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 AIA UPDATE: November/December 2006, Volume 11, No. 4
Aerospace Association Urges R&D Tax Credit Passage during Lame-Duck Session should pass the research and development tax credit during the lame-duck session to boost innovation and job creation, AIA President and CEO John Douglass is urging. The credit is vital to the aerospace and defense industry, is a huge economic engine for the United States, and enables development of crucial equipment for American warfighters, Douglass said. "The R&D tax credit represents a sound fiscal policy that supports a dynamic aerospace industrial base at home and the operational requirements of our warfighters abroad," Douglass said. The credit provided financial incentives to encourage companies to pursue high-risk product development that results in technical innovations. These innovations fuel the aerospace and defense industry, which has more than 635,000 employees and accounts for a $40 billion positive trade balance, the largest of any U.S. manufacturing sector. More than 75 percent of the credit went directly to wages and salaries for the tens of thousands of aerospace workers in the United States. Congress first passed the measure in 1981 and extended it 11 times over 24 years, but it expired in December 2005. This year an extension passed the full House and a Senate committee but fell short of final approval. Douglass said it is important that Congress passes the measure, which enjoys bipartisan support, during the lame-duck session because it would otherwise fall by the wayside for several additional months. AIA is an active member of the R&D Tax Credit Coalition, an effort including more than 1,000 companies and dozens of trade associations championing a strengthened and permanent credit. AIA Source: patrick.mccartan@aia-aerospace.org Dave North Selected For Lyman Award David M. North, former editor-in-chief of Aviation Week & Space Technology who retired in 2004 following a 28-year career at the magazine, has been selected to receive the prestigious Lauren D. Lyman Award for 2006. Established in 1972, the award will be presented at AIA's 42nd Annual Year-End Review and Forecast luncheon on Dec. 13. Sponsored by United Technologies Corporation and administered by AIA, the award honors distinguished, career-long achievements in aviation journalism or public relations. North joined Aviation Week in 1976 as transport editor after serving as a pilot and flight engineer with Pan American World Airways. He earlier was a U.S. Navy fighter pilot. Named editor-in-chief of the magazine in 1995, North established editorial policy and strategic direction for the magazine from the Washington Bureau. In his previous position, he was managing editor from 1987 through 1995, overseeing administration, editorial guidance, and a staff of more than 40 people. His responsibilities included managing the magazine's art department, desk operations, and production based in New York as well as the foreign bureaus in Hong Kong, Paris, London, Russia, and Japan. The award honors Deac Lyman, a Pulitzer Prize winner who covered aviation for The New York Times and later became a public relations executive for United Aircraft, predecessor of today's United Technologies. Previous Lyman Award Winners
AEROSPACE FOCUS  WASHINGTON PIPELINE: Export Control Rules Need Revamping By John W. Douglass, AIA President and Chief Executive Officer In the last year three nations tried to obtain sensitive information about military technology from the United States. But they were stopped in their tracks. Rules aimed at ensuring that foreign countries hostile to the United States don't get their hands on advanced technology kicked in, cutting off any chance those nations could receive the information. A victory over enemies in a time of considerable international danger and terrorist threats, right? Not quite. The problem is the three nations were Canada, the United Kingdom, and Israel. And they were inquiring about joint programs that increase the security of both themselves and the United States. The U.S. export control system cannot discern our staunchest allies from our enemies, a fact that dramatically illustrates the need to revamp how we do business. Our export control system assesses essentially commercial technology as risky because it doesn't have the tools and resources to make more nuanced decisions. A little over a year ago our executive leadership came to the right conclusion that it was time to chart a new course in our effort to seek reform. A careful examination of the export control system and its impact on our country yielded two inescapable conclusions:
