The Insider

December 8, 2017 at 2:12 PM | John Liang

The effects of tax reform on defense spending, GAO and the European Deterrence Initiative, Air Force AWACS aircraft and more highlight this Friday INSIDER Daily Digest.

Defense spending could be negatively impacted by proposed tax reform legislation:

Tax legislation generates concern over potential defense spending squeeze

With Congress poised to pass tax reform legislation that could grow the federal deficit, some analysts and experts say they expect defense spending to face new constraints.

The Pentagon isn't completely heeding the Government Accountability Office's advice when it comes to using OCO to fund the European Deterrence Initiative:

Pentagon will keep ERI in war-funding account, despite GAO criticism

The Defense Department will continue to use its controversial Overseas Contingency Operations account to fund the $4.5 billion European Reassurance Initiative, despite a recommendation from the Government Accountability Office that the Pentagon move ERI spending into its more stable base budget.

Despite upgrades, the Air Force's AWACS aircraft still have glitches:

Problems continue to slow AWACS upgrade process; wing staffs study BMC2

The E-3 Airborne Warning and Control System program office and Boeing are still working through myriad technical problems discovered in the fleet's Block 40/45 overhaul, though more than 12 aircraft have already been upgraded, according to the colonel who oversees the fleet at Tinker Air Force Base, OK.

The Air Force secretary was on Capitol Hill this week talking about acquisition reform:

Wilson talks acquisition reform as DOD delegates eight programs to Air Force

Air Force Secretary Heather Wilson told lawmakers this week the GPS III Follow-On program is an example of how the Defense Department is giving the services more leeway to manage their own acquisitions.

Document: Senate hearing on acquisition reform

Air Force Reaper unmanned aircraft are getting a much-needed cash infusion for upgrades:

Air Force shifting $20 million to urgently needed Reaper upgrades

The Air Force recently notified lawmakers it is moving nearly $20 million in fiscal year 2017 procurement funding to modify 14 MQ-9 Block 5 aircraft as a new-start program.

Inside Defense recently chatted with the new head of not-for-profit defense contractor LMI:

New LMI chief says company is 'actively looking' for new acquisitions

Not-for-profit defense contractor LMI is shedding its international work and refocusing its attention on its procurement, logistics, sustainment and analytics capabilities, the organization's new chief executive says.

The sale of Littoral Combat Ships to Saudi Arabia has spawned a dedicated program office within the Navy:

Navy establishes LCS program office to support Saudi Arabia buy

The Navy will establish a Littoral Combat Ship program office this weekend to support the foreign military sale to Saudi Arabia, Inside the Navy has learned.

December 8, 2017 at 11:58 AM | Lee Hudson

In the wake of recent surface ship collisions in U.S. 7th Fleet, the Navy plans to unveil findings from a strategic readiness review directed by Navy Secretary Richard Spencer, according to the service.

In September, Spencer asked five entities to participate in the review. He tapped BP North American because of the company's experience with the Deepwater Horizon oil spill, Crowley Marine for its safety program -- called "Road to Zero" -- and Maersk for the company's implementation of operational and safety standards. He also contacted Boeing and Sandia Labs.

"We're going to approach as best practices [from] people who've come out the other side," he said. "The culture of safety starts at the top."

The strategic readiness review focuses on best practices, while the service's comprehensive review focused on tactics and fleet employment.

December 8, 2017 at 11:00 AM | Rachel Karas

The Defense Department announced this week it has added $46 million to a $13.1 million undefinitized contract awarded to Boeing in June for the E-3 Airborne Warning and Control System's digital avionics overhaul, and the previous contract's details are now final.

That upgrade program, named Diminishing Manufacturing Sources Replacement of Avionics for Global Operations and Navigation (DRAGON), is in low-rate initial production and will be fully operational in the late 2020s. Congress is encouraging the Air Force to expand the modification, which adds modern navigation systems and other air traffic compliance and technology improvements in a digital cockpit, from 24 jets to the entire 31-aircraft fleet.

Once DRAGON is installed, the E-3 will no longer need a dedicated navigator onboard the aircraft, cutting the crew size to three. AWACS offers battle management, command and control and airborne target tracking capability from a Boeing 707 airframe.

The contract announced Dec. 7 "will definitize the undefinitized contract action contract line item numbers and award remaining effort not associated for low-rate initial production" of the DRAGON program. About $4.5 million in fiscal year 2017 funding was paid up front, the Pentagon said. Work will run through Jan. 24, 2022.

