High Value Naval Electronic Warfare Programs

Teal Group’s Military Electronics Briefing has added new forecasts for the biggest naval EW (electronic warfare) programs of the next ten years, including the multi-prime contractor AN/SLQ-32 & SEWIP (Surface Electronic Warfare Improvement Program) programs – in several “Blocks”, Raytheon’s SSDS (Ship Self Defense System), and Lockheed Martin’s Nulka and AN/ALQ-248 Advanced Off-Board Electronic Warfare (AOEW) decoy systems. When including all versions of the SLQ-32 and SEWIP, those programs alone will be worth $6.4 billion in Teal’s forecast. The MEB has also added a new, speculative Future US Air Force RF ECM Pods forecast.

AN/SLQ-32(V) & SEWIP & TEWM (SLQ-59 & 62)

Raytheon’s AN/SLQ-32(V) is the US Navy’s primary shipboard electronic warfare system. The 400+ systems produced since the early 1980s are mounted on nearly all types of USN ships, with more than 150 still in USN service today, and about 50 in service in international navies. New production originally ended in 1996, with new platforms for many years receiving “restored” systems from decommissioned ships, with the most recent restoration order in September 2007 for production through October 2010.

Today, SEWIP (Surface Electronic Warfare Improvement Program) is the ongoing SLQ-32 upgrade program, now with three Blocks in development, production, and upgrade. SEWIP is the US Navy’s primary shipboard EW program, worth hundreds of millions of dollars each year. The first SEWIP increment, Block 1A, entered full-rate production in 2006. By early 2016, Block 1B3 was still in LRIP. GD-AIS (now GD Mission Systems) is Block 1B3 systems integrator, with Lockheed Martin MST as a major subcontractor. In May 2018, the US Navy awarded GD a $9.7 million contract for services in support of SEWIP Block 1, reportedly covering upgrades to Block 1B3.

The next major upgrade development increment, SEWIP Block 2, was hotly contested by several manufacturers, including Lockheed Martin/ITT and General Dynamics/BAE Systems teams, and Northrop Grumman. Block 2 provides an upgraded receiver, antenna, and combat system interface for the SLQ-32, and will be produced for new platforms (e.g., DDG-1000 and CVN-78) as well as for back-fit. Block 2 greatly improves capabilities against emerging threats, as well as better integrating EW capabilities into the combat direction/management system.

In September 2009, the Lockheed Martin/ITT team won the SEWIP Block 2 development contract. Block 2 passed CDR in February 2011, with EMD completed in FY13. In March 2013, Lockheed Martin was awarded LRIP-1, though by July 2014 at-sea operational testing was only beginning aboard the USS Bainbridge (DDG-96). In early 2016, LRIP-2 was beginning. In October 2016, the US Navy awarded Lockheed Martin a $148.9 million contract to begin full production of SEWIP Block 2.

In February 2011, program changes in the FY12 budget moved future RDT&E funds from SEWIP Block 2 to the SEWIP Block 3, which will add a major new electronic attack (EA) capability. In January 2012, Lockheed and Raytheon announced they were teaming for the Block 3 competition. In March 2014, Block 3 EMD was planned to begin in FY15.

In February 2015, the Navy awarded Northrop Grumman a $267 million contract for preliminary design of the SLQ-32(V)7 SEWIP Block 3 system. Lockheed Martin and Raytheon reportedly asked the Navy for more information on their loss, but in October 2015 Northrop Grumman received a $91.7 million contract modification for SEWIP Block 3 EMD, with development already underway.

Then, in November 2017 the Department of Defense Inspector General (IG) released a report that found the Northrop’s Block 3 EMD program was experiencing significant cost overruns that could put the program behind schedule. Following access to the report, US Navy NAVSEA officials reportedly partially terminated the SEWIP Block 3 EMD phase in September 2017, and planned to establish a new cost estimate baseline for that phase by December 2017. Also, “PEO IWS will continue to review earned value management data and cost reports on a monthly basis to monitor contract performance.” But by mid-2018 there was no indication that SEWIP Block 3 EMD would be either re-competed or ended. Presumably, there will simply be better documentation and scheduling going forward. It should still be a huge program for Northrop Grumman.

Before Block 3 EMD began, in March 2014 the Navy planned the Transportable Electronic Warfare Module (TEWM) (SEWIP Block 3T) as a non-acquisition development and demonstration program to rapidly deliver an advanced counter-terminal EW capability as a transportable system. The units developed under this “Speed to Fleet” TEWM project will provide an immediate rapidly deployable capability. Multiple copies of the first articles are planned to be rapidly “replicatable” depending on operational needs. In mid-2018, SEWIP Block 3T (AN/SLQ-59) is the TEWM system supporting the 7th fleet Urgent Operational Need (UON). TEWM Speed to Fleet (STF) (AN/SLQ-62) is the TEWM system supporting the 6th fleet UON. A capability enhancement upgrade for the SLQ-62 was developed in FY17.

The World’s #1 Naval EW Program

This year, we have speculatively increased our RDT&E funding forecasts well above Navy/DoD reported plans, as with three separate SEWIP Blocks in service or production or development, for the bulk of the US surface fleet, with a surging Chinese Navy just around the corner, only $50 million annually is simply not possible (down to $23 million for all Blocks in FY22!). Maybe for the Luxembourgish Navy. Our forecasts thus include our broad estimate of hidden or classified or booked-elsewhere-in-the-budget funding.

We currently forecast only moderate delays with Northrop Grumman’s SEWIP Block 3 development, though there is a good chance this will stretch further to the right. Due to this possibility, combined with the historical evidence for frequent and sometimes major cuts to important electronic warfare programs, we have reduced our medium-term procurement funding forecasts in most years compared to DoD plans, which ramp up very quickly from $150 million in FY14 to $324 million in FY16 and $694 million in FY21.

Our procurement forecasts in the out years are more speculative – SLQ-32/AIEWS/SEWIP have seen delays and program changes for decades. Procurement funding levels will depend on continued development success, the strategic environment, program delays, and potential funding cuts. But whatever the success of a “pivot to Asia” for air forces, the Navy absolutely needs to upgrade protective EW for its front-line ships to operate safely near China. The SLQ-32(V)7 SEWIP Block 3 is planned to be installed on as many as 50 ships identified in the US Navy’s FY18 budget plan.

Thus, funding almost certainly will continue in the hundreds of millions annually for major shipboard EW systems, even if SEWIP again changes name or function. Our “SEWIP Block 3/Follow-On” forecast lines thus could transfer funding to other EW programs. But we believe this time it will stay with the Navy and stay EW, even if some funding goes classified. In fact, there is likely already much classified funding, which now we speculatively include in our forecasts.

The Navy has kept SEWIP a multi-prime effort, with General Dynamics providing much of Block 1, Lockheed Martin winning SEWIP Block 2, and Northrop Grumman winning the most recent Block 3 prime in February 2015. We see this continuing.

The Department of Defense now considers SEWIP a $5.7 billion program overall (was $5.3 billion in 2015), but Teal Group forecasts it will be worth much more than that over the next decades – we forecast $6.4 billion just in the next ten years.

With Block 2 SEWIP FRP now underway and Block 3 EMD continuing despite troubles, we forecast funding for all versions of SEWIP will reach or exceed $500 million annually beginning in FY17 and $700 million per year from FY25.