The Insider

By John Liang
January 28, 2013 at 4:34 PM

The Defense Business Board held its quarterly meeting last week, during which it discussed the status of a task group's study on "applying best practices for corporate performance management" to the Defense Department.

The impetus for the study, according to briefing slides shown during the meeting, was that "the department currently faces an extraordinary confluence of management challenges, mounting costs and budget reductions, while continuing to provide for the national defense." Consequently, the task group is to "evaluate how successful executives of large and complex corporations plan, implement and maintain strong performance, especially during periods of reduced resources and/or significant changes." The group is also tasked to "identify strategies, practices and performance metrics which could be used by DOD leadership," according to the presentation slides.

View those briefing slides.

The board also discussed the findings of a study on commercial satellite communications services. Our coverage:

The Pentagon should designate a single office to procure all satellite communications assets and services, according to a Defense Business Board task force.

During its quarterly meeting today, the board approved the task force's recommendations for how to better take advantage of commercial satellite communications services. Notably, the task force's new report says the Defense Department should "facilitate future governance by designating a single DOD point for procuring all [satellite communications] assets and services."

The report also calls for the Pentagon to "address which organization(s) has operational and tactical execution authority."

"Multiple DOD officials asserted ownership for key components of SATCOM (i.e. strategy, operational, tactical and acquisition support, etc.)," the report states. "From an outside view, appears current roles and responsibilities are ambiguous."

The Air Force Space and Missile Systems Center procures military satellite communications assets and selected frequencies to meet end-user requirements, the report states, while the Defense Information Systems Agency procures commercial satellite communications services as needed to augment military satellites. The Defense Space Council serves as an "advisory forum," the report states.

Following the task force's recommendation for a point person on SATCOM would enable the Pentagon to get better value and prevent redundancy, the report states.

The task force believes the Pentagon is on the right track. This month, DOD Chief Information Officer Teri Takai "defined" a satellite communications governance framework, the report notes. Accordingly, the task force calls for DOD to support the CIO in establishing a governance and usage plan for military and commercial satellite "ecosystem," which includes aerial and terrestrial elements.

View the rest of the article.

View the related presentation slides.

By Christopher J. Castelli
January 26, 2013 at 1:05 AM

Sen. Jim Inhofe (R-OK), ranking member on the Senate Armed Services Committee, has sent a letter to President Obama expressing concern and disappointment over the State Department's decision to proceed with the delivery of F-16 fighter jets to Egypt despite instability in the region and a change of leadership. Inhofe urged Obama to delay any remaining F-16s to Egypt until Congress has had time to further review the matter.

"The recent transfer of four F-16 Block 52 fighter jets to Egyptian Armed Forces is troubling, and future deliveries of the remaining sixteen jets scheduled to be completed by the end of 2013 should be delayed until Congress has had time to review further this Foreign Military Sale," Inhofe writes in the letter. “The fact that conditions have changed significantly and substantively since this sale was initially approved merits closer scrutiny of this proposed action as other partners and allies look to see if our aid and assistance continues to be based on principle."

View the letter.

By John Liang
January 25, 2013 at 7:52 PM

Incoming Senate Budget Committee Chairwoman Patty Murray (D-WA) is contending that if Republicans insist on further spending cuts, defense budgets should bear an equal burden.

In a memo sent yesterday to her congressional colleagues, Murray writes that nearly three-quarters of the $2.4 trillion in deficit reduction that Congress has already passed comes from spending cuts.

Specifically on defense, the memo -- first reported today by Inside Health Policy -- states:

Prior to Congress lowering the amount of the 2013 sequester (from $109 billion to $85 billion), OMB calculated the across-the-board cut for non-exempt programs in its report to Congress pursuant to the “Sequestration Transparency Act of 2012” in September 2012. However, with the replacement of $24 billion of the previously scheduled savings, those percentages will now be lower (see Table 4).

For instance, for nondefense discretionary, the percentage reduction should fall to approximately 5.1%. For nondefense mandatory (other than for Medicare), the percentage reduction should fall to 5.3%. Finally, for defense discretionary, the percentage reduction should fall to approximately 7.3%.

