Nouvelles

Jen DiMascio The Pentagon is employing new ways to track and funnel dollars to small- and medium-sized aviation suppliers hit hard by a drop-off in their commercial business since the novel coronavirus took hold. One way has been to accelerate up-front progress payments to prime contractors. Ellen Lord, the Pentagon's acquisition chief, announced April 30 that in this week alone, the Defense Department processed more than $1.2 billion out of $3 billion to defense contractors in accelerated payments. The acceleration was enabled by a March 20 memo which lifted the amount that large contractors could receive before delivering a contracted item from 80%-90% and for small contractors from 90%-95%. Lord singled out Lockheed Martin for praise for committing to speed $450 million to its supply chain. As those payments are being released, the U.S. Air Force is studying the needs of small suppliers and charting the flow of those progress payments through the industrial base, service officials said during an April 29 Aviation Week MRO webinar. After the first COVID-19 stimulus package was released, Col. Kevin Nalette, vice director, 448th Supply Chain Management Wing, Air Force Sustainment Center, said his office was asked to find out how much money small companies would need to maintain a constant flow of work to continue to support the defense sector. They had two days to ask contractors–the third- and fourth-tier “mom-and-pop shops” whose work becomes an end item purchased somewhere up the stream. The majority of defense vendors do more work–55% or more–for commercial aviation businesses. “As soon as the commercial sector shut down, we had an amazing ability. We now had their full attention,” Nalette said. “When you come to their attention with basically free cash, it's amazing what you can get done.” Tony Baumann, director of contracting for the Air Force Support Center, is capturing data about where the money and progress payments are going. And he is tracking some 2,700 contracts to find out the COVID-related constraints they are operating under. “My guys talked to all of them,” Baumann said, and they stay in contact so that the Air Force knows when a supplier needs to shut down to clean a business. Then Nalette's group is looking at whether that closure might impact deliveries of critical supplies or inventory. That has caused the Air Force to rewrite service contracts using new authorities granted by the CARES Act COVID-relief bill passed by Congress to keep multiple teams of service personnel on contract so that one group can work and another can be ready to backfill so that no group would experience a 14-day interruption, Baumann said. All of those changes are being tracked and coded based on COVID-19, he added. https://aviationweek.com/defense-space/budget-policy-operations/how-pentagon-reaching-small-suppliers

Michael Bruno April 21, 2020 Companies have good quarters and bad quarters, but rarely does a whole industry sound like it just got sucker-punched. That's what the next few weeks will be like in the aerospace and defense sector, and for sure there will be headlines describing industrial carnage as the industry gasps for air and works to recover after COVID-19. The truth is the aerospace and defense (A&D) supply chain suddenly is far too large for what is needed, maybe by a quarter or a third of excess capacity. As a result, quick or methodical cutbacks in manufacturing and services are expected throughout the syndicates that make airliners, business jets and other aircraft. As public companies report their latest quarterly financial results in late April and May, they will have to address the year ahead and offer insight into their response plans. Unfortunately, business as usual prior to COVID-19 is not expected until 2022 or later, according to numerous analysts and advisors. And that is just too long to carry extra financial costs, which means all levels will feel pain. “The COVID-19 decline is a serious risk for commercial OEM plays—Boeing, Spirit AeroSystems, Allegheny Technologies, Hexcel, Howmet Aerospace, Triumph Group and Carpenter Technology,” Cowen analysts say. “Aftermarket ‘relative safe havens' Honeywell International, Heico and TransDigm Group also face stiff near-term headwinds, with more serious risks at General Electric.”

