The Insider

UPDATE: The Missile Defense Agency announced today that its Ground-based Midcourse Defense system conducted a successful intercept of a ballistic missile target over the Pacific Ocean. According to the agency's statement:

For this test, a threat-representative target missile was launched from Kodiak, Alaska at 3:04pm (EST).This long-range ballistic target was tracked by several land- and sea-based radars, which sent targeting information to the interceptor missile. At 3:23pm (EST)the Ground-Based Interceptor was launched from the Ronald W. Reagan Missile Defense Site, located at Vandenberg Air Force Base, Calif. The interceptor's exoatmospheric kill vehicle was carried into the target's predicted trajectory in space, maneuvered to the target, performed discrimination, and intercepted the threat warhead.

This was the first time an operational crew located at the alternate fire control center at Ft. Greely, Alaska remotely launched the interceptor from Vandenberg AFB. In previous interceptor launches from Vandenberg, military crews at the fire control center at Schriever AFB, Colo. remotely launched the interceptor.

The target was successfully tracked by a transportable AN/TPY-2 radar located in Juneau, Alaska, a U.S. Navy Aegis BMD ship with SPY-1 radar, the Upgraded Early Warning Radar at Beale Air Force Base, Calif., and the Sea-Based X-band radar.  Each sensor sent information to the fire control system, which integrated the data together to provide the most accurate target trajectory for the interceptor.

As Inside Missile Defense reported in May, MDA retooled the program’s flight-test lineup following the last delay in the intercept test schedule:

FTG-4, the intercept test originally scheduled for the fourth quarter of fiscal year 2007 -- which had been pushed back to the second quarter of FY-08, and then pushed back again from this summer to early autumn -- has been renamed FTG-5, according to MDA spokesman Rick Lehner.

A telemetry unit aboard the exoatmospheric kill vehicle failed a recent electrical test, necessitating its replacement and causing the intercept-test delay, Lehner told IMD May 14.

The unit is called the Pulse Code Modulation Encoder, according to Lehner. It transmits real-time EKV performance data via telemetry.

Built by L-3 Communications West, the unit is only used during test flights and “has no role in an operational EKV,” he wrote.

Outgoing MDA Director Lt. Gen. Trey Obering “decided to move the test to the fall rather than risk losing performance data, as obtaining the data is one of the primary objectives of the test,” Lehner added.

Accordingly, FTG-4 was supplanted by a test that did not involve an interceptor:

“FTG-4 will be replaced by FTX-3, a target-only test, planned for July using all available range sensors -- transportable AN/TPY-2 at Juneau, AK, an Aegis ship and ((Sea-Based X-band Radar)), as well as Beale ((Air Force Base)) upgraded early warning radar,” Lehner told IMD May 15.

The target test flight “will provide ((an)) excellent risk-reduction flight for the FTG-5 intercept test, now scheduled for late this fall,” he wrote in an e-mail.

MDA’s FY-09 budget justification book states that FTG-4’s test objectives were to have included “demonstrat((ing)) the functionality of the GBI engage on ((upgraded early warning radar)) or AN/TPY-2 ((engagement sequence group)) for a GBI launched from Vandenberg AFB performing all functions through acquisition, discrimination, transition to terminal, and intercepting the lethal object from a live target complex launched from Kodiak using a more complex target scene than previous tests.”

Objectives for FTG-5, according to MDA’s latest budget book, include: “Demonstrate ((Ballistic Missile Defense System)) multisensor integration and functionality of the GBI engage on UEWR, AN/SPY-1, AN/TPY-2 or ((Sea-Based X-band radar)) for GBI launched from Vandenberg AFB to perform all functions through acquisition, discrimination, transition to terminal, and intercepting a medium/high closing velocity lethal object.”

One missile defense critic didn't wait for the test to take place. Phil Coyle, a senior adviser at the Center for Defense Information, sent out an e-mail to reporters last night stating:

If there were a credible threat, U.S. missile defenses can't deal with it anyway. If Iran or North Korea believed that U.S. missile defenses were effective, they would simply build more missiles or use decoys and countermeasures. That's what's behind the test scheduled for tomorrow, but if successful it won't prove what the MDA will say it proves.

U.S. missile defenses have no demonstrated effectiveness to defend Europe or the U.S. under realistic operational conditions. U.S. missile defenses lack the ability to deal with decoys and countermeasures, lack demonstrated effectiveness under realistic operational conditions, and lack the ability to handle attacks involving multiple missiles.

