The Insider

By John Liang
January 4, 2012 at 9:41 PM

Defense Secretary Leon Panetta won't be the only one on the podium tomorrow morning briefing the press on the Obama administration's new "Defense Strategic Review." According to a just-released statement, the president will join Panetta and Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey.

The review "will guide our budget priorities and decisions going forward," the White House statement reads, adding:

The President's remarks come after a comprehensive review of our defense strategy by the President, America's civilian and uniformed military leadership, and the Administration's national security team.

InsideDefense.com reported earlier today that the Pentagon's fiscal year 2013 budget request would slash Marine Corps and Army end strength in conjunction with the new military strategy that urges cutting back on stability operations, but even deeper cuts to both ground services are expected in the coming years, according to sources familiar with the plans. Further:

The FY-13 budget request prepared in conjunction with the Obama administration's new military strategy would shrink the Marine Corps to 182,000, permitting the service to spread the reduction over four years, in part by relying on funds from the overseas contingency account, one service official said, noting the plan not only pares back force structure but also reduces the number of Marines in some units. The niche Marine Corps capability known as the Chemical Biological Incident Response Force would remain, as would the practice of having Marines guard U.S. embassies around the globe, the official said.

Meanwhile, the FY-13 budget request aims to cut Army end strength from a force of 570,000 today to roughly 480,000 to 490,000 within the five-year budget plan, said current and former military officials.

A government source familiar with the Defense Department's new strategy, which is intended to inform the Pentagon's investment decisions and global posture, said it contains strong language on curbing the sort of major stability operations that have been performed in Iraq and Afghanistan. Defense Secretary Leon Panetta and Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey are scheduled to brief the strategy to reporters tomorrow.

Details of the strategy change were first reported by The New York Times.

By John Liang
January 4, 2012 at 4:48 PM

Defense Secretary Leon Panetta's plan to unveil details of his department's fiscal year 2013 budget request tomorrow is nothing new, according to Wall Street analysis firm Credit Suisse.

In a research note released this morning, Credit Suisse analysts state: "Panetta is expected to borrow a page from his predecessor's book & offer advance details about the FY13-17 budget, a month before its scheduled unveiling in early February. This announcement mirrors a similar move last year from then-Sec. Gates, who rallied defense markets with the early info."

More:

*      Why Now? Like 2011, we expect the DefSec to highlight strategic objectives for DOD, including major program curtailments and cuts (this time dictated by the recent Roles & Means review, which is an adjunct exercise to the 2010 Quadrennial Defense Review that was precipitated by August’s Budget Control Act). But, unlike last year, this announcement is largely expected, precisely because these cuts have been well-telegraphed by the BCA.

*      Last Yr. Stocks Rallied on the News: Sec. Gates catalyzed a defense rally in early Jan when his detailed budget preview removed uncertainty until the release on 2/14/11. In this period, defense outperformed the S&P by ~7.5%.

*      This Year Is Different; We Expect the Current Rally to Fizzle: Last year's January defense rally followed two months of relative underperformance by a total of 8% as the market fretted about program uncertainty. This year, the rally appears to have started earlier, with the same defense names up 4.5% during November and December. Thus, we think bullish investors have already been paid on this theme and see the rally dissipating in coming days.

*      Share Downside Possible: Unlike last yr, which addressed GFY12's budget, these cuts are expected to address the full 5-yr planning period (GFY13-17), and account for just more than half ($260B) of the $450B in prescribed 10-year cuts from the BCA. Thus, the magnitude and permanence of decisions may appear more significant. Further, this FY13-17 plan will not embed the potential sequester, which could more than double the known cuts, and increase downside for investors.

*      Procurement Most Exposed, Particularly Army: While we believe continued reductions in force structure (personnel) will account for some of the spending reduction, these are likely back-end weighted during the 5-yr period, especially with ongoing war activity. This leaves Readiness (O&M) and Procurement as the nearest targets, and we expect DoD to focus on the latter, with greatest exposure to ground vehicle and other Army weapons, potentially impacting GD, BAE.LON, OSK, NAV, HRS and XLS.

*      See Further F-35 Restructuring: While USAF & Navy should fare better, we do see further reductions to five-year F-35 procurement plan, perhaps by as much as 20%, which could impact LMT & NOC.

(UPDATE 2:50 p.m.: DOD officials tell InsideDefense.com that budget details won't be revealed until nect month.)

By John Liang
January 3, 2012 at 5:07 PM

Aurora Flight Sciences today announced it has delivered the first complete ship set of composite aerospace structures to Northrop Grumman for the Navy's Broad Area Maritime Surveillance Unmanned Aircraft System (BAMS UAS) program. According to an Aurora statement:

Aurora manufactures the aft fuselage, forward nacelle, mid nacelle, aft nacelle, and V-tail assemblies of the MQ-4C BAMS UAS aircraft at its composites manufacturing facility in Bridgeport, West Virginia. These structures are then shipped to Northrop Grumman's manufacturing facility in Palmdale, California for final assembly.