Consequently:

So while we have already cut so much from discretionary funding and should find savings in other ways before we cut more, should Republicans insist on additional cuts to this small slice of the overall budget, defense should contribute at least as much as nondefense. This equal sharing of the burden of discretionary spending reductions has been a key element of every bipartisan deficit reduction proposal, including Simpson-Bowles.

View the full memo.

By Christopher J. Castelli
January 25, 2013 at 6:40 PM

Sen. Dick Durbin (D-IL), the Senate's assistant majority leader, announced today that he will become the chairman of the Senate Appropriations defense subcommittee when the panel organizes early next month.

“I look forward to the Chairmanship of this critical Subcommittee,” Durbin said in a statement. “As we wind down the war in Afghanistan, face upcoming budget cuts, and work to prepare our military for future threats, this Subcommittee will focus on ensuring our military remains the most powerful, ready and capable force in the world. We will also work tirelessly to ensure we’re spending wisely, protecting taxpayers and planning well for the future needs. And as has always been the case, the needs of all our servicemembers - active duty and reserve; in theater or here at home – will be our first concern. I thank Appropriations Committee Chairwoman, Senator Mikulski, for this opportunity and look forward to working with her and Ranking Member Cochran on these important issues.”

As the chair of the panel, Durbin will succeed the late Sen. Daniel Inouye (D-HI), who died last month at the age of 88.

By John Liang
January 25, 2013 at 4:27 PM

Army Chief of Staff Gen. Raymond Odierno, speaking yesterday at an AUSA breakfast, touched on the "perfect storm" of looming budget challenges the Army faces -- a possible a yearlong continuing resolution, sequestration cuts, and more. As InsideDefense.com reported:

Odierno said a yearlong CR for FY-13 would create a shortfall of $6 billion in the Army's operations and maintenance accounts. "It's because we're not able to move money around in a continuing resolution," he said. "We're over-prescribed in one part of the budget and we're under-prescribed in another part."

The across-the-board cuts from sequestration would create an additional $6 billion shortfall in Army O&M for FY-13, he said. On top of that, the Army's wartime operations funding faces a potential $4 billion O&M shortfall in FY-13, he said.

"The Army's facing about $17 billion worth of shortfalls that we're going to have to figure how to deal with if we don't come to some conclusion by the first of March," he said.

The Army and the other services have issued guidance to commanders to begin planning for sequestration should the cuts be triggered, as InsideDefense.com reported last week.

"We've now given guidance to our major subordinate commands to come back with the details," he said. "We expect to have those details within the next week, which will define the actions we'll have to take. The situation is serious."

Odierno and Army Secretary John McHugh signed a memo on Jan. 16 on how to reduce spending to mitigate "significant budgetary uncertainty in the coming months.".

"While we are hopeful the current budgetary uncertainty will be resolved in a manner that avoids significant reductions to the Army's budget, we must begin to slow spending now and plan for the worst," the memo stated. Further:

"Our funding is in doubt as we support forward-deployed troops, those training to deploy and wounded warriors," the memo adds. "The uncertain Fiscal Year (FY) 2013 funding caused by the combined effects of a possible yearlong continuing resolution (CR) and sequestration, along with the need to protect wartime operations, may result in particularly severe reductions to operation and maintenance spending. . . .  Given the magnitude of our budgetary uncertainty, the Army must act now to reduce our expenditure rate and mitigate budget execution risks in order to avoid even more serious future fiscal shortfalls."

Defense Department officials have said the Pentagon will have to cut $45 billion from its FY-13 budget in the event of sequestration. The other services have recently issued similar guidance.

McHugh and Odierno note that the near-term steps listed in their guidance memo "will only achieve a small portion of the savings required should sequestration and a yearlong continuing resolution occur."

While funding for wartime operations and the care of wounded warriors will be "protected," a plan to institute much larger cuts is in the works and a directive will be issued by the Army comptroller's office "no later than 16 January," according to the memo. It was unclear at press time if the comptroller planned to issue that guidance later today.

To view the rest of that story, click here.

View the memo.

