The Insider

Oshkosh Layoffs
By Tony Bertuca
April 9, 2013 at 6:26 PM

Oshkosh Corp. announced today that its defense division will be laying off nearly 1,000 workers this summer due to expected decreases in military vehicle sales.

The company will reduce its work force in Oshkosh, WI, by approximately 700 hourly positions starting in mid-June and will cut another 200 salaried workers through July, the announcement states. The company will be left with 2,800 defense employees after the reductions are complete.

“As discussed on numerous occasions, Oshkosh expects domestic military vehicle production volumes to decline significantly as the year progresses,” the statement reads. “The company’s lower expected vehicle production is due mainly to the reduction in U.S. defense budgets and a return to peacetime spending levels as the U.S. winds down war activities. Daily production volumes are expected to decline by approximately 30 percent this summer.”

John Urias, Oshkosh's executive vice president of defense, called the layoffs “difficult but necessary decisions” given the current business climate. “When other business segments of Oshkosh and many companies in the U.S. were enduring layoffs, pay cuts and furloughs during the Great Recession, Oshkosh Defense was hiring employees and retaining jobs which ended up helping many people manage through that difficult period,” he said in the statement. “However, circumstances have now changed.”

Urias added that Oshkosh has worked to save more than 165 production jobs by enacting various insourcing measures. “The company will be reaching out to the county and state workforce development agencies, as well as local employers to help those affected by the layoffs make the transition to other employment if they so desire,” the statement reads. “The company will continue to build high-quality trucks and trailers, and provide support service and training for its military customers around the clock and around the world.”

Oshkosh is the Army's primary provider of heavy-duty trucks and is the contractor for the Mine Resistant Ambush Protected All-Terrain Vehicle. The company is currently one of three competitors vying for a Joint Light Tactical Vehicle contract.

Standing Down
By Maggie Ybarra
April 9, 2013 at 3:59 PM

The Air Force has issued a stand-down order to its active-duty combat squadrons due to budget cuts that have negatively impacted Air Combat Command's operations and maintenance account, according to a service statement.

ACC's flying hours -- specifically, the training hours its airmen are allotted -- will be reduced by about 45,000 hours between now and Oct. 1, the statement indicates. Defense News reported on April 8 that the Air Force would begin grounding its combat squadrons today.

“ACC, as the Air Force's lead for Combat Air Forces, manages the flying-hour programs for four major commands,” the statement reads. “This decision to stand down or curtain operations affects about one-third of the active-duty [Combat Air Forces] aircraft -- including those assigned to fighter bomber, aggressor and airborne warning and control squadrons -- stationed in the United States, Europe and the Pacific.”

ACC commander Gen. Mike Hostage said ACC has had to implement a tiered readiness approach in which "only the units preparing to deploy in support of major operations like Afghanistan are fully mission capable.” The units will stand down “on a rotating basis” so that the Air Force's “limited resources can be focused on fulfilling critical missions.” Hostage noted that the stand-down would have a “significant and multiyear impact” on the Air Force's operational readiness.

Some of the combat squadrons, which include A-10 twin-engine planes, B-1 long-range bombers, F-16 fighter jets and F-22 fighter jets, will stand down “after they return from their deployments,” according to the statement. Other squadrons will stand down operations today, April 9. Additionally, active-duty airmen assigned to the Air Force Reserve or the Air National Guard's A-10 and F-16 squadrons will also stop flying until October, the statement adds.

The stand-down will continue throughout fiscal year 2013, “barring any changes to current levels of funding,” according to the statement.

“Units that are stood down will shift their emphasis to ground training. They will use flight simulators to the extent possible within existing contracts, and conduct academic training to maintain basic skills and knowledge of their aircraft,” the statement reads. “As funding allows, aircrews will also complete formal ground training courses, conduct non-flying exercises and improve local flying-related programs and guidance.”

Budget Rollout
By Jason Sherman
April 8, 2013 at 2:22 PM

The Defense Department plans to publish its FY-14 budget request online -- http://www.budget.mil -- Wednesday morning soon after President Obama officially unveils the overarching executive-branch FY-14 spending proposal, according to a Pentagon official. The White House Office of Management and Budget has not published the exact hour for that event.

As soon as 1 pm, Defense Secretary Chuck Hagel and Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey will present the Pentagon's spending plan to reporters followed immediately by Pentagon Comptroller Robert Hale and Lt. Gen. Mark Ramsay, the Joint Staff J8 director, who will provide a more detailed briefing on the spending plan.