Opinion: How COVID-19 Has Already Changed Everything David Marcontell April 17, 2020 Oliver Wyman To say that COVID-19 is having a devastating effect on aviation is an understatement. With hundreds of millions of people living under stay-at-home orders and unemployment rates in the U.S. and Europe rising faster than they ever have, global airline capacity in available seat-miles is down 59% compared to what it was at this time last year. The International Air Transport Association is forecasting airline losses of $252 billion—a tally that has been revised upward twice in the last six weeks. At my own firm, we cut our 2020 forecast for demand in the MRO market by $17-35 billion to reflect the nearly 11,000 aircraft that have been taken out of service and the 50% drop in daily utilization for those that are still flying. Oliver Wyman also lowered its projection for new aircraft deliveries by 50-60% versus 2019 after a comprehensive review of original equipment manufacturer (OEM) build projections versus airline demand. Deliveries for most current-production models are expected to drop 50% or more in 2021 and 2022. As a result, we project that it will be well into 2022 before the global MRO market might return to the size it was before COVID-19. This crisis has gone well past the point of a V-shaped recovery. Lasting damage has been done, and not unlike the Sept. 11, 2001, terrorist attacks or the 2008 global financial crisis, the behavior of governments, businesses and the public is likely to have been changed forever. Following 9/11, it took nearly 18 months for passenger traffic to return to its previous level, and when it finally did, travel looked very different than it had before the attacks. Passenger anxiety and the “hassle” factor associated with heightened airport security caused people to stay at home or drive. It took nearly a decade for the public to adjust to the new normal of commercial air travel. In a post-COVID-19 environment, it is not unrealistic to expect new screening protocols to be put in place to help manage the risk of reinfection or an emergence of new hot spots. Already, international public health officials are considering such tools as immunization passports and body temperature scanning (already in use by some airports) that would be applicable to everyone on every flight, much like our security screening is today. In addition, virtual meeting technology—adoption of which is expanding quickly out of necessity—is now becoming business as usual for work and socializing, and it's unlikely we will turn away from it entirely even when the disease is a memory. These combined influences will undoubtedly slow passenger traffic growth. COVID-19 also will change the industry's labor landscape. For the past several years, the aviation industry has been concerned with a looming labor shortage. Before the coronavirus crisis, regional airlines were already being forced to shut down because they couldn't find enough pilots; others were trimming flight schedules. A stunning 90% of the Aeronautical Repair Station Association's 2019 survey reported difficulty finding enough technicians—a situation that cost ARSA members more than $100 million per month in unrealized revenue. COVID-19 will change all that. With the global fleet expected to have 1,200 fewer airplanes flying in 2021 than 2019, the industry will need roughly 18,000 fewer pilots and 8,400 fewer aviation maintenance technicians in 2021. The depth of the cutbacks is the equivalent of grounding 1-2 years' worth of graduates from training and certification programs around the world. How many would-be pilots and mechanics may now be dissuaded from pursuing a career in aviation with those statistics? If people turn away now, when aviation comes back it may be a few years before that candidate pipeline is restored. Another example of permanent change from aviation's last cataclysmic event was the consolidation of the OEM supply chain after the Great Recession. Tier 1 and Tier 2 suppliers went on a buying spree, gobbling up smaller companies. While the post-COVID-19 business environment will undoubtedly be hazardous for these same suppliers, the consolidation of the past decade has put them in a better position to survive this upheaval. Can the same be said for the MRO community, which comprises many smaller, privately held and family-owned companies? I suspect not. While governments are scrambling to provide financial relief for small businesses hurt by the global economic shutdown, these efforts will likely fall short. The result might well be a further consolidated MRO community dominated by the OEMs plus a handful of fully integrated firms that provide support to both OEMs and airlines. COVID-19 is a painful reminder that aviation always will be a cyclical business. With each cycle, the industry renews itself, performing better than before. One should expect this cycle to be no different. The biggest question is: How long will this cycle last? —David Marcontell, Oliver Wyman partner and general manager of its Cavok division, has aftermarket experience with leading OEMs, airlines, MROs and financial services.

