The Insider

By John Liang
August 5, 2024 at 1:34 PM

This Monday INSIDER Daily Digest has continuing coverage of the Senate Appropriations Committee's fiscal year 2025 defense spending bill, plus the Army's Future Long Range Assault Aircraft program reaching a new milestone and more.

The U.S. defense industrial base has had to adjust to the Pentagon's new munitions production requirements following a major increase in U.S. military aid to Ukraine following the ongoing Russian invasion, something that has caught the eye of congressional appropriators:

Lawmakers seek munitions 'surge capacity' requirements -- and costs -- from DOD

The Senate Appropriations Committee wants the Pentagon to provide Congress with future "surge capacity" costs for critical munitions as well as estimate how much industry cost-sharing or co-investment can be expected to support potential increases in production.

It has come to Senate appropriators' attention that DARPA has "routinely under-budgeted for indirect costs and anticipated program initiation cost":

DARPA under fire from Senate appropriators over alleged financial misrepresentation

Senate appropriators are calling for a quarterly audit of the Defense Advanced Research Projects Agency for its attempts at flexible budgeting, which lawmakers allege the agency has undertaken without congressional approval.

The Senate Appropriations Committee wants Congress' top auditor to investigate and provide a written finding as to whether the Defense Department skirted the law regarding rejiggering the Homeland Defense Radar-Hawaii for use on Guam:

Congress directs inquiry into whether DOD broke law by moving Hawaii radar to Guam

Congress is directing an investigation into whether the Pentagon broke the law by repurposing the Homeland Defense Radar-Hawaii for use on Guam, the latest twist in an ongoing battle of wills -- and funding -- between the executive and legislative branches over the sensor project.

Senate appropriators want to add $14 million to the Defense Innovation Unit:

Defense spending bill adds fund for DIU OnRamp hub expansion

Senate appropriators want to add money to the Defense Innovation Unit's fiscal year 2025 budget request, pushing DIU to sustain its engagements with "non-traditional" contractors, according to a report accompanying the upper chamber's version of the defense spending bill.

The Air Force has released a report into an investigation of a fatal CV-22 Osprey crash:

Gearbox failure caused fatal CV-22 crash, Air Force investigation finds

A CV-22 Osprey crash last year off the coast of Japan is linked to a severe failure of one of the aircraft's gearboxes as the crew was preparing for an emergency landing, killing the eight airmen on board, according to an Air Force investigation released Aug. 1.

The eventual replacement aircraft for the Black Hawk helicopter went through a successful preliminary design review in April, according to a service announcement:

Army's FLRAA moves to milestone B

The Army's Future Long Range Assault Aircraft program has been approved for entering the engineering and manufacturing development stage, or milestone B, according to the service.

While the Navy completed its first land-based demonstration of the Transportable Re-Arming Mechanism (TRAM) last month, the service has yet to set a date, pick a location or select the ships that will participate in an at-sea test:

SECNAV requesting $80 million for TRAM development, though planned at-sea demonstration has yet to occur

Navy Secretary Carlos Del Toro is asking for an $80 million "congressional add" to fund a developing at-sea re-arming capability, though the system has yet to complete an at-sea demonstration scheduled for this summer, a Navy spokesperson told Inside Defense.

By Nick Wilson
August 5, 2024 at 1:03 PM

The Marine Corps is interested in procuring a commercially available, ground-based, long-range cruise missile system to fill operational capability gaps, according to a recent request for information.

The Marine Corps and its Marine Air Ground Task Force may need a new long-range fires capability to meet current and future operational demands, including supporting sea control and countering seaborne fast-attack vessels, the July 31 notice states.

“Accordingly, the Marine Corps is interested in readily available ground-based, long-range cruise missile systems that can attack land and maritime targets designed to provide precision kinetic fires employing the Tomahawk Land Attack Missile (TLAM) and using its Tactical Tomahawk Weapons Control System (TTWCS) for fire control,” the notice states.

The service prefers systems that can be integrated into its remotely operated ground unmanned expeditionary (ROGUE) vehicle, the notice continues, and systems that can load Tomahawk missiles without non-organic support and operate alongside other weapon and surveillance systems currently in use.

“A complete system would be composed of fire and weapons control, kinetic launch, and reload and resupply system,” the RFI adds.

