The Insider

By Tony Bertuca
December 13, 2018 at 5:16 PM

The Pentagon is seeking $331 million in refueling charges from Saudi Arabia and the United Arab Emirates after U.S. Central Command found "errors in accounting."

CENTCOM has now "calculated the correct charges, and Department of Defense is in the process of seeking reimbursements," Pentagon spokeswoman Cmdr. Rebecca Rebarich said in an email.

The cost of the fuel in question is $36.8 million, while the cost of the flights hours is $294 million.

"Our partners have been individually notified about our intent to seek reimbursement, and have been given estimates as to how much they owe," Rebarich said.

Sen. Jack Reed (D-RI), ranking member on the Senate Armed Services Committee, released a statement saying he led the inquiry that led CENTCOM to investigate missed charges between March 2015 and November 2018 related to U.S. mid-air refueling services provided to the Saudi-led fighting in Yemen.

"This is good news for U.S. taxpayers and underscores the need for strong oversight of the Department of Defense," Reed said. "The American people should not be forced to bear these costs and I am encouraged DOD is taking steps to get full reimbursement. The Pentagon is taking action to reduce accounting errors of this nature and Congress must continue to be vigilant and fulfill its oversight mission."

Still, Reed said, a "larger issue remains" regarding Saudi Arabia's war in Yemen.

"It must be made clear to both the Saudi-led coalition and the Houthis that there is no military solution to this conflict and the time has come to reach a sustainable negotiated settlement," he said. "The conflict in Yemen has negatively impacted the strategic security interests of the Saudis, Emiratis, and the United States. It has emboldened Iran and relieved pressure on al Qaeda and ISIS.  Most importantly, the conflict has resulted in the largest humanitarian disaster facing the world in recent memory. It is time for this war to stop."

Meanwhile, the Senate took a historic 56-41 vote today to end U.S. support for Saudi-led forces in Yemen by invoking the War Powers Resolution -- the first time in history a chamber of Congress has done so.

By John Liang
December 13, 2018 at 3:24 PM

This Thursday INSIDER Daily Digest has a slew of Air Force news plus Navy submarine maintenance plans and more.

Here's an early look at some of the stories that will be in tomorrow's Inside the Air Force:

Air Force soliciting high-energy laser prototypes for base, aircraft defense

A fledgling directed-energy effort aims to create a ground-based laser prototype that can protect bases from airborne threats before scaling it up to fly on an aircraft, according to an Air Force request for solutions this week.

Lockheed exploring ways to leverage Space Fence software for LRDR

MOORESTOWN, NJ -- Lockheed Martin is exploring opportunities to leverage software developed for the Air Force's Space Fence radar into its work on the Long-Range Discrimination Radar the company is building for the Missile Defense Agency.

Air Force working with F-35 JPO, Lockheed to define ALIS agile software pathfinder

The Air Force is working with the F-35 joint program office and prime contractor Lockheed Martin to apply agile software development techniques used by the Kessel Run Experimentation Lab to the troubled Autonomic Logistics Information System.

Predictive maintenance, other advanced technologies under consideration for U-2, RQ-4

BEALE AIR FORCE BASE, CA -- The commander of the 9th Maintenance Squadron wants to piggyback on the Defense Innovation Unit's artificial-intelligence work to improve sustainment for Lockheed Martin's U-2.

Air Force weather director concerned about cybersecurity of space and ground systems

The official in charge of crafting Air Force weather and space environmental doctrine said this week one of the biggest challenges the service has faced as it works to modernize space weather ground stations is protecting and verifying data.

Robins AFB could eventually replace Northrop as key JSTARS maintainer after depot pathfinder

The Air Force will consider whether its maintenance crew at Robins Air Force Base, GA, can eventually replace Northrop Grumman as the depot provider for the E-8C Joint Surveillance Target Attack Radar System.

