The Insider

GAO On DOD Contracted Services
By John Liang
April 9, 2012 at 6:22 PM

The Government Accountability Office this morning released a report on the Pentagon's inventory of contracted services, finding that "further actions" were "needed to improve accountability."

GAO further states:

The Department of Defense (DOD) made a number of changes to improve the utility of the fiscal year 2010 inventory, such as centrally preparing contract data to provide greater consistency among DOD components and increasing the level of detail on the services provided. DOD, however, continued to rely primarily on the Federal Procurement Data System-Next Generation (FPDS-NG) for the inventory for most defense components other than the Army. As such, DOD acknowledged a number of factors that limited the utility, accuracy, and completeness of the inventory data. For example, FPDS-NG does not identify more than one type of service purchased for each contract action, provide the number of contractor full-time equivalent personnel, or identify the requiring activity. As before, the Army used its Contractor Manpower Reporting Application to compile its fiscal year 2010 inventory. This system collects data reported by contractors on services performed at the contract line item level, including information on labor hours and the function and mission performed. DOD officials noted that the Army’s current process complies with legislative requirements. In January 2011, GAO recommended that DOD develop a plan with time frames and the necessary resources to facilitate its efforts to collect contractor manpower data and address other limitations in its approach to meeting inventory requirements. DOD concurred with these recommendations. In November 2011, DOD submitted to Congress a plan to collect contractor manpower data. DOD officials noted that developing a common data system to collect and house these data would be challenging given the different requirements from the military departments and components. Consequently, DOD does not expect to fully collect contractor manpower data until fiscal year 2016. DOD’s plan, however, does not establish milestones or specify how it will meet the legislative requirement to identify the requiring activity and the function and missions performed by the contractor.

Military departments' required reviews of their fiscal year 2009 inventories of contracted services were incomplete. Navy headquarters officials had no assurance that their commands conducted the required reviews, and GAO found no evidence at the commands it contacted that the required reviews were conducted. Army and Air Force inventory reviews identified 1,935 and 91 instances, respectively, in which contractors were performing inherently governmental functions, though this variation may reflect differences in the departments' approaches to conducting the reviews. In 8 of the 12 Army and Air Force cases GAO reviewed, contractors continued to perform functions the military departments identified as inherently governmental. The absence of guidance that provided for clear lines of responsibility for conducting, documenting, and addressing the results of the reviews contributed to these outcomes. Further, Army officials cited difficulty in hiring DOD civilians caused by DOD's decision to freeze civilian full-time equivalents at fiscal year 2010 levels. DOD issued guidance in December 2011 that will require the military departments and components to certify that they have conducted the required reviews. The guidance, however, does not clearly establish lines of accountability and responsibility within the military departments and defense components for conducting the inventory reviews and addressing instances where contractors are identified as performing inherently governmental functions.

Rare Earth Report
By John Liang
April 6, 2012 at 4:59 PM

The Pentagon recently submitted a report to Congress on rare-earth materials in defense applications. The study looked at the seven most prevalent elements used by defense contractors: Dysprosium, Erbium, Europium, Gadolinium, Neodymium, Praseodymium and Yttrium, and states:

The assessment determined that by 2013, U.S. production could satisfy the level of consumption required to meet defense procurement needs, with the exception of yttrium (estimates based on model using 2010 data). Since 2010, both expected DOD demand, and, more significantly, actual U.S. commercial demand have decreased significantly. As importantly, the U.S. and global market has responded to market conditions with new investments, corporate restructuring, and technical advances. All are trending positive for a market capable of meeting future U.S. Government demand. It is anticipated the domestic supply of REEs and rare-earth-containing products will continue to grow between now and 2015, and it will be possible for manufacturers within the defense industrial base to obtain some rare-earth-containing products from reliable foreign sources of supply.

