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How Will the Election Shake-Ups Shake Out on the Budget?

With November elections in the rearview mirror, members of Congress will soon take up the 2015 defense budget.

Actually, the new fiscal year is already here; it arrived on Oct. 1. Right now Uncle Sam is spending money under a stopgap measure.

As of this writing, it was too early to tell whether the 113th Congress will pass a defense budget before it bows out, or whether the 114th Congress will pass a budget after Jan. 1 as one of its first acts.

Hang on to your seats. The 114th Congress is going to be a lively one, with Republican Sen. John McCain heading the Senate Armed Services Committee.

• • •

Targets Here, Transit There: Kratos Defense & Security Solutions Inc., the San Diego holding company with subsidiaries around the country, said recently that the U.S. Navy successfully completed the first flight of a target drone produced by its Unmanned Systems Division.

The drone, called the BQM-177A, flies at subsonic speeds and is meant to simulate cruise missiles. Navair, the Naval Air Systems Command, conducted the flight on Sept. 29 at its Point Mugu training range. Five tests are planned through 2015.

The drone is based on Kratos’ BQM-167X aircraft, a derivative of the BQM-167A Skeeter target built by Composite Engineering Inc. — a Sacramento company that Kratos acquired in mid-2012. The BQM-177A has a new fuselage with different wing placement and a MicroTurbo turbo jet engine. The drone can carry a variety of payloads, including electronic countermeasures, active and passive radar augmentation, infrared, identification friend or foe, internal chaff and flare dispensing, threat emitter simulators, smoke and scoring.

In other contract news, Kratos said that it received a five-year, $81 million contract to deploy and integrate a security system for a mass transit agency in one of the largest metro areas of the United States; Kratos did not name the city. The company’s Public Safety & Security Solutions Division, based in the University Towne Center area, will handle the work. Ben Goodwin, the division’s president, called the contract the largest single security system deployment award in the division’s history.

Kratos Defense released financial results in early November. The business missed analyst expectations by reporting a net loss of 19 cents per share in its third quarter, or earnings of 10 cents after certain items had been excluded, and Kratos’ stock price declined in the days that followed.

For the quarter ended Sept. 28, Kratos reported a net loss of $10.9 million on revenue of $217.1 million. In the same quarter of 2013, Kratos reported a net loss of $9.9 million on revenue of $226.4 million.

The business has 3,600 employees, down from 3,900 one year ago.

• • •

Tools for Training: Kearny Mesa-based Cubic Corp. had several pieces of news as October turned to

November.

The Royal Australian Air Force awarded the company a contract worth more than $20 million. Under the deal announced on Nov. 5, Cubic (NYSE: CUB) will provide air combat training electronics for several types of military jets, including the MK-127 Hawk, early models of the F/A-18 Hornet and the F/A-18G Growler.

Cubic Defense Applications is the prime contractor on the electronics, called the P5 Tactical Combat Training System. DRS Technologies Inc. is the principal subcontractor. The system includes aircraft-mounted instrumentation pods, equipped with GPS, which track aircraft during training sorties. The system also includes ground stations. Using the electronics, air force instructors can make detailed records of training flights and review them with pilots afterward.

One day earlier, Cubic said that it received a task order contract from the U.S. Army that could be worth more than $15 million. Under the deal, Cubic will provide services at the Joint Base Lewis-McChord Mission Training Complex near Tacoma, Wash., as well as other locations. The training will include computer-gamelike simulations. The task order includes a transition period, one base year and two single-year options. Cubic Applications’ Operations Support and Education Group, based in Virginia, will take the lead on the contract.

The award follows news of a U.S. Marine Corps contract win. On Oct. 29, Cubic said that it received a three-year, $46.5 million deal to provide the Marines with training systems support. Cubic will manage the program from its Cubic Applications facility in Orlando, Fla. The Marine Corps Systems Command awarded the deal.

• • •

Short Takes: Locally based Miro Technologies and Tapestry Solutions, both units of Boeing Co. (NYSE: BA), said in October that they have made expansions to their GOLDesp software line. The product was originally meant to help defense contractors with supply and maintenance issues. New features include load planning, terminal management, transportation management, resource planning and scheduling, and network optimization. The business is hiring, both in San Diego and farther afield … When it comes to issues facing the Navy, you can count on Proceedings, the magazine of the U.S. Naval Institute, to wade deep into the weeds — or into the crop of your choice when producing biofuels. Cmdr. James Corlett has a lot of questions about the Obama administration’s plan to run ships and aircraft on biofuels in his essay, “It’s Not So Easy Being Green,” in the November issue.

Send San Diego defense industry news to bradg@sdbj.com.

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