By Christopher J. Castelli
January 24, 2013 at 5:01 PM

The Obama administration is expressing concern today following North Korea's new vow to conduct a nuclear test and to invest in capabilities to strike the United States. "North Korea's statement is needlessly provocative, and a test would be a significant violation of U.N. Security Council resolutions. Further provocations would only increase Pyongyang's isolation, and its continued focus on its nuclear and missile program is doing nothing to help the North Korean people," Pentagon spokeswoman Lt. Col. Monica Matoush told InsideDefense.com.

"We will maintain close consultation with our Republic of Korea and other allies and continue to monitor the threat of a nuclear test from North Korea and any possible threat to the U.S. or our allies," Matoush continued. "The U.S. closely monitors threats to international security and has the capability to respond if and when appropriate. We are not going to discuss military operations, plans or intelligence. However, we stand ready to defend U.S. territory, our allies and our national interests."

By John Liang
January 24, 2013 at 4:24 PM

Even if sequestration hits the Pentagon, Raytheon officials believe the company's portfolio is diverse enough to weather the storm. According to Raytheon's fourth-quarter earnings statement released this morning:

The financial outlook for 2013 does not reflect any of the potential effects of sequestration under the Budget Control Act (BCA). Although it remains uncertain if sequestration will be implemented, it could have a significant impact on the U.S. Military, the Aerospace and Defense Industry and Federal spending. Several industry associations estimate that sequestration, if implemented, could have a severe impact on U.S. Aerospace and Defense Industry employment nationwide. We believe that Raytheon's large international market presence, portfolio of programs, technology and focus on high priority areas should help to mitigate some of the potential overall impact.

View Raytheon's full statement -- along with other defense contractors.

By Lee Hudson
January 23, 2013 at 4:33 PM

A top Marine official this week briefly discussed a topic that soon will be on everyone's lips: the Quadrennial Defense Review.

Speaking on Jan. 22 at the Stimson Center in Washington, Maj. Gen. Kenneth McKenzie, the Marines' representative to the QDR, said budget issues will play a major role in the run-up to the QDR -- and noted that the review itself will focus on force structure and size, among other issues.

“It all boils down to money; it all boils down to force structure and force-sizing,” he said.

The service will “see what happens with the continuing resolution, with sequestration, with the debt ceiling, and those decisions on those items are going to actually inform and I think shape the way the QDR is actually going to go,” he said.

Another important topic: forward presence. Through the QDR, the Pentagon may look at how much forward presence is needed, whether it will be permanently forward-based or rotationally oriented, and what the services expect from it, McKenzie stated.

The other services are looking at similar issues, and the Office of the Secretary of Defense has begun its QDR work as well, McKenzie stated, though the Marines do not expect to begin in earnest until March.

“There's a lot of intellectual energy that is focused on some of the problems the QDR could address,” he said.

By John Liang
January 23, 2013 at 4:28 PM

Defense Procurement and Acquisition Policy Director Richard Ginman has issued a charter for the Strategic Sourcing Directors Board. According to his Jan. 18 memo accompanying the charter:

The SSDB is the principal forum for establishing strategic direction, monitoring, and improving the DOD-Wide Strategic Sourcing Program. Strategic sourcing requires operating collaboratively, with increased efficiency and effectiveness, to deliver first-class support to our Warfighters and taxpayers. The SSDB is charged with facilitating this collaboration across the Department to share innovative initiatives and to achieve increased cost savings, process improvements, and encourage socio-economic participation.

View the charter.

The Government Accountability Office released a report in December that found that the Air Force was realizing only a fraction of the potential savings available through implementation of strategic sourcing efforts. As Inside the Air Force reported in October:

GAO's strategic sourcing report reviewed select government agencies -- the Defense, Homeland Security, Energy and Veterans Affairs departments -- and their efforts to expand aggregate buying power. The study found that those four agencies in fiscal year 2011 accounted for 80 percent of the $537 billion in federal procurement spending, but managed only 5 percent of that spending through strategic sourcing efforts.

Likewise, the Air Force in FY-11 reported spending $2.4 billion and achieving savings of $126 million through strategic sourcing -- a savings equal to about 5 percent of the spending through strategic sourcing.

"If the Air Force were to strategically source even 10 percent of its total procurement spending of $65 billion, and achieved savings equivalent to 5 percent of the spending through strategic sourcing vehicles, it would save $339 million," the report states.