The second phase we are implementing is an ambitious task, namely trying to develop a new U.S. export control system starting from a blank sheet. As we embark upon the export control reform effort, it is interesting to look at the problem through the eyes of some of our allies. UK leaders, for example, have publicly stated frustrations involved in the Joint Strike Fighter program. During a debate in the House of Lords last May, Lord Hoyle summed up UK feelings: "My Lords, perhaps I may say to my noble friend how disappointed I am at the Americans' attitude. Here we are, the most loyal and staunchest ally, yet when we go to them and ask for technology and benefits, they do not reciprocate and offer them to us. Why is that? Why are they dragging their feet in that way?" How incongruous. We share our most sensitive nuclear technology with the United Kingdom, yet we cannot provide an ally information on relatively low-tech items. The United States needs to change a system that treats our friends as if they are our adversaries. WASHINGTON WATCH: AIA Leads Opposition to Superfluous Defense Export Rule AIA's Acquisition Policy group is working with the Council of Defense and Space Industry Associations (CODSIA) in opposing a proposed Defense Department rule that would add superfluous controls to companies that export defense goods. The rule would amend the Defense Federal Acquisition Regulation Supplement (DFARS) to prevent unauthorized disclosure of export-controlled information and technology under DoD contracts. The proposal stems from a report by the DoD inspector general that asserts that not all contractors are aware of export control requirements that often accompany DoD contracts. The Defense Department said it would remedy concerns by adding new guidance in the DFARS. Industry believes DoD's proposed guidance goes too far and is excessively burdensome for contractors. In addition, industry points out that the guidance is inconsistent with existing federal export control laws and regulations. It would require the insertion of a new contract clause on contractor awareness of export-controlled information and technology. Once the new clause is added, the contracting officer would be required to list all export-controlled information in the contract and update the list through contract modifications. AIA and CODSIA urge that the rule be withdrawn, stressing that the agency already has adequate contractual and legal enforcement tools to protect against unauthorized disclosure of export-controlled information and technology. It's DoD's second attempt in two years to invoke regulatory coverage in this area. AIA's Acquisition Policy group also coordinated CODSIA opposition to the first effort. While the latest proposal is an improvement from the earlier effort, the association believes that a notice cautioning contractors to maintain controls is sufficient. AIA Source: elaine.guth@aia-aerospace.org WASHINGTON WATCH: End of Year Action Nears for Aerospace Issues in Congress As of early November the second session of the 109th Congress had adopted or stood prepared to act on the following provisions of significance to the aerospace industry: Defense Trade and Cooperation The congressional conference committee on the fiscal 2007 Defense Authorization Act, signed by the president in late October, deleted two provisions that would have restricted bilateral military relationships with nations as a result of disputes involving the World Trade Organization and commercial aerospace sales to China. AIA actively supported this result, arguing to the House and Senate Armed Services Committees that political and economic matters unrelated to national security should not disrupt the country's defense alliances. Export-Import Bank Reauthorization A five-year extension of the charter for the Export-Import Bank (Ex-Im) sailed through the House earlier this year and will likely pass the Senate without objection before the end of the post-election lame-duck session of Congress. AIA circulated a legislative briefing that endorsed renewal of the Ex-Im charter because it facilitates loans for U.S. civil aviation competition in high-risk air transportation markets such as southern Asia and Latin America. Aerospace Workforce Enhancement Bill (H.R. 758) This AIA-crafted measure creates an 11-agency federal task force on "aerospace revitalization." Introduced by Rep. Vern Ehlers (R-Mich.), the bill specifically requires the panel to work with industry, academia, and state governments to expand education programs in aerospace-related math and science disciplines. The House passed the bill by unanimous consent, and the Senate will likely take action on it during the lame-duck session. Research & Development Tax Credit AIA participates in an industry coalition, co-chaired by Microsoft and The Boeing Company, seeking a long-term extension of the R&D tax credit, an action that enjoys strong, bipartisan congressional support. The credit particularly benefits the aerospace industry by providing incentives for company-funded research on complex military, space, and air transportation technologies. The House extended the credit through the end of 2007, and it awaits final approval in the Senate. Manufacturing Extension Partnership Program (MEPP) Administered by the Commerce Department, the MEPP operates centers in all 50 states to assist small manufacturers, including aerospace suppliers, with facility and technology modernization. The administration requested only $46 million in fiscal 2007 funding for the program, but both the House and Senate appropriations committees increased the level to $92 million and $106 million, respectively. The final MEPP budget is expected to be close to $100 million. AIA Source: patrick.mccartan@aia-aerospace.org WASHINGTON WATCH: NGATS Designers Offer Concept of Operations for 2025 In the complex task of planning the Next-Generation Air Transportation System (NGATS), one more incremental achievement