The notice asks respondents to provide information on their system’s range, size, weight, launch platform requirements and procurement and sustainment costs. Responses to the RFI are requested by Aug. 12.

By Tony Bertuca
August 5, 2024 at 5:00 AM

Senior defense officials are scheduled to speak at several events this week.

Tuesday

DefenseOne hosts its DOD Cloud Workshop.

The annual Space and Missile Defense Symposium is held in Huntsville, AL. The event runs through Thursday.

Wednesday

The National Defense Industrial Association hosts its annual Emerging Technologies for Defense Conference. The event runs through Friday.

The Center for Strategic and International Studies hosts a discussion on "preserving the free flow of commerce in the Red Sea and beyond."

Thursday

The Center for a New American Security hosts a discussion on the potential for managing a protracted conflict with China.

By John Liang
August 2, 2024 at 2:42 PM

Aside from the Air Force's B-52 radar modernization program nearing a major cost growth breach, the bulk of this Friday INSIDER Daily Digest deals with the Senate Appropriations Committee's fiscal year 2025 defense spending bill.

The estimated cost for the B-52 Radar Modernization Program jumped from $2.3 billion in 2021 to about $3.3 billion in March, B-52 Deputy Senior Materiel Leader Brian Knight told reporters at the Life Cycle Industry Days conference, toeing the line of acceptable cost growth without yet requiring a notification to Congress for additional oversight:

B-52 radar modernization nears Nunn-McCurdy cost growth breach

DAYTON, OH -- The two programs designed to keep the B-52 Stratofortress bomber flying for the next few decades are facing serious headwinds, including new prices for the Radar Modernization Program nearing the Nunn-McCurdy Act cost growth thresholds, officials said this week.

The rest of our coverage looks at the Senate's FY-25 defense spending bill:

Senate appropriators would give NGAP another $280 million as Air Force calls it a priority program

The Senate Appropriations Committee approved a defense spending bill that would inject the Air Force's Next Generation Adaptive Propulsion efforts with $280 million above the service's fiscal year 2025 request, according to legislative documents.

Senate appropriations bill excludes second Virginia sub but funds shipset

The Senate Appropriations Committee's draft defense spending bill would increase shipbuilding spending by $3.4 billion but fund only one Virginia-class submarine in fiscal year 2025, teeing up a showdown between appropriators and authorizers over the future of the Virginia program.

Lawmakers look to redirect RDER toward second Replicator tranche

Senate appropriators say they want to slow the growth of the Pentagon's Rapid Defense Experimentation Reserve in favor of the Replicator program which aims to field thousands of attritable, autonomous drones by August 2025 to counter China.

Senate appropriators slash MQ-25 procurement, allotting funding solely for industrial base

Senate appropriators are proposing a major cut to the Navy's MQ-25 Stingray uncrewed aircraft program, slashing over $450 million from the service's fiscal year 2025 budget request.

Senate appropriators adding flexibility for counter UAS spending

The Senate Appropriations Committee, in its fiscal year 2025 defense spending bill, wants to give the Army more flexibility for funding counter unmanned aerial systems and is urging the service to eliminate bureaucratic red tape.

By John Liang
August 1, 2024 at 4:55 PM

General Dynamics announced today that Mark Rayha has been promoted to be the next president of Electric Boat.

Rayha, who currently serves as Electric Boat's senior vice president and chief operating officer, succeeds Kevin Graney, who announced he will retire at the end of the year.

Rayha joined GD's Land Systems business unit in 1989. He became chief financial officer of General Dynamics Mission Systems in 2015, joined Electric Boat in 2020 and served as CFO from 2021 to 2023. He became chief operating officer in 2023.

By John Liang
August 1, 2024 at 2:22 PM

This Thursday INSIDER Daily Digest has news on the Senate's version of the FY-25 defense spending bill, plus industry news from HII, Boeing and more.

The Senate Appropriations Committee today released its version of the report accompanying the fiscal year 2025 defense spending bill:

Senate appropriators advance bill to increase defense budget above spending cap

Senate appropriators are highlighting some of the key investments in their fiscal year 2025 defense spending bill, which would increase the Defense Department's budget by 3.3%, or more than $27 billion above what Congress enacted in FY-24.