The head of the Senate Armed Services Committee won't be buying Raytheon stock anytime soon:

Inhofe dumps defense stocks after controversial Raytheon purchase

Senate Armed Services Committee Chairman Jim Inhofe (R-OK) has instructed his financial adviser to no longer purchase any defense stocks after news broke that he bought shares in Raytheon following a meeting with President Trump that led to a newly proposed boost in defense spending.

Navy leaders this week gave lawmakers their plans for how to speed up maintenance on submarines:

Lawmakers press Navy to address submarine maintenance backlog

Lawmakers are pushing the Navy to address its submarine maintenance backlog at shipyards following a watchdog report that found the service spent over $1.5 billion in the last decade on vessels it could not operationally deploy.

Oracle America is asserting that there was more than one conflict of interest in DOD's selection of Amazon as a cloud services provider:

Oracle alleges DOD officials involved in $10B cloud project had 'significant' conflicts tied to Amazon

Oracle America is alleging two Defense Department officials helped craft a single-award strategy for the Pentagon's $10 billion cloud program while having "significant" conflicts of interest tied to their work with Amazon Web Services.

A prototype helicopter's first flight has yet again suffered a delay:

Boeing-Sikorsky FVL aircraft won't fly until 2019

The first flight of Bell-Sikorsky's proposed aircraft for the Army's Joint Multi-Role Technology Demonstrator has again been delayed, this time until early 2019, as representatives say it requires more testing.

The Army's Lower Tier Air and Missile Defense Sensor program has garnered a good amount of interest among potential contractors:

Five companies, including two foreign firms, express interest in LTAMDS 'Sense-Off'

Five companies -- three U.S. contractors and two foreign firms -- responded to the Army's industry day invitation and the chance to compete in the Lower Tier Air and Missile Defense Sensor program's "Sense-Off" event, a contest to rival the LTAMDS program of record -- allowing new players the opportunity to nab production of the expected multibillion-dollar Patriot radar replacement.

By Justin Doubleday
December 13, 2018 at 12:59 PM

Amazon Web Services has been allowed to intervene as a defendant in Oracle America's lawsuit against the federal government challenging a massive Pentagon cloud contract, as AWS argues Oracle's conflict-of-interest allegations are "meritless."

In a motion filed yesterday, Amazon argues it has "direct and substantial economic interests at stake" in Oracle's lawsuit challenging the JEDI request for proposals in the U.S. Court of Federal Claims.

"AWS timely submitted a proposal in response to the RFP and is currently seeking to be awarded the contract under the JEDI cloud procurement," the motion states. "Moreover, Oracle’s complaint specifically alleges conflicts of interest involving AWS."

Oracle is challenging DOD's decision to make a single award for the JEDI contract on multiple counts, including allegations that two DOD officials involved in crafting the acquisition strategy had "significant" conflicts of interest tied to their work with AWS.

Amazon argues the government's interest in defending against such bid protests centers on "preserving the discretion of agency officials" and being allowed to move forward with the procurement without delays.

"AWS has separate interests that the government has no incentive to defend, such as AWS's proprietary and financial interests in its proposal and AWS's reputational interest in defending against Oracle's meritless conflict of interest allegations," the motion states.

Today, the judge in the case granted Amazon's motion, according to court filings. The company is being represented by Crowell & Moring. Oracle is represented by Arnold & Porter.

Oracle filed the case in the Court of Federal Claims last week. Due to the conflict-of-interest allegations, as well as several counts that take issue with the Pentagon's decisions to make a single award and limit competition, Oracle is asking the court to prevent DOD from moving forward with the JEDI contract.

The company filed suit after the Government Accountability Office dismissed its claims last month. GAO recently dismissed a similar protest against the JEDI solicitation filed by IBM, citing Oracle's case before the court.

A status conference to decide on how to proceed with Oracle's lawsuit is scheduled for today, according to the case docket.

The Pentagon has declined to comment on Oracle's lawsuit. The deadline for proposals on the potential 10-year, $10 billion JEDI contract closed in October, with the Defense Department planning to make an award in April.

