The Insider

February 20, 2018 at 5:00 AM | Tony Bertuca

Several defense companies have scheduled earnings calls for the week ahead, while the Air Force Association's annual Air Warfare Symposium begins Wednesday in Orlando, FL.


ManTech International executives are slated to discuss the company's quarterly earnings.

General Dynamics' chief financial officer is scheduled to appear at a Citi conference.

Senior Air Force officials will speak at the Air Force Association's Air Warfare Symposium in Orlando, FL.


Leidos executives are set to discuss the contractor's quarterly earnings.

The Navy's program executive office for submarines speaks at a Navy League breakfast in Arlington, VA.


KBR executives are scheduled to discuss the company's quarterly earnings.

February 16, 2018 at 2:45 PM | John Liang

Sea-launched cruise missiles, Littoral Combat Ship funding, Army missile money, Air Force multidomain operations and more highlight this Friday INSIDER Daily Digest.

Sea-launched cruise missiles with nuclear warheads could be deployed on Navy vessels:

Sea-launched cruise missile could be deployed on surface ships, potentially DDG-1000s

The Pentagon is considering deploying a new nuclear-tipped, sea-launched cruise missile on surface ships such as the Zumwalt-class destroyers as well as submarines, according to the head of U.S. Strategic Command.

There's a disconnect between the Navy and Office of the Secretary of Defense regarding Littoral Combat Ship funding:

Navy, OSD set aside different amounts for LCS in FY-19 budget request

The Navy has budgeted for one Littoral Combat Ship in the fiscal year 2019 budget, generating consternation that the construction plan may be detrimental to the shipbuilding industrial base.

The Army wants more missile funding:

Army eyes $3 billion boost for missile procurement in effort to bolster decisive-action training

Army leaders are asking Congress to plow $3 billion more than previously forecast into the service's missiles account in fiscal year 2019 -- an increase of nearly 140 percent compared to the FY-19 forecast the Pentagon published last year -- with major increases for the Guided Missile Launch Rocket System, Patriot MSE missile, and modifications of Army Tactical Missile System programs.

The Air Force has a new way to approach multidomain operations:

Data-to-Decision pieces together technology to create new ops picture

A key experimentation campaign spurred by the Air Superiority 2030 flight plan is helping the Air Force move toward multidomain operations, its lead scientist tells Inside the Air Force.

The Air Force's Distributed Common Ground System is getting more money:

Air Force pledges to speed DCGS open architecture move in FY-19 request

The Distributed Common Ground System will reap the benefits of the Air Force's decision to double down on ISR capabilities with $450.3 million in the fiscal year 2019 budget request to speed its transition to an open architecture.

What role will U.S. Special Operations Command play under a new National Defense Strategy? That was one of the questions addressed at a recent congressional hearing:

SOCOM wrestles with role under new National Defense Strategy

The Defense Department is struggling to define the role U.S. Special Operations Command will play under a new National Defense Strategy that focuses on "great power competition" with China and Russia, while the department continues to rely on SOCOM to execute global counterterrorism operations.

Document: House hearing on SOF, SOCOM

February 16, 2018 at 12:29 PM | Marjorie Censer

Serco said this week Pamela Drew, a veteran government contracting executive, has been appointed to the board of its U.S. business.

Drew has worked at Northrop Grumman, Exelis, TASC and Boeing, Serco said.

Last month, Serco added retired Vice Adm. Carol Pottenger to the board of its U.S. business.

February 16, 2018 at 12:26 PM | Justin Katz

The Marine Corps reduced its fiscal year 2019 budget request for RQ-21 Blackjack unmanned aerial systems from four to zero as a result of an internal manpower shift, according to a service spokesman.

The service previously projected it would request four systems in the FY-19 budget request. However, six RQ-21 systems -- which consist of five air vehicles per system -- are scheduled to be delivered between fiscal years 2018 and 2019, which will bring the service to full operational capability by 2019 with 21 systems, Marine Corps spokesman Capt. Christopher Harrison told Inside the Navy in a Feb. 16 email.

"Internal Marine Corps reprogramming has shifted [Marine Unmanned Aerial Vehicle] manpower to a level that supports the current requirement of 21 RQ-21A systems by FY-18," he said.

The RQ-21 is a dedicated intelligence, surveillance and reconnaissance system capable of delivering intelligence products directly to the tactical commander in real time, according to Navy budget justification documents.

