The Navy's Orlando training-systems agency has indefinitely delayed a major contract award amid uncertainty about the potential for fallout from the federal government's ongoing deficit-reduction cutbacks in military spending.
Authorities have put a hold on awarding the lucrative deal as questions about funds surround the program to develop a life-size weapons-center simulator for the Navy's next-generation warship, the Littoral Combat Ship.
Unless Congress changes the federal budget's "sequestration," more than $52 billion in cuts to military spending will take effect Oct. 1, the start of the federal fiscal year. Note: More than $42 billion will also be cut from social programs and discretionary spending.
Military agencies, such as the Navy's air-warfare training-systems operation in Orlando, have scrambled to find ways of absorbing the across-the-board cuts. This year, among other measures, they imposed staff furloughs, trimmed travel budgets and delayed awards for many new programs, such as the Littoral warship's Mission Bay Trainer. But the fiscal 2014 cuts are expected to be even more severe and problematic.
The agency would not comment on the Mission Bay award or its procurement process.
Defense experts, however, said the reason for the contract's delay was clear.
Easy options gone
"It has to be the sequestration," said Michael Blades, senior defense analyst for the consulting firm Frost & Sullivan. "All of these agencies are just waiting to find out how they'll be affected.
"This past year, it was mitigated because they could draw on a lot of unused funds to make up for the cuts," he said. "Now, most of those options are done, and everyone is taking a closer look at what they'll have to cut going forward."
Until now, the sequestration has had a limited effect on Central Florida's training-and-simulation industry, considered the biggest cluster of such training agencies and contractors in the country. Most experts expected the industry to weather sequestration without suffering undue harm. That appeared to be on track earlier the year, as training-contract awards continued to flow.
In January, the Navy training-systems agency awarded Cubic Corp.'s Orlando operation a trio of Littoral Combat Ship crew-training contracts potentially worth a combined $300 million.
In April, the Army's Orlando-based training-simulation agency awarded a war-game commander-training deal worth $146 million to the Orlando unit of Lockheed Martin Mission Systems & Training.
Littoral turbulence ahead
In July, the Air Force awarded Northrop Grumman Corp.'s Orlando training-systems unit a deal worth $490 million to develop a next-generation air-combat training network.
With such lucrative deals still getting the green light, all seemed well for the Navy's Littoral Combat Ship Mission Bay Trainer program. Shortly after awarding the first Littoral ship training deal in January, the Navy called for bids for the mission-bay work. After closing bidding in March, the agency was expected to announce a winner in July.
But funds aren't the only thing holding up the Mission Bay award. The Littoral ship program has come under criticism for high costs, performance flaws and deficient equipment. In July, the Government Accountability Office recommended the program be scaled back dramatically until problems are solved. The Navy stood by the program, saying many such improvements have been made.
Still, the fate of the new warship remains uncertain, said Blades, the Frost & Sullivan analyst. "To me, the program is just so nebulous," he said. "They don't know exactly what equipment they'll have on it, and they don't know what training will be needed."