Document: Senate appropriators' FY-25 defense spending bill report

HII executives discussed their company's quarterly earnings this morning:

HII claims record second-quarter revenues, SSN-798's delivery timeline shifts

Shipbuilder HII experienced record second-quarter revenues of $3 billion -- up 6.8% compared to last year’s second quarter -- and a recent boost in hiring to keep the company on track to achieve its goal of 6,000 new hires by the end of the year, according to CEO Chris Kastner on today’s earnings call.

Boeing's KC-47 tanker program continues to suffer setbacks:

Boeing's KC-46A records new Category 1 deficiency, $391 million loss in second quarter

DAYTON, OH -- The embattled KC-46A Pegasus tanker is now dealing with seven issues that could result in significant damage to the air vehicle or death of an operator, Kevin Stamey, the Air Force's program executive officer for mobility and training aircraft, told reporters Tuesday.

The new Guam Defense System Joint Program Office doesn't have the funds needed to hire personnel and pay for software development associated with integrating elements of the system:

Fledgling JPO Guam Defense System is 'coalition of the willing,' eight-person shop

The new Joint Program Office in support of the Guam Defense System is hamstrung by a lack of funding, relying on a "coalition of the willing" and eight staff members to execute one of the U.S. military's most pressing engineering and software challenges while waiting for lawmakers to approve funding to hire staff and tackle the project in earnest.

The Air Force's top civilian spoke this week at the Life Cycle Industry Days conference:

Kendall: The next Air Force tanker could be part of an FY-25 quick-start

DAYTON, OH -- The Air Force's next-generation refueling fleet may come down the line sooner than previously expected, and with greater capability, after a potential injection from the service's quick-start authority in fiscal year 2025, according to service Secretary Frank Kendall.

By Theresa Maher
August 1, 2024 at 11:02 AM

The Defense Science Board will hold closed meetings throughout the last week of August to discuss the findings of a new study focused on advanced military technologies, according to a Federal Register notice.

The meetings will focus on a classified summer study on “advanced capabilities for potential future conflict,” which Pentagon technology chief Heidi Shyu commissioned the board to conduct in December.

The board is scheduled to hear from David Honey, the deputy defense under secretary for research and engineering who will provide remarks on the summer study’s objectives.

Additionally, the board will discuss strategies that support the Defense Department’s “continued development of symmetric and asymmetric capabilities that will characterize future conflicts.”

Prior DSB meetings about the 2024 Summer Study on Advanced Capabilities for Potential Future Conflict have been closed, despite the fact that the board operates under a statute designed to promote open and transparent proceedings.

By Nickolai Sukharev
August 1, 2024 at 10:43 AM

BAE Systems will build additional self-propelled howitzers for the Army after receiving a $274.4 million contract, the Defense Department announced Wednesday.

The Pennsylvania-based company will produce the M109A7 Paladin self-propelled howitzers and M992A3 ammunition carrier vehicles by an estimated completion date of Jul. 31, 2026, with work being completed in York, PA, according to the July 31 announcement.

“Fiscal [year] 2023 procurement of weapons and tracked combat vehicles, Army funds in the amount of $274,426,742 were obligated at the time of the award,” the announcement adds.

Each Paladin is paired with the M992A3 Carrier Ammunition Tracked vehicle, which stores and transports the artillery rounds.

Wednesday’s announcement follows a $579 million July 3 contract in which BAE would produce the M109A7 and M992A3 at their facilities in York, PA; Sterling Heights, MI; Aiken, SC; Elgin, OK; and Anniston, AL.

For FY-25, the Army plans to procure 20 Paladin systems for $417 million and 155 systems for $2.7 billion by FY-29, according to service budget documents.

The Army initially intended to replace a portion of the Paladins with the Extended-Range Cannon Artillery (ERCA) howitzer a modified M109 with a longer gun tube but cancelled the program in March after prototyping revealed technical issues.

Following the ERCA cancellation, the Army opted to use the remaining funds to assess existing howitzers and plans to hold capability demonstrations with industry manufacturers beginning in August 2024 at the Yuma Proving Ground in Yuma, AZ.

During a May 2 round table with reporters, Army acquisition chief Doug Bush said “around eight or nine” contractors are “interested in some form or fashion” in participating in the capability demonstrations.