February 16, 2018 at 12:22 PM | John Liang

Some must-reads from this week's issue of Inside the Air Force:

1. Air Force officials say the service is still targeting an annual F-35 production rate of 60 aircraft, but in the near term, the focus is on maintaining a "manageable ramp" in order to avoid undue strain on its production and logistics infrastructure.

Full story: Air Force says request for 48 F-35s supports 'manageable ramp' in production

3. The Air Force is pursuing new battle management and command-and-control efforts after abandoning the E-8C Joint Surveillance Target Attack Radar System recapitalization program in its fiscal year 2019 budget request.

Full story: AWACS, MQ-9 investments part of first phase to replace JSTARS

3. The Air Force's fiscal year 2019 budget offers new details on its plan to recapitalize the Space-Based Infrared System and support future overhead persistent infrared requirements, even as the effort still lacks an approved acquisition strategy.

Full story: Air Force outlines $7.3 billion five-year plan for future SBIRS architecture

4. The Distributed Common Ground System will reap the benefits of the Air Force's decision to double down on ISR capabilities with $450.3 million in the fiscal year 2019 budget request to speed its transition to an open architecture.

Full story: Air Force pledges to speed DCGS open architecture move in FY-19 request

February 16, 2018 at 12:13 PM | Marjorie Censer

Two private-equity firms this week announced new deals in the government contracting market.

Arlington Capital Partners said it has invested in Integrity Applications Inc., which specializes in systems engineering, technical analysis and subject matter expertise for intelligence and defense agencies.

“Arlington plans to combine the Company with its existing investment in Xebec, a highly specialized provider of human intelligence solutions to the intelligence community, which was previously acquired in September 2017,” the private-equity firm said.

The Chantilly, VA-based IAI also has locations in California, Hawaii, Ohio, Michigan, Pennsylvania, Massachusetts and Maryland.

Meanwhile, Veritas Capital, which like Arlington Capital has made numerous prior investments in the government contracting market, said this week an affiliate has agreed to acquire PricewaterhouseCoopers' U.S. public sector business.

The business, which has about 1,500 partners and staff, works with the Pentagon, the State Department and the Department of Homeland Security, among others.

“Under Veritas’ ownership, the US Public Sector business will retain its current leadership and talent base and continue to deliver trusted consulting services to its clients,” the companies said. “Upon closing, the US Public Sector business will be renamed and will operate as an independent company.”

February 16, 2018 at 10:50 AM | Tony Bertuca

The Senate last night confirmed several high-level Pentagon nominees, including one official intended to be the Defense Department's new No. 3 and one who will perform the role of chief innovation officer.

Jay Gibson was confirmed as the Pentagon's new chief management officer, a post established by the Fiscal Year 2018 National Defense Authorization Act to be the third-most senior position at DOD. Gibson is the former president and chief executive of XCOR Aerospace. He was previously confirmed as the deputy CMO.

Former NASA Administrator Michael Griffin was confirmed as the new under secretary of defense for research and engineering. The position was created amid the congressionally mandated elimination of the USD for acquisition, technology and logistics. While Griffin will be DOD's de facto chief innovation officer, Ellen Lord, the new USD for acquisition and sustainment, is tasked with managing DOD's procurement system.

Former Army acquisition official Kevin Fahey was confirmed as assistant secretary of defense for acquisition, while William Roper, the current director of the Strategic Capabilities Office was confirmed as the Air Force's top acquisition executive.

February 15, 2018 at 4:54 PM | John Liang

The Navy has overhauled its policy to protect electronic systems from the threat of electromagnetic pulses and space weather events.

A Feb. 2 memo "[e]stablishes the Department of the Navy (DON) Electromagnetic Environment (EME) policy and management consistent with national and Department of Defense (DoD) EME policy directives and instructions."

Additionally, the memo sets up related Navy policy "for Electromagnetic Environmental Effects (E3), Space Weather Event Preparedness (SWEP), and continuity of operations."

On protecting against electromagnetic pulses -- be they nuclear or non-nuclear -- the memo states:

DON organizations shall develop [electromagnetic compatibility] plans for ensuring continuity of operations, allowing reliable, safe, and mission-capable operations of all systems, subsystems, and equipment within their intended operational environments. These systems include [communications-electronics] systems and apply to all platforms, systems, subsystems, facilities, weapons, electrical or electronic equipment, networks, sensors, fuels, and ordnance developed, procured, acquired, operated, and maintained by the DON, including commercial items and non-developmental items.