According to Cristina Chaplain, director of acquisitions and sourcing management at GAO, the Air Force is considered an early adopter of strategic sourcing efforts and has been incorporating some aspects of strategic sourcing into its procurement for more than 10 years. The report notes that the service's efforts are "the most mature." Within DOD, the Air Force in FY-11 reported implementing strategic sourcing in 17 products and services areas, the Army in eight and the Navy in seven.

Read the rest of the story.

View the GAO report.

By John Liang
January 22, 2013 at 6:16 PM

House Armed Services Committee Chairman Buck McKeon (R-CA) today completed the designation of the subcommittee chairs for the 113th Congress, naming Rep. Martha Roby (R-AL) to head the oversight and investigations subpanel. In a statement, McKeon said:

I am honored that Congressman Roby has agreed to chair the Oversight and Investigations Subcommittee.  I know she will bring the energy and attention to this job that she has already brought to her work on the full committee.  O&I is a vital part of the Armed Services Committee's oversight mission; compelling the military to address difficult truths and informing our legislative approach as we help overcome tough issues.  I know that under Martha's leadership, O&I will continue to serve this important role well.

Roby will join the following subcommittee heads that were named last month:

Emerging Threats and Capabilities -- Rep. Mac Thornberry, Texas, Full Committee Vice Chair

Seapower and Projection Forces -- Rep. J. Randy Forbes, Virginia

Military Personnel -- Rep. Joe Wilson, South Carolina

Tactical Air and Land Forces -- Rep. Mike Turner, Ohio

Strategic Forces -- Rep. Mike Rogers, Alabama

Readiness -- Rep. Rob Wittman, Virginia

By
January 22, 2013 at 5:08 PM

Countries with nuclear weapons have a "special responsibility" in promoting nonproliferation, according to U.N. Secretary General Ban Ki-moon.

Speaking on Friday at the Monterey Institute of International Studies in California, the secretary general encouraged nuclear weapon states "to come up with a bold set of measures to promote transparency of their nuclear arsenals." Further:

They can do this next April at the second session of the Preparatory Committee for the 2015 NPT Review Conference. Or they can start today by contributing data to the U.N.'s "Repository of Information Provided By Nuclear-Weapon States," as mandated at the Review Conference in 2010.

This should commence with in-depth consultations between the States with the largest nuclear arsenals -- the Russian Federation and the United States -- followed by deep and verified cuts in their arsenals and additional reductions by other States.

I urge all nuclear-armed States to reconsider their national nuclear posture.

Nuclear deterrence is not a solution to international peace and stability.  It is an obstacle.

Member States also need to reinvigorate the international disarmament machinery.

When I spoke to the Conference on Disarmament in Geneva I said plainly that the very credibility of the body is at risk. The Conference's record of achievement is overshadowed by inertia that has now lasted for more than a decade.  That must change. Another year of stalemate in the Conference on Disarmament is simply unacceptable.

The U.N. chief also called on the Conference on Disarmament to begin "long-overdue negotiations on a fissile material treaty as a priority."

The conference "should also start deliberations on a nuclear weapons convention, a legal security assurance for non-nuclear weapon States against nuclear threats, and the prevention of an arms race in outer space," he said, adding: "Global nuclear disarmament requires global arrangements."

View his prepared remarks.

By Christopher J. Castelli
January 18, 2013 at 7:41 PM

The 11th annual U.S. Missile Defense Conference -- hosted by the American Institute of Aeronautics and Astronautics (AIAA) in cooperation with Lockheed Martin, and supported by the Missile Defense Agency -- has become a casualty of federal fiscal woes.

The event, slated to take place March 18-20 at the Ronald Reagan Building and International Trade Center in Washington, DC, has been canceled. In recent days, AIAA had the event labeled "currently waiting DOD approval" on its website, noting registration would begin early this month. Even today, AIAA still had the conference listed on the site as an upcoming event. But those clicking on the event now see this message: "Due to the uncertain atmosphere surrounding the budget sequestration and the near term guidance received from the Office of the Secretary of Defense, the 11th U.S. Missile Defense Conference and Exhibit has been cancelled."

