The Insider

BMD Details
By John Liang
August 2, 2010 at 8:21 PM

The House Appropriations Committee generally follows the practice of not making public the nitty-gritty details of its defense subcommittee mark-ups -- beyond some overall numbers -- until after the full committee has considered and passed the spending bill.

That, however, doesn't stop individual subcommittee members from releasing certain details on their own. A case in point is subpanel member Steve Rothman (D-NJ), who in a statement released today shed some light on fiscal year 2011 funding for U.S.-Israeli missile defense efforts:

On July 27, 2010, the Appropriations Defense Subcommittee of the U.S. House of Representatives sent a strong message – to our allies and enemies alike – by appropriating more funds than ever before toward joint U.S.-Israel and Israeli missile defense programs. This is only the latest example that when it comes to defense, military, and intelligence cooperation, the relationship between the U.S. and Israel has never been stronger.

Chairman Norm Dicks, myself and all the members of the Defense Subcommittee understand how important it is to be at the cutting edge of anti-missile technology, both to safeguard our own citizens and troops, but also those citizens and troops of our allies and friends such as the people of the Jewish state of Israel.

Given the concern and attention that we are focusing now on every dollar we are expending on behalf of the U.S. taxpayer for all purposes, including the defense of the United States and its allies, it is a mark of the importance of these projects that they were all funded so robustly and fully by our Subcommittee.

The Appropriations Defense Subcommittee has just appropriated $217.7 million in funding for essential joint U.S.-Israel missile defense programs, which is an increase of $95.7 million in funds over the original request. I am proud that since 2007, the Appropriations Defense Subcommittee has allocated more than $750 million in federal funding for the Arrow and David’s Sling anti-missile systems. Including this year’s allocation of $205 million toward Israel’s Iron Dome program, the Subcommittee has allocated nearly one billion dollars toward these three missile defense systems over the past three years.

I thank President Barack Obama, Chairman of the Defense Subcommittee, Norm Dicks, and all my colleagues on the Subcommittee for their leadership and vision in providing this life-saving support. The growing proliferation and increasing deadliness of missiles around the world pose a direct threat to the U.S. and our allies, making funding missile defense systems vitally important for America’s national security.

NORAD-Russia Vs. Terrorists
By Jason Sherman
August 2, 2010 at 7:46 PM

Using a scenario that reads like it was ripped from the pages of a thriller screenplay, the North American Aerospace Defense (NORAD) Command today announced plans for a first-ever cooperative air defense exercise with Russia's air force:

The basic premise is that a U.S.-flagged commercial air carrier on an international flight (Fencing 1220) has been taken over by terrorists.  The aircraft will not respond to communications.  The exercise scenario will create a situation that requires both the Russian Air Force and NORAD to launch or divert fighter aircraft to investigate and follow Fencing 1220.  The exercise will focus on shadowing and the cooperative hand-off of the monitored aircraft (Fencing 1220) between fighters of the participating nations.

A U.S. AWACS E-3B and a Russian A-50 along with fighter-interceptor and refueling aircraft will participate in the exercise, which is designed around two international flights that will follow the same route: one originating in Alaska and traveling to the Far East followed by one originating in the Far East and traveling to Alaska.

Dubbed "Vigilant Eagle," the four-day exercise will take place "on or about" Aug. 8 to 11 and involve U.S., Russian and Canadian officials participating in both the United States and Russia. Along with the military, U.S. and Russian civilian air control agencies will also take part.

The impetus for this exercise, a NORAD spokesman told InsideDefense.com, is a Sept. 2003 agreement between then-U.S. President Bush and then-Russian President Putin for their nations' militaries to increase cooperation in three areas: counterterrorism, missile defense, and peacekeeping.

Wagons East
By Marcus Weisgerber
August 2, 2010 at 7:05 PM

Boeing announced this afternoon that it is moving its C-130 Avionics Modernization Program and B-1B bomber program from Long Beach, CA, to Oklahoma City, according to company officials.