In a series of successive briefings, senior officials from the departments of the Army, Navy and Air Force will then present their new budget plans to reporters. The Missile Defense Agency will not present a briefing this year, according to the DOD official.

OMB Sequestration Guidance
By John Liang
April 5, 2013 at 3:15 PM

The White House Office of Management and Budget this week issued "further guidance on specific issues regarding the management and implementation of sequestration." Part of that guidance involves the "appropriate use of existing reprogramming and transfer authority." Specifically:

Sequestration provides an agency with little discretion in deciding where and how to reduce spending. All non-exempt budget accounts in a given spending category must be reduced by a uniform percentage, and the same percentage reduction must be applied to all programs, projects, and activities (PPAs) within a budget account. However, depending on an agency's account structure and any existing flexibilities provided by law, some agencies may have a limited ability to realign funds to protect mission priorities. As directed by Memorandum 13-03, in allocating reduced budgetary resources due to sequestration, agencies should generally "use any available flexibility to reduce operational risks and minimize impacts on the agency's core mission in service of the American people." Agencies should also "take into account funding flexibilities, including the availability of reprogramming and transfer authority."

Consistent with this guidance, agencies with reprogramming or transfer authority should continue to examine whether the use of these authorities would allow the agency to minimize the negative impact of sequestration on core mission priorities. In doing so, agencies must consider the long-term mission, goals, and operations of the agency and not just short-term needs. For example, agencies should avoid taking steps that would unduly compromise the ability to perform needed deferred maintenance on facilities, invest in critical operational functions and support, conduct program integrity and fraud mitigation activities, and pursue information technology or other infrastructure investments that are essential to support the long-term execution of the agency's mission. Similarly, while agencies with carryover balances or reserve funds should consider appropriate use of these funds to maintain core mission functions in the short term, it is important not to use these funds in a manner that would leave the agency vulnerable to future risks due to a potential lack of available funds in future years.

Agencies should consult with their OMB Resource Management Office (RMO) to assess options for utilizing existing authorities and ensure that any proposed actions appropriately balance short-term and long-term mission priorities. Agencies must also consult closely with their OMB RMO on any proposed actions that would reduce carryover balances or reserve funds below historical levels.

View the full memo.

Space Review
By John Liang
April 4, 2013 at 12:00 PM

The Defense Department inspector general's office is conducting an "assurance policy review" of "DOD and service/agency policies and procedures toward assuring mission success for spacecraft and strategic programs," according to a March 18 memo:

This assessment will focus on but is not limited to systems engineering, manufacturing, testing, quality assurance, engineering risk management, reliability, maintainability and availability requirements that ensure mission success of DOD space assets and strategic weapon systems such as satellites, missiles and airborne surveillance systems. This review will determine if there are any gaps and weaknesses in DOD assurance policies and procedures.

Structural Additions
By Gabe Starosta
April 3, 2013 at 7:43 PM

The leaders of the House Armed Services Committee today announced their picks for nominations to the National Commission on the Structure of the Air Force. Chairman Rep. Buck McKeon (R-CA) and Ranking Member Rep. Adam Smith (D-WA) each selected individuals who recently left government service.

According to a committee release, McKeon has nominated retired Gen. Raymond Johns, who most recently served as the top military official at Air Mobility Command and left the service just months ago Before that, Johns was the deputy chief of staff for strategic plans and programs at Air Force headquarters in the Pentagon. Notably, Air Mobility Command's aircraft are operated by a heavy mixture of active-duty, Reserve and Air National Guard airmen.

For his nomination, Smith chose Erin Conatan, the Air Force's former under secretary. Conaton left that position to take over as assistant secretary of defense for personnel and readiness in mid-2012 but resigned from the job at the end of the year. Before that, though, Conaton held the under secretary position for multiple years and showed particular familiarity with the Air Force's space portfolio.

Conaton and Johns would join President Obama's four picks, announced earlier in the week: Margaret Harrell, Janine Davidson, Whit Peters and retired Marine Corps Lt. Gen. Dennis McCarthy. Senate leaders have not yet made their nominations to the commission.

THAAD Deployment
By Christopher J. Castelli
April 3, 2013 at 6:35 PM

The Defense Department will deploy a Terminal High Altitude Area Defense system to Guam in the coming weeks "as a precautionary move to strengthen our regional defense posture against the North Korean regional ballistic missile threat," DOD said in a statement this afternoon.

"The THAAD system is a land-based missile defense system that includes a truck-mounted launcher, a complement of interceptor missiles, an AN/TPY-2 tracking radar, and an integrated fire control system," the statement notes. "This deployment will strengthen defense capabilities for American citizens in the U.S. Territory of Guam and U.S. forces stationed there."

