Industry News: Volume 4, Number 4
Freedom Group Announces George Kollitides as New CEO
Freedom Group, Inc. (FGI) announced George Kollitides as its Chief Executive Officer. Kollitides, a lifelong hunter, shooter and firearms enthusiast, had been serving since March as Acting CEO of FGI, the firearms industry powerhouse with brands including Remington Arms, Bushmaster, DPMS and Marlin, among others.
“As Acting CEO, George demonstrated unprecedented leadership and drive,” said Walter McLallen, Vice Chairman of the FGI Board of Directors. “In just his first six weeks as Acting CEO, George began rebuilding the company and making a series of strong new hires in manufacturing, quality control and operations. Further, he led a successful campaign to combat anti-gun legislation in New York and successfully refinanced our operations and concluded a strong financial quarter. George Kollitides is the clear choice as our permanent Chief Executive Officer.”
Kollitides had been at Cerberus Capital Management since 2003, where he served as a Managing Director, focusing on the defense, firearms and related industries. Kollitides was the principal architect of the investments in FGI for Cerberus. An avid outdoorsman, Kollitides is a long-time member of numerous hunting, shooting and conservation organizations. He currently serves as a trustee of the NRA Foundation and Director of the NRA’s Hunting and Wildlife Committee, Presidents Committee on Advancement, and Nominating Committee. He is also a Director of the New York State Rifle & Pistol Association.
ATK Receives $266 Million in Small Caliber Ammunition Orders
ATK has received orders totaling more than $266 million for small caliber ammunition under an Indefinite Delivery/Indefinite Quantity contract with the U.S. Army Contracting Command, Rock Island. This order includes a mix of 5.56mm, 7.62mm and .50 caliber military ammunition to be produced at the Lake City Army Ammunition Plant in Independence, Mo. ATK has operated the Lake City plant since April 2000.
“ATK is honored to be the Army’s industrial partner at the Lake City Army Ammunition Plant, collaborating in the operation and maintenance of the nation’s largest ammunition production facility,” said ATK Small Caliber Systems Vice President and General Manager Kent Holiday. “Since 2000, we have delivered more than 11 billion rounds of ammunition in support of our nation’s warfighters while modernizing the facility, increasing capacity, improving productivity and efficiency, and doing so in a safe and responsible manner.”
The Army and ATK are nearing completion of a $276 million modernization project at the Lake City facility. This includes the capacity to increase production of the new 5.56mm Enhanced Performance Round. ATK has delivered approximately 250 million of these rounds since transitioning to production in 2010.
ATF Letter to U.S. Firearms Dealers Addresses a Compliance Violation
An Open Letter from ATF addresses a situation that occurred in Miami where a Federal Firearms Licensee facilitated the licensed export of a firearm to a foreign buyer by checking in the firearm as luggage of the foreign buyer. The ATF letter points out that this would be a transfer under the Gun Control Act (GCA), thus requiring a Form 4473 and NICS check. U.S. based firearm licensees are reminded that firearms may not be checked in a foreign buyer’s luggage as a lawful means of export. A copy of the ATF letter may be found at the ATF website, www.atf.gov.
International Gun Trafficking Ring Dismantled by Arrests of North Carolina Resident and Chinese Nationals
According to the FBI, the Defendants supplied semiautomatic weapons to be exported to China. A criminal complaint was unsealed in federal court in Brooklyn charging Joseph Debose, a resident of North Carolina and Staff Sergeant in a U.S. Special Forces National Guard Unit, with illegal gun dealing and aiding others, including Chinese nationals Zhifu Lin and Lilan Li, in the illegal export of firearms to China.
According to the charging documents and facts presented by the government at Lin’s arraignment, between December 2010 and April 2012, Debose provided multiple shipments of firearms to associates who then secreted the weapons in packages and transported them to shipping companies to be sent to customers in China. The smuggling scheme came to light after authorities in China seized a package containing firearms with defaced serial numbers that had been shipped from Queens, New York. Thereafter, U.S. law enforcement agents traveled to China and examined the firearms, which were determined to be listed on the United States Munitions List and barred from export without a license issued by the U.S. State Department.
Utilizing forensic techniques, agents learned that one of the seized weapons had originally been purchased in North Carolina. Among the weapons seized in China were those Debose provided to his associates for export. An indictment was unsealed in Brooklyn federal court charging Lin and Li with illegally exporting firearms, including the seized firearms mentioned above, from Queens, New York to China without obtaining the required license from the State Department in violation of U.S. Arms Export Control Act. Lin was also charged with operating an illegal gun-dealing business and transporting firearms with obliterated serial numbers.” The defendants in North Carolina and New York allegedly ran a pipeline of illegal firearms from the United States to China. We will utilize all available resources to stop the export of such weapons,” stated United States Attorney Lynch.
“The arrest of Debose marks the latest in a series of charges brought by this office against international gun traffickers.” Ms. Lynch expressed her grateful appreciation to the task force of federal agencies that worked together to investigate the case and added that the government’s investigation is continuing. “The defendants allegedly altered the serial numbers on various weapons to disguise their origin in order to export them to China – an indication these guns were going to fall into the wrong hands,” said HSI Special Agent-in-Charge Hayes. “HSI maintains a zero-tolerance policy when it comes to the illegal export of weapons on the United States Munitions List.”