By Dan Schere
August 1, 2024 at 10:39 AM

Army Special Operations Aviation Command has awarded Boeing a $115 million contract to produce two additional MH-47G Block II Chinook aircraft and begin advance procurement on future helicopters, the company announced today.

The contract, awarded in June, is being funded with fiscal year 2024 Army procurement dollars and the majority of the work is expected to be completed by July 2027, according to a Pentagon contract notice.

The MH-47G Block II features a reinforced airframe, as well as redesigned fuel tanks and “state-of-the-art avionics.” With the new order, the Army has contracted for 46 of the aircraft, according to Boeing.

By Jason Sherman
July 31, 2024 at 5:45 PM

The U.S. government awarded a $2 billion contract to Raytheon today on behalf of Poland for the Lower Tier Air and Missile Defense Sensor, a major component of Warsaw's plan to invest $15 billion into integrated air and missile defense capabilities.

The announcement does not say how many radar Poland will receive under the contract; last September Raytheon announced a deal with Poland for a dozen LTAMDS.

By Abby Shepherd
July 31, 2024 at 4:47 PM

The Navy awarded defense contractor Leonardo DRS a contract worth more than $417 million today for "critical electronic combat control" and sonar systems to be installed in the service's submarine fleet, according to a news release.

The contract will provide design, procurement, production, installation and more, according to the release. Funding will also go toward producing subsequent systems, kits and enclosures.

“We are very proud to again be selected as the design agent on TI-26 and are honored to support this critical submarine combat control and sonar system hardware program for the U.S. Navy and allied partners,” Leonardo DRS’ Senior Vice President and General Manager of the naval electronics business unit Cari Ossenfort said in a statement. “DRS is uniquely qualified for this program because of our agility, proven engineering processes and experienced team, and that is also the reason we remain a trusted partner to Naval Sea Systems Command and Program Executive Office Submarine.”

The new system -- Technology Insertion Hardware TI-26 -- is the “latest generation” of a family of display, processor and network systems that support requirements of Navy submarines, the release added. The contract combines purchases for the U.S. Navy, the foreign military sales program as well as the Royal Australian Navy.

By John Liang
July 31, 2024 at 2:03 PM

This Wednesday INSIDER Daily Digest has coverage of the Air Force Life Cycle Industry Days conference and more.

We start off with news from the Life Cycle Industry Days conference:

Kendall: The next Air Force tanker could be part of an FY-25 quick-start

DAYTON, OH -- The Air Force's next-generation refueling fleet may come down the line sooner than previously expected, and with greater capability, after a potential injection from the service's quick-start authority in fiscal year 2025, according to service Secretary Frank Kendall.

Joint Simulation Environment may be used for B-21 training and testing

DAYTON, OH -- The Air Force may use the F-35 Joint Strike Fighter program's Joint Simulation Environment for training and testing for the B-21 Raider nuclear bomber, according to the program executive officer.

Decision on current NGAD design months away, Kendall says

DAYTON, OH -- Determining whether the current plan for the sixth-generation fighter jet is the right fit for the Air Force's fleet will take a few more months, according to Secretary Frank Kendall, delaying the schedule for the program, which expected a contract to be signed this summer.

Air Force Vice Chief of Staff Gen. Jim Slife spoke this week during an online event hosted by the Mitchell Institute for Aerospace Studies:

Army, Air Force looking to lock in agreed FY-26 air base air defense investments this fall

The Army and Air Force are aiming this fall to jointly identify investments needed to provide air base air defense -- a source of friction between the two services for most of the last seven decades -- once analytical teams complete ongoing studies that aim to recommend how best to defend against highly complex threats.

We also have the latest CMMC news from our colleagues at Inside Cybersecurity:

NDIA sees potential 'bottlenecks' for CMMC assessments, issues around CUI as rulemaking process moves forward

The National Defense Industrial Association is concerned over the Defense Department's ability to have enough capacity for the demand in assessments once the Cybersecurity Maturity Model Certification program gets up and running following the conclusion of the rulemaking process.

By Abby Shepherd
July 31, 2024 at 1:22 PM

The Navy is seeking industry information on rocket motor and booster production capabilities meant to propel the Standard Missile-6 -- a critical air defense capability -- to full rate production, according to a notice posted Tuesday.