About 550 of the approximately 800 positions in California will relocate to Oklahoma, according to a Boeing statement. "The remaining positions will be reduced from the programs over the next two years as contracts are fulfilled," the statement reads.

Boeing Vice President and General Manager of Maintenance, Modifications & Upgrades Mark Bass said relocating the programs will help the company "provide a more competitive cost structure for customers."

"Making a decision like this is never easy, but as we reviewed our anticipated operating costs for the next several years, it became clear that Boeing needs to take major actions on these programs in order to remain affordable for our customers," Bass said in the statement. "We remain committed to maintaining the excellent record of performance that our employees deliver for our U.S. Air Force B-1 and C-130 AMP customers during this transition."

Boeing is building a new avionics kit for legacy C-130H aircraft and is the B-1B prime contractor.

POM Proposition
By Jason Sherman
August 2, 2010 at 6:41 PM

The military services and defense agencies by last Friday, July 30, all delivered to the Office of the Secretary of Defense summaries of their proposed fiscal year 2012 spending plans, along with an outline that projects investments through FY-16, according to Pentagon officials.

Transferring details of these program objective memoranda (POMs) into the computer systems managed by OSD will take another few days, these officials say. The comptroller's shop is responsible for all FY-12 budget proposals and the office of cost assessment and program evaluation takes receipt of all FY-12 to FY-16 spending plans.

In August, service leaders will formally present their POM proposals to the Deputy's Advisory Working Group, co-chaired by Deputy Defense Secretary William Lynn and Vice Chairman of the Joint Chiefs of Staff Gen. James Cartwright.

In mid-September, according to Pentagon sources, the Office of the Secretary of Defense -- in concert with the White House Office of Management and Budget -- will proceed with a review of these spending plans that will continue until Christmas, when the Pentagon traditionally locks in its new budget proposal.

Upcoming Hearing
By John Liang
August 2, 2010 at 4:27 PM

The Senate Armed Services Committee this week is scheduled to hear testimony on the report of the congressionally mandated Independent Panel on the 2009 Quadrennial Defense Review.

As they did in the House Armed Services Committee last week, panel Co-Chairs William Perry and Stephen Hadley will brief the Senate Armed Services committee tomorrow at 9:30 a.m.

InsideDefense.com last week reported on the panel's conclusions -- increasing the size of the Navy to a 346-ship fleet and bolstering the U.S. military's posture in the Western Pacific to counter China's growing influence in the region -- before they were made public.

As Inside the Army reports this morning, House Armed Services Committee Chairman Ike Skelton (D-MO) last week questioned the panel's findings of sufficiency in Army force structure, given the stress placed on the service by two wars:

"I was very surprised to see the report indicate that you thought the current end strength of our active duty ground forces, Army and Marines, is sufficient," Skelton said at the July 29 hearing, adding: "I respect your opinion, but I find that difficult to understand, watching the toll these wars have placed on our forces," Skelton explained. "I would caution against being too optimistic about the demand for these forces in the future."

Additionally:

The report concurs with the QDR, released in February, that the Army force structure should remain at four corps headquarters, 18 division headquarters, 73 total brigade combat teams (45 active component and 28 reserve component), 21 combat aviation brigades, 15 Patriot battalions and seven Terminal High Altitude Area Defense batteries.

The report acknowledges that the panel had neither the time nor the resources to conduct a detailed force-structure analysis, but recommends that the Army and Marine Corps remain at the size they are today.

The Fiscal Year 2007 National Defense Authorization Act required the formation of the new, bipartisan panel to assess the QDR for Congress.

When questioned in the HASC hearing on force structure, QDR independent panel co-chairman Stephen Hadley said, "We were not in a position to do the kind of force planning that the Department of Defense would do . . . in the case of the Army and the Marine Corps, we endorsed the fact that it's actually a larger, slightly larger force; and we think that's appropriate."

