Analysis & Reports

USS Wichita is undergoing maintenance and modernization at BAE Systems’ Jacksonville Ship Repair facility after a significant mechanical breakdown. The U.S. Navy has awarded a $49 million contract for repairs, with completion expected by May 2027. This follows a Class A mishap in October 2022 and a previous proposal to decommission the ship, which Congress blocked. The vessel is involved in counter-illicit trafficking operations in the Caribbean.

European NATO members are accelerating military spending and expanding armaments to address defense gaps left by the U.S. ahead of the NATO summit in Ankara on July 7-8, 2023. Leaders are attempting to reassure the U.S. of their commitment to NATO amidst concerns over reduced American military support. The summit will highlight that European nations have filled most defense gaps, although strategic bombers remain a critical shortfall.

Congress is currently debating the Take Care of America’s Veterans Act, which includes over 60 bills aimed at expanding benefits for veterans while proposing changes to disability ratings for sleep apnea and tinnitus. Despite support from 23 veterans service organizations, concerns persist regarding potential reductions in future benefits. Lawmakers are divided on whether the proposed changes will cut disability payments for veterans.

China's People's Liberation Army Air Force (PLAAF) showcased dozens of Y-20B heavy transport aircraft during military exercises in 2023. The Y-20B, the largest transport aircraft globally, participated in refueling exercises with J-20 stealth fighters and simulated air-drop missions. This development highlights China's advancements in military logistics and airlift capabilities, with the Y-20B featuring new WS-20 engines that improve performance and production rates.

Defense Secretary Pete Hegseth consolidated nearly all Pentagon drone and autonomous systems programs under a new office, the Direct Reporting Portfolio Manager for Unmanned Systems, on June 29. This office will oversee the development, procurement, and deployment of unmanned systems across various domains, with a significant budget increase of $53.6 billion allocated for these initiatives. The office will also centralize congressional engagement and has the authority to make key decisions regarding drone acquisition.

The Royal Navy currently has no attack submarines deployed at sea, creating a significant operational gap in Britain's maritime strategy. This situation is exacerbated by increased Russian submarine activity in the North Atlantic. The Royal Navy's Astute-class submarines, while highly capable, are facing prolonged maintenance issues, limiting their availability. This decline in operational readiness poses risks to NATO's undersea surveillance capabilities and British national security.

Pentagon leaders are struggling to meet weapons delivery timelines, with the average time frame now exceeding 12 years. Significant delays have been reported in various defense programs, including the Air Force's T-7 and the Army's Long Range Hypersonic Weapon. The Government Accountability Office has highlighted the need for mature technologies in defense acquisitions to mitigate these delays.

Australia announced the Defence Industry Development Strategy (DIDS) in Melbourne, aiming to enhance its sovereign defense industrial base. The strategy includes an $80 million AUD investment to support small- and medium-sized defense businesses and reforms to a $3 billion fund for the defense industry. Additionally, the Anduril Ghost Shark will be prioritized for export, and a new Defence Delivery Group will be established to advise on defense projects.

Senators are evaluating the U.S. Space Force's legal readiness to support future space operations, emphasizing the need for a dedicated legal organization. The Space Force aims to expand its personnel from 6,500 to 20,000 and enhance its capabilities in response to rising threats from China and Russia. A report on current and projected space law requirements is expected by Dec. 1.

Defense tech startups are repurposing automotive chips and fracking pipes to enhance weapons production for the Pentagon. Companies like Castelion and Anduril are innovating with new technologies, including 3D printing, to meet the growing demand for missiles and rocket motors. The U.S. has utilized over 50,000 projectiles since the Russian invasion of Ukraine, prompting a $53 billion investment to boost production capabilities.

Indonesia is developing two Scorpene submarines, with the first expected to be operational by 2032 and the second by 2033. The Indonesian Navy faces challenges in maintaining a continuous patrol presence due to limited numbers and operational requirements. The submarines will incorporate advanced technologies, but Indonesia's goal of a 12-submarine fleet highlights the need for further development and support to ensure effective maritime security.

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INKAS plans to open three new production facilities across Canada and the United States, significantly increasing its manufacturing capacity in North America. This expansion aims to more than double the company's production space in the region.

The U.S. Navy is seeking to increase production of next-generation anti-radar missiles, requesting up to 600 Advanced Emission Suppression Missiles annually. This initiative aims to enhance capabilities against enemy air defenses, focusing on advanced targeting and integration with existing platforms. The Navy's current anti-radar missile, the AGM-88, has a range of up to 80 miles, while procurement for the AGM-88G is paused until Fiscal Year 2028.

Kratos Defense & Security Solutions received a $36 million contract for a new air defense missile system on July 2, 2023, at its San Diego facility. This contract is part of the U.S. effort to enhance missile and air defense production capacity amid rising demand for such systems due to modern threats. The specifics of the missile system and its intended targets remain undisclosed.

The Pentagon is urgently working to allocate $152 billion in reconciliation funds before the fiscal year ends on September 30. As of late April, only $26 billion has been contracted, leaving $126 billion at risk of an 8.3% cut if unspent. This financial urgency highlights the Department of Defense's focus on effective fund management.

KNDS delayed its IPO in Paris and Frankfurt due to unfavorable market conditions, raising concerns about the ability of European governments to convert wartime urgency into predictable defense orders. The company reported strong sales and a significant order backlog, but political risks and market volatility have made investors cautious about the European defense sector's future.

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Nineteen companies advanced to the Gauntlet II testing phase of the Pentagon's Drone Dominance Program, scheduled for August 2026 at Fort Carson, Colorado. The program aims to close the gap in drone capabilities with adversaries, particularly China, by ordering 50,000 to 60,000 additional drones. Companies must meet stringent production benchmarks to remain eligible for future orders, reflecting the urgency of enhancing U.S. drone capabilities.

Ukraine is initiating a grant competition to develop humanoid robots for its Defense Forces, aiming to enhance battlefield safety by reducing soldier exposure to danger. The project, led by Brave1, focuses on creating robots capable of performing military tasks in environments designed for humans. This initiative reflects Ukraine's ongoing efforts to innovate in defense technology amid the current conflict.

The Unified Force of the Alliance of Sahel States (AES) is deploying 6,000 troops to seek a route out of the Sahel trap, focusing on military coordination among Mali, Burkina Faso, and Niger. In July 2026, the AES aims to establish a command chain for cross-border operations, responding to recent jihadist attacks on strategic locations. The operation Yereko 2 has shown minimal coordination capabilities, highlighting the challenges faced by the AES in the region.

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KNDS has indefinitely postponed its IPO due to concerns over European defense market volatility. The company, known for producing the Leopard 2 main battle tank, stated that shareholders plan to resume the IPO process when market conditions improve. This decision follows significant fluctuations in defense stocks, influenced by recent defense spending cuts in Europe.