Teal Group In The Media

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15
March
2017

Why so many big defense companies are bowing out of this $16.3B Air Force competition

Featuring: Richard L. Aboulafia

Why so many big defense companies are bowing out of this $16.3B Air Force competition

The Air Force’s future $16.3 billion program to replace its training aircraft has seen each of the so-called “Big Five” defense contractors express an interest in the competition.

It has also seen three of them drop out of the running.

Of those defense giants, only The Boeing Co. (NYSE: BA) and Lockheed Martin Corp. (NYSE: LMT) remain in the Air Force’s Trainer-X competition. General Dynamics Corp. (NYSE: GD) first bowed out in April 2015, with Raytheon Co. (NYSE: RTN) announcing its exit in January and Northrop Grumman Corp. (NYSE: NOC) abandoning the program the week after. Textron Airland also announced that it too would not enter the fray, Defense News reported Tuesday.

So, why do the majority of big name defense companies want out? Given that the Air Force has already awarded contracts for the fighter, tanker and bomber— with not many major programs out on the horizon — one would think they would be clamoring to build the 350 trainers.

Richard Aboulafia, vice president of analysis at the Fairfax-based Teal Group and an aviation consultant, argued that the dearth of major future Air Force programs may actually be what’s behind all these companies leaving the field.

The Air Force, he said, likely took note of this environment marked with "not many aircraft contests" where "everyone is eager to win something” in drafting the request for proposals, allowing it to “extract the best possible terms based on the acquisition side.”

“They basically put forth a contract where you’re not reimbursed for development,” Aboulafia said. “It’s a price-shootout with a little window dressing. You get an incentive for performance but in the broader context of the cost of the program it’s almost insignificant.”

Media Outlet: Washington Business Journal Tags Boeing | Korea Aerospace Industries | Lockheed Martin | South Korea | T-X

06
March
2017

Don't expect a space race between SpaceX and NASA. They need each other

Featuring: Marco A. Caceres

Don't expect a space race between SpaceX and NASA. They need each other

SpaceX, the upstart company, and NASA, the government agency, both have plans to venture to Mars and orbit the moon. But that doesn’t mean they’ve launched a new space race.

In fact, NASA has long been SpaceX’s most important customer, providing contracts to deliver cargo and eventually astronauts to the International Space Station. And the Hawthorne company will need NASA’s technical support to achieve the first of its grand ambitions in deep space.

A major milestone for the partnership came in 2012 when SpaceX launched its first NASA cargo load, making it the first private company to send a spacecraft to the space station.

Marco Caceres, senior space analyst at the Teal Group, said the NASA supply missions gave SpaceX “almost instant credibility."

"Having NASA as an anchor client allowed them to have enough revenue flow so that they could establish themselves and eventually diversify and get some commercial contracts and eventually to be able to get into the military establishment,” he said.

Today, SpaceX and Boeing Co. are developing separate crew capsules as part of NASA contracts to transport astronauts to the space station.

SpaceX noted that this NASA program provided most of the funding to develop the Dragon 2 spacecraft, which will make the moon trip. It is planning to conduct the first test flight of the Dragon crew capsule in November, followed by a flight test with humans in May 2018.

Media Outlet: The Washington Post Tags NASA | SpaceX

28
February
2017

The T-X battle comes down to Lockheed and Boeing

Featuring: Richard L. Aboulafia

The T-X battle comes down to Lockheed and Boeing

WASHINGTON — With U.S. President Donald Trump’s attention fixed on the F-35 and Air Force One, the Air Force’s biggest ongoing aircraft competition so far has gone untouched. But even without Trump’s intervention, the T-X race has evolved into something not unlike an episode of a reality TV show, featuring industry teams breaking up, companies unexpectedly dropping out and upstart entries coming in at the last minute.

The T-X program began with four main competitors: Lockheed Martin, Boeing, Northrop Grumman — which developed a new prototype — and a Raytheon-Leonardo team offering the latter firm’s M-346. Over the past couple of months, Northrop has pulled out of the competition, Raytheon dissolved its partnership with Leonardo — leaving the Italian firm to ally with its US wing, DRS Technologies — and several smaller companies, including Sierra Nevada and the nigh-unknown Stavatti Aerospace, decided to throw their designs into the ring.