Dutch Deal
By Christopher J. Castelli
July 30, 2010 at 8:52 PM

Politicians in the Netherlands reached an informal deal today to form a right-wing government, which is "good news" for Dutch defense initiatives and the F-35 Joint Strike Fighter program, according to Lt. Col. Marcel de Haas, a Dutch military officer and a senior research fellow at the Netherlands Institute of International Relations Clingendael in The Hague.

Successful informal talks between the Conservative Liberals (VVD), Christian Democrats (CDA) and the anti-Islam Party for Freedom (PPV) will now lead to formal negotiations, De Haas told Inside the Pentagon. "This is intended to lead to a minority government of CDA and VVD, with support from PVV to gain a majority for the policy plans as agreed," he said. Though the parties are still "far away" from  forming a new government, the deal likely means there will be fewer defense cuts and greater commitment to Dutch participation in the F-35 program than if a left-leaning coalition had successfully emerged, according to De Haas.

He said the VVD has not advocated defense cuts, while the CDA has advocated half a billion euros ($651 million) in defense cuts.  The PVV has advocated 1 billion euros ($1.3 billion) in defense cuts, but in the support role the PPV would not be in government, De Haas said. CDA and VVD are in favor of the Joint Strike Fighter, whereas PVV is against, he said. De Haas is also a defense adviser for the Dutch Reformed Party (SGP). Dutch military personnel are allowed to be active in politics, to include running for parliament.

Plugging The Leaks
By John Liang
July 30, 2010 at 6:07 PM

Senate Armed Services Committee Chairman Carl Levin (D-MI) this week sent a letter to Defense Secretary Robert Gates regarding the Wikileaks.org website's release of thousands of classified documents on the war in Afghanistan.

"Since classified information is, by definition, material that reasonably could be expected to cause damage to the national security if made publicly available, I am concerned about the nature and extent of the damage caused by the release of these documents and the steps that the Department of Defense is taking to address the problem," Levin wrote July 28.

Specifically, the senator wants to know the following:

1. What is the Department's assessment of the extent to which the documents disclosed on Sunday contain information that was not previously available in the public domain? In the Department's judgment, what are the most significant new disclosures resulting from the release of these documents?

2. What is the Department's assessment of the extent to which sources and methods were divulged as a result of the release of these documents?

3. Has the Department conducted a damage assessment to determine the extent to which individuals may have been put at risk, the enemy may have learned about our tactics and techniques, our allies may be less cooperative in the future, or we may have suffered other specific damage as a result of the release of these documents?  If so, what are the conclusions of that assessment?

4. What steps is the Department taking to identify the individual or individuals who released these documents and to prevent future leaks of this kind?

In a Pentagon briefing yesterday, Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said:

The sheer size and scope of the collection now demands a careful review to determine the degree to which future tactical operations may be impacted, and the degree to which the lives of our troops and Afghan partners may be at risk. And I think we always need to be mindful of the unknown potential for damage in any particular document that we handle.

Mullen then had a few choice words for Julian Assange, the editor of Wikileaks:

Mr. Assange can say whatever he likes about the greater good he thinks he and his source are doing, but the truth is they might already have on their hands the blood of some young soldier or that of an Afghan family. Disagree with the war all you want, take issue with the policy, challenge me or our ground commanders on the decisions we make to accomplish the mission we've been given, but don't put those who willingly go into harm's way even further in harm's way just to satisfy your need to make a point.

In an interview this morning on NBC's Today show, White House spokesman Robert Gibbs admitted the administration doesn't have much leverage with Wikileaks in stopping the organization from releasing another batch of classified documents:

Well, we can do nothing but implore the person that has those classified top-secret documents not to post any more. As you mentioned, what Admiral Mullen said -- and I talked to him about that yesterday when we had our meeting about Afghanistan and Pakistan -- and, look, you have Taliban spokesmen in the region today saying they're combing through those documents to find people that are cooperating with American and international forces to bring peace to Afghanistan. They're looking through those for names. And they said they know how to punish those people.

