The Insider

By John Liang
October 8, 2008 at 5:00 AM

The Congressional Budget Office yesterday said the federal budget deficit had ballooned to about $438 billion in fiscal year 2008, compared to $162 billion the year before. That number is "about $31 billion higher than the $407 billion deficit CBO projected this summer, primarily due to lower-than-projected revenues and higher-than-expected spending for defense and deposit insurance," CBO said.

Wondering how this might affect defense spending in the near future? While Joseph Campbell of Barclays Capital did an informal survey of defense contractors recently who told him they felt that the recent financial turmoil wouldn't impact their credit ratings, Wall Street folks will get a chance to ask senior U.S. defense contractor officials directly during the upcoming quarterly earnings conference calls.

Here are links to the big ones (all times Eastern):

Lockheed Martin -- Oct. 21, 11am

Boeing -- Oct. 22, 10:30am

General Dynamics: Oct. 22, 11:30am

Raytheon -- Oct. 23, 9am

United Technologies -- Oct. 16, 10am

Northrop Grumman -- Date/time not finalized yet

We'll keep you posted on any major developments.

By Sebastian Sprenger
October 7, 2008 at 5:00 AM

Military leaders are still trying to get their hands around what it means to fight in cyberspace. From the outside, it’s hard to tell exactly how far the Pentagon has come in moving the idea of cyber warfare from a subject of study to a subject of doctrine writing and practice.

According to Air Force Brig. Gen. Michael Basla, the deputy in the Joint Staff’s J-6 directorate, the development of the intellectual underpinning of cyber warfare is not yet completed.

Fundamental questions remain to be answered, he told us at AUSA  yesterday, including “What constitutes a cyber attack?” and “How do we integrated cyber in the other warfighting domains?”

Or, put differently, at what point does a cyber conflict turn into a shooting war?

“We don’t have a strong answer to that,” Basla said.

According to the general, officials also are wondering how deterrence, a concept that brings back memories of Cold War nuclear arms racing, could be applied in cyberspace.

“There are huge efforts going on in studying all those different pieces,” Basla added.

At U.S. Strategic Command, where officials know a thing or two about deterrence, that very subject was up for discussion at a January 2008 workshop.

The two-day event produced a collection of papers by attendees, including a piece by defense strategist Tom Barnett, which we’ve posted here.

The military produced two key documents in recent years, both classified, guiding goings-on in the cyberspace arena: The 2006 National Military Strategy for Cyberspace Operations and the companion implementation plan. Former Defense Secretary Donald Rumsfeld signed the strategy on Dec. 11, 2006, in one of his last moves as Pentagon chief. His successors signed the implementation plan on Oct. 1, 2007.

The implementation plan contains 42 different “activities” that are being executed by “a number of different organizations,” according to Basla.

By Jason Sherman
October 7, 2008 at 5:00 AM

Despite another punishing day on Wall Street -- where stock prices plummeted more than 500 points, dragging the Dow Jones Industrial Average down to 9,447 -- the Pentagon’s main weapon systems builders report they are well-positioned to weather the credit crisis that is rocking global markets, Joseph Campbell of Barclays Capital told investors today.

Campbell, who analyzes aerospace and defense firms, conducted an informal survey asking firms that he follows to sketch out potential impacts of the credit crisis.

“Nearly all of the companies in our universe responded that they did not expect the credit crisis to have any impact on their financial liquidity or their ability to access credit markets,” he writes in a research note. “Most said they had no plans or expectations of needs to access credit markets and that their current cash on hand, expected cash flows, and credit facilities already in place would likely be adequate for all of their expected needs.”

He concludes:

Nearly all aerospace-defense companies in our universe have very good credit ratings, strong cash flows, and generally large amounts of cash on hand. As a result, we do not expect the credit crisis to have large impacts on the industry’s access to cash. The main impact we believe will be to weaken the global economy and to make credit for aircraft financing harder to find and more expensive to obtain.