The United States "continues to urge the North Korean leadership to cease provocative threats and choose the path of peace by complying with its international obligations," DOD writes. The United States "remains vigilant in the face of North Korean provocations and stands ready to defend U.S. territory, our allies, and our national interests," according to the statement.

Space Security
By John Liang
April 2, 2013 at 5:03 PM

The United States is pursuing bilateral "Space Security Dialogues" with traditional partners as well as with other established and emerging space-faring nations as part of its pursuit of transparency and confidence-building measures (TCBMs), according to Deputy Assistant Secretary of State for Space and Defense Policy Frank Rose, who spoke earlier today at a Space Security Conference in Geneva:

The United States believes TCBMs should be pragmatic, voluntary, near-term actions that aim to increase trust and prevent misperceptions, miscalculations, and mistrust between nations. To overcome these dangers and risks requires, in part, building confidence between nations. This can be achieved with transparency, openness, and predictability through, for example, information-sharing.

In that vein, our Space Security Dialogues provide an opportunity for constructive exchanges on emerging threats to shared space interests, national security space policies and doctrine, and opportunities for further bilateral cooperation. In addition to the direct outcomes from these dialogues, bilateral exchanges themselves serve as important TCBMs which can be considered for adoption and implementation at a multilateral level. Given the complex and interrelated nature of space activities, the willingness of partners to engage in serious and substantive discussions in "whole of government" dialogues is what economists call a "leading indicator" of their commitment to multilateral discussions of space security.

View the full text of Rose's speech.

Conventional Arms
By John Liang
April 2, 2013 at 2:51 PM

The United Nations General Assembly could vote on a conventional weapons trade treaty as early as this week, according to a State Department official.

Assistant Secretary of State for International Security and Nonproliferation Tom Countryman spoke with reporters last week at the end of the U.N. Arms Trade Treaty Conference. While attendees at the conference were unable to reach a consensus, "such a treaty would promote global security, it would advance important humanitarian objectives, and it would affirm the legitimacy of the international trade in conventional arms," he said, adding:

Over two weeks of hard negotiations we reached a text that was meaningful, that was implementable, a text that did not touch in any way upon the Constitutional rights of American citizens, a text that the United States could support. We look forward to this text being adopted by the United Nations General Assembly in the very near future.

(UPDATE 12:37 p.m.: The General Assembly just passed a resolution approving the Arms Trade Treaty by a vote of 154 in favor, three against and 23 abstentions, according to a U.N. statement.)

Commissioned
By Gabe Starosta
April 1, 2013 at 9:45 PM

President Obama today announced his four nominations to serve on the National Commission on the Structure of the Air Force, which will evaluate and recommend changes to the way the active-duty Air Force, Air Force Reserve and Air National Guard interact and execute their missions.

The four individuals nominated by the president are:

-- F. Whitten Peters, better known as Whit, who served as Air Force Secretary from 1999 to 2001, first on an acting basis.

-- Janine Davidson, the former deputy assistant secretary of defense for plans at the Pentagon and now a professor at George Mason University's school of public policy. Davidson is also a senior fellow at the Center for a New American Security

-- Retired Marine Corps Lt. Gen. Dennis McCarthy, a principal at a military consulting firm and the former assistant secretary of defense for reserve affairs. McCarthy served in the Marines, first in the active-duty force and then in the reserve component, between 1967 and 2005, according to a biography listed by the Reserve Officers Association, where he served as executive director from 2005 to 2009

-- Margaret Harrell, the director of the RAND Corporation's Army health program. Between 2011 and 2012, Harrell worked as the senior fellow and director of the Center for a New American Security's military, veterans and society program.

Money Matters
By Maggie Ybarra
March 29, 2013 at 8:51 PM

Air Force Chief of Staff Gen. Mark Welsh sent a memo to the service's general officers this week updating them on the financial difficulties the Air Force is facing following a recently passed congressional appropriations bill.

In a March 27 memo obtained by Inside the Air Force, Welsh wrote that when Congress crafted an appropriations bill for fiscal year 2013, it provided the Defense Department with "much needed flexibility," like the ability to invest in new start programs and reprogram funding, but that the bill "does virtually nothing to mitigate sequestration." As a result, the Air Force is scaling back on training exercises, requalification courses and is still considering the possibility of implementing furloughs later this year, he wrote.

"Civilian furloughs are still on the table but DOD has not pulled the trigger yet. We will do what we can to mitigate some of those impacts with the limited transfer authority we get; however, we just don't have the money or transfer authority to mitigate them all," he wrote.