Guy Norris Jens Flottau Michael Bruno Sean Broderick April 17, 2020 Aviation Week and Space technology Just a short time ago, Airbus could not expand fast enough. Given the strength of demand, the manufacturer planned to add another final assembly line for narrowbodies in Toulouse, even though its global industrial system was already complex — because maximum deliveries were what mattered. Now, as aircraft manufacturers begin to assess the medium- and longer-term impact of the COVID-19 pandemic, the Toulouse project and many others- are on hold or at least substantially slowed down. And if the revised projections for future aircraft deliveries are only roughly accurate, that additional assembly line will not be needed for a very long time. Airbus in early April became the first OEM to announce new production targets, around one-third below previous assumptions. At this stage, trying to figure out aircraft demand and future production rates is a matter of likelihoods and scenarios covering a wide range of outcomes. In many cases, the most optimistic scenarios already look outdated, leaving those indicating a deeper and more lasting impact on the table — a grim outlook for Airbus, Boeing, Embraer and their suppliers. Consultancy Roland Berger has attempted to define three possible outcomes. Its “rebound” scenario is modeled around two months of air travel restrictions, a full recovery to a precrisis air travel level by next winter and a compound annual growth rate (CAGR) of 4.6% thereafter. In that case, OEMs would lose only 790 deliveries over 10 years vis-a-vis the precrisis outlook. It is already clear that the short term will be much worse, although a steep recovery in later years remains a possibility. If restrictions stay in place for four months, the new normal would be at 90% of precrisis levels and would be reached in the summer of 2021. Airlines would defer aircraft replacement for 18 months and future growth rates average 4.1%. Under this “delayed cure” scenario, the industry would lose almost 6,000 deliveries between now and 2030. Unfortunately, the worst Roland Berger scenario may now be the most likely, at least in its short-term elements: Six months of severe travel restrictions, demand recovery to only 80% by the summer of 2022, extended deferrals and lower growth for the long term at 3.6%. In that circumstance, airlines would accept 10,460 fewer aircraft over the next 10 years. For context: Airbus delivered 863 aircraft in 2019, and Boeing sent out 380 (affected by the 737 MAX grounding). In 2019, Boeing led with 806 deliveries, and Airbus handed over 800 aircraft. If the worst-case scenario comes to pass, the industry will deliver only 11,280 aircraft in the next 10 years; the more positive assumptions of the “delayed cure” model leave that number at 15,840. This would essentially put the industry—on average and very roughly—at the 2017 delivery levels of a combined 1,600 commercial jets above 100 seats for Airbus (now including the A220), Boeing and Embraer. Of course, new players such as Mitsubishi's SpaceJet, the Comac C919 and the United Aircraft Corp. MC-21 will fill (small) amounts of the demand as well. Airbus' decision to cut production by one-third would, if continued, leave it with around 570 annual deliveries, close to 2011 levels. CEO Guillaume Faury points out that it is “not unlikely” that the new rates could go back up in 2021 as the situation improves, but he says it is too early to make firm commitments. The decisions made now reflect the “best knowledge” today and “many conversations with airline CEOs and [chief operating officers].” The production reduction will be implemented over the coming weeks. “This crisis will probably be a long one,” says Faury. “Our industry is one of the most impacted. . . . [The production rates are] the result of the best matching between the downturn and the remaining commitments. We needed to have a plan. We will review it probably on a monthly basis.” The manufacturer plans to produce 40 A320neo-family aircraft per month on average, down from a previous near-term target of 63 and a planned increase to 67 or more. Airbus will also reduce A330/A330neo output to two aircraft per month from the precrisis production level of 3.5. A350 deliveries are being reduced from 9-10 aircraft per month to just six. Airbus delivered 122 aircraft in the first quarter, 36 of them in March. That month included two A220s, 19 A320neos, one A321ceo, 10 A321neos, one A330-200 and three A350s, according to the company's latest order and delivery figures. Airbus produced 60 more aircraft that were not delivered in the quarter because customers said they were unable to accept them. The A330 will remain a profitable program, says Faury, but the A350 will face “more headwinds,” having just moved into profitability in 2019. Boeing's recently updated commercial airliner figures for 2020 through March reveal dramatic cuts in orders and deliveries as the air transport market continues to nosedive in the midst of the COVID-19 pandemic. The beleaguered company, which is due to release its first-quarter financial results on April 29, saw net orders for the year plummet by 307 aircraft, putting it on track for its worst period since the mid-1990s. Despite picking up 24 new orders for the 787 and two additional 767 orders, the bulk of the damage was caused by losses to the 737 MAX orderbook. According to many financial analysts, Airbus' rate cuts set a floor for similar action by Boeing. “We believe similar cuts from Boeing are likely,” Ken Herbert