Stamp Of Approval
By John Liang
July 29, 2010 at 7:16 PM

The Senate Intelligence Committee today approved the nomination of Lt. Gen. James Clapper to become the next director of national intelligence by a 15-0 vote. His nomination will subsequently be taken up for consideration by the full Senate.

In a statement, committee Chairwoman Dianne Feinstein (D-CA) said she "initially had reservations" about Clapper, "but those have been overcome by his experience and leadership ability. He has described for me and the Senate Intelligence Committee how he will be a strong DNI, independent of the influence of the Department of Defense, and he has promised to work in concert with the CIA and all the agencies of the Intelligence Community."

Feinstein said Clapper would "bring stability to an office that has had three leaders in just five years, and he will put the Office of the Director of National Intelligence on solid footing for the future. He has the support of President Obama, Secretary Gates and Director Panetta, and today he has my strong support."

Committee Vice Chairman Kit Bond (R-MO) had his own statement:

General Clapper has served our nation honorably for 46 years and I admire him, he has assured me that he does not intend to be a hood ornament but judging from recent history my yea vote is really a triumph of hope over experience.

Empire Challenge
By John Liang
July 29, 2010 at 2:34 PM

U.S. Joint Forces Command this week kicked off an annual intelligence, surveillance and reconnaissance interoperability exercise "that showcases emerging ISR capabilities, and provides vital lessons learned to improve joint and combined ISR interoperability to support warfighters at the tactical edge," according to a command statement.

Empire Challenge 10 runs from July 26 to Aug. 13, and "focuses on near-term capabilities that can be delivered rapidly to Afghanistan," the statement reads. "Requirements from Afghanistan will drive the event schedule, venues and scenarios, which are conducted through a combination of modeling and simulation, laboratory and live events."

The event itself is not limited to one location, according to a command fact sheet:

USJFCOM will host EC10 at Fort Huachuca, Ariz., and Naval Air Weapons Station China Lake, Calif., with locations at the Joint Intelligence Lab and Joint Systems Integration Center in Suffolk, Va.; the Combined Air Operations Center-X at Langley Air Force Base, Va.; service Distributed Common Ground/Surface System (DCGS) labs; coalition sites in the United Kingdom, Canada and Australia; and the NATO Consultation, Command and Control Agency in the Netherlands.

The fact sheet also lists the exercise's purpose and objectives:

EC10 Purpose

* Demonstrate and assess interoperability of the DCGS enterprise

* Evaluate sensor developers on data intake into DCGS and coalition ground station/enterprise

* Demonstrate and assess coalition interoperability

* Demonstrate and evaluate multinational data sharing

* Explore emerging ISR capabilities that can address warfighter requirements

* Explore joint and coalition ISR interoperability with command and control from national operations centers to deployed warfighters

EC10 Objectives

* Provide assessments of the DCGS enterprise, the capability-based interoperability of multinational systems, and the quality of intelligence support to command and control

* Enable a quick reaction capability and optimize the live-fly phase of EC

Fleet Readiness
By John Liang
July 28, 2010 at 3:58 PM

House Armed Services readiness subcommittee Chairman Randy Forbes (R-VA) said at a hearing this morning on the Navy's fleet readiness that "it has become wholly evident that decisions driven by near-term budget pressures have resulted in long-term impacts to the fleet."

While the committee "has consistently warned of the risk associated with the Navy's resourcing decisions over the last several years . . . the trend of declining readiness is undeniable," Forbes said in his opening statement. Further:

You may think we ask for things like the 30-year shipbuilding plan, the 30-year aviation plan and the Quadrennial Defense Review (QDR), because we just need a few more reports to read each night before we fall asleep. In fact, we legislated the very specific requirements for these plans and reports, because we consistently see the Department taking a myopic view when it comes to resourcing decisions.