Industry Meetup
By John Liang
April 5, 2012 at 8:45 PM

The Defense Acquisition University plans to hold an industry forum on May 1 to talk about "affordability, efficiency, and the industrial base," according to a notice posted this morning on the Federal Register. The notice further states:

After a variety of presenters, the session will conclude with Mr. Frank Kendall, Acting Under Secretary of Defense for Acquisition, Technology and Logistics, leading a panel to discuss how we will achieve affordable, efficient programs in this time of fiscal austerity, while maintaining a healthy industrial base. Following the plenary session, each company will have the opportunity to sign up for an individual, non-attribution, 20-minute session with a DAU faculty member. DAU plans to incorporate feedback into changes to the Business Acumen curriculum.

The INSIDER - April 5, 2012
By
April 5, 2012 at 1:11 PM

Listing.

COCOMS' integrated priority lists, up first:

Consolidated Combatant Commanders' Wish List Set To Influence FY-14 Budget

Top Defense Department officials have hammered out a new ranking of the military's most acute capability shortfalls, a classified list of potential Achilles' heels intended to help drive investment decisions between fiscal years 2014 and 2018.

On March 20, the Joint Requirements Oversight Council convened in the Pentagon to wrap up work on one of its most important annual tasks -- producing a consolidated list of combatant commander priorities, according to military officials.

This year marked the first time combatant commanders have participated in the five-month "capability gap assessment" process as full voting members of the JROC. Combatant commanders, who play only an ancillary role in DOD's budget process, were last year elevated by law to full membership on the JROC and now outnumber the four service vice chiefs of staff, who wield enormous influence over the military's purse strings.

"Combatant commanders were able to participate and get their voices heard on particular issues a lot more than in the past," Air Force Col. Keith Duffy told InsideDefense.com. Duffy, the planning and integration branch chief in the Joint Staff's J-8 Joint Capability Division, played a key role in finalizing the "integrated priority list."

Proposed.

A key document up next:

DOD's Second FY-13 Legislative Proposals Package

On March 28, 2012, the Defense Department submitted its second package of fiscal year 2013 legislative proposals.

Touches on subjects like this:

DOD Asks Congress To Ease Notification Mandates For Cost Increases

The Defense Department is asking Congress to water down statutory notification requirements for major acquisition programs with soaring costs tied to quantity cuts.

In a legislative proposal sent to Capitol Hill last week, the Pentagon proposes further reducing the statutory requirements for critical Nunn-McCurdy breaches caused primarily by quantity changes.

DOD Wants To Narrow Definition Of Commercial Item To Ensure Fair Prices

The Pentagon wants lawmakers to narrow the definition of a commercial item to ensure goods and services are acquired at fair and reasonable prices and to preclude abuse.

Pentagon Seeks To Add Nine Countries To 'High Income' List

The Pentagon wants Congress to designate nine more countries, including four in the Middle East, as "high income," which would enable these governments to pay for military training at an incremental rate as part of the foreign military sales program.

DOD Asks Congress To Exempt DOE Work From Mandated Reviews

To avoid interruptions in critical national security activities, Congress should let Energy Department procurement efforts that support the Defense Department sidestep mandated inspector-general reviews, the Pentagon argues in a recent legislative proposal.

Cyber Concept.

Moving on to the front page of today's Inside the Pentagon:

New Joint Cyber Concept, Blessed By STRATCOM, Nears Dempsey's Desk

U.S. Strategic Command has approved a new joint concept to support major decisions about doctrine and resources for cyberspace operations, a key step toward final approval of the document by the military's top officer.

The Joint Concept for Cyberspace, designed to help military forces grapple with fundamental questions about cyberwarfare in the 2020s, now bears the signature of STRATCOM chief Gen. Robert Kehler and will ultimately land on the desk of Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey for final approval. In the interim, STRATCOM officials must brief the document, roughly 55 pages, to key Joint Staff officials who oversee military requirements.

"The Joint Concept for Cyberspace will form the basis of joint warfighting doctrine and resourcing decisions to provide the joint force commander with the means to achieve and sustain cyberspace superiority," STRATCOM spokesman Rodney Ellison told Inside the Pentagon.

Legal Eagles.

