Raanan Horowitz, President and CEO of Elbit Systems of America discusses priorities and the development of the budget picture for army systems during an interview with Defense & Aerospace Report Editor Vago Muradian at the 2018 AUSA Annual Meeting in Washington, DC. Our AUSA coverage is brought to you by Bell, a Textron Company, Elbit System of America, L3 Technologies, Leonardo DRS, and Safran
President and CEO, Elbit Systems of America
AUSA Annual Meeting
Vago Muradian: Welcome to the Defense and Aerospace Report. I’m Vago Muradian here at the Association of the United States Army’s Annual Meeting, the biggest gathering of Army leaders from around the world to talk about the service’s future, its strategy, budgets, and technology and all the industries that serve the world’s greatest Army. Our coverage here is sponsored by Bell, a Textron company; Elbit Systems of America; L3 Technologies; Leonardo DRS; and SAFRAN. And we’re honored to have with us my friend Raanan Horowitz, the President and CEO of Elbit Systems of America.
Raanan, it was great seeing you at AFA and great seeing you here.
Raanan Horowitz: Good morning, Vago. It’s great to be here and great to be at AUSA again.
Mr. Muradian: It is. You’re the first, as has become our custom, the very first interview of the show, so you’ll help set the tone a little bit.
Mr. Horowitz: It’s quite an honor.
Mr. Muradian: What are the priorities? The Army’s got a lot of money. It’s spending it. It’s trying to spend it fast, but trying to spend it wisely. Everybody, this is the biggest show in at least half a decade, I think since 2012, that, you know, it’s the largest. All the floor space is taken.
Talk to us a little bit about what your priority efforts here are.
Mr. Horowitz: Vago, as you know, we have a pretty broad portfolio, so I would say priority number one is everything to do with situational awareness inside a combat vehicle, for a dismounted soldier, on the ground force protection. As you know, we’re completing the acquisition of IMI with the Active Protection System. We have other systems that are relevant for that. And of course sensors, Iron Vision which we showed before has been tested on Stryker and now is integrated with the rest of the systems.
In the airborne portfolio, in helicopters, as you know, we’re one of the world’s leaders in helmet-mounted display systems. We are moving into integrated complete sensor suites for helicopters which basically converges capabilities and sensing, missile warning systems, aircraft protection, and so forth. That’s a big focus of ours.
Of course on the existing platforms, Apache, Black Hawk, Chinook, but also looking forward to the AVL.
We look at munitions. Right behind me, we have a Sky Striker which is a loitering munition. We see this as an emerging requirement to be able to address precision targeting across the horizon with a loitering munition, so that’s a big focus which is, of course, on top of our Laser Seekers family which is on the Griffin, the Laser JDAM, Laser STP and others.
So quite a broad set of interests here in AUSA this year.
Mr. Muradian: There is concern, and we talked a little bit about it, about the budget picture, which is going to be strong in ’19, maybe not as strong, flattening out certainly in ’20 if not going down, although there are some people who hold out hope that those kinds of strong increases are going to continue in the future.
As you look at the strategic, at your strategic plan, looking out not just one year, but two years and five years, how do you see the budget picture evolving for Army systems in particular? There is a concern that the focus is going to go to air and sea systems, and a little bit less toward land systems. How do you guys project that and how is it shaping your investment?
Mr. Horowitz: I think the Army like all the other services are following the mission requirements. When you look at near peer competitors, of course, there is a lot of need for Army systems. If you look at East Europe, facing the Russians. Of course, there is a lot of need for situation awareness, protection of platforms, resilient networks. The whole area of networks and tactical communication, we believe, is set for discontinuity, for disruption, with more resiliency capable system. I would draw your attention to our latest win in the UK, the Morpheus Programme, as good evidence that Elbit has a lot to contribute in that field as well.
So I think that’s one area that we see as a key.
I wouldn’t forget, Vago, that when you’re fighting in an urban environment, the war on terror, those things are not over yet. We’re still in the Middle East. We still have things we need to do and I think Elbit has a lot to offer in those areas as well.
Mr. Muradian: You guys for the Israel military produce a lot of the battle command networks that are integrated across services. That’s a very, very big priority. General Perkins was one of the first in the Army to talk about multi-domain battle, multi-domain command and control. We’ve heard General Goldfein, as one of his signature priorities as Chief of Staff of the United States Air Force, and that’s been adopted by each of the services.