of Canaccord Genuity said April 14. His team assumes MAX deliveries will not restart until at least the third quarter, with just 36 to be delivered this year. It will take “several quarters” for MAX new order activity to pick up. Production next year could average 21 new narrowbodies monthly, and perhaps around 40 per month by the end of 2022. But some of that depends on how much government aid and commercial-sector funding Boeing ultimately receives. “We believe the updated production forecasts are alarming, but not surprising,” Herbert added. “The coronavirus is likely to become a significantly greater pressure point on Boeing than the long-running 737 MAX crisis,” says Jonathan Root, Moody's Investors Service senior vice president and lead analyst. “We now estimate external funding needs in 2020 to at least double—to $30 billion—compared to our precoronavirus expectations,” he says. Boeing already funded about half of this need with the $13.8 billion delayed-draw term loan facility arranged in February and drawn down by mid-March. In the long term, Root's team does not envisage a return to 2019 delivery numbers before the end of 2022. Many other analysts such as Herbert and consultants such as Roland Berger's group agree. Grounded since March 2019 following two accidents, the 737 MAX lost a further 150 orders in March 2020, half of which were cancellations from aircraft lessor Avolon. Other operators included Brazilian carrier Gol, which cut 34 aircraft from the backlog as part of a compensation deal for nondelivery of 25 MAXs in 2019. Overall, net 737 orders for the first quarter have been reduced by 314 aircraft, some 173 of which are listed as cancellations or conversions to other models, and another 141 lost because they no longer meet Boeing's firm contract revenue accounting standard. Deliveries were also significantly down. Just 50 aircraft of all models were delivered through March 31, representing the lowest number of quarterly deliveries since the end of 2008. By comparison, Boeing delivered 149 aircraft in the same period in 2019, and 184 were handed over to customers in the first quarter of 2018. The falloff in deliveries primarily reflects the continuing impact of the 737 MAX grounding, which last year more than halved the company's overall delivery target. Boeing says delivery numbers have been also affected by logistical challenges, as some operators have been unable to bring flight crews to the U.S. to accept the new aircraft owing to travel restrictions. The restrictions are also hampering the MAX's return-to-service effort. The final FAA certification flight to put the software through its paces, the next major step in the return-to-service process, has not taken place. The subsequent milestone, work by the Joint Operational Evaluation Board (JOEB), a multiregulatory group that will evaluate the MAX training recommendations in simulator sessions, has not been scheduled and is not likely to happen until international travel restrictions are eased. The MAX will not be approved for service until the JOEB's work, including a written report, is done. Boeing has not wavered from its projection that a mid-2020 FAA approval is in the cards, but the lack of progress on key milestones makes this increasingly unlikely. In 2019, Boeing completed the year with 380 deliveries, 127 of which were 737s and 158 787s. The previous year, with production of the MAX ramping up and manufacture of the final 737NGs still being phased out, the single-aisle models accounted for 580 of the record-breaking 806 deliveries the company racked up for the year. Military deliveries accounted for eight of the 50 (five KC-46A/767-derivative tankers and three P-8A maritime patrol 737NG derivatives), while the 787 contributed to the bulk of the tally with 29 aircraft. Boeing has meanwhile announced it will begin a phased return to production of commercial aircraft models—including the 737MAX—at its Puget Sound, Washington, and South Carolina plants starting as early as April 20 after suspending activity on March 25 due to the COVID-19 outbreak. It is, however, widely expected to announce rate reductions for the 737, 777 and 787 shortly after manufacturing resumes. The adjusted numbers, using Boeing's own accounting standards on firm contracts, now show the overall firm backlog for all models has been reduced to 5,049—4,079 of those are for the 737. The 747-8F backlog is now reduced to 13, while the 777 orderbook has shrunk to 356 and the 787 to 515. Business aviation fares no better than civil, with an expectation that the business jet market will see deteriorating demand. “Though we expect demand for smaller and midsize jets will see a greater decline in demand than larger jets, there will still be a negative impact to the large-cabin segment that includes Bombardier's Global family,” Moody's analysts say. In turn, credit rating agencies such as Moody's, S&P Global Ratings and Fitch Ratings are downgrading debt rankings of OEMs and suppliers across the board. “The downgrades reflect Moody's expectation that 2020 will be a very challenging year for commercial aerospace suppliers, with double--digit earnings declines stemming from a significant reduction in commercial aerospace production by Tier 1 OEMs and suppliers,” the Moody's analysts say. “Stress on the supply chain will result in unprecedented deterioration in earnings and cash flows, resulting in key credit metrics that will remain strained for some time.” “Many suppliers are distressed,” Spirit AeroSystems said in a regulatory filing.