has been logged with approval of a Concept of Operations (ConOps) for commercial aviation in 2025. The NGATS Institute Management Council (IMC) in October okayed a working group's recommended revisions to the ConOps as submitted by the Joint Planning and Development Office (JPDO). AIA sits on the IMC and was active in the working group. The approved ConOps is a block-to-block description of how NGATS' transformational elements will operate in 2025. It focuses on commercial aircraft operations from departure to arrival but excludes, at this time, safety, airport, and security issues. The ConOps will be updated and expanded in later steps. Recognizing that the JPDO document is limited in scope, AIA believes its most valuable contribution is a listing of research and development, policy, and liability issues that need to be addressed. Even though the operational design concept is just getting started, the number of outstanding R&D issues is extensive, underlining the urgent need for federal support and funding of NGATS-related research. Compounding industry concern is the fact that research and development for NGATS is heavily frontloaded with most of it required by 2011 or sooner. AIA and other IMC participants are alarmed at NASA's new focus on fundamental research and its termination of most transitional and higher level research. The agency's stance will seriously impede U.S. development of technologies needed for NGATS and allow the European Union to set the standards and products for advanced global aviation technologies. AIA Source: susan.mertes@aia-aerospace.org Five New Members Add to AIA's Strength As 2006 comes to a close, AIA welcomes five new companies into the association, bringing the roster of regular members to 108. There are 182 associate members. The newest members: Accenture is a global management consulting, technology services, and outsourcing company. Committed to delivering innovation, the firm collaborates with its clients to help them become high-performance businesses and governments. Headquartered in New York, Accenture can mobilize the right people, skills, and technologies to help clients improve performance. The company has 140,000 people in 48 countries. AeroVironment is the world's largest supplier of small unmanned aircraft systems and electric vehicle fast charge systems. Raven, Dragon Eye, Pointer, Swift, Puma, and Wasp unmanned aircraft are used by the Defense Department and other U.S. government agencies and allied military forces. PosiCharge fast charge systems have eliminated battery changing for electric material handling vehicle fleets in factories, airports, and distribution centers. AeroVironment is headquartered in Monrovia, Calif. Andrews Space has been a catalyst in the commercialization and development of space since the company was founded in 1999. Andrews develops innovative solutions for government and commercial customers involving space transportation systems, technologies, and components. Headquartered in Seattle, Andrews' technical competencies include product/system development, space system design, rapid prototyping, propulsion system design, systems engineering, and business analysis. Click Commerce, Inc., a leading provider of on-demand supply chain management solutions, enables millions of users in 70 countries to collaborate in real time with business partners across an enterprise. Headquartered in Chicago, the company supports the business processes of multiple industry segments, such as manufacturing, aerospace and defense, and high technology in coordinating and optimizing business processes, accelerating revenue, lowering costs, and improving customer service. Solectron provides electronics manufacturing and supply chain management services to the world's leading networking, telecommunications, computing, consumer, automotive, industrial, and medical device firms. Founded in 1977, Solectron's services include new product introduction, collaborative design, materials management, product manufacturing, product warranty repair, and end-of-life support. Based in Milpitas, Calif., the company operates in more than 20 countries on five continents. AIA Source: trish.ward@aia-aerospace.org Exhibit with AIA at 2007 Paris Air Show AIA will provide co-located exhibit space for associate and regular member companies during the 47th Paris Air Show at Le Bourget next June 18-26. The association's booth will be in Hall 3, a site with high traffic and exposure to air show participants and visitors. Benefits include exhibit space, tickets to social events, help with hotel accommodations, introductions to potential customers, business meetings in AIA member chalets, and international business seminars. To learn more, contact Trish Ward at 703-358-1061 or trish.ward@aia-aerospace.org. Rocketry Challenge Entering Fifth Year Entries for the 5th Annual Team America Rocketry Challenge closed November 15, and hundreds of teams from almost every state in the union clamored to enter. An AIA initiative that encourages careers in aerospace, the Challenge attracts national media attention and support from NASA, the Defense Department, and scores of association member companies. In the next five months, teams of middle- and high-school students will design, construct, and launch their rockets under the supervision of