"The delivery of the first ship set of flight hardware is a major step in this important program," said John Langford, Aurora's President and CEO. "We are proud of the role that Aurora plays to deliver affordable, high-quality composite structures to Northrop Grumman for the Navy BAMS UAS program."

The MQ-4C BAMS UAS is the Navy version of the RQ-4 Global Hawk aircraft used by the U.S. Air Force to execute surveillance and reconnaissance tasks. The BAMS aircraft is expected to make its first flight in 2012. The MQ-4C is a long endurance UA that provides Intelligence, Surveillance, and Reconnaissance (ISR) information to the maritime forces. When it becomes operational, the BAMS UAS will provide military commanders with a persistent assessment of surface threats covering vast areas of open-ocean and littoral regions.

In October, Inside the Navy reported that the service's industrial base is largely stable, but in many cases the Navy relies on contractors that are the sole qualified source of a material or capability.

According to an annual Defense Department Industrial Capabilities Report submitted to Congress Oct. 3, BAMS was reviewed and found to have some concerns. Specifically, ITN reported:

The good news is that although current production requirements are for four units per year, "each contractor analyzed can support additional workloads at this time," the report says of the airframe contractors.

"Based on the DOD procurement budget for the next decade, the sub-tier industrial infrastructure supporting the UAS industrial base will most likely increase in size," the report says. "It consists of numerous subcontractors/vendors, employing the industrial capabilities to support all levels/tiers of DOD UAS programs."

However, the BAMS UAS industrial base is also considered to be at moderate risk because the components and systems are contracted to companies that are the sole source of that capability. The report also notes there are 12 subcontractors that manufacture critical components that are sole sources, and it would take three to three-and-a-half years to develop a qualified alternate if anything were to happen to any of these companies.

Jamie Cosgrove, a spokeswoman for NAVAIR, told ITN in an email Oct. 7 that "BAMS UAS Program Office along with their industry partner Northrop Grumman Corporation (NGC) are collaborating to reduce long lead times for qualified sources while maintaining economic order quantity initiatives. Additional initiatives for the supply chain include: supplier optimal procurement timelines, supplier sub tier alternate procurement sources, and long term buying agreements."

The report's authors were also concerned that BAMS/Global Hawk integration could be affected as production ramps up, since work space is approaching full capacity. Cosgrove said current projected buys do not exceed Northrop Grumman's production capacity, so "at this time, there are no program plans to try and increase production capacity or changing the schedule."

By Christopher J. Castelli
January 3, 2012 at 5:00 PM

Pentagon Press Secretary George Little today issued a statement regarding published reports that Iran may impede the transit of U.S. naval ships operating in the Persian Gulf region:

The deployment of U.S. military assets in the Persian Gulf region will continue as it has for decades.

These are regularly scheduled movements in accordance with our longstanding commitments to the security and stability of the region and in support of ongoing operations.

These carrier strike group deployments are necessary to maintain the continuity and operational support to ongoing missions in the U.S. Central Command area of responsibility.

The U.S. Navy operates under international maritime conventions to maintain a constant state of high vigilance in order to ensure the continued, safe flow of maritime traffic in waterways critical to global commerce.

Our transits of the Strait of Hormuz continue to be in compliance with international law, which guarantees our vessels the right of transit passage. We are committed to protecting maritime freedoms that are the basis for global prosperity; this is one of the main reasons our military forces operate in the region.

Little also stressed that no one in the U.S. government is seeking a confrontation with Iran over the Strait of Hormuz.

By Christopher J. Castelli
January 3, 2012 at 4:47 PM

Defense Secretary Leon Panetta and Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey will brief reporters Thursday afternoon on the new military strategy that will guide the Defense Department's budget decisions and global posture, Pentagon Press Secretary George Little said today.

Little declined to discuss the specifics of the strategy in advance of the briefing.

By Dan Dupont
December 23, 2011 at 7:39 PM

The Government Accountability Office has denied a protest filed by Hawker Beechcraft alleging that the Air Force violated procurement law by excluding the company from a contract competition that would procure 20 light attack aircraft for Afghanistan.

The protest -- and the final decision -- come down in large part to timing and a mailing address:

The Air Force argues that HBDC’s protest should be dismissed because the certified return receipt demonstrates that HBDC received notice of its exclusion from the competition on November 4, and because HBDC did not timely request a debriefing or file a timely protest. HBDC maintains that the timeliness of its debriefing request and protest should be measured from November 15, as opposed to November 4, since the Air Force sent the notice of exclusion to an allegedly “incorrect address.”

More specifically, HBDC asserts that the Air Force erred in sending the notice to HBDC’s physical government business address, rather than to HBDC’s designated mailing address, and due to this error the notice cannot be considered received by HBDC until the time the notice reached HBDC’s contracts manager on November 15. HBDC argues that its separate mailing address was identified on Standard Form (SF) 33 of its most recent proposal revision of September 14, and is accurately listed in HBDC’s Central Contracting Registry (CCR) Database profile, along with its physical government business address.