Welsh noted that Congress rescinded about $760 million in prior year investment funds and about $600 million in operations and management funding. That means the Air Force is now grappling with a multimillion dollar shortfall consisting of a $10 billion sequester reduction and a $1.8 billion overseas contingency operations shortfall, which has forced the service to cancel advanced training classes and requalification courses, he wrote.

In the coming months, the Air Force will continue to implement changes to counterbalance that shortfall, according to Welsh's memo.

"That reduction will still result in grounding some [Combat Air Force] squadrons as early as April -- [Mobility Air Force] impacts will kick-in later in the summer," Welsh wrote. "We will keep [Formal Training Unit] training on track until the funding runs out (late summer) but we had to cancel advanced training (IP courses, requalification courses) to do so."

Another problem for the Air Force is that Congress, in its fiscal year 2013 Defense Authorization Act, mandated the service retain more aircraft than it initially planned to fly in coming years. Maintaining those aircraft will cost the Air Force about $602 million, but lawmakers only provided the Air Force with $504 million, leaving the service with a $98 million shortfall, according to the Air Force's FY-13 implementation plan, Welsh wrote, adding that the Air Force was doing its best to mitigate that shortfall.

"We're pushing very hard to stretch every dollar and turn over every rock to buy as much mission capability back as possible," according to the memo.

Delta IV Date
By Gabe Starosta
March 29, 2013 at 4:22 PM

The Air Force's fifth Wideband Global SATCOM satellite will launch from Cape Canaveral Air Force Station, FL, on May 8, service officials announced today -- four months later than originally scheduled. The launch will mark the first use of a Delta IV rocket since a flawed launch on Oct. 4, 2012, during which the Delta IV boosting a Global Positioning System IIF satellite into orbit suffered a fuel leak. That problematic launch, although ultimately successful, led the Air Force and the United Launch Alliance to conduct dual investigations and prompted the service to impose a launch freeze, pushing back WGS-5's blastoff date.

The Space and Missile Systems Center said in a press release today that the investigation "into the off-nominal performance on the Global Positioning System IIF-3 launch last October is still progressing. Final testing related to the investigation is under way. ULA, Pratt Whitney Rocketdyne, and the Air Force have been working closely on this investigation and have approved processing this mission toward the May 8 launch date."

Launch officials have planned investigation closure reviews in mid-April, the release states.

WGS-5 is already out of storage and was sent to Cape Canaveral early this month, Boeing announced on March 12. Boeing is the lead contractor on the the WGS constellation, as well as on all GPS IIF satellites.

Competition Conundrum
By John Liang
March 29, 2013 at 3:51 PM

The Government Accountability Office is recommending that the Defense Department "identify, track, and consider the specific factors that affect competition when setting competition goals; develop guidance to apply lessons learned from past procurements to help achieve competition in the future; and collect reliable data on one-offer awards."

In a report issued yesterday, GAO further notes:

The Department of Defense's (DOD) competition rate for all contract obligations declined over the past five fiscal years, from 62.6 percent in fiscal year 2008 to 57.1 percent in fiscal year 2012. GAO also found that the competition rate in fiscal year 2012 varied by specific DOD component with the Air Force having the lowest at 37.1 percent and the Defense Logistics Agency the highest at 83.3 percent. The majority of the noncompetitive awards cited the availability of only one responsible source to meet the government's needs as the reason for using noncompetitive procedures.

A number of factors affect DOD's competition rate, but these factors are not always considered when setting DOD's annual competition goals. For example, reliance on an original equipment manufacturer throughout the life cycle of a program has been a long-standing challenge for DOD competition, and budget uncertainty can also hinder DOD's ability to compete. Noncompetitive purchases that DOD makes on behalf of foreign governments can also affect DOD's competition rate. DOD does not systematically consider these and other factors when setting its annual competition goals. For example, it sets competition goals for individual DOD components by simply adding two percentage points to the rate achieved in the previous year. Without identifying and tracking the specific factors affecting competition DOD cannot set meaningful goals for improving competition or accurately gauge its progress toward achieving them.

Many of the noncompetitive justifications GAO reviewed included the required elements as defined by the Federal Acquisition Regulation; however, the level of insight into the reasons for noncompetitive awards varied. For example, some justifications included clear descriptions of market environments where only one source was available to meet the government's needs or described planned actions that could help improve competition in the future. However, other justifications provided limited insight into the reasons for the noncompetitive award or did not fully describe actions that the agency could take to increase future competition. Without this information, DOD may be missing opportunities to gain a fuller understanding of why past acquisitions were not competitive and may be unable to apply those lessons to effectively facilitate competition for future acquisitions.