volunteers from the National Association of Rocketry. The top 100 teams will bring their rockets to the national finals, scheduled May 19, 2007, at Great Meadow, Va. Each team competes to launch a raw egg precisely 850 feet into the sky in a flight lasting 45 seconds. AIA encourages its member companies to adopt local teams and help spread the word about the many great careers in aerospace. AIA Source: jj.gertler@aia-aerospace.org CIOs Take Steps to Improve Electronic Access to Information At its first forum for government and industry chief information officers, AIA's e-Business Steering Group established steps for the aerospace and defense industry and government to bridge gaps in the ability of their respective information systems, security programs, and identity management to work together. Participants acknowledged that a balanced strategic plan is needed for industry and government to securely and efficiently share computer-based information. Security discussions examined joint efforts to expand strong identity and access management tools and processes. Topics for future forums will include evolving public key infrastructure trust, the role of an identity management federation, and a rapidly evolving need for a roadmap for access management, including facilities protection and information assurance. AIA Source: rusty.rentsch@aia-aerospace.org PBL Awards Made 
Also recognized were Lockheed Martin and the U.S. Army for the High- Mobility Artillery Rocket Systems program, which won the System Level Award, and Raytheon Company and the Navy's Fleet Readiness Center in Jacksonville, which earned the Sub-System Level Award for the H-60 Forward Looking Infrared contract. Space Roundtable Considers Election Campaign Message Sixty aerospace chief executive officers and other senior executives took part in the 3rd Executive Space Industry Roundtable at AIA's Board of Governors meeting in Phoenix on Nov. 15. The roundtable was chaired by Mike Cerneck, chief executive officer of Swales Aerospace. Discussion centered on the changing political landscape in Washington. It was decided that the key aerospace industry message in the 2008 presidential election campaign would encourage candidates to support a space exploration policy that resonates on a national level. "In our conversations with highly placed government officials in NASA and the Defense Department, we've been very gratified to learn that they are aware of the Executive Space Industry Roundtable," said J.P. Stevens, AIA's vice president of space systems. "This recognition that our goals come from the highest levels of industry is a tremendous tool as we promote policy for aerospace." Roundtable attendees also discussed maintaining a skilled aerospace workforce, an upcoming Cost Estimating Forum linked to AIA's acquisition reform efforts, an update on the Space Education Series presented on Capitol Hill, and Space Council plans for 2007 and beyond. Space roundtable sessions take place twice a year at association Board of Governors meetings and are designed to provide information to senior executives of member companies and receive back strategic directions. The next will occur in Williams-burg in May and will be chaired by Dean Flatt, president of space and defense for Honeywell Aerospace. AIA Source: andrew.barber@aia-aerospace.org Defense Council Gets to Work Tackling Key Industry Issues AIA's Defense Council, formed earlier this year, has launched programs and committees to tackle key industry issues such as workforce revitalization, unmanned aircraft operations, and rotorcraft industry support. The Industrial Base and Workforce Committee, formed from the previous Workforce Working Group, has reviewed a seven-point, comprehensive plan to help develop the next generation of aerospace professionals. In addition, the committee is creating new programs within AIA to identify and share best practices among member companies, define and endorse new legislation in support of aerospace education, and propose ways to encourage retiring aerospace professionals to help develop their successors. The committee's plan was briefed to the association's National Security Council in late October. Meanwhile, the Defense Policy and Budget Committee is scoping out a range of issues and developing supportive industry positions. This committee will oversee the work of task- and subject-specific subcommittees, such as the Subcommittee on Unmanned Aircraft Systems, which has already had its initial meeting. AIA Source: jj.gertler@aia-aerospace.org Improvements Made in Domestic Specialty Metals Language Defense contractors, many of whom are AIA members and associate members, were disappointed when Congress failed to adopt many of the modifications to the Berry Amendment proposed by the Senate. Most believe Congress missed an opportunity in the fiscal 2007 Defense Authorization Act to produce legislation that would have continued to adequately protect the domestic specialty metals producers while correcting the unworkable provisions of the Berry Amendment. Despite rejecting many of the Senate-sponsored reforms supported by the Defense Department and the aerospace and defense industry, the legislation accomplished some improvements:
AIA Source: terry.marlow@aia-aerospace.org |
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