By Marjorie Censer
December 13, 2018 at 11:04 AM

The Defense Department said yesterday it will host three public meetings early next year "to obtain views of experts and interested parties in Government and the private sector regarding revising policies and procedures for contract financing, performance incentives, and associated regulations for DOD contracts."

The slate of meetings follows the Pentagon's withdrawal of a controversial rule that would have reduced contractor progress payments. The Defense Department was implementing legislation meant to encourage performance-based payments.

In its October withdrawal, the Pentagon said regulation related to implementing the legislation that prompted the original rule would be known as Defense Federal Acquisition Regulation Supplement Case 2019-002. "Any other changes to contract financing policy will be addressed under DFARS Case 2019-D001," the notice added.

The new slate of meetings is associated with case 2019-D001.

DOD is set to hold public meetings Jan. 10, Jan. 22 and Feb. 19. All will be held at the Mark Center in Alexandria, VA.

By John Liang
December 13, 2018 at 5:05 AM

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

1. Rep. Adam Smith (WA), the Democrat poised to lead the House Armed Services Committee, says he is ready to take on Republicans pushing for an increase in defense spending and wants to reorient the conversation toward a more fiscally restrained national security strategy.

Full story: Smith wants to pivot defense spending debate toward cost savings

2. The Pentagon, despite the abrupt departure last month of Chief Management Officer Jay Gibson, saved nearly $4.4 billion in fiscal year 2018 through various business reforms and remains on track to save $6 billion in FY-19, according to acting CMO Lisa Hershman.

Full story: Pentagon's reform team claims $4.4B in FY-18 'efficiencies'

3. U.S. Central Command, in response to a Pentagon directive earlier this year, has proposed a plan to "recalibrate" the U.S. military presence in the Middle East in accordance with the Trump administration's National Defense Strategy, a plan that will reduce force posture in the region in order to direct resources to high-priority areas around the world.

Full story: CENTCOM proposes plan to 'recalibrate' force posture, shift personnel to other regions

4. The Pentagon's highest ranking officer said last week it's "inexplicable" commercial technology companies wouldn't want to work with the U.S. military.

Full story: Dunford implores Google: 'We're the good guys'

By Rachel Cohen
December 12, 2018 at 4:35 PM

President Trump has nominated Lt. Gen. Arnold Bunch, the Air Force's military deputy for acquisition, for a promotion to become the next four-star head of Air Force Materiel Command, the service said Wednesday.

"Bunch would take the banner of AFMC as the new National Defense Strategy focuses each of the services on innovation, cost-effective modernization and enhancing lethality to address the challenge of great power competition," according to a Dec. 12 Air Force release. "Bunch has served in a number of leadership roles in the weapons development, acquisition and test communities, including program executive officer for fighters and bombers, commander of the Air Force Security Assistance Center and commander of the Air Force Test Center."

Bunch began his current job in June 2015. The service has not set a change-of-command date.

AFMC's nearly $60 billion portfolio spans 80,000 employees and eight Air Force installations that develop, buy, modernize and sustain weapon systems. The command is headquartered at Wright-Patterson Air Force Base, OH, along with the Air Force Research Laboratory and myriad program offices under its umbrella.

If confirmed by the Senate, Bunch would replace Gen. Ellen Pawlikowski, who retired in September after three years in the post. Lt. Gen. Robert McMurry has been serving as interim commander since August in addition to his duties as leader of the Air Force Life Cycle Management Center.

By Marjorie Censer
December 12, 2018 at 4:28 PM

Science Applications International Corp. said today it has named Donna Morea chair of its board of directors, effective following the closing of SAIC's planned acquisition of Engility next month.

She will succeed Sandy Sanderson, who has been chair since 2013. He will remain a board member.

Morea, who joined SAIC's board in 2013, was president of CGI Technologies and Solutions, the U.S. subsidiary of CGI Group.