Another front-pager, this one suggesting a need for more help on legal issues at the Pentagon:

Panetta Poised To Stand Up Defense Legal Policy Board

Defense Secretary Leon Panetta plans to create a blue-ribbon panel to advise the Defense Department on an array of complex legal policy matters, according to DOD officials and documents.

A defense official said the spectrum of issues awaiting the new Defense Legal Policy Board could include the targeted killing of individuals abroad; the process of trying terrorism suspects in military courtrooms; and matters related to major crimes committed by deployed service members, including requirements for status-of-forces agreements and the way the department processes major crimes.

On March 30, the Pentagon submitted a draft charter for the new panel to the General Services Administration, which has since approved the document.

DOCUMENT ALERT:

Defense Legal Policy Board Charter

The March 30, 2012, Office of the Secretary of Defense memo lays out the charter of the Defense Legal Policy Board.

Performance Review.

The IG gets busy:

Pentagon IG To Scrutinize DOD's Use Of Performance-Based Payments

The Pentagon's inspector general has launched a broad review of the award and administration of performance-based payments in Defense Department contracts.

The objective of this audit is to determine whether DOD officials negotiated and administered performance-based payment milestones in DOD contracts in accordance with selected Federal Acquisition Regulation requirements, according to a March 22 memo signed by Lorin Venable, the acting assistant inspector general for DOD payments and accounting operations.

"Specifically, we will determine whether DOD properly negotiated, verified, and disbursed performance-based payments," Venable writes. The memo is addressed to acting Pentagon acquisition chief Frank Kendall, DOD Comptroller Robert Hale, service officials and defense agencies.

DOCUMENT ALERT:

DOD IG Memo On Performance-Based Payment Contracts Audit

In a March 22, 2012, memo, the Defense Department inspector general's office announces it would undertake an audit "to determine whether DOD officials negotiated and administered performance-based payment milestones in DOD contracts in accordance with selected Federal Acquisition Regulation requirements."

High Energy.

One more item of note today:

New Charter: Operational Energy Board To Serve As Forum, Review Plans

The Defense Department has released a new charter defining the membership, procedures and functions of the Defense Operational Energy Board, which will serve to review, synchronize and support department-wide operational energy policies, plans and programs.

DOCUMENT ALERT:

Defense Operational Energy Board Charter

On March 22, 2012, the Pentagon issued a charter establishing the Defense Operational Energy Board.

The

DOD's Facebook Policy
By John Liang
April 4, 2012 at 4:48 PM

Pentagon Chief Information Officer Teresa Takai on March 22 signed a memo outlining the Defense Department's policy for using Facebook.

Right now, DOD organizations may only set up Facebook "pages," according to the memo. "Official use of other FB products by DOD, such as Profiles, Groups, and third-party products integrated with FB, is not authorized," it adds.

Use of Facebook should be done in accordance with a DOD directive that outlines how the Pentagon's Non-Classified Internet Protocol Router Network (NIPRNET) is used. According to that directive:

* The NIPRNET shall be configured to provide access to Internet-based capabilities across all DoD Components.

* Commanders at all levels and Heads of DoD Components shall continue to defend against malicious activity affecting DoD networks (e.g., distributed denial of service attacks, intrusions) and take immediate and commensurate actions, as required, to safeguard missions (e.g., temporarily limiting access to the Internet to preserve operations security or to address bandwidth constraints).

* Commanders at all levels and Heads of DoD Components shall continue to deny access to sites with prohibited content and to prohibit users from engaging in prohibited activity via social media sites (e.g., pornography, gambling, hate-crime related activities).

* All use of Internet-based capabilities shall comply with paragraph 2-301 of Chapter 2 of the Joint Ethics Regulation (Reference (b)) and the guidelines set forth in Attachment 2.

Panetta Calls Japan
By Christopher J. Castelli
April 3, 2012 at 6:43 PM

Defense Secretary Leon Panetta today called Japanese Defense Minister Naoki Tanaka to discuss developments related to North Korea's announcement that it plans to conduct a missile launch in mid-April, according to Pentagon Press Secretary George Little.