The Second-Engine Drama, Ctd
By Jason Sherman
July 27, 2010 at 11:06 PM

Defense Secretary Robert Gates' spokesman, Geoff Morrell, issued a statement responding to the House Appropriations defense subcommittee's decision today to add $450 million in its version of the Pentagon's fiscal year 2011 spending bill to fund the Joint Strike Fighter alternate engine program:

I don't know what more we can say or do to make clear that this is something we don't want, we don't need and we can't afford. However, despite today's vote, I can assure you Secretary Gates will do whatever it takes to make sure we don't continue to throw good money after bad in pursuit of the extra engine and he enjoys the full support of the president in that effort.

Rep. Jerry Lewis (R-CA), the subcommittee's ranking member who led the effort to support the F136 engine, issued a statement earlier today stating the panel would not be intimidated by veto threats:

There has been much debate on the issue of the second engine, but it all comes down to this: competition saves money. I truly believe that spending a little money today will save a great deal in the future. And, to the question of a possible veto by the president, I say that we cannot let fear and threats keep us from doing what we believe is right for the taxpayers and our troops.

$44M In Bombs For Holland
By Jason Sherman
July 27, 2010 at 5:25 PM

The Pentagon today announced a potential $44 million sale to the Netherlands of the Small Diameter Bomb, a deal that -- if completed -- would mark the first purchase by Amsterdam of the Boeing-built precision-guided bomb.

The Defense Security Cooperation Agency, the DOD arm that manages Foreign Military Sales, said in a statement that it had notified Congress on July 26 of the potential sale of 603 GBU-39B Small Diameter Bombs.

This proposed sale contributes to the foreign policy and national security objectives of the U.S. by improving the military capabilities of The Netherlands and enhancing standardization and interoperability with U.S. forces. The sale of this equipment and support will improve The Netherlands’ ability to destroy protected, high-value targets such as command and control nodes and weapons storage facilities.

Incentivizing An Incentive Policy
By Jason Sherman
July 27, 2010 at 5:06 PM

The Pentagon earlier this month agreed to draft new policies that will guide future investments at private shipyards -- which have totaled nearly $2 billion over the last decade, according to a new Government Accountability Office report -- where Navy ships are built, according to Brett Lambert, the Pentagon's industrial policy chief.

In response to a congressional investigation that concluded the Navy lacks a coherent approach to how it allocates incentives to the U.S. shipbuilding industrial sector, Lambert in a July 9 memo said the Navy agreed with the GAO recommendation for such a policy:

The Navy agrees to issue guidance on the intended goals and objectives of investment incentives, criteria for using incentives, and methods for validating outcomes. When shipyard investment is considered, it is done as a part of a holistic approach to negotiating a contract. Recognizing that there is no one-size-fits-all approach for contract incentives, the Navy's guidance will provide direction to the program managers and contracting officers while preserving their flexibility to tailor investment incentives appropriate to their particular program needs.

The GAO, in its July 2010 report published yesterday, “Defense Acquisitions: Guidance Needed on Navy's Use of Investment Incentives at Private Shipyards,” concluded:

The Navy lacks policy to help ensure it achieves goals and objectives from providing facility and equipment investment incentives at private shipyards. Absent this policy, individual program offices and contracting officers make decisions about what type of incentive to use, desired return on investments, and what kinds of investments to support. Without policy, program officers and contracting officers use different methods to validate expected outcomes and safeguard the Navy’s financial support.

Done Deal
By John Liang
July 27, 2010 at 4:28 PM

House lawmakers today passed a revised version of the fiscal year 2010 supplemental spending bill by a voice vote, with some voicing concerns the bill won't do much good.

House Appropriations Committee Chairman Dave Obey (D-WI) "reluctantly" decided to vote against the supplemental:

I have a double, and conflicting, obligation. As Chairman, I have the obligation to bring this supplemental before the House to allow the institution to work its will.

But I also have the obligation to my conscience to indicate -- by my individual vote -- my profound skepticism that this action will accomplish much more than to serve as a recruiting incentive for those who most want to do us ill.