By Jason Sherman
October 6, 2008 at 5:00 AM

The Army has unveiled an important new addition to its doctrinal canon: Field Manual 3-07: Stability Operations. Yesterday’s Washington Post summed it up nicely:

The Army on Monday will unveil an unprecedented doctrine that declares nation-building missions will probably become more important than conventional warfare and defines "fragile states" that breed crime, terrorism and religious and ethnic strife as the greatest threat to U.S. national security.The doctrine, which has generated intense debate in the U.S. military establishment and government, holds that in coming years, American troops are not likely to engage in major ground combat against hostile states as they did in Iraq and Afghanistan, but instead will frequently be called upon to operate in lawless areas to safeguard populations and rebuild countries. (full article)

This new manual is being released today as the annual AUSA convention begins in Washington. It is the latest installment in a wider effort to bring the Army’s doctrine in line with strategic guidance from the Office of the Secretary of Defense to prepare for an array of threats much wider than traditional state-on-state conflicts.

Earlier this year the Army updated its keystone doctrine, Field Manual 3-0: Operations, shifting emphasis from conventional to a “full spectrum” operations, a change that places post-conflict stability operations on par with offensive and defensive engagement. That change was made in accordance with Defense Department directive, 3000.05, issued in November 2005 that defined stability operations as “a core U.S. military mission” to be given “priority comparable to combat operations.”

By John Liang
October 6, 2008 at 5:00 AM

Looks like China didn't take long to respond to the Defense Department's announcement on Friday of a multibillion-dollar arms sale to Taiwan:

Beijing has notified the U.S. that it will not go forward with some senior level visits and some other cooperative military-to-military plans, Marine Maj. Stewart Upton, a Defense Department spokesman, told The Associated Press.

"In response to Friday's announcement of Taiwan arms sales, the People's Republic of China canceled or postponed several upcoming military-to-military exchanges," he said.

Sister publication Inside U.S.-China Trade reported last month that the sales had stalled since 2001 because of internal disagreement between political parties in Taiwan over whether the sales were necessary given the fact that they would likely anger China.

Taiwan approved the weapons purchases last December following a compromise in its legislature that limited some of the sales.

In a statement released over the weekend, a Chinese government spokesman called the potential sale "a serious violation of the principles set in the three Sino-U.S. Joint Communiqués, August 17 Communiqué in particular, and gross interference in China's internal affairs, which will undermine China's national security, and create disturbance and obstacles to the peaceful development of the cross-Strait relations. The Chinese government and people will definitely respond with strong indignation."

By Sebastian Sprenger
October 5, 2008 at 5:00 AM

The Washington Post last week ran a good piece on the Pentagon’s use of information operations in Iraq. The story is based on a contract awarded last month to four public relations firms. Under the contract, the Post reports, the companies are charged with producing “media campaigns” that cast U.S. objectives in Iraq in a positive light and convince residents of the barbarism of the insurgency.

The application of information operations during future wars likely will be near the top of the agenda for the new defense leadership. The field is considered key to irregular warfare, which many defense officials believe to be the predominant type of conflict facing America in the foreseeable future.

An August draft version of a yet-unreleased policy directive governing IW says information ops are crucial for neutralizing “adversary propaganda” during Iraq-style counterinsurgency campaigns, as we reported in September.

Exactly how this should be done isn’t all that clear yet, according to experts and officials, who say some thorny issues remain to be resolved.

For example, one question is who should be in charge of conducting information operations. “IO authorities have been a subject of much contention from the outset over a decade ago,” one expert writes.

While the authority to employ IO initially rested solely with the “national command authority,” which consists of the president and the defense secretary, the combatant commanders were given more power over IO some years ago, this expert said. “Now ((it is)) a bit of pulling and hauling, with many hoping a balanced result will ensue.”

There also were instances of friction among the COCOMs themselves, we’re told. One official described a “food fight” breaking out at one point over operational control of IO forces and equipment between U.S. Strategic Command and U.S. Central Command as part of the military’s “Countering Adversary Use of the Internet” program.

That program targets the online propaganda efforts of violent Islamic extremists, we reported last month.

In that context, the now-declassified Rumsfeld-era information operations roadmap, from 2003, remains a great read.

By Marjorie Censer
October 3, 2008 at 5:00 AM

During last night's vice presidential debate, Democratic nominee Sen. Joe Biden (D-DE) gave a brief shout-out to Mine Resistant Ambush Protected vehicles. If you left the room for even a few seconds you might have missed it, but it’s worthy of note given that the blast-proof truck program has long been a priority of Biden’s.