On space weather, the document states:

DON organizations shall predict, prepare for, respond to, and recover from space weather events. This authorizes all actions to plan, organize, equip, train, and exercise to build and sustain the capabilities necessary to prevent, protect against, mitigate the effects of, respond to, and recover from those threats that pose risk to the mission of the DON.

Read the full memo.

February 15, 2018 at 1:45 PM | John Liang

The service vice chiefs' testimony on military readiness, plus news on Air Force bombers, the Space-Based Infrared System and more highlight this Thursday INSIDER Daily Digest.

More money could help ease readiness problems, according to the service vice chiefs:

Military's tone on readiness shifts from alarm to guarded optimism

The military service vice chiefs, who last year generated alarm by testifying before the Senate Armed Services Committee that U.S. military readiness had been compromised, this week delivered a more optimistic message following a bipartisan budget deal poised to pump an additional $165 billion into the Defense Department over the next two years.

Document: Service vice chiefs' testimony on military readiness

The Air Force is floating its updated bomber roadmap, or vector, and a basing strategy to members of Congress:

Air Force to phase out B-2, B-1 bombers; kicks off B-52 re-engining

The Air Force's fiscal year 2019 budget request reveals some details of its plan to retire legacy B-2 and B-1 bombers as it begins to field the B-21 in the mid 2020s.

The Air Force's new budget request for the SBIRS program calls for $643 million in FY-19 research and development funds, $936 million in FY-20, $1.5 billion in FY-21, $2.2 billion in FY-22 and $2 billion in FY-23:

Air Force outlines $7.3 billion five-year plan for future SBIRS architecture

The Air Force's fiscal year 2019 budget offers new details on its plan to recapitalize the Space-Based Infrared System and support future overhead persistent infrared requirements, even as the effort still lacks an approved acquisition strategy.

The Pentagon CIO's office is still determining how to execute its new NC3 authorities:

Newly empowered DOD CIO sets NC3 as top priority

The Defense Department's chief information officer, newly empowered by the latest defense policy bill, has set the modernization of the nuclear command, control and communications network as the office's top priority.

The Air Force's Next-Generation Air Dominance effort stands to double its funding in FY-19:

Air Force's five-year spending plan more than doubles funding for Next-Gen Air Dominance

The Air Force's budget outlook for Next-Generation Air Dominance has nearly doubled in its fiscal year 2019 funding request, which proposes $9.8 billion over the next five years to support continued experimentation and risk reduction for a new air dominance family of systems.

A proposed Defense Department deal with Raytheon would lock in five years of purchases for the SM-3 Block IB ballistic missile interceptor and the SM-6 guided missile:

DOD seeking multiyear deals with Raytheon worth nearly $4 billion for Standard Missiles

The Defense Department is seeking permission from Congress to negotiate a pair of multiyear contracts with Raytheon for Standard Missiles worth nearly $4 billion.

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February 15, 2018 at 11:57 AM | Marjorie Censer

Huntington Ingalls said today sales in 2017 reached $7.4 billion, up about 5 percent from a year earlier.

The contractor's profit for the year hit $479 million, down about 16 percent from the prior year.

Huntington Ingalls' sales were buoyed by its acquisition of Camber. The technical solutions unit, which includes Camber, reported revenues for the year of $952 million, up nearly 38 percent from 2016.

The unit's profit in 2017 hit $21 million, up from $8 million in 2016. "This increase was primarily due to improved performance in oil and gas services and higher volume in integrated missions solutions services following the December 2016 acquisition of Camber," the company said.

Mike Petters, Huntington Ingalls' chief executive, told analysts in a morning call the company plans to use the savings from new tax legislation to invest in its facilities, its employees and its charitable contributions.

The company announced several years ago it intends to invest $1.5 billion of capital in shipbuilding through 2020. Now, Huntington Ingalls will add $300 million to that plan, Petters said.

"These funds are designated for facility improvements that expand operational capacity at Ingalls [Shipbuilding] and for investments in digital tools to improve operational efficiencies at Newport News [Shipbuilding]," he told analysts.

Additionally, Petters said Huntington Ingalls will provide $500 to each hourly and salaried employee and will increase its charitable giving.

February 15, 2018 at 11:00 AM | Justin Doubleday

The Defense Department's cloud executive steering group will host an industry day next month to discuss its plans for a high-profile and often controversial commercial cloud acquisition, according to a Pentagon announcement.