Proposed U.S. missile defenses in Europe are threatening to Russia, and are causing the Cold War with Russia to be reignited. Proposed space-based missile defenses are also threatening to Russia, as well as China.

Can America depend on missile defenses for its security? Unfortunately the answer is no. The United States has been trying unsuccessfully to develop effective missile defenses for over 60 years, and we still don't know how to deal with a realistic threat. Fortunately we don't have a real threat unless you want to worry about Russia or China someday, and with their missiles Russia and China already can overwhelm the most futuristic missile defenses the Pentagon can imagine.

The Pentagon has shipped to the Office of Management and Budget a roughly $80 billion war cost spending request that would fund operations in Iraq and Afghanistan from spring through September, according to a defense official.

Still, it may be a few more days at the soonest before the package is forwarded to Congress.

Defense Secretary Robert Gates earlier this week said this package -- which, when combined with the $66 billion bridge fund appropriated in October, would bring total FY-09 war costs to roughly $145 billion -- should be sent to lawmakers within the next two weeks.

The reason for the hold-up: Gates, according to the defense official, wants to hear one more time from Gen. David Petraeus, commander of U.S. Central Command, on how much will be required this fiscal year to execute a new strategy in Afghanistan, and ensure the amount is included in the request.

Just as big defense contractors like Lockheed Martin and Boeing release an annual financial report to their shareholders, summarizing their income and outflows as well as projections for the following year, the Defense Department this week did the same thing.

The "FY 2008 DOD Agency Financial Report (AFR)," has a cover letter dated Nov. 17 and written by Deputy Defense Secretary Gordon England. In it, England writes:

At the end of each fiscal year, the Department of Defense (DOD) provides an accounting to the American people for the funds appropriated by act of Congress and signed into law by the president during the previous budget cycle.

The Agency Financial Report (AFR) is a concise and easy-to-understand summary of DOD's use of those tax dollars to maintain and modernize America's defenses -- including expenditures to pay, train, equip, and supply the men and women who wear the nation's uniform, and to cover the costs of the Global War on Terror and other military operations.

Some notable passages from the report include:

The Department’s total resources primarily consist of carried forward budget authority of $112.0 billion for unfilled commitments from FY 2007 and received additional appropriations of $736.4 billion in FY 2008 to support the Global War on Terror (GWOT), train and equip our warfighters, and ensure broad national security priorities are met.

Of the $736.4 billion, the report sports a pie chart that breaks down that figure, with 25 percent of that amount ($186.8 billion) going toward the GWOT, 24 percent ($175.5 billion going toward "strategic modernization," 19 percent ($143.4 billion) going toward "operations, readiness & support," 18 percent ($129.2 billion) going for "military pay and benefits," 10 percent ($73.1 billion) for "military retirement benefits," 3 percent ($20.2 billion) for "family housing & facilities," and 1 percent ($8.1 billion) for "civil works and cemeterial." Additionally:

Most ($1.0 trillion or 91%) of the total budgetary resources for FY 2008 were spent or reserved for specific purposes. The remaining resources relate to receipt of multi-year appropriations and supplemental funding that were received late in the fiscal year with insufficient time to fully obligate and outlay. The Department’s total FY 2008 obligations incurred are in support of present and future initiatives such as establishing the Africa Command (AFRICOM), building partnership capacity with foreign partners, realigning the ballistic missile defense sites in Europe, and strengthening cyberspace security. Obligations incurred presented in Figure 1-6 are shown separate between mandatory and discretionary funding.

Additionally, the report states that DOD owned assets worth $1.7 trillion during fiscal year 2008, having increased by 13 percent from the previous year. "This increase is largely attributable to increases in Fund Balance with Treasury (FBWT), Investments, and Military Equipment," the report states.

As for liabilities (emphasis added):

In contrast, the Department has significant unfunded liabilities consisting primarily of actuarial liabilities related to military retirement pension and health care benefits. While the liability presents the Department with a negative financial position, the majority of the unfunded portion will come from annual appropriations outside the Department’s budget. The FY 2008 actuarial liability estimate totaled $2.0 trillion of which $1.3 trillion will come from the U.S. Treasury to cover liabilities existing at inception of the programs. Approximately $378.9 billion is currently covered with invested U.S. Treasury securities. Due to the significant growth in liability in recent years, the Board of Actuaries accelerated the liquidation of the initial unfunded liabilities by reducing the amortization period thus increasing the annual contribution amounts from the U.S. Treasury.

