The Insider

The Army's new capability portfolio review effort is intended to help the service take a holistic look at its programs and find potential efficiencies, Army Vice Chief of Staff Gen. Peter Chiarelli told the House Armed Services readiness subcommittee today.

Answering a question about the increasing price of systems, Chiarelli said an assessment of any individual item will typically show the system is needed. But examining "a portfolio of common systems" will probably reveal areas in which the Army has more of a specific capability than it needs or opportunities for improved efficiencies, he said.

He used the example of precision munitions, noting that a portfolio review might find that some munitions are precision that do not need to be -- significantly increasing the cost.

"It's time we think in the Army that we step back," Chiarelli said of the portfolio review approach.

InsideDefense.com in early March reported on a Feb. 22 rule set signed by Joseph Westphal, under secretary of the Army, and Gen. Peter Chiarelli, Army vice chief of staff, that sets the guidelines for conducting the one-year, pilot capability portfolio review effort directed by Army Secretary John McHugh. The purpose is to conduct an “Army-wide, all-components revalidation of requirements.”

More here.

The Senate has confirmed President Obama's picks to head environment programs for the Navy and Air Force. The action follows the lifting of holds Republicans had placed on the nominees over a battle to secure Navy funding for an environmental health study and the Air Force's aerial tanker program, Defense Environment Alert reports today. Specifically:

The Senate voted March 4 to confirm Jackalyne Pfannenstiel as assistant secretary of the Navy for installations and environment, and Terry Yonkers to be assistant secretary for the Air Force for installations, environment and logistics. Obama nominated Pfannenstiel Dec. 3, but Sen. Richard Burr (R-NC) had placed a hold on her nomination out of frustration over a dispute about funding a mortality study and health survey related to the effects of drinking water contamination at Marine Corps Base Camp Lejeune, NC.

Burr admonished the Navy for dragging its feet on funding the federal Agency for Toxic Substances & Disease Registry (ATSDR) studies. The Navy late last month agreed to fund the studies, and a Senate source at the time said Burr was waiting to see funding actually transferred to ATSDR before lifting the holds on Pfannenstiel and another Navy nominee (Defense Environment Alert, March 2).

Yonkers, who was nominated Aug. 3, had been caught in a hold that Sen. Richard Shelby (R-AL) had originally placed on over 70 of the administration’s nominees in an attempt to sway the Air Force on its next-generation aerial tanker program known as KC-X. While Shelby lifted his "blanket hold" on many nominees last month, Yonkers remained under it because his slot is directly related to the KC-X program. A spokesman for Shelby’s office did not respond to an inquiry on Yonkers' hold.

Nearly 100 individuals representing more than 50 companies attended a pre-proposal conference in Dearborn, MI, today on the Army's Ground Combat Vehicle.

The GCV is set to replace the terminated Future Combat Systems manned ground vehicles.

According to program executive office integration spokesman Paul Mehney, the pre-proposal event provided overviews of evaluation factors including program design, integrated design, program plans, cost, past performance and small business participation.

"GCV will continue to receive additional questions up to proposal submittal," Mehney added, noting that all questions and answers will be posted on the program Web site.

Responses to the GCV request for proposals are due April 26. The Army is seeking three contractors to participate in the 27-month technology development phase of the program and plans to award technology-development contracts in September.

As much as the idea of social network analysis is en vogue in defense circles, officials at the Joint Improvised Explosive Device Defeat Organization still have a lot to learn in that department, according to the outfit's new boss.

Familial and tribal relationships in Afghanistan, for example, are “very, very foreign to most of us Westerners,” Army Lt. Gen. Michael Oates told defense bloggers today. “Fundamentally, our challenge with social networking in Afghanistan and in Iraq is still driven by significant cultural ignorance,” he said. “We have a long way to go.”

The assessment comes as U.S. coalition forces a face sharp increase in the number of IEDs planted on the roads of Afghanistan, Oates said. For JIEDDO, the point of using social network analysis techniques is to identify, track and neutralize individuals who are key in insurgent bomb emplacement operations.

Pentagon acquisition chief Ashton Carter just told the Senate Armed Services Committee that the F-35 Joint Strike Fighter will breach critical Nunn-McCurdy spending caps.

Defense Department Director of Cost Assessment and Program Evaluation Christine Fox said in prepared testimony that officials Nunn-McCurdy notification is expected by April 1 and certification should be complete by June.

Fox also just told lawmakers that F-35s will cost between $80 million and $95 million per copy using 2002 dollars. Back in 2002, the planes were expected to cost $50 million per copy.

In addition to Carter and Fox, Pentagon Director of Operational Test and Evaluation Michael Gilmore and DOD Acting Program Executive Officer for the Joint Strike Fighter Program Air Force Maj. Gen. Clyde Moore and Michael Sullivan from the Government Accountability Office are all testifying this morning.

An "interim" version of the Pentagon's 2010 Space Posture Review was signed today by a senior Defense Department official, according to Air Force space programs chief Gary Payton.

Payton told the Senate Armed Services strategic forces subcommittee this afternoon that officials from the office of the director of national intelligence have not yet approved the report. Once that is done, a copy will be made available to Congress, he added.

As Inside the Air Force reported in January, the service is conducting its own soup-to-nuts review of its space policies, programs and operations with plans to have a final slate of recommendations ready for review by Air Force Secretary Michael Donley by the end of the year.

Donley outlined the parameters and prime objectives of the review in a service-wide memo issued on Dec. 9, 2010, ITAF reported, adding:

Service officials have conferred with DOD regarding the ongoing Air Force review, according to the service official, who declined to comment on what kind of impact the DOD-led review would have on the service assessment, or how the service review would be incorporated into the Pentagon’s work.

“It has been a positive discussion, and I’ll just leave it at that,” the official said.

While the review is on pace to meet the mid-2010 deadline set by Donley in the Dec. 9 memo, the official said no preliminary versions of the report’s recommendations have been issued. “I do not think it is going to work like that,” the source said. “I think it is going to be more of an iterative process.”

Two analysts with Oppenheimer's Equity Research department weigh in on Northrop Grumman's decision not to bid on the tanker competition:

Northrop Grumman decided not to pursue the US Air Force's large aerial refueling contract, which they had won during the last competition. However, that was then and this is now and a new CEO at NOC is facing a different leadership team at the Pentagon, a different RFP (request for proposal) and contract structure. In the end, we think the decision came down to economics that left NOC with the choice to submit a token bid in the name of competition or try to compete on price with a more expensive (but more capable) aircraft, and potentially, end up with a fixed price contract that could dramatically increase the risk profile of NOC's future earnings/cash flows.

More:

Listening to NOC management over the past few months, and seeing the changes in leadership and incentives, we weren't entirely surprised by the move not to bid. This contract has always been a must-win for Boeing and nice-to-have for NOC. The change to fixed price (vs. prior cost-plus) further softened the risk/reward for NOC.

We expect the DoD/AF will now enter into sole-source discussions with BA over a desirable tanker. Under those discussions, we do expect the DoD to obtain better pricing, cost discovery data, which will likely get over the hurdle of a blown competition in the end.

Other alternatives include: Congress demands loosening the RFP to balance the field, the DoD deciding to GFE (government furnished equipment) commercial 767s from Boeing and compete the integration (after clearly favoring the size/performance of the 767), or a very outside chance for EADS to take a shot at the contract on their own.

We're sure that some in Washington will both cheer and jeer at the decision; however, we're of the mind that the company made its goals clear in advance (even in laying out the incentives by which they are governing themselves), stated opposition early, fully evaluated the risk/reward and got to, what we'd agree is the right answer, "No."