His reminder of his work on MRAPs -- he argued for huge amounts of money for the vehicles -- came during a discussion with Republican nominee Gov. Sarah Palin about troop funding.

“John McCain voted against an amendment containing $1 billion, $600 million that I had gotten to get MRAPs, those things that are protecting the governor's son and, pray God, my son and a lot of other sons and daughters,” he said during last night's 90-minute debate.

But, these days the MRAP program isn't expected to get a whole lot more funding; in fact, it's winding down. The Defense Department issued what was likely the last program contract last month, this time to International Military and Government.

However, a new effort -- known now as MRAP “Lite” -- is emerging. Check back with Inside the Army next week for more information on that initiative.

By Marcus Weisgerber
October 3, 2008 at 5:00 AM

For the first time in months, the Air Force has a nearly complete senior leadership staff. The Senate voted yesterday evening to confirm Michael Donley as Air Force secretary and Lt. Gen. William Fraser as the vice chief of staff.

Donley -- who has been serving in an acting capacity since June 21 -- becomes the Air Force's 22nd secretary. But his time as the service's top civilian could be limited, though, as a new administration will enter the White House in January and likely make new appointments.

As for Fraser, the president must offer the official appointment to the general before he can assume his new position, according to an Air Force statement released last night. The general -- who now serves as the assistant to the chairman of the Joint Chiefs of Staff -- will assume the vice chief of staff position on Oct 9.

The position of under secretary of the Air Force -- which has been vacant since Ronald Sega stepped down in August 2007 -- and assistant secretary of the Air Force for installations, environment and logistics, remain the only unfilled senior positions. Kevin Billings has been serving in the assistant secretary role since this summer.

In addition, the Senate has confirmed Air Force Lt. Gen. Craig McKinley to receive his fourth star and lead the National Guard Bureau. McKinley becomes the first four-star general in the NGB's history, as we reported this morning.

The move reflects changes made in the Fiscal Year 2008 Defense Authorization Act, which provided a fourth star for the chief of the National Guard Bureau, mandated that at least one deputy head of U.S. Northern Command be a Guard officer and expanded the bureau’s charter.

McKinley, who is the director of the Air National Guard, will succeed Lt. Gen. Steven Blum, who was confirmed on Thursday as the first National Guard deputy commander for NORTHCOM, according to a National Guard Bureau statement.

By Sebastian Sprenger
October 2, 2008 at 5:00 AM

Two stories posted yesterday shed some much-needed light on the goings-on at the Pentagon as the Bush administration winds down.

First up:

Joint Staff officials are beginning a sweeping review of combatant command and service priorities that could lay the groundwork for the next administration’s decisions early next year on everything from Afghanistan to weapons of mass destruction, according to defense officials.

The analysis is part of the military’s second “comprehensive joint assessment,” a little-known process piloted last fall. As part of this year’s iteration, military leaders in June asked the combatant commanders and service leaders to compile a list of resource priorities, concept-development and experimentation plans, and assessments of the security environment in their areas of responsibility.

In response to the data call, the combatant commanders crafted lists of “warfighter challenges” specific to their regions, describing where they want to see increased investment, according to a defense official.

Joint Staff officials now are beginning to comb through the heaps of data, trying to determine trends, we’re told.

This year marks the second time the military establishment is conducting an annual comprehensive joint assessment. The drill will be soon be codified in the upcoming CJCS directive 3100.01B, which governs the Joint Strategic Planning System.

Officials said the timing of the exercise is opportune, as it is expected to flesh out a comprehensive portrayal of all happenings at the COCOMs just when a new president-elect weighs his first defense-related moves.

Cynics could argue the CJA, like many other Pentagon plans and strategies drawn up toward the end of the Bush era, is doomed to have a limited shelf life.

But, officials say, the review is the product of a supposedly apolitical military caste whose advice has merit regardless of who moves into the White House.

