C4ISR, radar, electronic warfare, unmanned markets continue growth
As threats evolve globally the demand and investment continues to grow in military application areas such as electronic warfare (EW), radar, unmanned systems, and communications, computers, intelligence, surveillance and reconnaissance (C4ISR).
The U.S. military market is trending upward in terms of investment under the new Trump Administration as evidenced by the increase in the Department of Defense FY 2018 budget request. Modernization of current radar, EW, ground, and sea platforms continues as well as investment in research, development, test, and evaluation (RDT&E) in new systems such as unmanned undersea vehicles. According to market analysts these application areas are not flat and are projected to grow over the next five years.
Overall C4ISR market
“The key for C4ISR at the strategic level will be missile defense and at the tactical level it will be sea and land platforms and electronic warfare,” says Brad Curran, industry analyst at Frost & Sullivan. “Globally the emphasis is on making sure U.S. allies, NATO countries, Japan, Australia, have the technological capability to talk with us and share data and targeting. Foreign Military Sales (FMS) are going well financially and politically.
Frost and Sullivan’s forecast numbers reflect that positive growth. “For 2017 there has been about $42 billion spent on C4ISR technology with a growth rate of 3 percent through 2022. For 2017 programs of record, the services each got about $11 billion in program spending a piece. Within the DoD budget request there was about 920 C4ISR program line items. The biggest area was surveillance and reconnaissance with almost $48 billion funded at 6 percent CAGR for a total of 920 programs total; [This is an increase of about] $3.0 billion over the prior year. The fastest growing C4ISR application area is electronic warfare, up 22 percent from last year’s budget.
Among the leading prime contractors there are no surprises. “The biggest C4ISR company is Lockheed Martin with $5.4 billion in contract funding and with about 11 percent market share,” Curran says. “Next up is Northrop Grumman at $5.26 billion or 10 percent market share.”
The top ten primes received 47 percent of the money, he notes. “They are from the top: Lockheed Martin, Northrop Grumman, Raytheon, Boeing, General Atomics, BAE Systems, Booze Allen Hamilton, Microsoft, Leonardo, and Harris. At the end of 2016, there were 515 total prime contractors, There were also many little ones, but our numbers show a total of 1,274 major contacts totaling $51 billion.”
Year after year the military radar market continues to show strong growth and investment and this year is no different. “The military radar market is still looking good with new missile defense requirements driving it via programs such as the Army’s Integrated Air Defense System, Patriot radar upgrades, the Navy’s AMDR, and counter-UAS (unmanned aerial system) solutions,” Curran says. “When you look at FMS for radar systems, there is also growth. Companies such as Raytheon and Lockheed Martin are supplying technology from Israel to Australia for everything from new systems to lifetime support contracts.
“A total of 49 U.S. military radar contracts were awarded in 2016 and were valued at $2.56 billion,” Curran notes. “Boeing was on top with their win on the F-15 APG 16 Version 3 radar improvement program valued at $558.4 million. They are taking the fleet of F-15s and giving them much improved eyesight.
Other large programs include the Marine Corps Ground/Air Task Oriented Radar (G/ATOR) program led by Northrop Grumman, he continues. This is in procurement and low rate initial production (LRIP) and valued at $375 million.
“Something I believe to be important even though it does not cost the Army much money is CRAM,” he says. “Operationally it’s going to be huge because it can function as an early warning system for incoming missiles and also can provide counter-battery fire. The CRAM can track where incoming fire originates, triangulating the situation while warning troops of the threat. It will also be a future foundation for using kinetic or laser weapons to shoot down incoming artillery mortar shells and anti-tank shells. Lockheed Martin’s T-53 falls into this category and is slated for another $16.5 billion.”
Raytheon’s biggest contract in 2016 was a $110 million LRIP for the AMDR S-band, Curran adds. “The company also received funding to Patriot configuration 3+ radar upgrade for the Army. Harris was also a player in 2016 with an IDIQ contract for 42 COTS precision approach radar 21 systems for the Navy, Army, and Air Force.
“EW funding also continues to increase,” Curran says. “Contracts awarded in 2016 totaled about $4.6 billion. Program funding increased $860 million for 2018. 2016 contracts increased $2.5 billion over 2015. The biggest one at $79 million went to Booze Allen Hamilton to run the Joint Improvised Threat Defeat Agency. This is an administration contract.