"Secretary Panetta and Defense Minister Tanaka reiterated their view that such a missile launch would directly violate North Korea's international obligations and U.N. Security Council Resolutions 1718 and 1874," Little said in a statement. "They also affirmed the importance of the U.S.-Japan Alliance in defense of Japan and in contributing to regional peace and security. Both leaders agreed to continue close contact leading up to and following a potential missile launch."

During March 30 remarks aboard the amphibious ship Peleliu (LHA-5), Panetta cited the potential missile launch. "In North Korea they're threatening to fire a missile and they've done this before," he said. "We thought we were in a period of accommodation with them. Now it looks like we're in a period of provocation with the Koreans -- North Koreans. And so you never quite know."

DSB On Support Contractors
By Thomas Duffy
April 3, 2012 at 4:20 PM

The Defense Science Board has been asked to study the issue of contractor logistics support of contingency operations.

In a March 8 memo, Frank Kendall, the acting Pentagon acquisition executive, said a DSB task force should look at several issues including Defense Department policies and procedures for planning contractor logistics support of contingency operations, the organization and staffing needed to put those policies into practice, and the development of doctrine for such operations.

Kendall said the review should include conclusions and recommendations tied to legislative or policy guidance to address the issues studied. He also wants to know if future Quadrennial Defense Reviews or other high-level assessments should be required to consider contractor support of the armed services in "conducting peacetime training, peacekeeping, overseas contingency operations, and major combat operations and the risks associated with such support."

The F-35 Up North
By Christopher J. Castelli
April 3, 2012 at 3:59 PM

A new Canadian report on the F-35 program criticizes the Canadian defense ministry's handling of the procurement process for the multibillion-dollar endeavor. Issued by the Office of the Auditor General of Canada, the 42-page report says the ministry did not appropriately plan with other Canadian government entities to manage the unique procurement aspects of the program. In a related statement, the auditor general notes that the defense ministry "did not acknowledge that the decision to purchase the F-35 was well under way four years before it was officially announced."

The audit report also states that the defense ministry "likely underestimated the full life-cycle costs of the F-35," adding that parliamentarians were not provided with complete cost information or fully informed about the risks involved. "The budgets for the F-35 acquisition (CAN$9 billion) and sustainment (CAN$16 billion) were initially established in 2008 without the aid of complete cost and other information," the report states. "Some of that information will not be available until years from now. If the budgets prove insufficient to cover total costs, the Department will have to find ways to cover additional costs that may be incurred. Alternatively, it may have to seek additional funds from the government or use funds from other parts of its capital or operating budgets."

The Globe and Mail reports the "scathing report . . . will fuel a political headache for the Harper government, which has ignored years of opposition attacks on the matter and which was fully committed to the F-35 until a few weeks ago."

Cyber Questions
By John Liang
April 2, 2012 at 7:37 PM

Senate Armed Services Committee Ranking Member John McCain (R-AZ) wants some answers from Army Gen. Keith Alexander, the head of the National Security Agency and U.S. Cyber Command.

In a March 29 letter to Alexander, McCain writes:

During your testimony before the Senate Armed Services Committee earlier this week on the roles and responsibilities of U.S. Cyber Command and the National Security Agency in protecting the United States from the threats we face in the cyber domain, you stated unequivocally that the U.S. Government needs no additional authorities to defer and defend against cyber attacks on our nation. Yet, just last November, in remarks at the U.S. Strategic Command Cyber and Space Symposium, you stated that "we have to have more authorities to protect ourselves in cyberspace, we just can't defend." I do not understand what caused you to abandon this latter view, which is consistent with the views of former Vice Chairman of the Joint Chiefs of Staff, Gen. James Cartwright, who asserted that we are "on the bad side of a divergent threat" and must shift from a strategy that focuses 90 percent of our resources on playing defense to one that imposes meaningful consequences to those who look to hold U.S. interests at risk via cyberspace.

A February 27, 2012 article in the Washington Post suggests that the White House cautioned you to refrain from publicly arguing for expanded government authorities related to cyber security and defense. The article quotes an Administration official as saying you were reminded that making statements inconsistent with official Administration policy is "undermining the commander-in-chief." I was very disappointed that your testimony to this Committee appears to have been more heavily influenced by White House policy, rather than your best military and technical advice and expertise.

