The Aftermath Of The Failed BAE - EADS Merger -- A News Roundup

US Defence Giants Poised To Swoop On BAE Following Collapse Of Merger With French And German Companies -- Daily Mail

Fears were growing last night that BAE Systems could fall prey to a major US competitor.

A number of American aerospace and defence companies are believed to be running the rule over the UK defence giant, which could put British jobs at risk.

It came as pressure mounted on the company's top two executives to resign after they led the group into disastrous negotiations with the European aerospace conglomerate EADS.

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More News On The Aftermath Of The Failed BAE -EADS Merger

BAE-EADS Torpedoed By Politicians -- Wall Street Journal
Self-Interest Leads to Collapse of BAE-EADS Merger -- International Herald Tribune
BAE, EADS call off deal to create European defense giant -- Star Telegram
BAE-EADS: Angela Merkel blamed for collapse of £28bn merger -- The Guardian
BAE jobs at risk after EADS deal failure -- Financial Times
Analysis: BAE-EADS merger collapse shifts focus to smaller deals -- Reuters
BAE Systems cautious about US defence spending outlook -- BBC
BAE CEO Says Company Robust in Wake of EADS Merger Failure -- Bloomberg Businessweek
Back to drawing board after Berlin halts BAE, EADS deal -- Today Online
BAE investors should not expect any quick answers from the US -- The Telegraph
BAE warns of limited disruption to its US business -- The Guardian
Expected Deals With Oman, Saudi Arabia Help BAE Project Strength -- Defense News
EADS-BAE Deal’s Collapse Damps Bankers’ Fee Prospects -- Bloomberg
EADS CEO Faces Terminator Torment After BAE Merger Judgment Day -- Bloomberg Businessweek
EADS chief was 'politically naive’ over defence merger -- The Telegraph
EADS-BAE merger collapse hits EU ambitions, firms' future -- Economic Times
BAE-EADS Merger: What next after the collapse of the deal? -- Rusi
After The Demise Of BAE-EADS, What Comes Next? -- Wall Street Journal
IN FOCUS: BAE-EADS merger a 'test of national resolve to change' -- Flight Global
Whitehall’s mistake over BAE and EADS -- David Blackburn, The Spectator
The BAE fiasco shows just how much we need America -- Con Coughlin, The Telegraph
The BAE dilemma -- The Telegraph (editorial)
EADS-BAE Failure Shows Road to United EU Ends in Berlin -- Bloomberg Businessweek

No Mega Merger Of Defense Giants BAE Systems And EADS

Astute class submarines, Artful, left, and Ambush, right, being built by BAE Systems. Photo: BAE Systems

BAE And EADS Ditch £28bn Mega Merger -- The Telegraph

The £28bn mega-merger between British defence giant BAE Systems and EADS has collapsed after governments blocked the deal to create the world's biggest aerospace and defence company.

The companies said that while they had agreed the principal terms of a merger, convincing governments in Germany, France and Britain to approve a deal had become a major sticking point.

"It has become clear that the interests of the parties' government stakeholders cannot be adequately reconciled with each other or with the objectives that BAE Systems and EADS established for the merger," the companies said in a statement..

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More News On The Collapse Of The BAE And EADS Merger

BAE and EADS merger collapse: How it all unfolded -- The Telegraph
EADS, BAE call off world's biggest arms merger -- Reuters
BAE Systems, EADS End Merger Talks -- Wall Street Journal
EADS-BAE Pull Plug on Merger After Governments Balk -- Bloomberg Businessweek
EADS/BAE merger talks break down -- Defense News
BAE, EADS Walk Away from $45B Merger -- FOX News/Reuters
Proposed BAE-EADS merger called off -- Bloomberg Businessweek/AP
BAE-EADS merger cancelled amid political impasse -- BBC
EADS, BAE call off world's biggest arms merger -- CNBC
BAE, EADS scrap merger talks on lack of govt accord -- AFP
EADS-BAE Pull Plug on Merger After Governments Deny Backing -- SFGate/Bloomberg
BAE Systems and EADS Abandon Merger Talks -- New York Times
BAE, EADS drop $45 billion merger plan -- CNN
EADS-BAE Systems Call Off Talks: Here’s Their Wistful Statement -- Wall Street Journal
Germany feared being left on the sidelines in BAE-EADS merger: Analysts - -Economic Times
BAE/EADS merger off as Angela Merkel refuses to endorse deal -- The Guardian
How Germany killed the merger of BAE and EADS -- Robert Peston, BBC