Wall Street analysts Cai von Rumohr and Gautam Khanna are upgrading their Lockheed Martin rating to "outperform," confident that company growth is "still likely under ((the)) new administration" even with possible defense budget cuts, according to an SG Cowen research note issued this morning.

"Higher F-22 cancellation risk an overblown concern," Von Rumohr and Kanna write. Although President-elect Obama's decision to have Defense Secretary Robert Gates to continue in the latter's job "boosts odds that F-22 output (~ 60 of LMT's PS) will end, since he's criticized the fighter for 'next waritis' . . . the current multiyear contract extends thru 2011 (for targeted 183 units). Early termination would be uneconomic; and there's $8 billion in potential updates to bring early F-22 models up to current capability."

The Air Force is in the midst of preparing an official F-22A requirement number and a major Air Combat Command study that could fuel future decisions will be completed next fall, Inside the Air Force reported last week. The Office of the Secretary of Defense directed the service to include $554 million to cover F-22A production shut-down costs in its internal six-year spending plan, according to a summary of Pentagon budget decisions reviewed by ITAF.

Not only that, ITAF learned that OSD's recent decision to fund long-lead item purchases for only four F-22A fifth-generation fighters could result in the cost-per-jet increasing by as much as $35 million:

A 20-plane Raptor buy could end up costing $700 million more than what the Air Force is currently paying for the advanced fighter jets should the incoming Obama administration decide it wants to purchase F-22As in fiscal year 2010, according to information provided by an official close to the program. The best-case scenario shows the Air Force paying $20 million more per plane.

Even if the F-22 line were to shut down, other aeronautical gains are likely through 2011, according to the SG Cowen note. "F-16/C-130 sales are apt to ramp in 2009-10 and hold in 2011 even if the Obama administration has tighter foreign arms sales controls," the analysts write. "Pluses are (1) firm backlogs into 2011, (2) broad order potential (esp. mideast), & (3) further slip of competing ((Airbus)) A400M. F-35 sales are slated to ramp thru 2015."

While the Air Force's "proposed F-35 ((Joint Strike Fighter)) acceleration seems unlikely, DOD is unlikely to both end F-22 in 2011 and slow F-35, especially given its large export potential," von Rumohr and Khanna continue.

The analysts forecast returns on the company's pension fund will improve in 2010, and predict that company earnings per share will grow by 6 percent in 2009 and 2010 "even with slips." With the exception of the F-22 and F-35 product lines, Lockheed "has a broad mix with (1) no Iraq drawdown risk, (2) foreign upside (F-16, C-130J, UAE Patriot/THAAD), (3) #1 services play (22 percent of ((earnings before interest and taxes))) & (4) US. new biz. (LCS, JLTV, CSAR-X, TSAT). Cash redeployment & GOES-R win offer upside."

There's a lot of national security-related introspection going on in the government these days, which some would say is fitting during a presidential transition. For one, Pentagon officials are wrapping up a congressionally mandated review of the Defense Department's roles and missions. At the same time, they are doing prep work for the next administration's 2010 Quadrennial Defense Review, set to begin in earnest by springtime.

Then, the Department of Homeland Security is doing the Quadrennial Homeland Security Review, and the nation's spies are conducting the Quadrennial Intelligence Community Review. The DHS drill, we're told, is the first of its kind, while the intelligence review is done for the second time.

As for the roles-and-missions study, some at DOD believe the timing is a bit inopportune.

"If you asked when would be not a good time to start looking at roles and missions, I would say in the fourth year of an administration," a senior Pentagon official, who spoke on condition of not being named, told us last week.

Yet, the forthcoming report is the result of a "good, honest effort . . . in a very challenging period," the official said.

As of yesterday, lawmakers had not yet received a copy of the document, according to House Armed Services Committee spokeswoman Lara Battles, who added committee staff were last briefed about the review over the summer. She noted the final report is due with the submission of the defense budget in early February.

In a May 8 press briefing, a senior DOD official talked about plans to have the report be wrapped up internally by late November, which would give senior leaders a chance to use the month of December for figuring out "how they want to work with transition teams and exactly how the document and when the document might go forth."