Analysts tell Defense News that the drama overshadows the most important point: The competition has become a face-off between Boeing’s clean-sheet T-X design and the Lockheed Martin-Korean Aerospace Industries’ T-50A, the US derivative of a trainer flown by the South Korean, Iraqi, Philippine and Indonesian militaries.

And with the T-50 already in production and thousands of hours of flight time behind it, Boeing will face an uphill battle to keep Lockheed from cinching the contract.

"It looks like the emphasis is still very much on unit price and not much of anything else. It's [lowest price technically acceptable], basically, but with some window dressing,” said Richard Aboulafia, an analyst with the Teal Group. “And given the need to roll up the upfront development costs, Boeing is at a disadvantage. They'd have to be very aggressive price-wise. They obviously have a history of doing that with [the KC-46] tanker, but this clearly puts the advantage with Lockheed."

Media Outlet: Defense News Tags Boeing | Korea Aerospace Industries | Lockheed Martin | South Korea | T-X

18
January
2017

SpaceX sends 10 satellites into orbit, lands rocket booster on drone ship in first flight since September explosion

Featuring: Marco A. Caceres

SpaceX sends 10 satellites into orbit, lands rocket booster on drone ship in first flight since September explosion

Four months after a launch pad explosion, SpaceX returned to flight Saturday morning, delivering 10 satellites into orbit and landing its first-stage booster on a floating drone ship. Analysts had described the launch as “all-important” for the Hawthorne space company to reestablish customer confidence and momentum after a Sept. 1 launchpad explosion in Florida destroyed a Falcon 9 rocket and a commercial communications satellite perched on top. But beyond the specter of the accident, stakes were high for Saturday’s launch because it involved deploying the first 10 satellites of a new commercial constellation for well-known operator Iridium Communications Inc.

The new satellites have more capability than their older counterparts, including higher data speeds. Saturday’s launch is the first of seven that SpaceX will perform for Iridium to carry a total of 70 satellites into orbit.

“There was a lot riding on this for SpaceX, but also for Iridium, and I think they can breathe a sigh of relief,” said Marco Caceres, senior space analyst at the Teal Group.

The launch occurred at 9:54 a.m. Pacific time from Vandenberg Air Force Base, north of Santa Barbara. About eight minutes after liftoff, the first-stage rocket booster landed upright on a floating platform called “Just Read the Instructions” in the Pacific Ocean.

About an hour after the launch, company Chief Executive Elon Musk tweeted that the mission “looks good.” By 11:15 a.m., Musk tweeted that all satellites had been successfully delivered to the correct orbit.

Media Outlet: Los Angeles Times Tags Elon Musk | NASA | SpaceX

31
March
2015

The Problem With the America's Russian Rocket Phase-out

Featuring: Marco A. Caceres

The Problem With the America's Russian Rocket Phase-out

Nor does the Pentagon really want a fast-tracked rocket engine, says Marco Caceres, senior analyst and director of space studies at aerospace consultancy Teal Group. "The engine is the core of your rocket, and the majority of things that go wrong in a rocket have to do with the engines," he says, "You really don't want to rush this."

Moreover, the Pentagon plan intends to spread the cost of technology development out via public-private partnerships, each of which would require roughly a dozen private sector space launches each year to remain viable. That launch demand doesn't yet exist, nor does a spike in demand appear on the horizon.

All that places SpaceX in a particularly good position to take on a lot, if not all, of the military's space launches toward the end of this decade, at least until other launch technologies can be adequately matured. Barring a change in Congress's stance on RD-180 imports or some kind of mishap that jeopardizes its certification, SpaceX might not just break ULA's military launch monopoly—it may become the monopoly.

"Overall, SpaceX is starting to look very all-American and very attractive, and ULA looks weak without its Delta IV," Caceres says. "All along ULA has had its eggs in one basket, but that only works as long as you've got a monopoly."