By Justin Katz
December 12, 2018 at 3:44 PM

The Navy is not ruling out the possibility of splitting the award for production of 20 next-generation frigates between two or more shipbuilders, according to the service's top civilian.

Sen. Angus King (I-ME) asked Navy Secretary Richard Spencer today about the possibility of splitting the production of the service's new frigate during a joint hearing of the Senate Armed Services seapower and readiness and management support subcommittees.

Spencer said the idea is "not off the table" and that the service must balance two competing factors. On one hand, splitting the program, which will produce at least 20 ships, would be positive for maintaining the industrial base's labor force.

But the Navy also must consider the flow of new vessels into the fleet.

"What we want to avoid is a spike," Spencer said. "When [those ships] all go through regular maintenance cycles and every one comes due within two or three or four years, it gets very crowded."

The Navy expects to publish a request for proposals for its new frigate in the fourth quarter of fiscal year 2019, and a contract award is slated for FY-20. While the service has issued conceptual design contracts to five shipbuilders, the service plans to hold a full-and-open competition.

By Courtney Albon
December 12, 2018 at 2:55 PM

Air Force Space Command announced today it has assumed authority for commercial satellite communications services procurement -- a role traditionally filled by the Defense Information Systems Agency.

Congress in the Fiscal Year 2018 National Defense Authorization Act directed the agencies to make the change by Dec. 1. DISA will retain some administrative control of COMSATCOM procurement personnel until October 2019, according to a Dec. 12 press release. The release notes that full operational capability should be reached by October 2020.

"The phased approach from initial to full operational capability maintains the expertise of the personnel in DISA's SATCOM organizations today and limits the impact to personnel and operations during the transition," the release states. "AFSPC and DISA have been working closely together over the last year to ensure a smooth transfer of responsibilities, while maintaining timely and effective provision of COMSATCOM services for the joint force during and after the transition."

The service has been experimenting with new ways to buy COMSATCOM services over the last few years and recently conducted an analysis of alternatives to consider new options for relying on commercial SATCOM providers.

By Justin Katz
December 12, 2018 at 2:50 PM

Navy Secretary Richard Spencer today told Congress he predicts the Navy will achieve a "clean audit" in five to six years.

The comments came during a joint Senate Armed Services seapower and readiness and management support subcommittees hearing after questions from Sen. Angus King (I-ME).

The results of the Defense Department's first-ever audit were published last month, and the Pentagon failed to receive a "clean" opinion, Inside Defense reported.

"We failed the audit," Deputy Defense Secretary Patrick Shanahan told reporters. "We never thought we were going to pass an audit. Everyone was betting against us that we would even do the audit. . . . It was an audit on a $2.7 trillion organization. The fact we did the audit is substantial."

Spencer told senators the Navy has worked to "change the conversation" and view the audit as a tool to understand how the organization is operating, rather than an "invasion for financial reasons."

"If you look at our list of deficiencies, there are many, but this was the first time in the barrel for the Navy. It was eye-opening," he said.

By Mallory Shelbourne
December 12, 2018 at 2:26 PM

The Government Accountability Office plans to issue a report on the Navy's efforts to modernize shipyards in the summer of 2019.

John Pendleton, the defense capabilities and management director for GAO, told lawmakers during a joint hearing today with the Senate Armed Services Committee seapower and readiness and management support subcommittees to expect the report in May or June of next year.

"We have a review underway looking at how that's going," Pendleton told the panel of lawmakers in response to a question from seapower subcommittee Ranking Member Mazie Hirono (D-HI).

"We have work that indicates the age and condition of the shipyards and have looked at the impact on maintenance delays. But the optimization itself, we're still looking at that," he added.

Meanwhile, Navy Secretary Richard Spencer told lawmakers the service is in the process of executing a proposal to upgrade its four public shipyards.

Inside Defense in January reported that the Navy would start an optimization blueprint for the private shipyards, in addition to the service's plan for the public yards.