Deputy Defense Secretary Gordon England announced today that he would not be Defense Secretary Robert Gates' No. 2 man in the Obama administration.

"I congratulate President-elect Obama for retaining Bob Gates as secretary, and I salute Bob Gates for his continued commitment," England said in a statement. "However, it's time for me to leave. When I came into government in early 2001, I anticipated serving for two to four years. After almost eight years, it's now time for me to turn over the reins to a successor. Also, it's most appropriate for the new administration to name its own deputy."

Saying it has been "an astonishing time to serve the nation," England also said he was willing, if asked, to stay past Inauguration Day to assure a smooth transition.

Mindful of the current budgetary environment, the industry team developing the Airborne Laser has begun to do some in-house studies to see how system could be re-jiggered to be able to shoot down not just ballistic missiles in their boost phase but also cruise missiles and other enemy flying objects.

"The contractors have begun to do some work in simulation to show that there are capabilities for the weapon system in the future and there are some changes that would need to be made because we're optimized for ballistic missiles, but we believe that there are some capabilities for counter-aircraft and counter-((surface-to-air missiles)), for example, and potentially cruise missiles," Boeing ABL Program Director Mike Rinn told reporters during a conference call earlier today. "So it kind of opens up a whole other area -- that is not our primary mission, I want to state that emphatically, the Missile Defense Agency has designed the system for all classes of ballistic missile in boost phase -- but we believe there's other potential in the multimission arena."

Earlier today, MDA and its industry partners announced that the ABL program has successfully test-fired the megawatt-class laser through the Boeing 747 aircraft's turret mount in a ground test last week.

During the conference call with reporters, Boeing's Rinn said the program was still on track for a late summer, early fall 2009 attempt to intercept a live target ballistic missile.

The ABL program has encountered increasing congressional scrutiny. House Armed Services strategic forces subcommittee Chairwoman Ellen Tauscher earlier this month promised hearings on programs like ABL when Congress comes back in session next year. Not only that, InsideDefense.com reported earlier this month that the incoming Obama administration was mulling cuts to a small handful of named high-profile weapon systems, among them national missile defense and ABL.

Even if next summer's intercept attempt is successful, such a demonstration will not by itself be enough to prove the weapon meets requirements, the program office's commander said this past summer. Follow-on tests of the platform must occur before the laser is ready to go into production, he added. As Inside Missile Defense reported:

Unless the program office discovers something considered anywhere between "concerning" and "hideous" between now and August 2009, ABL’s in-flight shoot-down demonstration will take place as scheduled, Col. Robert McMurry, commander of the Airborne Laser program office at Kirtland Air Force Base, NM, said during a June 27 National Press Club briefing on the directed-energy weapon's progress.

Still, though the test will be at a range that is "significant" -- the exact range is classified, but retired Lt. Gen. Michael Dunn, CEO of the Air Force Association, at the same briefing put it at hundreds of kilometers -- the program follows a "crawl-walk-run" process, and an "envelope expansion" of the laser's capabilities will be needed to prove its concept of operations, McMurry said.

“I don’t think you’re going to satisfy all of the government’s requirements that you need to say, ‘That thing’s ready to procure’ by . . . a single shoot-down; it’s just not going to happen,” McMurry said. “So what we need to do is show the operational utility. Part of that plan is things like taking the system now and shoot((ing)) something down, but, instead of shooting it down here, fly it to Hawaii and shoot it there and prove you can move it and then use it. There are a number of those variations on the theme that kind of start to pin down the modeling that you’ve done to support the concept of operations and do it beyond just computer modeling that really anchor that in real-life, purposeful execution of the . . . top-end requirements.”

In the conference report accompanying the Fiscal Year 2009 Defense Authorization Act, House and Senate lawmakers called for a Defense Department-sponsored independent study of boost-phase missile defenses, including ABL, the Kinetic Energy Interceptor and other potential systems.

“The study would assess a variety of relevant factors and compare the results to non-boost-phase missile defense systems,” the report states.

The conferees also prohibit spending money to buy a second ABL aircraft until the defense secretary certifies that the system “has demonstrated, through successful testing and operational and cost analysis, a high probability of being operationally effective, suitable, survivable and affordable.”

Money also cannot be allocated to a second aircraft until 60 days after the boost-phase missile defense study is submitted, according to the bill text.