The other story of note concerns the transition to that next administration -- and efforts to figure out which issues, according to the current leadership, should matter most to the next:

The Pentagon's top brass are homing in on about 10 issues identified this summer as crucial matters for the next president and his Defense Department transition team to address as they take the reins of the U.S. military bureaucracy early next year, according to Pentagon officials.

Nearly all of the top issues are classified secret, and most deal with geopolitical challenges, these officials say. They are part of a wider package of 90 briefings detailing issues of lesser import that are expected be of interest to an incoming administration.

“They deal with issues such as sustaining the fight and making the appropriate fiscal decisions at the right time,” said one Pentagon official who has seen the briefings. “It’s not a wish list.”

The story adds important details on the work of the Chairman's New Administration Transition Team, led by this general.

FURTHER READING: PENTAGON TRANSITION EFFORTS

By Kate Brannen
October 2, 2008 at 5:00 AM

A growing consensus among national security experts holds that in order for the U.S. military to be successful in the types of missions it is fighting, it needs better support from the State Department and the U.S. Agency for International Development. But for that to happen, these other federal agencies need a dramatic boost in resources, some of those experts said this week.

"We have more members in military bands than we have foreign service officers," said retired Lt. Col. John Nagl, at a panel discussion yesterday hosted by the Center for a New American Security, where he is a senior fellow.

While Nagl said he likes a John Philip Sousa march as much as the next guy, he is willing to scrap bands in favor of compact discs if it means defense dollars can be spared for the State Department. "We need a bigger State Department more than we need a bigger Army," said Nagl. "I believe that very strongly."

At the same event, a discussion titled "Officership In a Time of War," Gen. Peter Chiarelli, the Army's vice chief of staff, voiced similar sentiments.

"I'd like to see a surge in the State Department," he said, crediting both "kinetic and non-kinetic solutions" for the decrease in violence in Iraq.

And in that vein, Chiarelli ascribed the recent decline in violence not just to the fabled surge of additional troops, but to the Anbar Awakening -- the movement among Sunni tribes to act as security forces alongside coalition troops -- and the work of people like Paul Brinkley, the deputy under secretary of defense for business transformation, who led the Task Force for Business and Stability Operations in Iraq.

"I happen to believe it's more than just the five BCTs ((brigade combat teams)) that are responsible for the security situation that we see today," said. Gen. Peter Chiarelli.

A new report from the RAND Corp., "Integrating Instruments of Power and Influence," takes up similar themes. The report argues that to better prepare for future military interventions, "the United States needs to shift substantial resources to the Department of State and U.S. Agency for International Development, and military-civilian efforts must be integrated from top to bottom."

It also recommends:

"A major increase is needed in U.S. resources for non-military activities -- where the ratio between military and non-military national security spending is now 17 to 1. This should include adding at least 6,600 Foreign Service officers for the State Department, 2000 for USAID, and recreating a separate “United States Information Agency-like” agency."

The provisional reconstruction teams in Iraq are good examples of military and civilian officials teaming up, performing tasks for which they are best suited, said an Army colonel in the audience at the CNAS event.

"If you marry the military's capacity with discrete civilian expertise, it is a winning combination," said Michele Flournoy, president and co-founder of the Center for a New American Security. She said the military can provide security, transportation, planning and expertise to better enable their less-resourced civilian counterparts to do their jobs.

By Thomas Duffy
October 2, 2008 at 5:00 AM

Obama senior foreign policy adviser Richard Danzig had breakfast with defense reporters this morning, and he was asked whether Obama would ask America's European allies for more help in Afghanistan.

Danzig responded by explaining how he thinks Obama would change America's relations overseas:

One of the many remarkable things the election of Senator Obama would produce is a very different view of America through much of the world. Lots of enthusiasm for him in Europe but obviously also in Asia and Africa and Latin America. That gives some greater freedom of action to governments in those countries to support America. And that's a worldwide observation, whether it's Japanese ships in the Indian Ocean or French combat troops in Afghanistan.

My sense is that one can fairly and should ask the Europeans to do more in Afghanistan. Where for many nations that focus should be on combat troops, there is also potential for dealing with support of the police and the civilian reconstruction items I've mentioned as priorities where many of them have real resources to offer.

But how, Danzig was asked, can some of these countries send troops if their populace is against doing so?