Gone is AIAA's previous statement that the event "aims to provide a world-class, secure environment for the U.S. missile defense community to meet and discuss the future of homeland and regional missile defense." According to the statement, the national missile defense community includes senior executive leaders, program managers, scientists, and staff in government, defense, and industry, as well as members of active duty, Reserve, and National Guard forces.

By John Liang
January 18, 2013 at 4:43 PM

The Pentagon this week issued a memo that updates Defense Department space systems acquisition policy.

Here's an excerpt outlining the technology development phase:

1. TECHNOLOGY DEVELOPMENT PHASE

a. Technology Development Strategy (TDS) - Additional Considerations. In addition to the requirements in subparagraph 5.c.(7) of Enclosure 2 of Reference (c), the TDS for space systems shall detail the acquisition strategy and contracting approach to be employed for the development of pertinent technologies for each phase of the program lifecycle.

b. Systems Engineering Plan (SEP) - Additional Considerations. In addition to the requirements in subparagraph 5.d.(5) of Enclosure 2 of Reference (c), the SEP for space systems shall:

(1) Emphasize the space system's integration with other existing and approved future architectures and capabilities.

(2) Include mission assurance (MA) planning. MA is a description of those activities undertaken to ensure that space systems operate properly once launched into orbit, since retrieval for repair is impractical.

c. System Design Review (SDR). During the technology development phase, space system Program Managers shall conduct an SDR to ensure that the system's functional baseline is established and that the system has a reasonable expectation of satisfying the requirement of the initial capabilities document (ICD) within the currently allocated budget and schedule. It completes the process of defining the items or elements below system level. This review accesses the decomposition of the system specification to system functional specifications. The SDR determines whether the system's functional definition is fully decomposed and that the program is prepared to begin preliminary design.

d. Post-System Design Review Assessment (P-SDRA). The MDA shall conduct a formal program assessment following the SDR for space systems. The SDR provides an opportunity to assess satisfaction of user needs through functional decomposition and traceability of requirements from the ICD to the contractor’s functional baseline and system specification. An IPA shall be provided to support the P-SDRA.

(1) Space system program managers shall provide a post-SDR report to the MDA reflecting an overall assessment of design maturity and a summary of the system-level SDR results. The post-SDR report shall include an independent vulnerability assessment and an orbital debris mitigation risk report. The orbital debris mitigation risk report will include an assessment of debris generation risk during launch, on-orbit operations, and end-of-life disposal, and shall assess compliance with the U.S. Government Orbital Debris Mitigation Standard Practices (Reference (d)).

(2) The MDA shall review the post-SDR report and the program manager’s resolution and/or mitigation plans, and determine whether additional action is necessary to achieve technology development phase objectives and satisfy the capability need specified in the ICD. The results of the MDA’s post-SDR assessment shall be documented in an Acquisition Decision Memorandum and include the MDA’s determination to proceed with technology development.

(3) Additional guidance and expectations will be provided in the Defense Acquisition Guidebook (Reference (e)).

View the full memo.

View InsideDefense.com's coverage of space issues.

By Christopher J. Castelli
January 17, 2013 at 5:13 PM

Sen. Jim Inhofe (R-OK), the incoming ranking member of the Senate Armed Services Committee, today wrote Defense Secretary Leon Panetta to urge the Pentagon to provide detailed information on the impact of sequestration as soon as possible.

“The threat of sequestration has loomed for well over a year and I find it deeply troubling that despite these repeated requests from Congress, you are just now instructing Department Components to conduct this long-overdue assessment and implementation plan," the letter states. "Detailed information on the number of civilians impacted by hiring freezes; specifics on reductions in flying hours, steaming days, vehicles miles; plans for large programs; and essential reprogramming actions, would have led to a better understanding of the military risk posed by these cuts and should have been made privy to long before the original January 2, 2013 sequestration date.”