What role do you think Elbit can play in that space, given that you guys organically, as one company, have the expertise, both in the air, land and sea command and control?
Mr. Horowitz: Vago, I think we have a good understanding of the entire multi-dimension battlespace. So networks. Focus number one is resiliency. It doesn’t help if you have a network if it’s been penetrated or it’s not secure, it’s not assured. So resiliency of networks, resiliency of communications, software defiant networks.
Again, I would highlight that we now have systems, networks have been selected in three of the Five Eye countries — Australia, New Zealand and now UK. And we definitely are looking forward to additional dialogue that we’re having with the Army regarding what we can contribute to the networks and tactical communication effort for the Army.
Mr. Muradian: Let me ask you about the Army’s acquisition plan. There are some folks who are still questioning it and saying look, it’s not fully baked. The service has sort of gotten it wrong in the past, are they going to get it right this time? That’s one of the big questions. And then there are all sorts of questions about how the Futures Command is going to affect the whole acquisition scheme. And a lot of questions about that. Does Dr. Jette’s organization maintain the power in that relationship or does it shift to Futures Command?
As somebody who’s doing business with the Army, how do you see this? Has the Army been clear enough about its priorities? And how do you think the Futures Command is going to affect how everybody does business with the service?
Mr. Horowitz: First of all, Vago, we are delighted to have Futures Command in Texas, in Austin. We think it’s a great location. Of course, you know, our headquarters are in Fort Worth, so that’s wonderful.
In general, I think the Army is still working to really define how they’re going to do this. Futures Command is going to be limited in size, I believe up to 500 people. How it will work exactly between the Futures Command and the acquisition community and the PEOs we are still learning and studying.
For now, what we’re doing as a company, we’re talking both to the PEOs and the program offices and the CFTs and looking forward to the next few months, hopefully, to get more clarity on the direction, how the requirements process will flow and how can we work with that.
We are excited to learn that Futures Command will put maybe a lab or an innovation center where we believe we’ll be able to interface with new ideas, and maybe short circuit some of the time it takes right now from requirements to fielding.
I believe this is what the Army is trying to do, and I support that, of course. I think when you look at some of our peer competitors the time from requirements and idea to market is much shorter than ours. This is where we need to go, and we intend to support the Army in that.
Mr. Muradian: Do you think they’ve been clear enough about their priorities? Is it as crystal clear and sensible from your standpoint, the plan that they’ve put forward, or the plans at least they put forward for their main modernization efforts?
Mr. Horowitz: I think more clarity is needed, Vago. I mean the honest truth is, we’re working with the Army on the different plans. We think that more clarity is needed. I would just highlight the Army’s coming off a period where they didn’t do a lot of modernization so they have a big gap to cover both on readiness and modernization. So it’s not an easy task to prioritize. We stand ready to support them as they firm up their strategy and their priorities.
Mr. Muradian: And let me ask you one last question which I was going to ask you at AFA and I didn’t, each one of the services has more authority now over their acquisition programs. A little bit less oversight from OSD unless it’s absolutely necessary. All of that is to try to accelerate programs. From your standpoint, has that started making a difference in terms of the speed of programs or the access or the communications you’re having with the services?
Mr. Horowitz: We’re definitely seeing some acceleration. We’re seeing more use of OTAs, 804 authorities. I think that from an execution perspective, from moving forward and executing programs we’re definitely seeing upbeat and much quicker pace.
I think where the clarity still needs to happen is on the management of the entire portfolio for DoD between the services which means what is it that we need to execute? What are the priorities? Versus once you set them up, executing. I think on the execution side we’re seeing an acceleration. Air Force is a good example where things are moving. Quite a lot of awards in September. I think the Army’s still working to decide what do they really need to execute. I’m pretty confident once they clarify that then will prioritize, then they’ll move forward quickly with their new authorities for acquisition and execution of programs.
Mr. Muradian: Raanan Horowitz, President and CEO of Elbit Systems of America. It’s always a pleasure and have a great AUSA.
Mr. Horowitz: Vago, thank you very much. Great to be with you.
Mr. Muradian: Thank you.