Last year, as the Administration was undertaking its Afghanistan review, I expressed my concern that the best policy in the world could not succeed if we did not have the tools on the ground -- namely the effective cooperation of the governments of Afghanistan and Pakistan -- to accomplish it.

I submit today, that those critical tools are not at hand. The Afghan government has not demonstrated the focused determination, reliability and judgment necessary to bring this effort to a rational and successful conclusion.

House Armed Services Committee Chairman Ike Skelton (D-MO) and Ranking Member Buck McKeon (R-CA) each supported the bill, saying failure to pass it would cause the Pentagon to furlough civilian workers. Skelton said:

Today we take a vital and overdue step towards fulfilling one of Congress’s most basic and important responsibilities. We will provide the men and women of the United States military with the resources they need to carry out their missions in Iraq and Afghanistan -- missions for which they are risking their lives. While I wish we had been able to send this bill to the President sooner, passage of this bill today will ensure that funding is provided to the Department of Defense without any operational disruptions.

Without this bill, the Department of Defense would be forced to use inefficient and costly budget work-arounds throughout the month of August. According to testimony the Armed Services Committee received last week, without this bill the DOD would be forced in September to furlough thousands of civilian employees, and would even be forced to reprogram funding to pay the troops. Instead, by passing this bill today on a strong bipartisan vote, we can uphold the best traditions of Congress in support of national security and avoid the possibility of crippling funding shortfalls at the Department of Defense.

I urge my colleagues to vote for passage of H.R. 4899, the Supplemental Appropriations Act, 2010, and forward it to the President for his signature.

. . . and McKeon:

Mr. Speaker, I rise today in strong support of the long-delayed troop funding supplemental. Failure to pass this supplemental before the August work period would result in severe consequences to our military departments.

Last Thursday, Under Secretaries from the Army, Navy and Air Force testified at our committee that without this supplemental, their services are past or dangerously close to the point of having to furlough Department of Defense employees.

According to Robert Work, Under Secretary of the Navy, 'failure to pass the supplemental before the recess would . . . hamstring the department's operations for the remainder of the year and significantly disrupt operations within the Department.'

Mr. Speaker, these are Departments at war. The President sent us his troop funding request in February. Our former commander in Afghanistan, General McChrystal, urged its passage by Memorial Day.  Secretary of Defense Robert Gates said if the supplemental was not passed by the Fourth of July recess, the Department would have to resort to doing 'stupid things.' And now we are 60 days past Memorial Day.

Those of us here in Congress cannot lose sight of the broader perspective: our brave military men and women, and their civilian counterparts, are in the midst of a tough fight that is critical to U.S. national security. Cutting off their funding in the middle of that fight is tantamount to abandonment. I'm confident General Petraeus and our troops will succeed in Afghanistan if given the time, space, and resources they need to complete their mission.

In December and again when he tapped General Petraeus, the President reminded us why we are in Afghanistan. It was the epicenter of where al Qaeda planned and launched the 9/11 attacks against innocent Americans.

The timeline for success in Afghanistan cannot be dictated by arbitrary political clocks here in Washington; it must be driven by the operational clock in Kabul, Kandahar, and the Afghan countryside. We all hope and pray that this goal can be accomplished by July 2011, but conditions on the ground must dictate the pace of any withdrawal.

The Democrat leadership in the House has tried to advance their domestic political agenda on the backs of our forces, while at the same time permitting one anti-war measure after another to be debated on the House floor. This is cynical and wrong. A vote on a clean troop funding bill is long overdue.  We should have completed this work months ago -- not in the last minutes before we adjourn for the August work period.  We must send this troop funding to the President without further delay.

I encourage all members to send a clear message to our military men and women by supporting this critical troop funding bill -- this Congress believes in you, we support you, and we honor your dedication.

Earnings News
By John Liang
July 27, 2010 at 3:55 PM

Lockheed Martin today announced net sales of $11.4 billion for the second quarter of 2010, up 3 percent over the $11.1 billion in the same period last year, according to a company statement. "Earnings from continuing operations for the second quarter of 2010 were $727 million, or $1.96 per diluted share, compared to $731 million, or $1.87 per diluted share, in 2009," the company said. "Cash from operations in the second quarter of 2010 was $1.2 billion, compared to $1.1 billion in 2009."