As I stated at the hearing, I view the inevitability of a large-scale cyber attack as an existential threat to our nation. Therefore, I am deeply concerned by your endorsement of the Administration's proposal to appoint the Department of Homeland Security as the lead agency responsible for ensuring domestic security against cyber attacks. Our vulnerability to cyber attacks will not be remediated by creating additional layers of bureaucracy in an agency already failing in several of its core missions, including aviation security and border control.  I do not understand why you believe DHS can more effectively protect our nation's critical infrastructure better than U.S. Cyber Command or the National Security Agency.

Consequently, McCain wants answers to the following questions:

* What additional authorities do you believe are necessary to defend the United States from a cyberattack initiated by a peer-competitor like China or Russia?

* Which agency within the federal government has the most cybersecurity expertise and is most capable of protecting our critical infrastructure?

* Does the Department of Defense rely on any critical infrastructure that, under the Administration's proposals, would be subject to Department of Homeland Security oversight?

* Can the Department of Homeland Security currently protect our national interest in the cyber realm without NSA involvement?

* Do you believe we are deterring and dissuading our adversaries in cyberspace?

* With respect to imposing requirements on the private sector, if the rate of technological advances outpaces the implementation of performance requirements and regulation, how would imposing additional regulations better protect us from a catastrophic cyber attack?

GAO's Annual Check-In
By Dan Dupont
March 29, 2012 at 5:41 PM

The Government Accountability Office today released its annual "Assessments of Selected Weapon Programs," which GAO describes as an area on its "high-risk list."

From the summary:

The total estimated cost of the Department of Defense’s (DOD) 2011 portfolio of 96 major defense acquisition programs stands at $1.58 trillion. In the past year, the total acquisition cost of these programs has grown by over $74.4 billion or 5 percent, of which about $31.1 billion can be attributed to factors such as inefficiencies in production, $29.6 billion to quantity changes, and $13.7 billion to research and development cost growth. DOD’s portfolio is dominated by a small number of programs, with the Joint Strike Fighter accounting for the most cost growth in the last year, and the largest projected future funding needs. The majority of the programs in the portfolio have lost buying power in the last year as their program acquisition unit costs have increased. The number of programs in the portfolio has decreased from 98 to 96 in the past year and, looking forward, is projected to decrease again next fiscal year to its lowest level since 2004.

In the past 3 years, GAO has reported that newer programs are demonstrating higher levels of knowledge at key decision points. However, most of the 37 programs GAO assessed this year are still not fully adhering to a knowledge-based acquisition approach. Of the eight programs from this group that passed through one of three key decision points in the acquisition process in the past year, only one—Excalibur Increment Ib—implemented all of the applicable knowledge-based practices. As a result, most of these programs will carry technology, design, and production risks into subsequent phases of the acquisition process that could result in cost growth or schedule delays.

GAO also assessed the implementation of selected acquisition reforms and found that most of the 16 future programs we assessed have implemented key provisions of the Weapon Systems Acquisition Reform Act of 2009. Programs have also started to implement new DOD initiatives, such as developing affordability targets and conducting “should cost” analysis. Finally, as could be expected from the increased activity early in the acquisition cycle, the 16 future programs we assessed are planning to spend more funds in technology development than current major defense acquisition programs.

Of Subs and Ships
By Christopher J. Castelli
March 29, 2012 at 3:52 PM

The huge cost of new SSBN(X) nuclear ballistic submarines cannot be borne by the Navy's shipbuilding account alone, acting Pentagon acquisition chief Frank Kendall told the Senate Armed Services Committee this morning at his confirmation hearing. Officials will have to find "some other way" besides the shipbuilding account to pay that bill, Kendall said.

The Navy's latest 30-year shipbuilding plan, sent to Congress Wednesday, is affordable for the next five years but thereafter "presents a resourcing challenge" largely due to the investment requirements associated with the new subs, Deputy Defense Secretary Ashton Carter informed lawmakers in a letter accompanying the plan. See here for our story.