Smith & Wesson Converts Three Agencies to M&P Pistol
Smith & Wesson, a U.S.-based leader in firearm design and manufacturing, announced that it has recently filled orders from three law enforcement agencies for duty firearms from its Military & Police (M&P) Pistol Series. In Florida, the Miami Beach Police Department (PD) has converted to the M&P40 pistol, while the Olympia, WA, Police Department and the Passaic County Sheriff’s Office in New Jersey have both selected the M&P45 pistol. Each of the agencies has initiated the transition process and officers are currently using the M&P pistol in the field.
Miami Beach PD has received 460 pistols that will replace currently issued, non Smith & Wesson firearms. During the agency’s review process for a new pistol, the M&P40 was subjected to a high volume of test firing in order to assess its reliability over an extended period of use. The M&P40 performed to a high degree under close examination and was selected by the department for its ergonomic design and customizable features. The Passaic County Sheriff’s Office has received 660 M&P45 pistols that replaced non Smith & Wesson firearms supplied by a European manufacturer. Selected for its professional-grade features, low perceived recoil and reliability during firing; the M&P45 will be used as the primary side arm by the sheriff’s department. In Olympia, WA, the Police Department has received 77 M&P45 pistols for duty use. The department upgraded to the new sidearm after conducting a thorough evaluation of the new pistol. Officials within the Olympia Police Department complimented the performance of the M&P45 during live fire assessment drills and also noted the ability of the M&P pistol to adapt to a wide variety of officer preferences.
Glock, Inc. Appoints Radecki as National Sales Manager
Glock, Inc. has named Bob Radecki as the new National Sales Manager for the United States. Radecki will perform all leadership responsibilities in the Glock sales department. Radecki has served in the pistol manufacturer’s sales department since 2004. He began his Glock career in the Commercial Sales division before serving as the regional manager for the Central and Western regions. “Bob Radecki has been a tremendous sales manager for Glock throughout the years,” said Glock Vice President Gary Fletcher. “We are all extremely proud to have him on our team and look forward to his continued success as he transitions into his new role.”
Leupold Tactical Optics Lowers Price on Mark 8 1.1-8x24mm CQBSS
Leupold Tactical Optics is lowering the cost of the cutting-edge Mark 8 1.1-8x24mm CQBSS M5B1 Front Focal. “We’ve worked with the production and assembly teams to increase efficiencies allowing us to reduce the cost of the CQBSS,” said Kevin Trepa, Leupold’s vice president of global sales. “While this optic was designed for the American warfighter in theater, it’s an outstanding choice for competition and home defense rifles as well.”
With models now starting at $2,999 MSRP, Leupold’s versatile Mark 8 CQBSS riflescope offers the speed of a holographic red dot sight and the capability of an 8-power precision riflescope in one rugged, field-proven unit. The 34mm maintube features a fully checkered ocular bell for making quick magnification adjustments even while wearing gloves.
ATF to Host Regulatory Conferences on Firearm Imports and Explosives
ATF will be hosting an explosives regulatory conference at ATF National Headquarters in Washington, DC in late 2012. The conference will address a diversity of topics, such as current issues, explosives imports, licensing, pyrotechnics, field inspections, and U. S. Bomb Data Center activities. It will also include speakers from other Federal agencies with authority over various aspects of the explosives industry. Watch for additional information and registration opportunities in the coming months at www.atf.gov/explosives/industry/.
To help Federal Firearms License holders stay on top of and in compliance with myriad federal laws and regulations, an ATF regulatory Conference will take place July 31 to Aug. 1 at the Hyatt Regency Reston Town Center in Reston, Va. Last year’s event was sold out, so please plan ahead in getting registered. Hosted by the National Shooting Sports Foundation, interested parties may learn more and register at www.Nssf.org/ImportExport.
Export Control Reform Transition Plan
As part of the President’s export control reform initiative, the Directorate of Defense Trade Controls (DDTC) seeks public comment on the proposed implementation plan for defense articles and defense services that will transition from the jurisdiction of the Department of State to the Department of Commerce. The intent of this plan is to provide a clear description of DDTC’s proposed policies and procedures for the transition of items to the jurisdiction of the Department of Commerce. The revisions to this rule are part of the Department of State’s retrospective plan under E.O. 13563 completed on August 17, 2011. The Department of State will accept comments on this proposed policy statement until August 6, 2012. Interested parties may submit comments within 45 days of the date of publication by Email to: DDTCResponseTeam@state.gov with the subject line, ‘‘ECR Transition Guidance.’’