Martijn Rasser There's no question the post-corona world will be very different. How it will look depends on actions the world's leaders take. Decisions made in coming months will determine whether we see a renewed commitment to a rules-based international order, or a fragmented world increasingly dominated by authoritarianism. Whomever steps up to lead will drive the outcome. China seeks the mantle of global leadership. Beijing is exploiting the global leadership vacuum, the fissures between the United States and its allies, and the growing strain on European unity. The Chinese Communist Party has aggressively pushed a narrative of acting swiftly and decisively to contain the virus, building goodwill through ‘mask diplomacy', and sowing doubts about the virus' origin to deflect blame for the magnitude of the crisis and to rewrite history. Even though the results so far are mixed, the absence of the United States on the global stage provides Beijing with good momentum. Before the pandemic, the world's democracies already faced their gravest challenge in decades: the shift of economic power to illiberal states. By late 2019, autocratic regimes accounted for a larger share of global GDP than democracies for the first time since 1900. As former U.K. foreign secretary David Miliband recently observed, “liberal democracy is in retreat.” How the United States and like-minded partners respond post-pandemic will determine if that trend holds. There is urgency to act — the problem is now even more acute. The countries that figure out how to quickly restart and rebuild their economies post-pandemic will set the course for the 21st century. It is not only economic heft that is of concern: political power and military might go hand in hand with economic dominance. At the center of this geostrategic and economic competition are technologies — artificial intelligence, quantum computing, biotechnology, and 5G — that will be the backbone of the 21st century economy. Leadership and ongoing innovation in these areas will confer critical economic, political, and military power, and the opportunity to shape global norms and values. The pre-crisis trajectory of waning clout in technology development, standards-setting, and proliferation posed an unacceptable and avoidable challenge to the interests of the world's leading liberal-democratic states. The current crisis accentuates this even more: it lays bare the need to rethink and restructure global supply chains; the imperative of ensuring telecommunication networks are secure, robust, and resilient; the ability to surge production of critical materiel, and the need to deter and counteract destructive disinformation. This is difficult and costly — and it is best done in concert. Bold action is needed to set a new course that enhances the ability of the world's democracies to out-compete increasingly capable illiberal states. The growing clout of authoritarian regimes is not rooted in better strategy or more effective statecraft. Rather, it lies in the fractious and complacent nature of the world's democracies and leading technology powers. In response, a new multilateral effort — an alliance framework — is needed to reverse these trends. The world's technology and democracy leaders — the G7 members and countries like Australia, the Netherlands, and South Korea — should join forces to tackle matters of technology policy. The purpose of this initiative is three-fold: one, regain the initiative in the global technology competition through strengthened cooperation between like-minded countries; two, protect and preserve key areas of competitive technological advantage; and three, promote collective norms and values around the use of emerging technologies. Such cooperation is vital to effectively deal with the hardest geopolitical issues that increasingly center on technology, from competing economically to building deterrence to combating disinformation. This group should not be an exclusive club: it should also work with countries like Finland and Sweden to align policies on telecommunications; Estonia, Israel, and New Zealand for cyber issues; and states around the world to craft efforts to counter the proliferation of Chinese surveillance technology and offer sound alternatives to infrastructure development, raw material extraction, and loans from China that erode their sovereignty. The spectrum of scale and ambition this alliance can tackle is broad. Better information sharing would yield benefits on matters like investment screening, counterespionage, and fighting disinformation. Investments in new semiconductor fabs could create more secure and diverse supply chains. A concerted effort to promote open architecture in 5G could usher in a paradigm shift for an entire industry. Collaboration will also be essential to avoiding another pandemic calamity. Similar ideas are percolating among current and former government leaders in capitals such as Tokyo, Berlin, London, and Washington, with thought leaders like Jared Cohen and Anja Manuel, and in think tanks around the world. The task at hand is to collate these ideas, find the common ground, and devise an executable plan. This requires tackling issues like organizational structure, governance, and institutionalization. It also requires making sure that stakeholders