Talking Defense Cuts And Sequestration With Boeing

Dempsey Talks Defense Cuts, Sequestration With Boeing Execs -- The Hill

Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey met with top Boeing executives on Friday to gauge the defense giant's level of concern over the automatic defense cuts facing the Pentagon next year.

The answer the four-star general got was disconcerting, but not surprising.

"I wanted to get a sense of their level of concern, and they are concerned," Dempsey told reporters after the meeting at the company's headquarters in Seattle.


Pentagon officials and the defense industry have been sounding the alarm on the damage a projected $500 billion in automatic defense budget cuts would have on U.S. national security interests, should the cuts go into effect in January.

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My Comment: Defense cuts and sequestration reminds me of a slow moving train wreck. Everyone sees it coming .... people are running all over the place .... but nothing can stop the inevitable crash.

U.S. Defense Contractors Are Starting To Cut Jobs

FILE: April 10, 2010: An Army UH-60 Black Hawk helicopter practices landing aboard the USS Underwood off the coast of Honduras. (U.S. Navy)

Black Hawk Maker Cuts Jobs As Contractors, Lawmakers Fret Over Defense Cuts -- FOX News

Sikorsky Aircraft Corp. – maker of the Black Hawk helicopter – has announced the elimination of 570 jobs, becoming the most recent defense contractor to announce financial struggles amid tightened defense spending and the potential for drastic cutbacks in January.

The Pentagon plans to cut $487 billion from its budget over the next decade, but contractors and lawmakers alike are alarmed about a separate wave of cuts that could begin Jan. 2 unless Congress and the White House team up to avert them.

The Sikorsky cuts are set to go into effect Dec. 31 when the company closes its upstate New York plant and sends the work to its facility in West Palm Beach, Fla.

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My Comment: I suspect that these cuts are just the tip of the iceberg .... and if sequestration occurs at the beginning of 2013, these cuts will end up gouging defense contractors and their workforce. But with 40 cents of every dollar that the government now spends is borrowed cash .... options are fast becoming limited.

More On Waste And Fraud In Pentagon Contracts

Photo: Dod Buzz

Dubai Firm Overbilled Pentagon $900 for $7 Switch, Bowen Says -- Bloomberg

A U.S. contractor in Iraq overbilled the Pentagon by at least $4.4 million for spare parts and equipment, including $900 for an electronic control switch valued at $7.05, according to a new audit.

Based on the questionable costs identified in a $300 million contract with Dubai-based Anham LLC, the U.S. should review all its contracts with the company in Iraq and Afghanistan, which total about $3.9 billion, said Special Inspector General For Iraq Reconstruction Stuart Bowen.

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My Comment: For more on this horrid story of waste and fraud, read this.

The High Cost Of Supplying Military Services

What Costs Even More Than DoD’s Weapons? Its ‘Services’ -- DoD Buzz

Journalists, lawmakers and others tend to focus on the Pentagon’s expensive hardware, in part because it’s expensive, but in part because it’s conceptually easy to grasp — there’s a pointy, silver airplane out there somewhere that goes whoosh and costs much more than it was supposed to. But as one of DoD’s top acquisitions officials said this week, most of what the department spends on acquisitions isn’t on goods or hardware. The real money — and potentially, the real waste — is in “services.”

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My Comment: I have trouble seeing how services can be cut any further .... these contracts are usually tendered to go to the lowest cost supplier. If I am wrong, please correct me.

The Growing CIA Brain Drain

CIA’s Brain Drain: Since 9/11, Some Top Officials Have Moved To Private Sector -- Washington Post

In the decade since the attacks of Sept. 11, 2001, private intelligence firms and security consultants have peeled away veterans from the top reaches of the CIA, hiring scores of longtime officers in large part to gain access to the burgeoning world of intelligence contracting.