Here's the full text of the letter:

Dear Secretary Panetta:

I write concerning your January 10, 2013 press conference and Department-wide memo regarding budget uncertainty in Fiscal Year 2013. I agree with your assessment that, despite the range of serious threats and adversaries we face around the world, the most immediate threat to our national security is the Department’s inability to provide resources, readiness and training to carry out our national military strategy due to the fiscal uncertainty of drastic budget cuts. For the past four years, this Administration has pursued the systematic disarming of U.S. military power under the guise of defense budget cuts in order to maintain significantly higher levels of funding for non-security related domestic programs. Consistent with the President’s direction to the Secretary of Defense in April 2011, the Office of Management and Budget directed the Department of Defense to cut another $487 billion from defense budgets, resulting in a revised budget-driven military strategy that increases risk in our operational plans to protect national security objectives both at home and around the world. As you point out, the potential for lower defense budgets are now driving the need to further revise our national military strategy. This should not, and can not be the case. I fully agree that the fiscal uncertainty we face is unacceptable and, if left unaddressed, will result in serious and lasting harm to the capabilities and readiness of our military. While the possibility of a year-long Continuing Resolution has the potential to impact readiness accounts, the Department can mitigate the impact by transferring funds from other accounts with excess funds. The more serious threat is the real possibility of a sequestration of defense accounts.

Over the past fourteen months, the Senate Armed Services Committee has requested on multiple occasions detailed information from the Department on the impact of sequestration on the military in order to avoid these devastating cuts. The threat of sequestration has loomed for well over a year and I find it deeply troubling that despite these repeated requests from Congress, you are just now instructing Department Components to conduct this long-overdue assessment and implementation plan. Detailed information on the number of civilians impacted by hiring freezes; specifics on reductions in flying hours, steaming days, vehicles miles; plans for large programs; and essential reprogramming actions, would have led to a better understanding of the military risk posed by these cuts and should have been made privy to long before the original January 2, 2013 sequestration date. Moreover, I am deeply concerned that severe budget cuts could adversely impact defense health and family support programs, which would lower service members’ morale and negatively affect recruitment and retention. Budget cuts must not harm the medical and dental readiness of our active or reserve forces, and cuts must not limit, in any way, the superb care that we give our wounded warriors.

Given the importance of this information to our oversight responsibilities, I request that you provide the Committee, as soon as it’s available, with the responses of each of the Department Components tasked in the January 10, 2013 memo along with any additional information that may be necessary for the Committee to fully understand these anticipated impacts as soon as possible. I also request within 30 days, an assessment by the Joint Staff on the extent to which the cuts you direct will have an impact on military training and operations as well as the risk of a hollow force.

As you have stated on numerous occasions, the consequences of sequestration would be devastating. Given the other cuts the Defense Department has been asked to endure, I couldn’t agree more. Both Congress and the Administration have a shared responsibility and, rather than simply blaming Congress as you did repeatedly in your press conference, it is my hope that you and the President will work with Congress to ensure that an agreement can be reached to spare our military from further devastating cuts. I continue to stand ready and willing to work with you and the President and my colleagues in Congress on this vitally important matter.

By John Liang
January 17, 2013 at 1:00 PM

On Tuesday, InsideDefense.com reported that Air Force leaders had instructed the service's major commands to begin implementing small-scale cost-saving actions linked to sequestration, moves laid out by the secretary and chief of staff last week.

We now have their memo.

From the story:

To prepare for the possibility of sequestration taking effect on March 1, and in an effort to minimize the negative effects of a continuing resolution, Air Force Acting Under Secretary Jamie Morin and Vice Chief of Staff Gen. Larry Spencer have instructed the service's MAJCOMs to begin cutting cost immediately in a number of different ways. Morin, who spoke at an Air Force Association breakfast this morning, said he and Spencer issued that guidance yesterday.

Their new direction follows a memo from Secretary Michael Donley and Gen. Mark Welsh, the Air Force's chief of staff, dated Jan. 7 and addressed to Deputy Defense Secretary Ashton Carter. In the memo, Donley and Welsh outlined the short-term steps the Air Force will be taking to trim expenses, such as freezing civilian hiring; pausing many facility restoration projects; limiting non-critical travel and non-mission-related flying, such as appearances at air shows; and curtailing the purchase of non-essential equipment or services like software refreshes and furniture.

Morin said his and Spencer's guidance highlights those same kinds of cost-cutting measures and is "very much of a piece with what the secretary directed." The document formally gives the MAJCOMs the go-ahead to start limiting expenses because of the threat of sequestration, whereas Donley and Welsh's correspondence with Carter simply laid out likely courses of action, Morin said.