December 8, 2017 at 10:46 AM | Rachel Karas

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

1. The E-3 Airborne Warning and Control System program office is still working through myriad technical problems discovered in the fleet's Block 40/45 overhaul, and an AWACS official expects the Air Force will keep seven jets it planned to divest.

Full story: Problems continue to slow AWACS upgrade process; wing staffs study BMC2

2. SIMI VALLEY, CA -- The Pentagon acquisition chief said Dec. 2 a much-anticipated Defense Acquisition Board review of the F-35 will not convene until the joint program office's modernization plan has the necessary buy-in.

Full story: Lord: Pentagon needs more details, buy-in before F-35 DAB review

3. SIMI VALLEY, CA -- U.S. Strategic Command Chief Gen. John Hyten wants the Air Force to deliver a next-generation missile warning satellite faster than the fiscal year 2029 time frame proposed in a recent request for information.

Full story: STRATCOM chief wants next-generation SBIRS satellites before FY-29

December 7, 2017 at 9:16 PM | Tony Bertuca

The Senate, by a vote of 81-14, tonight passed a two-week extension to a stopgap continuing resolution, averting a government shutdown and extending budget negotiations to Dec. 22.

The measure, which passed the House earlier in the day, now goes to the White House for President Trump's signature.

Trump met with House Speaker Paul Ryan (R-WI), House Minority Leader Nancy Pelosi (D-CA), Senate Majority Leader Mitch McConnell (R-KY) and Senate Minority Leader Chuck Schumer (D-NY) at the White House Thursday to discuss a broader budget deal to raise defense and non-defense spending over the caps mandated by the 2011 Budget Control Act.

Senate Armed Services Committee Chairman John McCain (R-AZ) voted against the CR, citing its toll on military readiness.

"The president and an overwhelming majority of Congress agree we need to increase investment in the military to rebuild our forces," he said in a statement. "This will only be possible with a bipartisan budget agreement. I hope that following today’s meeting between Congressional leaders and the White House, that budget agreement will provide for substantial, sustained growth to defense spending for this year and next.”

Pentagon Comptroller David Norquist told reporters Thursday a longer CR, though inefficient, would be far better than a shutdown.

"There's no way to make a shutdown easier," he said. "It's not designed to be easy, it's designed to be destructive."

December 7, 2017 at 6:04 PM | Marjorie Censer

Science Applications International Corp. said today sales in its most recent quarter reached $1.1 billion, up 3 percent from the same three-month period a year earlier.

The contractor reported quarterly profit of $43 million, up 2 percent from the prior year.

Nazzic Keene, SAIC's chief operating officer, said in a call with analysts today the company has eliminated about 70 jobs, partly through a voluntary retirement package 190396 offered to about 100 senior managers as well as through some involuntary cuts.

She said that effort, along with other steps, will reduce SAIC's annual operating costs by $20 million.

December 7, 2017 at 5:11 PM | Tony Bertuca

The House, with a vote of 235-192, passed a two-week extension to a stopgap continuing resolution to avert a government shutdown Friday. The measure now moves to the Senate.

Most Democrats voted against the CR because it did not contain language to support safeguards for those in the Deferred Action for Childhood Arrivals program, among other items.

Meanwhile, President Trump met with House Speaker Paul Ryan (R-WI), House Minority Leader Nancy Pelosi (D-CA), Senate Majority Leader Mitch McConnell (R-KY) and Senate Minority Leader Chuck Schumer (D-NY) at the White House on Thursday afternoon to discuss a broader budget deal to raise defense and non-defense spending caps mandated by the 2011 Budget Control Act.

It remains unclear if the Senate will pass the House version of the CR or author its own, which would need to be reconciled in a conference committee.

Senior Defense Department officials said Thursday they were preparing for the shutdown, warning it would halt pay for U.S. soldiers in combat, damage military readiness and disrupt key defense contracts.

"I cannot emphasize too much how destructive a shutdown is," Pentagon Comptroller David Norquist told reporters Thursday.

"No one gets paid," he continued. "The disruption of this ripples through the organization."

December 7, 2017 at 2:17 PM | John Liang

The impending end of the current continuing resolution and its effect on defense spending lead off this Thursday INSIDER Daily Digest.