At least 91 of the agency’s upper-level managers have left for the private sector in the past 10 years, according to data compiled by The Washington Post. Several of the top positions have turned over multiple times in that period: In addition to three directors, the CIA has lost four of its deputy directors for operations, three directors of its counterterrorism center and all five of the division chiefs who were in place the day of the Sept. 11 attacks.

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My Comment: The budgets for intelligence have skyrocketed since 9/11. Companies are aware of this mother-load, and are hiring the personnel who have experience and/or contacts to get a piece of this pie. Since they are offering salaries that dwarf what the CIA and other intelligence agencies pay .... the temptation to jump ship is impossible to resist .... hence the brain drain.

U.S. Opposes Large Defense Contractors From Merging

Defense Mergers Opposed by U.S. -- Wall Street Journal

The Pentagon's procurement chief is expected to deliver a message to Wall Street Wednesday: The Defense Department wants to discourage potential consolidation among top-tier defense contractors.

In remarks to an investment conference in New York, Ashton Carter, the undersecretary of defense for acquisition, technology and logistics, is expected to draw a line against major defense-sector mergers in an era of tighter defense spending. A draft of Mr. Carter's remarks says the Pentagon "is not likely to support further consolidation of our principal weapons-systems prime contractors."

His principal concern, Mr. Carter indicated during an interview, is maintaining competition and bolstering the Pentagon's buying power.

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More News On The U.S. Opposing Large Defense Contractors From Merging

Pentagon Welcomes Mergers Except for Top Six Suppliers -- Bloomberg
Pentagon open to mergers, but not at very top -- Reuters
Pentagon will not support big defence mergers -- Financial Times
Pentagon mostly fine with defense industry mergers -- the Hill
DOD Urges Consolidation For Lower-Tier Suppliers -- Aviation Week
Pentagon: Bring on the Contractor Mergers -- Government Executive

How Retired Generals Influence Arms Sales

From The Pentagon To The Private Sector -- Boston.com

In large numbers, and with few rules, retiring generals are taking lucrative defense-firm jobs.

WASHINGTON — An hour after the official ceremony marking the end of his 35-year career in the Air Force, General Gregory “Speedy’’ Martin returned to his quarters to swap his dress uniform for golf attire. He was ready for his first tee time as a retired four-star general.

But almost as soon as he closed the door that day in 2005 his phone rang. It was an executive at Northrop Grumman, asking if he was interested in working for the manufacturer of the B-2 stealth bomber as a paid consultant. A few weeks later, Martin received another call. This time it was the Pentagon, asking him to join a top-secret Air Force panel studying the future of stealth aircraft technology.

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My Comment: If someone is going to offer you tons of money for your expertise and knowledge .... how can you say no. It appears that for many in the U.S. military .... that temptation is too irresistible to resist.

Defense Contractors Are Getting Ready For The Future

Defense Contractors On Offensive -- Washington Post

Washington area defense contractors are buying and selling companies at an increasingly high rate as they seek to position themselves for a realignment in Pentagon spending priorities.

BAE Systems, which bases its U.S. operations in Arlington County, is the latest to make some changes. The company recently picked up Stamford, Conn.-based L-1 Identity Solutions's intelligence services business for $295.8 million, just as its parent company confirmed it is considering selling the U.S.-based "platform solutions" business, which builds aircraft and buses, among other equipment.

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My Comment: I have trouble seeing where the money is going to come from to support (and grow) for these defense companies. I guess they know something that I do not.

Another War For Obama - Taking On The Defense Contracting System

F-22

From International Herald Tribune:

NEW YORK: In pledging last week that the "days of giving defense contractors a blank check are over," President Barack Obama was taking on the giant weapons contracting system that he says has "gone amok."

Nearly everyone agrees that huge cost overruns and delays in creating new weapons have become the norm. Even so, fierce battles are starting over some of the prominent programs that he would like to cancel or cut back.

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My Comment: This is not going to be an easy fight.