The meeting is scheduled for March 7 at the Sheraton Pentagon City in Arlington, VA, according to a Feb. 14 statement from the Pentagon. The event is open to the public and will discuss the steering group's plans for the Joint Enterprise Defense Infrastructure (JEDI) acquisition, although "no live questions will be fielded during the event," the Feb. 14 statement notes.

The industry day will include speakers representing the DOD chief management officer, the Joint Staff, the chief information officer, U.S. Cyber Command, the office of the under secretary of defense for acquisition and sustainment, the Defense Digital Service, the Strategic Capabilities Office, and the program manager and contracting officer for JEDI, according to the statement.

In a Feb. 15 statement responding to frequently asked questions about the cloud acquisition, DOD summarized the steering group's tasking and stressed the committee is still in a "fact finding phase," with no final decisions made on the acquisition strategy.

The steering group has been closely watched since Deputy Defense Secretary Patrick Shanahan established the committee in September to accelerate DOD's adoption of commercial cloud computing. Many in industry have raised concerns the steering group is planning to select one cloud provider for the entire DOD enterprise, and their fears were buffered by a leaked document showing an initial JEDI acquisition strategy that involved awarding a potential 10-year contract to one cloud services provider. 

The steering committee was initially chaired by Pentagon acquisition chief Ellen Lord, and the group's initial acquisition strategy has been developed by the Defense Digital Service. The group includes other nontraditional players like SCO, the Defense Innovation Unit Experimental and the Defense Innovation Board.

In January, Shanahan reorganized the group, naming Jay Gibson, slated to become the Pentagon's chief management officer, as the chair. He also added the DOD CIO and the director of cost assessment and program evaluation as group members.

But lawmakers have recently said they are concerned by a lack of transparency from the group. Earlier this month, DOD awarded a potential $950 million contract to REAN Cloud, a premier Amazon Web Services partner, further stoking industry's concerns that DOD is planning to award all its cloud work to a single provider like AWS. But the Pentagon said the REAN Cloud award is unrelated to the steering group's acquisition.

February 15, 2018 at 10:06 AM | Tony Bertuca

Some must-reads from this week's edition of Inside the Pentagon:

1. The Trump administration Monday unveiled the outlines of a $686 billion budget for the Defense Department in fiscal year 2019 that includes a $20 billion placeholder for military spending increases set as part of the recent two-year budget deal.

Full story: DOD seeks $686B in FY-19; $617B in base budget with big modernization boost

2. Before Congress finalized a two-year spending deal, the Defense Department planned to finance a multibillion-dollar budget buildup through its controversial Overseas Contingency Operations account. Now, it is reversing course and projects it will begin phasing out OCO in FY-20.

Full story: Pentagon sparks OCO whiplash as it seesaws from $89B request to planned phase-out

3. The Missile Defense Agency this year plans to select the best of three "low-power" lasers being designed by industry for follow-on development, but the agency's budget documents show a laser potentially powerful enough to disable ballistic missiles in their boost phase is not planned to be put on contract until 2023.

Full story: MDA to select best 'low-power' laser design this year

February 14, 2018 at 4:56 PM | Lee Hudson

The Marine Corps is looking to grow its force by 100 Marines in fiscal year 2019, not the 1,100 figure that was mentioned during the budget rollout.

Assistant Marine Corps Commandant Gen. Glenn Walters told Inside Defense today after a Senate Armed Services readiness subcommittee hearing the service will use the additional 100 Marines to "flesh and fill out holes" in United States Marine Corps Forces and Special Operations Command.

"We're not going to ask for people that we know we can't get through the training pipeline," he added. "MARSOC is a very stringent requirement."

During the Pentagon's Feb. 12 budget rollout, Rear Adm. Brian Luther, deputy assistant secretary of the Navy for budget, said the Marine Corps was looking to increase its force structure by an additional 1,100 billets.

"The increased number of Marines is informed by the Marine Operating Concept, and is balanced across the pillars to provide a more experienced, better-trained and more capable force with the special skills required for special operations, intelligence operations, electronic, information and cyber warfare," Luther said at the time.

February 14, 2018 at 3:56 PM | Marjorie Censer

(This occasional feature highlights protests decided by the Government Accountability Office.)