Chairman and CEO Bob Stevens said Lockheed "had strong second quarter financial results," and the company is "continuing to implement affordability initiatives that will enhance performance and lower cost, and our dedicated workforce is focused on meeting our commitments. Strategically, we decided to divest two units and realign others to strengthen performance over the long term. In the new reality of escalating demands and increasing constraints on resources, we continue to refine our portfolio of capabilities and services to provide the best, most affordable solutions for our customers, a secure future for our employees and value for our shareholders."

Among its individual business units, Lockheed reported the following:

Aeronautics:

Net sales for Aeronautics increased by 2 percent for the quarter and 4 percent for the first six months of 2010 from the comparable 2009 periods.  In both periods, sales increased in Air Mobility and declined in Combat Aircraft. The increase in Air Mobility primarily was attributable to higher volume on C-130J programs including deliveries and support activities. There were six C-130J deliveries in the second quarter of 2010 (compared to three in the second quarter of 2009) and nine in the first six months of 2010 (compared to six in the comparable period of 2009). The decrease in Combat Aircraft principally was due to lower volume on the F-35 System Development and Demonstration (SDD) contract, F-16 programs, including a decline in deliveries, as well as lower volume on F-22 and other combat aircraft programs. These decreases partially were offset by higher volume on the F-35 production contracts. There were five F-16 deliveries in the second quarter of 2010 (compared to eight in the second quarter of 2009) and 11 in the first six months of 2010 (compared to 16 in the comparable period of 2009). Other Aeronautics Programs sales were relatively unchanged between periods.

Operating profit for Aeronautics decreased by 7 percent for the quarter and 8 percent for the first six months of 2010 from the comparable 2009 periods.  In both periods, the decline in operating profit primarily was due to decreases in Combat Aircraft, which partially were offset by increases in Air Mobility and Other Aeronautics Programs. The decrease in Combat Aircraft’s operating profit primarily was due to the lower volume on the F-35 SDD contract, F-16 and F-22 programs as well as a decrease in the level of favorable performance adjustments on other combat aircraft programs in 2010 compared to 2009. These decreases more than offset increased operating profit resulting from higher volume and improved performance on F-35 production contracts. The increase in Air Mobility operating profit primarily was due to the higher volume on C-130J and other air mobility programs. The increase in Other Aeronautics Programs mainly was attributable to improved performance in sustainment activities and higher volume and improved performance on P-3 programs.

Electronic Systems

Net sales for Electronic Systems increased by 4 percent for the quarter and first six months of 2010 from the comparable 2009 periods. In both periods, sales increased in GT&L and Missiles &  Fire Control (M&FC) but declined in Mission Systems & Sensors (MS2). The increase at GT&L primarily was due to growth on readiness and stability operations and higher volume on simulation & training programs. The increase at M&FC primarily was due to higher volume on air defense and certain tactical missile programs, which partially were offset in the six month period by lower volume on fire control systems. The decrease at MS2 mainly was due to lower volume on ship & aviation systems and undersea warfare programs, which partially were offset by higher volume on surface naval warfare and radar system programs.

Operating profit for Electronic Systems increased by 2 percent for the quarter and 1 percent for the first six months of 2010 from the comparable 2009 periods. During the quarter, operating profit increased at M&FC and GT&L but declined at MS2. The increase at M&FC mainly was due to higher volume and improved performance on certain tactical missile programs and improved performance on fire control systems, which partially were offset by declines on air defense programs. The increase at GT&L primarily was attributable to higher volume on readiness and stability operations, which partially were offset by lower profitability on certain simulation & training programs in 2010. The decrease at MS2 primarily was attributable to lower volume and performance on undersea warfare system programs and lower volume on ship & aviation system programs, which partially were offset by higher volume and improved performance on radar system programs in 2010.

