelligence (ELINT) and signals intelligence (SIGNT) data from them. It helps us learn more about the capabilities of their new systems and update our countermeasures appropriately. Counterinsurgency operations are also being supported.
“I’d wish they’d spend a lot more on EW as our adversaries continue to enhance their own EW capability,” Curran says.
C4ISR and cyber
Another area seeing an increase in funding is also one embedded-computing companies serve – the C4ISR market and its increased emphasis on cyberdefense.
“I had C4ISR at $43.6 billion in the FY2017 budget, an increase over the $39.54 billion estimated in last year’s budget request,” Curran says. “One of the big increases was in Operations and Maintenance (O&M) funding for enterprise IT, especially for a defense healthcare network. About 15 to 20 percent of any enterprise network spending is also going to be for cyber – for cyber after the fact or to have more cyber included in a new program. But now the emphasis is shifting to securing networks to securing combat systems.
“The increase in cyber funding is unlikely to subside any time soon, as an inherent portion of enterprise networks for health care, logistics, administrative functions are still important to secure and then you have the additional contracts to plug any holes in these systems,” he continues. “Other DoD cyber applications that could be opportunities for commercial companies include cybersecurity for cloud infrastructures and big-data activities. Commercial encryption and cyber is nearly as good as most government technology, so most applications are perfectly fine to use for government-issued mobile devices.”
Software-defined radio (SDR) technology for military communications systems continues to move forward in development and in fielded equipment, though a bit more slowly than other application areas.
“A radio that can switch back and forth between multiple waveforms is still a goal the government is aiming for, even years after the Joint Tactical Radio System (JTRS) faded away and split up into other programs and nondevelopment items (NDIs),” Curran says. “The technology – SDR – is still too hard to do, so we have to lower operational expectations while continuing to make improvements. We recognize switching simultaneously between waveforms with small radios is not as easy as we thought. To maintain operational reliability, the U.S. is making sure they have separate sets for unique missions.
“Having said that, most of the SDR action today is with Harris and their Falcon family and the FlexNet from Thales,” he adds. “One thing for certain is that future radios will have a small-form-factor requirement, with an emphasis on reducing thermals to enable the use of more signal processing. I’m a fan of SDR and see it continuing to be an investment for the U.S. military.”
Analysts at Technavio in Elmhurst, Illinois, also see increased requirements driving the global military mobile-computing systems market over the next five years. They forecast the market to grow at a CAGR of more than 7 percent by 2020.
“The military avionics market has been kind of quiet with few new starts hogging the attention and most of the money – to be blunt – being spent on the F-35 Joint Strike Fighter,” says Wayne Plucker, Aerospace and Defense Director at Frost & Sullivan. “The market has had small negative CAGR even with most spending going toward the F-35.
“When it comes to avionics upgrades, the modernizations that are ongoing are not the wholesale kind of modernizations we’ve had in past,” he continues. “They are more minor tweaks than anything else. And that is one way of saving money – to temporarily bite the bullet and upgrade only a certain number of systems now, essentially holding your fire until more funding becomes available downstream.”
Rockwell Collins and Honeywell are still the leading providers of military flight avionics systems, “but there are a myriad of other computing elements on these aircraft such as mission computers for managing the ISR data on aircraft such as the P-8,” Plucker states. Companies such as BAE Systems, Thales, CMC, and GE Aviation contribute in this area as well as in flight systems, he adds.
U.S. military unmanned aircraft funding
While the commercial unmanned aircraft system (UAS) market gets most of the press attention these days, with the Federal Aviation Administration (FAA) opening up portions of the national airspace to these aircraft, the military market has been more of a sustainment market focused more on payload designs than on new platform designs.
“The market right now is mostly one of sustainment as certain programs like the MQ-9 and the MQ-1C are dropping off in terms of production,” says Mike Blades, Aerospace and Defense Senior Industry Analyst at Frost & Sullivan. “Meanwhile, the Triton MQ-4C is still in steady production. Then you have Unmanned Carrier-Launched Strike and Surveillance (UCLASS) aircraft going away and essentially becoming the Carrier-Based Aerial Refueling System (CBARS), which will have similar RDT&E funding levels to UCLASS but be pushed further to the right with regard to spending years.” (Figure 2.)
