Contrary to expectations, at least one defense prime might be able to address the lack of affordable battlefield systems recognized in the 2024 NDAA.
The “hedge portfolio” recently put forward by the House Armed Services committee as strategic insurance foresees development and production of large numbers of cheap battlefield systems by non-traditional defense contractors.
In articulating its vision of affordable tools to give America’s military something, anything to fight with, the Committee looks to break the chokehold of ever fewer stratospherically expensive weapons issuing forth from the usual primes.
But there may be a few often-ignored legacy companies like drone and rocket maker, Kratos Defense & Security Solutions, that can break out and produce in mass at prices we can afford. Though its product lines include space, training and C5ISR software and hardware, its unmanned systems division has been rooted in the design and provision of aerial target drones to the Air Force, Navy and Army for decades.
Nearly a decade ago, Kratos leveraged the technology and market leadership of its BMQ-167, MQM-178 and BMQ-177 aerial target drones to move into the unmanned combat air vehicle (UCAV) business, developing tactical offshoots of its target drones including the UTAP-22 Mako and Air Wolf.
The company’s UCAV development progress yielded the XQ-58 Valkyrie which first flew in 2019 as part of the Air Force Research Laboratory’s Low Cost Attritable Aircraft Technology project portfolio and since then as part of the USAF’s Skyborg development project. That project includes what have become colloquially known as “Loyal Wingman” aircraft, more recently designated as Collaborative Combat Aircraft (CCAs) by the Air Force.
Kratos’ aerial target drone business continues to underpin its unmanned systems division (the unit was awarded a $95 million contract to provide target drones to the Army earlier this week) and the historically “un-sexy” (back to WWII) pursuit of supplying the military with these aircraft has imbued the company with a more-for-less mentality.
When you make target drones like the BQM-167, which costs around $600,000 per copy, you become highly sensitive to price versus capability Kratos’ unmanned systems division president, Steve Fendley, says.
“Target systems obviously don’t get a big chunk of the budget even though they may be critical. We had to provide capability at cost to survive. If we hadn’t met very challenging cost targets, it was easy [for the customer] to cut our systems. We’ve had to continue to increase capability.”
That perspective backs up Fendley’s answer to a question I raised asking what Kratos could start doing here and now to produce a range of tactical drones – from simple moderately sized UCAVs to the AI-infused XQ-58s – in quantity?
Kratos is currently under contract to build 150 drones per year, not including aircraft for classified programs Fendley explains. “Our production facilities are in place and running, our staff and suppliers are in place. Our supply chain has tooled up and can support higher rates from us across six different types of aircraft.”
How high? Kratos could get to 300 aircraft per year in 18 months if funded and well beyond thereafter according to Fendley. The company forecasts this based on projections it did for customers during the COVID slow-down.
While there has been considerable recent discussion of rapid prototyping and production possibilities for cheap UAS systems by small firms working with the Pentagon’s Defense Intelligence Unit and by startups like Firestorm Labs, it has been more theoretical than practical to this point. (Though surely worth quickly exploring.)
Kratos, Fendley says, can go past quadrupling its current production based on presently achievable metrics.
“We have plans in place to get to quantities in the thousands. That’s not based on some new magic technique. That’s based on a plan with reasonable, low risk increases with our current suppliers, for suppliers we’re bringing onboard, and for ramping up [production] at our current facilities.”
Such expansion would be welcome by the Services and most on Capitol Hill – if it could yield aircraft at low to moderate cost. Could Kratos deliver on price as well as quantity?
“We did formal analyses for customers,” Fendley affirms. “In no case did the cost of any current airplane increase. They decreased.”
Price decreases would not stem solely from economies of scale thanks to higher production volume Fendley asserts. Kratos can deliver on cost based on the efficiency of its current production scheme. “There are some additive manufacturing techniques, there are some different automation techniques that we looked at but that’s not what our numbers are dependent on.”
Kratos is a relatively small prime with a workforce of about 3,500. That gives the company some agility akin to emerging defense startups but Fendley contends that its established business model, products and production line offer the fastest reliable path to affordable [materiel] deliveries.
“We see what’s going on in Ukraine. Over time, we can develop new [production] techniques, new suppliers, maybe not traditional defense suppliers. But at the end, you still need a defense product to work when you push the button. It’s different in the commercial world. It doesn’t mean you can’t get there, but it takes time.”
Kratos’ aircraft are already certified and currently serving existing military customers Fendley adds. They have high subsonic levels of performance, can be ground-launched from dispersed, runway-independent locations (prepositioned on small Pacific islands) or air-launched from a variety of platforms. They can presently carry weapons, ISR sensors, RF and electronic warfare systems (ranging from simple communications relay gear to electronic attack) and are mature.
The company views CCAs as a compliment of unsophisticated to moderately autonomous unmanned systems – not just cash-cow Loyal Wingman platforms.
“These aircraft may just be collaborative with each other, maybe sending data back to a network that manned aircraft are using as well but not necessarily directly controlling or influencing,” Fendley says.
“They may simply be getting targeting data from a mass of forward deployed systems that they don’t have to have any interaction with [beyond passing the data], yet manned aircraft reap the [benefit]. At the same time, when deployed en masse, they’re likely lighting up enemy [sensor] systems, making it easier for us to target and eliminate those.”
Fendley pointed to language in the draft 2024 NDAA that articulates cost thresholds for unmanned systems that put expendables at $3 million or less per unit, attritables at $10 million or less and exquisite systems at $25 million or less. “In general, our systems in each of those categories fit at about half of those numbers,” he affirms.
Kratos acknowledges USAF interest in higher capability, higher cost Valkyrie-type systems but Fendley points to its work on the Marine Corps’ “Collaborative Killer” concept project as “very focused on lower cost, more in the attritable range”.
America may only have a small window to acquire combat systems in quantities it will certainly need to deter China or other adversaries. Time is running short most observers agree. Kratos’ unmanned systems president believes it can affordably deliver weapons systems in a way most primes can’t.
“We don’t have to learn the lessons, experience the challenges that other companies who are used to building more expensive exquisite systems have,” Fendley explains.
“It’s a whole lot harder to take a design or design-approach that’s been very expensive and figure out how to design it for less capability for half the price. If you start with something affordable and add some capability – like going from a target [drone] to a tactical system – you may add 10 to 15 percent to its price with new mission systems. We already do stuff that works and we can prove it.”
Read the full article here