During the first six months of the year, operating profit increased at M&FC and GT&L but declined at MS2. The increase at M&FC mainly was due to higher volume and improved performance on certain tactical missile programs and higher volume on air defense programs. The increase at GT&L primarily was attributable to higher volume on readiness and stability operations, which partially were offset by the absence in 2010 of a benefit recognized in the first quarter of 2009 from favorably resolving a contract matter at simulation & training programs. The decrease at MS2 primarily was attributable to lower volume and performance on undersea warfare system programs, which partially were offset by higher volume and improved performance on radar system programs in 2010.

Information Systems and Global Solutions:

Net sales for IS&GS increased by 6 percent for the quarter and 3 percent for the first six months of 2010 from the comparable 2009 periods. In both periods, sales increased in Civil but declined in Defense and Intelligence. Civil increased principally due to higher volume on enterprise civilian services. Defense sales primarily decreased due to lower volume on mission and combat systems activities. Sales in Intelligence programs declined slightly mainly due to lower volume on security solutions, which partially were offset by higher volume in enterprise integration activities.

Operating profit for IS&GS increased by 6 percent for the quarter and decreased by 1 percent in the first six months of 2010 from the comparable 2009 periods.  During the second quarter, operating profit increased in Intelligence and Civil but declined in Defense. The increase in Intelligence programs mainly was due to improved performance on security solutions, enterprise integration activities and other intelligence activities. The increase in Civil was mainly due to higher volume on enterprise civilian services. The decrease in operating profit at Defense primarily was attributable to lower volume on mission and combat systems activities.

During the first six months of the year, operating profit increases in Civil and Intelligence were more than offset by a decline in Defense. The increase in Civil was mainly due to higher volume on enterprise civilian services. The increase in Intelligence programs mainly was due to higher volume and improved performance on enterprise integration and other intelligence activities.

The decrease in operating profit at Defense primarily was attributable to lower volume on mission and combat systems activities.

Space Systems:

Net sales for Space Systems increased by 1 percent for the quarter and first six months of 2010 from the comparable 2009 periods. In both periods, sales growth at Satellites and Space Transportation partially were offset by declines in Strategic & Defensive Missile Systems (S&DMS). The sales growth in Satellites primarily was attributable to higher volume in government satellite activities. There were no commercial satellite deliveries during the second quarter and first six months of 2010 or 2009. The increase in Space Transportation principally was due to higher volume on the Orion program, which partially was offset by lower volume on the space shuttle external tank program. S&DMS sales decreased mainly due to lower volume on defensive missile and strategic missile programs.

Operating profit for Space Systems increased by 9 percent for the quarter and 5 percent for the first six months of 2010 from the comparable 2009 periods.  Operating profit increased in all three lines of business during the quarter. The increase in Space Transportation mainly was attributable to higher volume on the Orion program, which partially was offset by lower volume on the space shuttle’s external tank program. Satellites’ operating profit increased primarily due to higher volume and improved performance on government satellite programs, which partially was offset by performance on commercial satellite programs. S&DMS operating profit increased mainly due to improved performance on strategic missile programs. Equity earnings represented 26 percent of operating profit at Space Systems in the second quarter of 2010, compared to 28 percent in the second quarter of 2009.

During the first six months of the year, operating profit increases in Space Transportation and S&DMS partially were offset by a decline in Satellites’ operating profit. The increase in Space Transportation mainly was attributable to higher equity earnings on the ULA joint venture and higher volume on the Orion program, which partially were offset by lower volume on the space shuttle’s external tank program. Satellites’ operating profit decreased primarily due to performance on commercial satellite programs and a lower level of favorable performance adjustments on government satellite programs in 2010 as compared to 2009. S&DMS operating profit increased mainly due to improved performance on strategic missile and defensive missile programs. Equity earnings represented 25 percent of operating profit at Space Systems in the first six months of 2010, compared to 22 percent in the first six months of 2009.