Media Outlet: The Washington Post Tags Atlas V | RD-180 | United Launch Alliance

20
March
2015

Mission for New Bomber: Avert Procurement Death Spiral

Featuring: Richard L. Aboulafia

Mission for New Bomber: Avert Procurement Death Spiral

Aerospace industry analyst Richard Aboulafia, of The Teal Group, has hypothesized that the bomber selection could upend the defense industrial base. If Northrop doesn't win, its days as a military airframe prime contractor could be numbered, he said. "When the bomber program gets decided, someone is going to be without a seat at the table."

Media Outlet: National Defense Tags Northrop Grumman

23
March
2015

A New Space Race Emerges as NASA Prepares to Award Contract to Ferry Supplies to Space Station

Featuring: Marco A. Caceres

A New Space Race Emerges as NASA Prepares to Award Contract to Ferry Supplies to Space Station

Marco Caceres, an analyst with the Teal Group, says there is a strong business case for ULA to retire the Delta IV, as the cost for keeping two redundant lines is significant. But he also acknowledged that there is a smart political angle at work. "If they were to cancel the Delta IV medium and all they have is the Atlas V, then there is a better argument to be made for preserving the RD-180 shipments," Caceres said. "No question about that. Have they thought about it? I'm sure people at ULA have considered it as a good strategic move."

But, Caceres said, there are many practical reasons for ULA to move away from the Delta IV, a largely redundant and expensive capacity. He notes that part of the reason Bruno was brought in to lead ULA last summer was to streamline the company in the face of SpaceX's competition. "If the Air Force wants ULA to be more competitive on price, it has to become leaner, and it can't do that with two redundant systems," Caceres said.

Media Outlet: The Washington Post Tags cargo supply | International Space Station | ISS | NASA

23
March
2015

ULA to Retire Delta IV, Push for More RD-180s

Featuring: Marco A. Caceres

ULA to Retire Delta IV, Push for More RD-180s

Marco Caceres, an analyst with the Teal Group, says there is a strong business case for ULA to retire the Delta IV, as the cost for keeping two redundant lines is significant. But he also acknowledged that there is a smart political angle at work. "If they were to cancel the Delta IV medium and all they have is the Atlas V, then there is a better argument to be made for preserving the RD-180 shipments," Caceres said. "No question about that. Have they thought about it? I'm sure people at ULA have considered it as a good strategic move."

But, Caceres said, there are many practical reasons for ULA to move away from the Delta IV, a largely redundant and expensive capacity. He notes that part of the reason Bruno was brought in to lead ULA last summer was to streamline the company in the face of SpaceX's competition. "If the Air Force wants ULA to be more competitive on price, it has to become leaner, and it can't do that with two redundant systems," Caceres said.

Media Outlet: Defense News Tags Delta IV | RD-180 | ULA

20
January
2015

Google Said to Be Close to Investing $1 Billion in Musk’s SpaceX

Featuring: Marco A. Caceres

Google Said to Be Close to Investing $1 Billion in Musk’s SpaceX

"If Google is committing money to SpaceX, they are likely to be a major investor and a real partner," said Marco Caceres, director of space studies at consultant Teal Group. "Google brings the applications for the satellites to the table, and SpaceX has the technical know-how and the launch capacity."

Media Outlet: Bloomberg Businessweek Tags Google | SpaceX

18
January
2015

Shrouded in Mystery, New Bomber Makes Waves

Featuring: Richard L. Aboulafia

Shrouded in Mystery, New Bomber Makes Waves

The half a dozen analysts and experts interviewed by Defense News for this piece all agree on one thing: the LRS-B has the chance to shape American military aerospace for the next 20 years. Whichever competitor wins will reap a windfall of development money; the loser could find itself out of the military attack airframe business entirely.

And while the program appears to be on track, Congress is waiting in the wings for any sign of cost overrun or technological problems.

"This is crunch time," said Richard Aboulafia, an analyst with the Teal Group. "It's the biggest single outstanding DoD competition by a very wide margin. That makes it important in and of itself."

Media Outlet: Defense News Tags Long Range Strike-Bomber | LRS-B

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