By John Liang
December 12, 2018 at 2:16 PM

This Wednesday INSIDER Daily Digest has coverage of a Washington breakfast featuring the presumed incoming House Armed Services Committee chairman, DOD artificial intelligence efforts, a pending missile defense radar contract and more.

Rep. Adam Smith (D-WA), the presumed incoming House Armed Services Committee chairman, wants to rein in defense spending:

Smith wants to pivot defense spending debate toward cost savings

Rep. Adam Smith (WA), the Democrat poised to lead the House Armed Services Committee, says he is ready to take on Republicans pushing for an increase in defense spending and wants to reorient the conversation toward a more fiscally restrained national security strategy.

Defense Department Chief Information Officer Dana Deasy testified before a House Armed Services emerging threats and technology subcommittee hearing this week:

Pentagon's artificial intelligence center to coordinate military AI projects above $15 million

The Pentagon's newly established Joint Artificial Intelligence Center will "coordinate" all military AI projects expected to cost more than $15 million to ensure common standards and practices, with the organization expected to take on a greater role for component-specific programs once it receives more funding.

Document: House hearing on DOD AI efforts

Keep an eye on the Missile Defense Agency for an imminent Homeland Defense Radar-Hawaii contract award:

Source selection for $1 billion Hawaii ballistic missile radar expected this month

MOORESTOWN, NJ -- The Missile Defense Agency could select a winner in the $1 billion program to design and deliver a new ground-based, ballistic missile defense radar to better defend Hawaii from North Korean threats, one of the three competitors for the Homeland Defense Radar-Hawaii program said here.

The B61-12 is made up of four legacy B61 bomb variants that will be refurbished and consolidated into one weapon:

B61-12 tailkit program reaches milestone C with production to follow

The Air Force announced this month it had approved a milestone C decision for the B61-12 tailkit assembly program in late October, clearing the way for production.

The Congressional Budget Office this week released a review of the potential cost to replace, one-for-one, the Air Force's aging aircraft fleet:

CBO report projects $300 million unit cost for penetrating counterair platform

A new Congressional Budget Office report estimates the unit cost of a new fighter jet to replace the F-22 and F-15 C/D at about $300 million and projects the Air Force's yearly procurement spending on the new aircraft will peak in 2030 at about $9 billion in 2018 dollars.

Document: CBO report on 'the cost of replacing today's Air Force fleet'

By Maximilian Kwiatkowski
December 12, 2018 at 11:18 AM

The Army will host briefings for industry next month on a new system that combines signals intelligence, electronic warfare, and offensive cyber into a single device.

An industry day for the Terrestrial Layer System is scheduled for Jan. 23 at Aberdeen Proving Ground, MD, according to a Dec. 7 notice posted on Federal Business Opportunities. There will be both unclassified and top secret briefings.

TLS will be a modular kit that can run all three operations inside of a single vehicle.

The program is set to start sometime in fiscal year 2020 while FY-19 will be a “campaign of learning,” Col. Kevin Finch, project manager EW and cyber, told Inside Defense in October.

By Justin Doubleday
December 11, 2018 at 5:58 PM

The Government Accountability Office's comptroller general has dismissed IBM's pre-award protest of a massive Pentagon cloud contract after Oracle brought a similar case before the U.S. Court of Federal Claims last week.

GAO dismissed IBM's protest of the Joint Enterprise Defense Infrastructure solicitation "because the matter involved is currently pending before a court of competent jurisdiction," according to the decision. It pointed to Oracle America's suit over the JEDI solicitation, filed in federal claims court last week.

"More specifically, Oracle's complaint before the COFC includes arguments that are the same or similar to assertions presented in IBM's protest to our office," the decision document states. "Accordingly, we view the matter involved in IBM's protest as currently before a court of competent jurisdiction."