In its request for information, Naval Sea Systems Command clarifies it is seeking affordable and technical readiness of SM-6 production by fiscal year 2026-27. Interested parties are encouraged to respond by October 1, and include solutions, projected cost drivers, relevant technology risk areas and an anticipated development timeline for near-term production in their response.

The solicitation for information comes after lawmakers denied a Navy request to enter a multiyear deal for SM-6, forcing the service to opt for single-year contracts in FY-24 and FY-25. This move could result in higher unit costs, according to a Navy spokesperson.

Meanwhile, Bloomberg reported in January that the House Appropriations defense subcommittee blocked the initial SM-6 proposal because contractor RTX fell behind on deliveries -- producing half of the 625 missiles purchase in FY-19’s five-year contract award.

By Nickolai Sukharev
July 31, 2024 at 1:07 PM

(Editor's Note: A previous version of this story indicated that Oshkosh's tactical truck sales would offset the loss of the Joint Light Tactical Vehicle contract. The story has been amended to indicate that the company expects tactical contract extensions following the loss of the JLTV contract.)

Oshkosh expects contract extensions for heavy and medium tactical trucks following a production drawdown for the Joint Light Tactical Vehicle, company executives said during a quarterly earnings call today.

The Wisconsin-based company reported a 20.2% sales increase in their defense segment during the second quarter of 2024, driven by higher tactical truck sales.

“While domestic JLTV production will wind down in early 2025, we continue to supply the [Defense Department] on many important programs including [Family of Heavy Tactical Vehicles] and [Family of Medium Tactical Vehicle] programs,” John Pfeifer, the company's president and CEO, said during an earnings call.

Overall, the company reported an 18% sales increase from the same quarter last year, an increase of $433.8 million to $2.85 billion, driven by organic sales in all segments, according to a company statement.

“We believe these key programs as well as other programs such as Stryker [Medium Caliber Weapon System] and the Rogue Fires family of carriers provide enhanced profitability and important visibility for the business into the future,” Pfeifer added during the call.

The MCWS program intends to arm a portion of the Army’s Stryker infantry carrier vehicles with 30mm cannons while the Marine Corps Rogue Fires program uses the JLTV as a wheelbase for coastal anti-ship missiles.

The JLTV is designed for combat operations and will replace a portion of the Army’s humvees.

In January 2023, the Army awarded AM General a follow-on production contract for the JLTV. In June 2023, the Government Accountability Office denied Oshkosh's protest of the decision.

Oshkosh will continue to produce the JLTV for the Army in 2025 along with international orders. Last December, the company announced it would produce the vehicle for Israel.

Pfeifer added that the company received a $232 million order for the Family of Heavy Tactical Vehicles, which will be the last order of the current contract for the vehicles but expects a five-year extension to the contract in August 2024.

He added he expects a similar extension for the FMTV in early 2025.

The company is developing the A2 variant of the FMTV, which features a more powerful engine, and improved capabilities compared to the previous A1 variant.

Oshkosh is also competing with Textron, HDT and General Dynamics for the Robotic Combat Vehicle, an unmanned vehicle designed to operate alongside manned units.

Additionally, the company faces Navistar, Mack Defense as well as a joint bid American Rheinmetall and General Motors Defense for the Common Tactical Truck, a replacement program for the FHTV.

Pfiefer added that orders for the company’s Next Generation Delivery Vehicle, a new mail carrier vehicle for the United States Postal Service, will "exceed the decline of JLTV revenue from 2024 to 2025."

By John Liang
July 31, 2024 at 11:06 AM

Boeing's board of directors has elected Kelly Ortberg as the company's new president and CEO.

Ortberg succeeds Dave Calhoun, who earlier this year announced his intention to retire from the company, having served as president and CEO since January 2020 and as a member of Boeing's board of directors since 2009.

Ortberg began his career in 1983 as an engineer at Texas Instruments, then joined Rockwell Collins in 1987 as a program manager and rose through the ranks to become its president and CEO in 2013. He then steered that company's integration with United Technologies and RTX until his retirement from RTX in 2021.

In addition to serving on RTX's board of directors, Ortberg serves on vehicle systems company Aptiv PLC's board and is the former chair of the Aerospace Industries Association board of governors.