F-22A Briefing
By John Liang
March 28, 2012 at 8:28 PM

The Air Force plans to hold a Pentagon briefing tomorrow at noon on the F-22A Raptor's oxygen-generation system, according to a Defense Department announcement issued this afternoon.

The briefers will be retired Air Force Gen. Gregory Martin, chair of the Scientific Advisory Board study on the F-22; Maj. Gen. Noel Jones, director of operational capability requirements and deputy chief of staff for operations, plans and requirements; and Maj. Gen. Charlie Lyon, Air Combat Command's director of operations, the statement reads, adding:

They will provide an update on the secretary of the Air Force-directed study into the systems safety issues involving F-22 oxygen generation systems and discuss F-22 operations since the September 2011 return to fly order.

For more info on the F-22A, check out InsideDefense.com's recent coverage:

New Air Force Program To Execute F-22A Pre-Planned Improvement Package

F-22 Crash Review Marks IG's First In-Depth Mishap Assessment Since 1990s

Air Force Chief Defends F-22A Crash Investigation Report

DOD IG Launches Assessment Of F-22A Crash Report That Blamed Pilot

For the latest military aircraft news, check out InsideDefense.com's Aircraft Alert.

Carrier Costs
By Christopher J. Castelli
March 28, 2012 at 3:33 AM

Navy Secretary Ray Mabus has sent Sen. John McCain (R-AZ), the top Republican on the Senate Armed Service Committee, a letter responding to the senator's call for a detailed plan for controlling soaring costs in the multibillion-dollar program to build new aircraft carriers.

In the coming weeks, the Navy and shipbuilder Huntington Ingalls Industries "must develop a credible plan to control costs" for the lead ship in the new carrier class, the Gerald R. Ford (CVN-78), and the following two ships, McCain counseled Mabus in a March 21 letter.

Mabus' eight-page reply, dated March 26 and first reported earlier today by Defense News, lays out the Navy's approach for ensuring CVN-79 and follow ship affordability focuses on tackling a handful of key challenges "while applying the many lessons learned in the course of CVN-78 procurement."

We have Mabus' letter.

Iron Dome
By Christopher J. Castelli
March 27, 2012 at 6:15 PM

The Defense Department will ask Congress for more funding for Israel's Iron Dome missile defense system, Pentagon Press Secretary George Little said today.

"The Department of Defense has been in conversations with the Government of Israel about U.S. support for the acquisition of additional Iron Dome systems and intends to request an appropriate level of funding from Congress to support such acquisitions based on Israeli requirements and production capacity," Little said this afternoon in a statement.

Supporting the security of the State of Israel is a "top priority" of President Obama and Defense Secretary Leon Panetta, Little said, noting the United States has previously provided $205 million in support of Israel’s Iron Dome short-range rocket and mortar defense system.

"During the rocket attacks earlier this month, the Iron Dome system played a critical role in Israel's security," Little said. "When nearly 300 rockets and mortars were fired at southern Israel, Iron Dome intercepted over 80 percent of the targets it engaged, saving many civilian lives."

Transformers
By Thomas Duffy
March 27, 2012 at 10:14 AM

In roughly one month the Army plans to issue two separate reports on its modular force transformation; one fulfilling a statutory requirement for 2012 and the other updating its 2011 report released in September, according to a Government Accountability Office report issued yesterday.

The Fiscal Year 2007 National Defense Authorization Act requires the Army to submit annually a report on the progress of its force transformation -- moving from a division-based force to a brigade-based force. The 2011 law, enacted in January 2011, made adjustments to that statute the Army was to include in its report last year. It didn't. According to the GAO:

Army officials responsible for developing the mandated report said that they did not address the amended requirements because they were not aware of the changes in the legislation. Army officials attributed this oversight to internal communications.

Army officials also told the GAO that "responding to the legislative requirements that require the Army to discuss plans for the future will be challenging because decisions about the size and structure of the Army force are under review and may not be finalized prior to the reporting date."