Agency: Army

Awardee: CACI Technologies

Protester: BAE Systems

What GAO found: BAE Systems protested the Army's award to CACI of a task order for intelligence support services for Afghanistan, taking issue with the way the service evaluated personnel.

Specifically, GAO notes in its report, BAE challenged “the agency’s evaluation of the awardee’s proposal, asserting that the agency could not have known whether the personnel proposed by CACI meet the minimum experience requirements.

"Therefore, BAE asserts, the agency's evaluation of the awardee's proposal as outstanding under the technical factor was unreasonable," the document continues.

GAO agreed with BAE, noting the Army "had no way to assess whether the proposed employees met the minimum requirements, because the agency had no knowledge of whether the awardee was relying on experience in an 'equivalent' [military occupational specialty], and, if so, whether the agency viewed that experience as equivalent to the solicitation requirements."

GAO, sustaining the protest, recommended the Army conduct discussions, reevaluate the proposals and conduct a new best-value tradeoff analysis. Additionally, it called for BAE to be reimbursed the costs of pursuing the protest.

Read the decision here.

February 14, 2018 at 2:01 PM | John Liang

This Wednesday INSIDER Daily Digest features news on the defense contractor services market, a Sikorsky protest of the Air Force's Black Hawk helicopter replacement program, the Army's tactical networks, the missile defense budget and more.

Inside Defense takes a broad look at the defense contractor services market:

As other contractors exit services market, General Dynamics bets big on it

L3 Technologies was one of the first to sell off its services business, spinning off what's now Engility in 2012. Lockheed Martin followed suit in 2016, divesting its information systems and global solutions unit.

Sikorsky disagrees with the Air Force's data and software requirements for the Black Hawk helicopter replacement program:

Sikorsky files pre-award bid protest over data rights in UH-1N replacement program

Sikorsky this week filed a protest with the Government Accountability Office in a disagreement over the Air Force's data and software requirements for the UH-1N replacement program.

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The Army wants money to revamp its tactical network infrastructure:

In FY-19 request, Army seeks to transform tactical network

In its fiscal year 2019 budget request, the Army seeks funding to help it revamp its communications and mission command infrastructure.

Related network news from this week's Inside the Army:

Network CFT pitches modernization plans to industry

Industry representatives last week gained insight into the Army's vision of its future tactical network, which the service laid out in a strategy submitted to Congress earlier this month.

Army delivering electronic warfare systems to units in Europe

Three Army units in Europe are receiving a set of interim electronic warfare capabilities designed to counter near-peer adversaries, with further updates to come next year.

Missile defense budget news:

MDA to select best 'low-power' laser design this year; eyes 'high-power' laser contract in 2023

The Missile Defense Agency this year plans to select the best of three "low-power" lasers being designed by industry for follow-on development, but the agency's budget documents show a laser potentially powerful enough to disable ballistic missiles in their boost phase is not planned to be put on contract until 2023.

MDA advances plan for $1.9 billion buy of Raytheon-built SM-3 Block IB interceptors

The Missile Defense Agency is asking Congress for permission to negotiate a five-year contract for Aegis ballistic missile defense interceptors, a potential $1.9 billion deal with Raytheon for Standard Missile-3 Block IB guided missiles beginning in fiscal year 2019 the agency estimates would cost $306 million less than if procured annually.

Document: MDA's FY-19 budget justification books

The Air Force really wants the RQ-20B Puma unmanned aerial system:

Air Force adds new-start RQ-20B procurement program in FY-19 request

The Air Force is asking Congress to fund a new $13.5 million procurement program for the RQ-20B Puma in its fiscal year 2019 budget request, after the service unsuccessfully tried to reprogram money to purchase the small unmanned aerial vehicles last year.

More unmanned system news:

Navy seeks more funding for MQ-25 as it prepares for 2026 IOC

Citing a 2026 initial operational capability threshold, the Navy is seeking $234 million more than projected for its unmanned tanker program in fiscal year 2019.

Building a new F-35B vertical lift-fan test facility could face delays:

Budget uncertainty may hinder F-35B depot-level maintenance

Budget uncertainty may stall a contract award this spring to construct an F-35B vertical lift-fan test facility at Marine Corps Air Station Cherry Point, NC, to support depot-level maintenance.

Having 355 ships isn't as important as having the capability of 355 ships:

Kelley: Navy should focus on achieving 355-ship capability, not count

The Navy should shift its focus on ship count to the capability various platforms bring to operators, according to a top unmanned systems official.