GAO had already dismissed Oracle's bid protest of the JEDI solicitation last month. GAO ruled the Defense Department was within its rights to structure the potentially 10-year, $10 billion JEDI contract as a single-award deal and also said Oracle's conflict of interest argument would not be sustained prior to an award.

Both Oracle and IBM are opposed to the Pentagon's single-award strategy, arguing it is flawed and geared toward Amazon Web Services.

"IBM knows what it takes to build a world-class cloud," Sam Gordy, general manager of IBM U.S. Federal, wrote in an Oct. 10 statement. "No business in the world would build a cloud the way JEDI would and then lock into it for a decade. JEDI turns its back on the preferences of Congress and the administration, is a bad use of taxpayer dollars and was written with just one company in mind. America's warfighters deserve better."

Bidding for the JEDI contract closed in October. The Pentagon is expected to make an award in April.

By John Liang
December 11, 2018 at 2:02 PM

This Tuesday INSIDER has continuing coverage of the implications of a possible $750 billion defense budget request, a chat with the acting DOD chief management officer, the Army's new intellectual property in acquisition policy and more.

Analysts aren't sold on the Pentagon submitting a $750 billion budget request:

New defense topline could break budget cap by $100B; analysts question strategy

If the Trump administration submits a $750 billion defense budget, as multiple sources have indicated, the proposed topline could blow past Congress' statutory budget cap by more than $100 billion.

"We are not taking a knee, we are jumping up and high-fiving," the Pentagon's acting chief management officer told Inside Defense this morning:

Pentagon's reform team claims $4.4B in FY-18 'efficiencies'

The Pentagon, despite the abrupt departure last month of Chief Management Officer Jay Gibson, saved nearly $4.4 billion in fiscal year 2018 through various business reforms and remains on track to save $6 billion in FY-19, according to Acting CMO Lisa Hershman.

Alexis Ross, deputy assistant secretary of the Army for strategy and acquisition reform, who managed the job of getting the service's new intellectual property in acquisition policy written, recently spoke to Inside Defense about the policy:

Army's new intellectual property policy seeks to plan ahead

The Army's new policy on intellectual property in acquisition intends to provide overarching guidance on how the service should consider IP in negotiations and better plan for sustainment, according to one of its authors.

Next year, at Yakima Training Center, WA, the Army's Joint Warfighting Assessment team will use a roboticized version of the Assault Breacher Vehicle not yet in production and built on an Abrams chassis:

Army to test reconfigured Abrams chassis in robotic mine-clearing demonstration at JWA

The Army at the 2019 Joint Warfighting Assessment this spring will for the first time use a reconfigured Abrams tank to serve as the robotic vehicle breaching a simulated minefield.

The Missile Defense Agency's Standard Missile-3 Block IIA interceptor shot down a target this week:

SM-3 Block IIA intercepts target in key test to bolster defenses against Iran

The Pentagon's newest Aegis ballistic missile interceptor -- the Standard Missile-3 Block IIA -- intercepted a target in a key operational test over the Pacific today, a pivotal event that caps a 12-year development, sets the stage for a technical declaration of improved defenses against Iranian threats and also makes way for a long-delayed production decision.

The Navy is telling lawmakers that a new version of the MH-53 Sea Stallion wouldn't be "practical":

Navy advises Congress against 'MH-53K King Dragon,' pegs procurement at $7.6B

The Navy has deemed a theoretical "MH-53K King Dragon" helicopter as "not practical," estimating procuring such a platform could cost up to $7.6 billion in 2014 constant-year dollars for 48 aircraft, while developing and testing the aircraft could run $2.6 billion, according to documents viewed by Inside the Navy.

Some cyber defense news from our colleagues at Inside Cybersecurity:

Development of cyber deterrence policy remains elusive despite widespread support

There is widespread agreement within industry and government that the United States needs to strengthen its position for deterring cyberattacks from foreign adversaries, yet the process for developing such a widely supported policy remains unresolved even after years of debate, legislative action and an administration intent on demonstrating a get-tough resolve in countering cyber threats.