The DoD’s funding plans bear this out: “Based on the most recent DoD budget request, FY 2017, U.S. spending will be at about $4 billion for 2015, growing to $6.25 billion by 2021, with a CAGR of about 7 percent,” Blades continues. “So we can’t ignore a program that size, even if there is a chance it could be another totally manned bomber. If not for the B-21, the U.S. military unmanned aircraft market would be fairly flat through 2021, as the $2.5 billion increase we see by 2021 is all due to B-21. The B-21 is slated for just over $3 billion in RDT&E funding in the FY 2017 budget. These market totals aren’t just platforms, but also include sensors, subsystems, and aircraft support and maintenance funding in the full estimate.
“Many of the smaller aircraft still being built are replacements for those lost in battlefield operations or those that have already flown their maximum amount of sorties and are being used for training in guard units,” Blades says. “Where you will see growth at the platform level is with the small or micro UASs, but there are not a lot of official programs of record in this unmanned aircraft class. You will see a lot of funding going toward tactical small- and micro-UAS platforms that have medium-altitude long-endurance (MALE)-type capabilities and enhanced sensor payloads.”
“Unmanned aircraft funding today is targeting the payloads more than the new airframe designs,” Blades says. “It is better and more cost-effective to upgrade the sensor payloads. Whatever may be the platform, the important thing is not flying 30 to 40 hours, it is about increasing the capability of the sensors.
Other analysts also see the sensor payload market as a bright spot. Markets and Markets analysts in Vancouver, Washington, say they estimate the unmanned aircraft payload market’s value at $3.63 billion in 2016, and are forecasting it to reach $7.72 billion by 2021, at a CAGR of 16.25 percent between 2016 and 2021.
“From what I know that number is not outrageous,” Blades says.
“With any military platform, the smaller you get, the more the percentage of that platform is taken up by payload,” Blades explains. “The payload consists of sensors, SATCOM [satellite communications], and data links and with the small ones you’re talking about half the cost of a UAS. Even with large platforms, it applies proportionally. If you take the MQ-9 Reaper, 25 percent of it is payload – that does not count the ground-control station or extraneous equipment. For the Army Predator, about 20 to 25 percent is payload.”
The question remains whether to process the payload sensor data on board the aircraft and then send it down, or to send the data down first. “The problem with sending the data later is that the data links are not capable of handling all the data being generated,” Blades says. “Then when you scramble data and encrypt it, even more space is taken up. A solution to this bottleneck remains elusive. Optical data links, while wide, have to be line-of-sight, as the atmosphere can interrupt the link.”
Who is best poised to grab the opportunities in sensor payloads?
“COTS and open architectures are growing in unmanned circles, but there will be areas that are proprietary for classified,” Blades says. “I think the bottom line goes back to cost. For sensor payloads today, you need embedded computing on the front end and the back end; there are many companies that can build that capability, but the best will enable that capability in a way that costs less money.”
Over the last few years, the military-vehicle electronics, or vetronics, market has been the most quiet area of the DoD budget. The recent Joint Light Tactical Vehicle (JLTV) award to Oshkosh Defense did add some minor excitement to it last year, however. (Figure 3.)
“The military vetronics world is still quiet, even with the JLTV being alive and well,” Plucker says. “There is still refurbishing going on for Foreign Military Sales and also upgrades happening, based on lessons learned in battle. We took some platforms in Iraq that we were able to make adjustments to in the field, but some need long-term fixes such as enhancements to situational awareness and improvement in power distribution.
“There are also some vehicles that will never be retrofitted, as they’ve been worn out, but there are some lightly used platforms that may have be around for many years,” Plucker continues. “Stryker [armored combat vehicle] is a good candidate to last, as it probably has better legs than some other vehicles. Much of the work on military vehicles is low-level right now, as the revenue in this market segment is barely moving. Realistically, until the next president takes office and sets an agenda with a new Congress, we won’t get a clear picture on ground-vehicle funding.”
“The JLTV getting life was a surprise to some and is kind of a neat opportunity,” Plucker says. “It’s just that the JLTV won’t be a target-rich environment for the proliferation of computing systems because it’s the jeep of the military world. As we start using the JLTV for special missions and such, we will see folks like DRS and BAE Systems having more to do in this area. But the initial JLTV investments will be to see if the vehicle works properly.”