The Insider

Milan Vodicka, a Czech journalist, is using the platform of The Wall Street Journal's op-ed page today to warn the United States against turning its back against his country on missile defense, after so much political capital was spent getting the agreement to base an X-band radar there.

If the United States builds a radar system in the Czech Republic as part of the missile defense program developed by the Bush administration, it's likely that the Russians will target the Czech Republic with their tactical nuclear missiles. But many Czechs are fearful of an even greater danger than Russia: The possibility that the U.S. may decide not to deploy the defense system. Unfortunately, Vice President Joseph Biden suggested this prospect last week in Munich when he said, "We will wait for what the experts say and then we will see."

Czech politicians and their Polish counterparts have invested a lot of political capital in the missile defense project. If the Obama administration doesn't follow through, supporters of the missile shield would feel abandoned by the U.S.

What's worse, Czech and Polish leaders would lose credibility among their opponents and, most importantly, Russia. Moscow would see the failure to build the radar system as proof of its influence over Central Europe, and as recognition of its veto power over European security policy.Mr. Biden doesn't seem to appreciate that the missile defense project isn't just about American interests. It's about the Czechs and the Poles, too.

But the juiciest line comes later:

It's beginning to look as though the Americans were taking us for a ride. Now that there's a new driver in the White House, they think they can just drop us off at the curb.

Last week, we reported on a presentation by Stanford academic Dean Wilkening, who argues that Bush-era plans to station ballistic missile defense assets in Poland and the Czech Republic offer European nations less protection from Iranian missiles than defense officials have claimed publicly. Inside Missile Defense was able to interview Wilkening yesterday, and today's issue features an updated version of the story.

Textron's sales of the V-22 Osprey and other products to the Defense Department may be one of the few things keeping the company's debt rating from truly tanking, according to a report issued yesterday by debt-rating agency Fitch Ratings:

Fitch Ratings has downgraded the Issuer Default Ratings (IDR) and long-term debt ratings for Textron Inc. (TXT) and Textron Financial Corporation (TFC) to ‘BBB-’ from ‘BBB’. In addition, the short-term IDRs and commercial paper ratings have been downgraded to ‘F3’ from ‘F2’. The Rating Outlook is Negative.

At the same time, Fitch has downgraded and simultaneously withdrawn its ratings for TXT’s preferred securities due to the small amount outstanding. Debt and preferred securities totaled nearly $11 billion at Jan. 3, 2009, including $2.5 billion at TXT and $8.3 billion at TFC. . . .

The downgrade of TXT’s and TFC’s ratings recognizes execution risks related to TFC’s plans to exit its non-captive finance business, as well as difficult economic conditions that could pressure TFC’s asset quality and financial performance at TXT’s manufacturing businesses. These factors could lead to liquidity pressures in 2010 in the absence of asset sales or capital market transactions. Other developments considered in the ratings include the full drawdown of the company’s committed bank facilities and the recently announced management changes, which emphasize the broad challenges facing the company.

Here's what Fitch had to say about Textron's manufacturing business, of which the V-22 is a big part (through its Bell Helicopter subdivision):

At TXT, the ratings incorporate Fitch’s view that TXT’s manufacturing businesses will generate positive free cash flow, albeit at lower levels than in the past due to weaker demand at Cessna and for the Industrial segment. In late January 2009, TXT lowered its estimate for deliveries in 2009 to 375 aircraft, a nearly 20% reduction from the 467 jets that were delivered in 2008. In Fitch’s view, the reduction understates the decline in demand because the mix of low-end Mustangs has been increasing. As a result of higher deferrals and sharply lower orders, deliveries could potentially remain at lower levels for a sustained period. However, the impact is partly offset by Cessna’s large backlog that totaled $14.5 billion at the end of 2008 after peaking at $15.6 billion in September 2008. The outlook for TXT’s Bell and Defense & Intelligence segments is more stable, helping to mitigate concerns about declining demand for business jets and difficult conditions in TXT’s Industrial segment.

While Textron's overall defense business looks safe, implementing the Pentagon's earned-value management rules has been a challenge, as Inside the Pentagon reported late last month:

When contractors fail to follow the rules, they risk losing their certification. That happened to Bell Helicopter Textron in March 2006; the company has struggled ever since to earn it back. Bell again failed to reach this goal during ((the Defense Contract Management Agency's)) most recent review of the company last November. The next such review is slated for March.