This comes back to my observation that Sen. Obama is not a miracle worker, and there are real difficulties and many (countries) will remain unpersuaded. But he would instantly be our most persuasive advocate. As I've indicated I have great respect for Secretary Gates but I think there's a large difference between the potential that a new president, particularly what a president Obama would have, recognizing that 80 percent of the world roughly articulates a desire to have him as president and 20 percent Sen. McCain.

It's an extraordinarily dramatic evocative power he has. I was with him in Berlin and saw the manifestation of that there. And this translates into advantages for America. Does it translate into magical bottom-line resolutions? No, it doesn't. Will it be as strong on the first day as it might be on the fifth year? Yes. I think it's definitely something that we can work with. Your question was would Sen. Obama request (that) the Europeans contribute more to Afghanistan? The answer to that is yes.”

Danzig also said today he could see Gates sticking around in an Obama administration. And he made news on the subject of defense spending under Obama.

More to come, too.

By Dan Dupont
October 1, 2008 at 5:00 AM

Tomorrow DC-based defense reporters get to question former Navy Secretary Richard Danzig, a top adviser to Barack Obama and a guy rumored to be on the short list for defense secretary should Obama win.

We'll have much more tomorrow on what he has to say, but today we'll take a brief look at what he's been saying of late.

First up, our story, from September, on Danzig and former Defense Secretary William Perry, also an Obama backer.

Next, from July, this National Journal interview touches on some key topics including the state of the defense budget. A taste:

NJ: How do you tame the defense budget, given the huge and increasing costs of long-deferred equipment modernization programs?

Danzig: There's a persistent problem with cost overruns. The recent performance of the Pentagon has been unusually bad. It's very difficult, but I think we can do a lot better than we've seen from this administration. This administration got off to a very bad start when it put $10 billion into missile defense and took it out of the normal acquisition process. It compounded that when it made it apparent that it didn't like bad news, and you had turnover in the heads of ((the Pentagon Office of)) Program Analysis and Evaluation. You have to create an atmosphere of honesty and candor.

NJ: But where do we cut spending?

Danzig: That's a very appropriate question. The Hindu religion has a goddess, Kali, who is the goddess of destruction, and we need a Kali: We need some creative destruction. We need the ability to recognize that some programs shouldn't be pursued and some pressing expenses need to be cut back. The answer to that isn't ideological; it's got to be based on a one-by-one look at the programs. I would say the Obama watchword is pragmatism.

And:

  • Here's a bio on Danzig, from the Navy.
  • This Newsweek piece from August gives Danzig's view of how Obama would handle Russia.
  • And then there's Danzig . . . on Winnie the Pooh. Really.
By John Liang
October 1, 2008 at 5:00 AM

The Pentagon today officially stood up U.S. Africa Command, an organization that likely will begin its life without the full funding the Pentagon has requested from Congress.

Earlier this month, the powerful House Appropriations defense subcommittee slashed the Pentagon's spending request for the fledgling organization, arguing that the military should not be leading U.S. government efforts to ensure stability and security on the continent. As InsideDefense.com reported, the panel’s mark of the fiscal year 2009 Pentagon spending bill provided just $80.6 million for AFRICOM -- 80 percent less than the $389.7 million DOD requested for the new command:

The committee believes that traditional U.S. military operations are not an appropriate response to most or many of the challenges facing Africa, which include: ending armed conflict, calming political unrest, consolidating democratic achievements, fighting terrorism, expanding economic growth, and preventing the spread of HIV/AIDS and caring for its victims,” states a report accompanying the subcommittee mark. InsideDefense.com obtained a copy of the committee report.

In 2006, Congress authorized a study to assess the feasibility of merging under a single U.S. military command those activities dealing with Africa that were spread across three Defense Department organizations.

President Bush in February 2007 announced plans to establish AFRICOM, which he pitched as a bid to promote U.S. national security interests in the region. The move gave a single unified U.S. commander responsibilities previously divided among three other commands: European, Central and Pacific. AFRICOM’s area of responsibility includes all nations on the continent except Egypt.