At least one House lawmaker doesn't think a government shutdown will happen:

House's top defense appropriator bullish on budget deal as shutdown nears

The chairwoman of the House Appropriations defense subcommittee says she's optimistic Republicans and Democrats will avert a government shutdown Friday and ultimately reach a budget deal that boosts defense spending through the Pentagon's controversial war-funding account.

Check out our previous coverage of what other lawmakers have said about this Friday's impending budget deadline:


Senior DOD officials were on Capitol Hill this morning talking about acquisition reform:

DOD acquisition chief asks Congress to reduce cost data requirements

The Pentagon's acquisition chief has asked Congress to consider legislation to reduce existing requirements for the Defense Department to get detailed cost and pricing data from defense contractors on sole-source contracts.

Esper: Army aims to cut requirements process to 12 months, halve acquisition time line

Army Secretary Mark Esper emphasized the value of prototyping to improve requirements definition as the service aims to streamline its acquisition process, detailing an array of efforts taken or underway during testimony today before the Senate Armed Services Committee.

Document: Senate hearing on acquisition reform

Army leaders are taking lessons learned from the defense industry and the other services to improve modernization efforts:

Hix: Modernization command task force seeking 'best practices' for acquisition

As part of the effort to consolidate modernization functions under a single command, Army leaders expect to borrow from industry and the other services to reduce "inertia" and increase agility in the acquisition system.

The Air Force will begin prepping its five-year plan for fiscal year 2020 next month:

Air Force to start review in January to prepare for FY-20 POM, FYDP

Air Force leaders will review the service's programs, budgets and manpower to find ways to get the best bang for their buck in the fiscal year 2020 program objective memorandum and future years defense plan, the service said this week.

Monitoring people with security clearances remains a challenge, according to a new GAO report:

GAO details lack of policy around continuous evaluation of cleared workers

The federal government has not set clear policies for using technologies to continuously monitor individuals who hold security clearances, which experts say could call into question the Defense Department's plan to replace a large portion of the background investigation process with continuous evaluation.

Document: GAO report on personnel security clearances

December 7, 2017 at 11:01 AM | Tony Bertuca

Here are a few must-reads from this week's edition of Inside the Pentagon:

1. The chairwoman of the House Appropriations defense subcommittee says she's optimistic Republicans and Democrats will avert a government shutdown Friday and ultimately reach a budget deal that boosts defense spending through the Pentagon's controversial war-funding account.

Full story: House's top defense appropriator bullish on budget deal as shutdown nears

2. Industry groups are sounding the alarm over the Pentagon's plan to select one cloud services provider for the entire Defense Department, arguing the strategy could lead to a costly and limiting situation of "cloud lock-in."

Full story: Industry concerned about DOD plan to 'lock in' one cloud services provider

3. The Defense Department expects to release in fiscal year 2018 a modernization blueprint to guide future investments in technological capabilities, the Pentagon's acquisition chief said Saturday.

Full story: Lord: DOD crafting new modernization strategy to guide cutting-edge tech investments

December 7, 2017 at 9:36 AM | Marjorie Censer

Raytheon said today it has formed a new, wholly owned subsidiary headquartered in Abu Dhabi.

The organization, known as Raytheon Emirates, “will oversee Raytheon's operations in the Emirates by leveraging capabilities and resources in the fields of cybersecurity, effectors, air defense and sustainment, and advanced technology, and by applying Raytheon expertise, processes and systems to the development of human capital and locally based suppliers,” the company said.

Raytheon has named John Brauneis chief executive of Raytheon Emirates.

December 7, 2017 at 9:34 AM | Marjorie Censer

Northrop Grumman said this week it has “received a request for additional information” from the Federal Trade Commission as part of the FTC's review of its planned acquisition of Orbital ATK.

Northrop said it “continues to expect the acquisition to close in the first half of 2018, after receiving regulatory approvals.”

Last month, Orbital ATK stockholders approved the proposed acquisition at a special meeting. 

December 6, 2017 at 2:47 PM | Lee Hudson

LINTHICUM, MD -- The Navy may consider using a new unmanned aerial vehicle created through a joint venture between Northrop Grumman and VX Aerospace as part of the EA-18G Growler Block II upgrade, according to a Northrop Grumman executive.

JJ Thompson, naval aviation campaign director at Northrop Grumman Mission Systems, told reporters here the system, known as Dash X, is designed to be an expendable intelligence, surveillance and reconnaissance asset.