Fitch put out the rating in the wake of Textron's reshuffling of the folks in charge of its soon-to-be-defunct financing business earlier this morning. In December, the company announced it was getting out of the financing business altogether.

At the very least, yesterday’s news should make the company's presentation today at an industry conference in Miami Beach, FL, rather interesting.

Here's hoping the new under secretary of defense for policy, Michèle Flournoy, does something about her organization's Website.

The home page features an "Announcements" box right in the middle, highlighting "News, Speeches, Items of Interest."

The most recent news: March 27, 2007.

Latest "Public Statements": Sept. 28, 2006.

And the latest "Special Report": The Quadrennial Defense Review. From 2006.

At least the site does reflect that Flournoy is, finally, the under secretary following her confirmation this week -- though it spells her name without that tricky accent. Just one more update to be made.

Facing tighter budgets and a greater emphasis on fuel efficiency, the military vehicle industry has a challenging year ahead, according to industry panelists at last week's tactical wheeled vehicles conference in Monterey, CA.

“We're going to be all together facing an uncertain future with unpredictability as the main theme,” Pat MacArevey, Navistar's director of government business and government affairs, said during the Feb. 2 panel. “I think the challenge is for our industry to behave like our customer and be on our toes in an era of persistent conflict.”

In particular, the panelists -- including retired Gen. Paul Kern, president and chief operating officer of AM General; John Stoddart, executive vice president and president for defense at Oshkosh; Dennis Dellinger, president for mobility and protection systems at BAE Systems; and MacArevey -- said the industry needs to look toward lightweight materials that provide vehicle protection and increased fuel efficiency.

Additionally, Kern touched on the need to constantly improve vehicles -- in his company's case, the humvee -- to meet threats in theater, while Dellinger looked toward the need to repair damaged vehicles. He favored recap, which allows new technology insertions, instead of reset, which simply returns vehicles to their original configurations.

Stoddart suggested the companies may consider future collaborations.

“We know that collectively we can do what our national strategy calls for us to do, and don't be surprised if you see the four of us working more closely together in the future,” he said.

For more coverage of the Monterey conference, check out this week's Inside the Army.

President Obama's national security adviser, James Jones, yesterday delivered his most detailed public remarks to date on his plans for leading the National Security Council. Speaking in Munich to the annual conference on security policy, Jones said the NSC is paying increased attention to the United States' capability to counter weapons of mass destruction as well as “placing a far higher priority on cyber security.”

From the transcript:

The President has made clear that to succeed against 21st century challenges, the United States must use, balance, and integrate all elements of national influence: our military and our diplomacy, our economy and our intelligence, and law enforcement capacity, our cultural outreach, and as was mentioned yesterday, the power of our moral example, in short, our values. Given this role, the NSC is by definition at the nexus of that effort. It integrates on a strategic sense all elements of our national security community towards the development of effective policy development and interagency cooperation. But to better carry out the president’s priorities, the National Security Council must respond to the world the way it is and not as we wish it were. And it must consider the fusion of our national priorities within the broader international context and interest. The NSC’s mission is relatively simple. It should perform the functions that it alone can perform and serve as a strategic center – and the word strategic is operative here – for the President’s priorities.

Jones, retired Marine four-star general, also said the NSC must adapt to evolving challenges.

There are traditional priorities that we will manage. But we must also update our outlook and sometimes our organization to keep pace with the changing world. To give you just a few examples, the NSC today works very closely with President Obama’s National Economic Council, which is led by Mr. Larry Summers, so that our response to the economic crisis is coordinated with our global partners and our national security needs. The NSC has worked closely with the White House Counsel’s office as we implement the President’s orders to ban torture and close the detention center at Guantanamo Bay. The National Security Council is undertaking a review to determine how best to unify our efforts to combat terrorism around the world while protecting our homeland. And this effort will be led by Mr. John Brennan.

The National Security Council will be at the table as our government forges a new approach to energy security and climate change that demand broad cooperation across the U.S. Government and more persistent American leadership around the world. And the NSC is evaluating how to update our capacity to combat the proliferation of weapons of mass destruction while also placing a far higher priority on cyber security. There is no fixed model that can capture the world in all of its complexity. What’s right today will have to be different four years from now or eight years from now. And that’s precisely the point. The NSC’s comparatively small size gives it a unique capacity to reinvent itself as required and to pivot on the key priorities of our time.

A new survey conducted by the National Research Council and the American Association for the Advancement of Science queried scientists about their attitudes toward research that could be used for both good and evil.