Speaking to reporters after the ceremony, AFRICOM commander Gen. Kip Ward said that if the funding cuts stand, "we will adjust, we will prioritize and we will do those things that we need to do to continue to bring value added to our programs."

"Will we be able to do everything that we would have liked to have done? Maybe not, but we will do those things that are important and essential and we will reprioritize as required so that those activities that we do engage in make a difference and support our foreign policy and national security objectives," he added.

Defense Secretary Robert Gates said during the ceremony that the new command "is, at its heart, a different kind of command with a different orientation -- one that we hope and expect will institutionalize a lasting security relationship with Africa, a vast region of growing importance in the globe. The focus is on the three Ds: defense, diplomacy, and development."

FURTHER READING: AFRICOM

By Dan Dupont
September 30, 2008 at 5:00 AM

Defense Secretary Robert Gates gave a speech yesterday that's receiving a ton of attention, so we've put it up here.

It really must be read in full, but here's a choice excerpt:

In the past I have expressed frustration over the defense bureaucracy’s priorities and lack of urgency when it came to the current conflicts – that for too many in the Pentagon it has been business as usual, as opposed to a wartime footing and a wartime mentality. When referring to “Next-War-itis,” I was not expressing opposition to thinking about and preparing for the future. It would be irresponsible not to do so – and the overwhelming majority of people in the Pentagon, the services, and the defense industry do just that. My point was simply that we must not be so preoccupied with preparing for future conventional and strategic conflicts that we neglect to provide both short-term and long-term all the capabilities necessary to fight and win conflicts such as we are in today.

Support for conventional modernization programs is deeply embedded in our budget, in our bureaucracy, in the defense industry, and in Congress. My fundamental concern is that there is not commensurate institutional support – including in the Pentagon – for the capabilities needed to win the wars we are in, and of the kinds of missions we are most likely to undertake in the future.

What is dubbed the war on terror is, in grim reality, a prolonged, world-wide irregular campaign – a struggle between the forces of violent extremism and moderation. In the long-term effort against terrorist networks and other extremists, we know that direct military force will continue to have a role. But we also understand that over the long term, we cannot kill or capture our way to victory. Where possible, kinetic operations should be subordinate to measures to promote better governance, economic programs to spur development, and efforts to address the grievances among the discontented from which the terrorists recruit. It will take the patient accumulation of quiet successes over a long time to discredit and defeat extremist movements and their ideology. As the National Defense Strategy puts it, success will require us to “tap the full strength of America and its people” – civilian and military, public sector and private.

We are unlikely to repeat another Iraq or Afghanistan anytime soon – that is, forced regime change followed by nation-building under fire. But that doesn’t mean we may not face similar challenges in a variety of locales. Where possible, our strategy is to employ indirect approaches – primarily through building the capacity of partner governments and their security forces – to prevent festering problems from turning into crises that require costly and controversial American military intervention. In this kind of effort, the capabilities of our allies and partners may be as important as our own, and building their capacity, is arguably as important, if not more so than the fighting we do ourselves.

By Dan Dupont
September 30, 2008 at 5:00 AM

UPDATE: It looks like some of these dates have changed. We'll keep you posted as we learn more.

A look at the current Defense Acquisition Board schedule turns up some interesting programs scheduled for reviews between now and the end of the year – perhaps the last reviews to be conducted by this administration’s defense leadership.

First up is the Cooperative Engagement Capability program. Our latest on that program, from July, touches on contract awards and what to expect from the DAB.

After that, on Oct. 8, it’s the Joint High Speed Vessel, which is due for a milestone B review.

The rest of the schedule is as follows:

  • Oct. 15: C-130 Avionics Modernization Program AMP Milestone C (LRIP)
  • Nov. 5: Joint Strike Fighter (JSF) LRIP III
  • Nov. 12: Mine Resistant Ambush Protected (MRAP) Full Rate Production
  • Nov. 19: Mobile User Objective System (MUOS) Follow-On Decision Buy
  • Dec. 3: Black Hawk Upgrade UH-60M In Process Review
  • Dec. 5: Joint Air-to-Surface Standoff Missile (JASSM) In Process Review
  • Dec. 10: Combat Search and Rescue (CSAR-X) Revisit

And, naturally, we'll be tracking them all.