Elbit Systems to Upgrade Korean Air Forces’ C-130 Transport Aircraft Under Contract Valued at $62 Million
Elbit Systems Ltd. announced that it was awarded a contract valued at $62 million to upgrade the Korean Air Force C-130 transport aircraft. Under the contract, the C-130 aircraft will be installed with various types of advanced electronic systems. In addition, Elbit Systems will convert the existing analog cockpit to a “Glass-Cockpit” using Elbit Systems’ cutting-edge digital flight displays. The project, to be performed over four years, will be executed in cooperation with Korea Aerospace Industries, Ltd. (KAI), who is the leading local aircraft manufacturer in Korea.
Yoram Shmuely, Co-General Manager of Elbit Systems’ Aerospace Division commented: “We are very proud of this award. It marks an additional milestone in the projects Elbit Systems has performed for the Korean Air Force in collaboration with Korea Aerospace Industries. This new contract is expected to further enhance capabilities of the Korean Air Force.” Shmuely added: “The global demand for transport aircraft upgrades and the experience we have accumulated in performing various similar projects such as the previous program for the Korean C-130, as well as programs for the Romanian C-130 and the Brazilian C-95, position us as favorably for similar projects to follow.”
United Technologies Subsidiary Pleads Guilty to Criminal Charges for Helping China Develop New Attack Helicopter
Pratt & Whitney Canada Corp., a Canadian subsidiary of the Connecticut-based defense contractor United Technologies Corporation, pleaded guilty to violating the Arms Export Control Act and making false statements in connection with its illegal export to China of U.S.-origin military software used in the development of China’s first modern military attack helicopter, the Z-10.
In addition, UTC, its U.S.-based subsidiary Hamilton Sundstrand Corporation, and PWC have all agreed to pay more than $75 million as part of a global settlement with the Justice Department and State Department in connection with the China arms export violations and for making false and belated disclosures to the U.S. government about these illegal exports. Roughly $20.7 million of this sum is to be paid to the Justice Department. The remaining $55 million is payable to the State Department as part of a separate consent agreement to resolve outstanding export issues, including those related to the Z-10. Up to $20 million of this penalty can be suspended if applied by UTC to remedial compliance measures. As part of the settlement, the companies admitted conduct set forth in a stipulated and publicly filed statement of facts.
Since 1989, the United States has imposed a prohibition upon the export to China of all U.S. defense articles and associated technical data as a result of the conduct in June 1989 at Tiananmen Square by the military of the People’s Republic of China. In February 1990, the U.S. Congress imposed a prohibition upon licenses or approvals for the export of defense articles to the People’s Republic of China. In codifying the embargo, Congress specifically named helicopters for inclusion in the ban.
Dating back to the 1980s, China sought to develop a military attack helicopter. Beginning in the 1990s, after Congress had imposed the prohibition on exports to China, China sought to develop its attack helicopter under the guise of a civilian medium helicopter program in order to secure Western assistance. The Z-10, developed with assistance from Western suppliers, is China’s first modern military attack helicopter.
During the development phases of China’s Z-10 program, each Z-10 helicopter was powered by engines supplied by PWC. PWC delivered 10 of these development engines to China in 2001 and 2002. Despite the military nature of the Z-10 helicopter, PWC determined on its own that these development engines for the Z-10 did not constitute “defense articles” requiring a U.S. export license because they were identical to those engines PWC was already supplying China for a commercial helicopter.
Because the Electronic Engine Control software, made by HSC in the United States to test and operate the PWC engines, was modified for a military helicopter application, it was a defense article and required a U.S. export license. Still, PWC knowingly and willfully caused this software to be exported to China for the Z-10 without any U.S. export license. In 2002 and 2003, PWC caused six versions of the military software to be illegally exported from HSC in the United States to PWC in Canada and then to China, where it was used in the PWC engines for the Z-10.
According to court documents, PWC knew from the start of the Z-10 project in 2000 that the Chinese were developing an attack helicopter and that supplying it with U.S.-origin components would be illegal. When the Chinese claimed that a civil version of the helicopter would be developed in parallel, PWC marketing personnel expressed skepticism internally about the “sudden appearance” of the civil program, the timing of which they questioned as “real or imagined.” PWC nevertheless saw an opening for PWC “to insist on exclusivity in [the] civil version of this helicopter” and stated that the Chinese would “no longer make reference to the military program.” PWC failed to notify UTC or HSC about the attack helicopter until years later and purposely turned a blind eye to the helicopter’s military application.
HSC in the United States had believed it was providing its software to PWC for a civilian helicopter in China, based on claims from PWC. By early 2004, HSC learned there might be an export problem and stopped working on the Z-10 project. UTC also began to ask PWC about the exports to China for the Z-10. Regardless, PWC on its own modified the software and continued to export it to China through June 2005.
According to court documents, PWC’s illegal conduct was driven by profit. PWC anticipated that its work on the Z-10 military attack helicopter in China would open the door to a far more lucrative civilian helicopter market in China, which according to PWC estimates, was potentially worth as much as $2 billion to PWC.
Today, the Z-10 helicopter is in production and initial batches were delivered to the People’s Liberation Army of China in 2009 and 2010. The primary mission of the Z-10 is anti-armor and battlefield interdiction. Weapons of the Z-10 have included 30-mm cannons, anti-tank guided missiles, air-to-air missiles and unguided rockets.