“For EW gear the largest contract went to Boeing, which received $308 million for the Next Generation Jammer for F-18 Growler,” Curran continues. “Raytheon won $253 million for Next Generation Jammer development model pods. For engineering and manufacturing Boeing has the airplane while Raytheon has the actual jammer pod.
Meanwhile “BAE Systems is still the clear leader when it comes fuzz busters, also known as radar warning systems,” he notes. “A new company named Zel Technologies also received $165 million to help develop counter-threat technologies and urgent mission solutions. A very large program – the Surface Electronic Warfare Program (SEWIP), led by Lockheed Martin – is also still strong.
“Lastly, the Navy recently awarded a $180 million contract called Combat Environment Instrumentation Systems (CEIS) to 12 companies to study and develop a prototype system that integrates/fuses EW, radar, communications, and information operations into multifunction aperture to jam adversary computers and electronics,” Curran says. “In other words using radar to essentially jam computer networks, other radars, etc.”
The unmanned aerial systems (UAS) market continues to grow worldwide. “The unmanned aerial vehicle market is increasing at 7 percent from 2015 through 2021 with market value eventually reaching a little over $6 billion in 2021 with a CAGR of 6.9 percent,” says Mike Blades, Senior Industry Analyst, Aerospace & Defense at Frost & Sullivan.
“When it comes to programs of record the Global Hawk is getting a good deal of funding from the Air Force for capability investment and payload sensors,” Blades says. “Northrop Grumman is upgrading the sensors to bring U2 capability to the platform. They are spending $300 to $400 hundred million every year just for Global Hawk. “Actually, less than half of this is for procuring upgrades. A considerable amount is still for capabilities enhancements through RDT&E.”
“The MQ-9 Reaper has obviously taken the place of the MQ-1 Predator in terms of procurement through 2021 with funding slowly decreasing over that period,” he continues. “This funding peaks in 2019 then starts to decrease as the platform is built out.
“For other major programs it depends on when people are making a forecast especially with the Long Range Strike Bomber (LRSB), which depending on when and who you ask will or will not have an unmanned portion,” Blades says. “I believe it will be optionally manned and have some portion unmanned. This program ramps up to $3 billion in funding in 2021 according the President’s FY 2018 budget request. The unmanned portion will possibly be loyal wingmen and may or may not be part of the LRSB procurement.”
Small UAS programs such as the RQ-11 Raven are slated to get about $300 to $600 million in funding through 2021, he continues. “Within the FY 2018 budget request Special Operations has a line item under unmanned and this is likely for a small UAS platforms with funding for $20 to $30 million a year.”
Other applications getting attention and funding include UAS as munitions and tethered UAS for persistent surveillance missions.
“Unmanned aircraft that function as loitering munitions are also having success such as the Switchblade, the L-3 Cutlass, and the Israelis have small loitering munitions of several different sizes,” Blades says. “These systems are only going to become more prevalent. They also have the potential to be launched from other unmanned aircraft.
“Tethered UAS only account for 2 percent of budget, but these drones are getting steady use,” he adds. “They provide a way around civil aviation regulations as they are not flying through the airspace, so fire departments and the like make use of them. The tethered platforms also function as test beds for testing sensors over long time periods.”
Unmanned undersea vehicles
The unmanned undersea vehicle (UUV) market “has been one of the few I’ve seen where military technology was not driving innovation,” Blades says. “Oil and gas companies were the ones funding development of these platforms. When the oil process market hit a downturn innovation started again from the military side.
“A lot of money was spent on extra large displacement UUVs, more of a submarine replacement. There was also a concentration of small UUVs that could form a swarm and do different things simultaneously. A lot of money is still being spent on LDUUV [large displacement UUV] and XLUUV [extra large UUV] as they are the largest contributors to UUV RDT&E funding.
Today “the primary mission of these platforms is mine countermeasures, which is the biggest segment and sees the most funding,” Blades continues. “These platforms are still mostly in R&D phases as they take a long time for test and evaluation. In the 2017, DoD officials spent $338 million out of the budget in RDT&E – most of it DARPA funding – while total procurement was only about $65 million. The U.S. is still highly in RDT&E phase and the rest of world is the same way.
“Regarding programs, $28 million has been scheduled for an unmanned maritime system called Sea Mob,” Blades says. “Other programs receiving funding include the General Dynamics KnifeFish, Swordfish, and Kingfish. Most of these are centered around mine countermeasures. Procurement for Swordfish and KingFish is around $3 to $6 million. That is not a lot funding and it mostly targets maintenance.” (See Figure 1).