According to an NRC statement, "rapid advances in the biological sciences over the last several decades have yielded great benefits such as medical therapies and vaccines. But some of these same scientific advances could also be used for malicious purposes, a threat that has become more salient to the science and policy communities since the terrorist attacks of 2001."

To that end, the survey "also explored actions the scientists might support to reduce the risk of misuse of research, as well as steps that scientists may already be taking in response to these concerns," the statement continues. The survey's results are summarized in a new NRC report that "includes recommendations for next steps."

While the survey had "a low response rate and uncertainties about whether the sample reflects the broader life sciences community limit the ability to generalize from the responses about the full U.S. life-sciences community” the survey results are nonetheless said to be “useful and informative," according to the statement.

The results suggest that survey respondents perceive a potential but not overwhelming risk of a bioterror attack in the next five years, a risk they believe is greater outside the U.S. Most respondents do not believe it is likely that dual-use knowledge, tools, or techniques will facilitate a bioterror attack in that time period.

Survey results also indicate that some respondents -- more than the committee had expected -- have been so concerned about dual-use issues that they have already taken action to try to avert misuse of research in the life sciences, even in the absence of guidelines or government restrictions. Some respondents reported that they had broken collaborations, not conducted some research projects, or not communicated research results.

Many of respondents' precautionary actions were taken during design, collaboration, and initial communication stages of research, before reaching the publication stage, the report notes. Of particular interest and concern to the committee, a few respondents offered comments about foreigners as potential security risks, which may be reflected in the reported avoidance of some collaborations.

"The fact that some scientists are changing their research activities may indicate that the life sciences community is responsibly responding to reduce the risk of misuse of science," said committee chair Ronald Atlas, professor of biology and public health at the University of Louisville. "But it is also possible that some scientists are overreacting to the perceived threat, for example by breaking collaborations and excluding foreigners from their laboratories. Our committee feels that it's important to further investigate how research activity is being changed in response to dual-use concerns."

With regard to future actions that the life sciences community would support to reduce the threat of misuse of research, the survey results indicate that life scientists in the U.S. may be more willing to consider mechanisms to reduce risks if they are developed and implemented by the scientific community itself. Most respondents favor their professional societies prescribing a code of conduct to help prevent misuse of life science research, for example, while a minority supported greater federal oversight. Among possible government restrictions, respondents were more supportive of restrictions on access to biological agents and certification of researchers than of any control of scientific knowledge generated from the research.

In addition, respondents showed support for mandatory training by institutions for practicing life scientists regarding dual-use concerns, as well as education materials and lectures for students.

The Carnegie Corp., the Alfred P. Sloan Foundation and the National Academies' Presidents' Circle Communications Initiative sponsored the project.

As the newly minted Obama White House formulates policies on everything from economic stimulus proposals to defense spending, one initiative being pursued by the new administration has raised the hackles of a small but influential circle of lawmakers on Capitol Hill.

The issue that has lawmakers up in arms is a recent memorandum issued by the Office of Management and Budget requesting a cost-benefit assessment on transferring the National Nuclear Security Administration and the national laboratories from the Energy Department to the Pentagon.

First reported by media outlets in New Mexico, OMB's request calls upon DOE to “assess the costs and benefits” of shifting NNSA to DOD beginning in fiscal year 2011.

“The idea of moving NNSA into the DOD is not a new one, and has been rejected in the past for good reasons,” according to Rep. Ellen Tauscher (D-CA), chairwoman of the House Armed Services strategic forces subcommittee.

NNSA's assignment to DOE is necessary to “ensure some independence from the military,” and the move would send a message to the international community that the United States was “militarizing control” of the nuclear weapons portfolio, she said in a Feb. 5 letter to OMB Director Peter Orszag.

Defense Secretary Robert Gates and others in the Pentagon have taken significant steps to reinvigorate the importance of the nuclear mission after a number of high-profile gaffes in the handling and transport of nuclear weapons in recent years.

But those efforts, according to Tauscher, have done little to restore lawmakers' confidence in the Pentagon's ability to manage the entire nuclear portfolio. “With all the recent evidence of military neglect of the nuclear mission, it is an odd time to consider relying on that vast bureaucracy to manage the activities” of either NNSA or the labs, Tauscher's letter states.

While opposed to the effort, the California Democrat suggested that if the White House was intent on exploring this option, it should do so in a broad-based manner, “and not focused on one option for improved management.”

“Such an examination would also be best formulated in consultation with Congress, particularly the committees of jurisdiction,” she writes.