from government, industry, and civil society from around the world provide input to make the alliance framework realistic and successful. No one country can expect to achieve its full potential by going it alone, not even the United States. An alliance framework for technology policy is the best way to ensure that the world's democracies can effectively compete economically, politically, and militarily in the 21st century. The links between the world's leading democracies remain strong despite the challenges of the current crisis. These relationships are an enduring and critical advantage that no autocratic country can match. It is time to capitalize on these strengths, retake the initiative, and shape the post-corona world. Martijn Rasser is a senior fellow at the Center for a New American Security. https://www.c4isrnet.com/opinion/2020/04/14/technology-alliances-will-help-shape-our-post-pandemic-future/

On April 8, 2020, the DARPA Small Business Programs Office (SBPO) pre-released the following SBIR/STTR Opportunities (SBOs): "Seabed Simulation Synthesis", Announcement Number HR001120S0019-04, published at https://beta.sam.gov/search?keywords=HR001120S0019-04 "Wearable Laser Detection and Alert System", Announcement Number HR001120S0019-05, published at https://beta.sam.gov/search?keywords=HR001120S0019-05 "Open Source Wide Band Software Defined Acoustic Modem", Announcement Number HR001120S0019-06, published at https://beta.sam.gov/search?keywords=HR001120S0019-06 These SBOs will open for proposals on April 23, 2020 and close on May 26, 2020. If you have any questions on the open BAAs or DSIP, please contact the DSIP Help Desk Monday – Friday, 9:00 a.m. – 5:00 p.m. ET at 703-214-1333 or DoDSBIRSupport@reisystems.com. Thank you for your interest in the DoD SBIR/STTR Program. DoD SBIR/STTR Support Team

by Sandra Erwin In response to the SBIR solicitation, a space startup is developing a geospatial intelligence-based tool that can help governments identify infected areas. WASHINGTON — The U.S. Air Force Small Business Innovation Research office has posted a new solicitation that includes COVID-19 countermeasures as an area of interest. The March 30 Small Business Innovation Research solicitation, like most SBIR calls, is open to proposals on any topic that addresses a defense-focused need. But this is the first one that includes COVID-19 “defeat and mitigation related to Air Force operations and activities” as an area of interest. Proposals are due April 30. This SBIR is for “direct to Phase 2” contracts of up to $1 million over 27 months. Phase 1 awards are for early research work whereas Phase 2 are for technologies that are relevant to defense needs but also have commercialization potential. Some Air Force SBIR programs require matching funds from private investors. According to the March 30 solicitation, companies can compete for $1 million Air Force awards but private matching funds are not a requirement. The SBIR solicitation is an opportunity for startups in space and defense to adapt technologies for COVID-19 response, Shawn Usman, an astrophysicist with Rhea Space Activity, told SpaceNews. Usman said Rhea Space Activity has partnered with Illumina Consulting Group and Dynamic Graphics to offer a geospatial intelligence-based tool that can help governments identify infected areas much faster than is currently possible. “We can provide operational, real-time data analysis and alerting capabilities to federal, state, and military emergency operations centers,” he said. “Our solution will collect publicly available information, including social media and adware data, and correlate it with other data sets from public health organizations to create alerts detailing the emergence of COVID-19 hotspots.” Using open-source analytics and satellite collected geospatial information it would be possible to “readily confirm COVID-19 infected population areas, and will provide first responders with much more detailed, real time information to formulate their own reaction plans,” Usman said. https://spacenews.com/air-force-small-business-program-seeks-technologies-to-help-counter-covid-19/

Aaron Mehta A congressionally mandated panel of technology experts has issued its first set of recommendations for the government, including doubling the amount of money spent on artificial intelligence outside the defense department and elevating a key Pentagon office to report directly to the Secretary of Defense. Created by the National Defense Authorization Act in 2018, the National Security Commission on Artificial Intelligence is tasked with reviewing “advances in artificial intelligence, related machine learning developments, and associated technologies,” for the express purpose of addressing “the national and economic security needs of the United States, including economic risk, and any other associated issues.” The commission issued an initial report in November, at the time pledging to slowly roll out its actual policy recommendations over the course of the next year. Today's report represents the first of those conclusions — 43 of them in fact, tied to legislative language that can easily be inserted by Congress during the fiscal year 2021 budget process. Bob Work, the former deputy secretary of defense who is the vice-chairman of the