Dash X has been overseen by the Office of the Secretary of Defense, the Office of Naval Research and the F/A-18E/F Super Hornet program office, he said.

VX Aerospace, using ONR funding and working with North Carolina State University and the University of South Carolina, designed and built two Dash X unmanned aerial systems for flight testing.

The UAS folds into a canister that can be carried by a tactical aircraft. When dropped by an aircrew, it separates from the container and flies off to perform its mission.

The UAS then relays information back to the aircraft. Though Thompson did not predict the precise cost of Dash X, he said the military will be able to treat the systems as disposable.

VX and Northrop concluded the first phase of development with a flight test on Oct. 26 at Foothills Regional Airport in Morganton, NC. The demonstration proved Dash X could work in conjunction with a manned aircraft, collecting and sharing electronic warfare and signal intelligence data inflight, Thompson said.

The demo used a modified Bombardier Dash 8 as the manned aircraft. Northrop installed a sensor suite developed with internal research and development dollars, Thompson said.

Though Dash X can only travel up to 60 knots, Thompson said this speed works to its advantage. The system goes too fast for small arms to shoot it down, but is slow enough to be below the range of tactical aircraft engagement systems.

Thompson said he envisions the Navy using this technology as part of the Growler Block II upgrade because the modernization effort focuses on manned-unmanned teaming.

"I think that long-range teaming is where the highest probability of fielding this is going to go," he said.

December 6, 2017 at 2:14 PM | Tony Bertuca

The Defense Department announced today there are 2,000 U.S. troops in Syria, after last month reporting there were only 500.

Col. Rob Manning, a Pentagon spokesman, said the new number was being provided in the interests of transparency, but stressed the figure was approximate so as to not provide information to the Islamic State of Iraq and Syria.

"We will be in Syria as long as it takes to make sure that ISIS is not afforded the ability to reestablish safe havens and plan and conduct attacks,” he said of the Trump administration's "conditions-based strategy."

Manning also said there were approximately 5,200 U.S. troops in Iraq.

December 6, 2017 at 2:02 PM | John Liang

Defense industry coverage, the Joint Strike Fighter, missile defense and more highlight this Wednesday INSIDER Daily Digest.

The next CEO of L3 Technologies spoke at an industry conference this week:

L3 executive says company has dozens of companies in acquisition pipeline

L3 Technologies, which completed several acquisitions this year, has more than two dozen companies under consideration as potential purchases, the company's next chief executive said this week.

The Pentagon's plan to select one cloud services provider for the entire Defense Department isn't going over well with industry:

Industry concerned about Pentagon plan to 'lock in' one cloud services provider

Industry groups are sounding the alarm over the Pentagon's plan to select one cloud services provider for the entire Defense Department, arguing the strategy could lead to a costly and limiting situation of "cloud lock-in."

The Joint Strike Fighter could be getting an Automatic Ground Collision Avoidance System:

F-35 may get Auto GCAS before official start of Block 4

EDWARDS AIR FORCE BASE, CA -- The F-35 joint program office is considering outfitting the aircraft with an Automatic Ground Collision Avoidance System prior to the start of Block 4 modernization.

The Army recently put out a request for information for a vehicle-mounted, short-range air defense system to counter unmanned aerial system threats:

Army eyes production of Stryker-mounted SHORAD capability

The Army aims to determine whether industry can produce a vehicle-mounted, short-range air defense system to counter unmanned aerial system threats in the near term.

The Charles Stark Draper Laboratory and Numerica Corp. will be looking into the possibility of developing an ability for radar and other sensors to track hypersonic glide vehicle threats:

MDA awards contracts to improve radar ability to track maneuverable targets

The Missile Defense Agency has awarded a pair of research contracts that aim to develop an ability for radar and other sensors to track hypersonic glide vehicle threats which both China and Russia are testing.

December 6, 2017 at 12:49 PM | Tony Bertuca

The Air National Guard has deployed an M-Q9 Reaper drone to assist local authorities fight an outbreak of wildfires in Ventura County, CA, according to a Pentagon spokesman.

A unit from the 146th Air Wing stationed at Channel Island Guard Station in Oxnard, CA, has been approved to operate the drone for 14 days, according to Col. Rob Manning.

The Air National Guard has also deployed two C-130J Modular Airborne Firefighting System Aircraft to release flame retardant on the wildfires.