In 2010, DOD introduced a new requirement that applies to competitive awards that elicit only one offer (one-offer awards); however, the impact of the requirement is unknown because of unreliable data. To address the risk associated with one-offer awards, the requirement established rules that were intended to help ensure adequate solicitation time, ensure that contract requirements are not unnecessarily restrictive, and verify that offers received are fair and reasonable. However, GAO’s analysis of 35 one-offer awards determined that contracting officers had incorrectly coded 10 of these awards in the procurement database that DOD relies on to measure the impact of its new requirement. Six of the 10 awards were noncompetitive awards and the remaining 4 had received multiple offers. As a result, GAO determined that DOD's data cannot be used to accurately calculate the amount obligated on one-offer awards during fiscal year 2012. Without reliable data, DOD cannot accurately measure the impact of its new requirement.

View the full report.

Budget Issues
By Christopher J. Castelli
March 28, 2013 at 9:04 PM

The Pentagon must cut $41 billion in fiscal year 2013 due to sequestration, not $46 billion as anticipated, Defense Secretary Chuck Hagel said today. The continuing resolution signed into law this week "did fix some of our urgent problems," Hagel told reporters. "In particular, it put some of the dollars back in the right accounts. We still don't have the flexibility that we had hoped to get. But having money in the right accounts is particularly important."

The legislation reduces a shortfall in the operations budget, he said. "You also know that we came out better than we went in under the sequester, where it looks like our number is $41 billion now, versus the $46 [billion]," he said. "It gives us program authorities to start new programs . . . and military construction, which is significant."

Hagel also said the overseas contingency operations budget is about $7 billion higher than DOD had estimated, in part due to the cost of removing troops and equipment from Afghanistan.

"In the operation and maintenance account, we're going to be short, at least $22 billion for FY-13," he said. "We're going to have to deal with that reality, and that means we're going to have to prioritize and make some cuts and do what we got to do." DOD will slash base operating support, reduce training for nondeployed units and face furloughs, he said.

"I suspect overall the biggest issue that we're going to be dealing with and concern is the department's people and its mission, how these numbers are going to affect all that," Hagel added, citing DOD's new ongoing review of strategic choices and management.

"The uncomfortable truth is that . . . on Monday, we'll be halfway through the fiscal year and we'll be 80 percent spent in our operating funds," Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey said during the same briefing. "We don't yet have a satisfactory solution to that shortfall, and we're doing everything we can to stretch our readiness out. To do this, we will have to trade, at some level and to some degree, our future readiness for current operations. It will cost us more eventually in both money and time to recover in the years to come."

DOD will be trying to recover lost readiness and reshape the force concurrently. "We can do it, but that's the uncomfortable truth," Dempsey said. "We simply can't do this, though, without additional budget certainty in the outyears, time to absorb the reductions and flexibility."

That doesn't simply mean having the authority needed to transfer and reprogram funds, the general said. "I mean what I would describe as full flexibility," Dempsey added. "I'm talking about the unpopular but unavoidable institutional reforms that will be necessary. We can't afford excess equipment. We can't afford excess facilities. We have to reform how we buy weapons and services. We have to reduce redundancy. And we've got to change, at some level, our compensation structure.

"Without that kind of reform, we will lose the human capital, the important talented young men and women, and we'll lose combat capability," he continued. "But with that kind of reform, we have it within us to stay strong despite declining dollars and increasing risk. If our elected leaders can help us with full flexibility, our people will do the rest."

The FY-14 budget will be released April 10, Principal Deputy White House Press Secretary Josh Earnest told reporters today.

EUCOM Nominee
By John Liang
March 28, 2013 at 8:06 PM

President Obama plans to nominate Air Force Gen. Philip Breedlove to become the new head of U.S. European Command and supreme allied commander of NATO, Defense Secretary Chuck Hagel announced this afternoon.

Breedlove would replace Navy Adm. James Stavridis, who has held the post since 2009.

"We need to get that position filled," Hagel said during a Pentagon briefing today. "And I would say too that not only is he particularly well-qualified, but the job that Adm. Stavridis has done over there has been significant, and I think you've extended him a few times. So he needs a little relief one of these days. And I wanted to particularly recognize him, and it'll be more appropriate, and we will all recognize him in more detail as this unfolds."

Breedlove is head of U.S. Air Forces in Europe and Africa as well as Air Component Command based at Ramstein Air Base in Germany, according to his official bio.