commission, said the report is tied into a broader effort to move DoD away from a focus on large platforms. “What you're seeing is a transformation to a digital enterprise, where everyone is intent on making the DoD more like a software company. Because in the future, algorithmic warfare, relying on AI and AI enabled autonomy, is the thing that will provide us with the greatest military competitive advantage,” he said during a Wednesday call with reporters. Among the key recommendations: The government should “immediately double non-defense AI R&D funding” to $2 billion for FY21, a quick cash infusion which should work to strengthen academic center and national labs working on AI issues. The funding should “increase agency topline levels, not repurpose funds from within existing agency budgets, and be used by agencies to fund new research and initiatives, not to support re-labeled existing efforts.” Work noted that he recommends this R&D to double again in FY22. The commission leaves open the possibility of recommendations for increasing DoD's AI investments as well, but said it wants to study the issue more before making such a request. In FY21, the department requested roughly $800 million in AI developmental funding and another $1.7 billion in AI enabled autonomy, which Work said is the right ratio going forward. “We're really focused on non-defense R&D in this first quarter, because that's where we felt we were falling further behind,” he said. “We expect DoD AI R&D spending also to increase” going forward. The Director of the Joint Artificial Intelligence Center (JAIC) should report directly to the Secretary of Defense, and should continue to be led by a three-star officer or someone with “significant operational experience.” The first head of the JAIC, Lt. Gen. Jack Shanahan, is retiring this summer; currently the JAIC falls under the office of the Chief Information Officer, who in turn reporters to the secretary. Work said the commission views the move as necessary in order to make sure leadership in the department is “driving" investment in AI, given all the competing budgetary requirements. The DoD and the Office of the Director of National Intelligence (ODNI) should establish a steering committee on emerging technology, tri-chaired by the Deputy Secretary of Defense, the Vice Chairman of the Joint Chiefs of Staff, and the Principal Deputy Director of ODNI, in order to “drive action on emerging technologies that otherwise may not be prioritized” across the national security sphere. Government microelectronics programs related to AI should be expanded in order to “develop novel and resilient sources for producing, integrating, assembling, and testing AI-enabling microelectronics.” In addition, the commission calls for articulating a “national for microelectronics and associated infrastructure.” Funding for DARPA's microelectronics program should be increased to $500 million. The commission also recommends the establishment of a $20 million pilot microelectronics program to be run by the Intelligence Advanced Research Projects Activity (IARPA), focused on AI hardware. The establishment of a new office, tentatively called the National Security Point of Contact for AI, and encourage allied government to do the same in order to strengthen coordination at an international level. The first goal for that office would be to develop an assessment of allied AI research and applications, starting with the Five Eyes nations and then expanding to NATO. One issue identified early by the commission is the question of ethical AI. The commission recommends mandatory training on the limits of artificial intelligence in the AI workforce, which should include discussions around ethical issues. The group also calls for the Secretary of Homeland Security and the director of the Federal Bureau of Investigation to “share their ethical and responsible AI training programs with state, local, tribal, and territorial law enforcement officials,” and track which jurisdictions take advantage of those programs over a five year period. Missing from the report: any mention of the Pentagon's Directive 3000.09, a 2012 order laying out the rules about how AI can be used on the battlefield. Last year C4ISRNet revealed that there was an ongoing debate among AI leaders, including Work, on whether that directive was still relevant. While not reflected in the recommendations, Eric Schmidt, the former Google executive who chairs the commission, noted that his team is starting to look at how AI can help with the ongoing COVID-19 coronavirus outbreak, saying "“We're in an extraordinary time... we're all looking forward to working hard to help anyway that we can.” The full report can be read here. https://www.c4isrnet.com/artificial-intelligence/2020/04/01/panel-wants-to-double-federal-spending-on-ai/

No HANNOVER MESSE in 2020 HANNOVER MESSE cannot take place this year due to the increasingly critical situation surrounding the Covid-19 pandemic. The Hannover region has issued a decree that prohibits the staging of the world's leading tradeshow for industrial technology. From now until the next HANNOVER MESSE in April 2021, a digital information and networking offer will provide exhibitors and visitors with the opportunity for economic policy orientation and technological exchange.