HBDC also argues that the Defense FAR Supplement (DFARS) and its associated Procedure, Guidance, and Information (PGI), require defense agencies to “use the CCR database as the primary source of contractor information for contract award and administration,” and “shall use the CCR database as the authoritative source” for certain information, including a contractor’s mailing address. DFARS PGI 204.1103. Finally, HBDC notes that the Air Force sent correspondence to HBDC’s “correct” mailing address earlier in the competition.

We fundamentally disagree with HBDC’s premise that the Air Force directed the notice of exclusion to an “incorrect” address. The Air Force notice correctly indicated--i.e., there were no typographical errors--an address HBDC provided to the Air Force throughout the competition--i.e., in its initial proposal, in its revised proposal, on the cover letter of its revised proposal signed by its contracts manager, and in the signature line of email correspondence sent by its contracts manager. AM, Tab 1, at 2; Tab 2, at 1, 2; Tab 5 at 2, 3. It is this address which HBDC now claims to be “incorrect” for the purpose of receiving the agency’s exclusion letter.

To the extent HBDC listed a different address on the SF 33 of its September 14 revised proposal submission, this address was not identified as a “mailing address” or HBDC’s “correct” address, and the record reflects that in various other places in this submission, HBDC identified its address as the address used by the agency to provide this notice.[1] HBDC Response, Tab 3, at 1. We also note that the DFAS PGI provisions that HBDC relies on for establishing its “correct” mailing address do not apply to agency communications during the course of a procurement--by their terms they apply to contract award and contract administration matters. The use of a firm’s CCR information has never been established as a requirement when providing adverse action notices.

More importantly, our timeliness rules do not turn on whether an agency has sent information to a particular designated address; rather, we look to whether the relevant information was in fact received by the offeror. In this regard, our Office has previously held that actual notification to a company’s designated point of contact is not required to constitute notice under our Bid Protest Regulations, where notice is otherwise received by the firm. For example, in Jarrell-Ash Div., Fisher Scientific Co.--Reconsideration, we held that notice of rejection of a proposal was effective on the date it was received at the company’s sales office address, even where the sales office address was not designated in the firm’s proposal, and was not the address of the individuals who prepared the proposal. Jarrell-Ash Div., Fisher Scientific Co.--Reconsideration, B-209236.3, Dec. 21, 1982, 82-2 CPD ¶ 562 at 3.

Here, it is beyond dispute that the Air Force sent the notice of exclusion, via certified mail, to HBDC’s designated contracts manager at an address set forth on numerous proposal documents submitted by HBDC--including a revised proposal cover letter signed by the contracts manager--and that receipt of the notice on November 4 is confirmed by an HBDC employee’s signature on the certified mail return receipt.

Accordingly, there is no basis for HBDC to claim that the Air Force caused the delay here. That it took HBDC 11 days to route the notice of exclusion to the appropriate person does not toll the filing deadline imposed by our regulations, or the statutory deadline to request a required debriefing.[2]

In this regard, Our Bid Protest Regulations contain strict rules for the timely submission of protests. Under these rules, a protest based on alleged improprieties in a solicitation must be filed prior to bid opening or the time established for receipt of proposals, 4 C.F.R. § 21.2(a)(1) (2010), and all other protests must be filed no later than 10 calendar days after the protester knew, or should have known, of the basis for protest, whichever is earlier. 4 C.F.R. § 21.2(a)(2). Where a protester timely requests a required debriefing,a protest filed within 10 days of the debriefing will be considered timely with respect to bases known before or as a result of the debriefing. Id. An offeror excluded from further consideration prior to contract award may request a preaward debriefing, but must submit a written request to the contracting officer within three days after receipt of the agency’s notice of exclusion. Federal Acquisition Regulation (FAR) § 15.505(a)(1). An offeror that fails to submit its request to the contracting officer within three days after receiving notice of exclusion is not entitled to either a preaward, or post-award, debriefing.[3] FAR § 15.505(a)(3).

Accordingly, HBDC was required to request a debriefing within three days of its receipt of the Air Force notice on November 4, or, absent a debriefing, was required to file its protest no later than 10 days after that date.[4] Where HBDC did not timely request a debriefing, and failed to file its protest until 17 days after it was notified that its proposal had been excluded from the competitive range, the protest is untimely and must be dismissed.

By Christopher J. Castelli
December 22, 2011 at 1:51 PM

The Defense Department released a statement early this morning concerning the outcome of the U.S. Central Command investigation into the late November U.S. airstrike that left 24 Pakistani troops dead:

The investigation into the 25-26 November engagement between U.S. and Pakistani military forces across the border has been completed. The findings and conclusions were forwarded to the Department through the chain of command. The results have also been shared with the Pakistani and Afghan governments, as well as key NATO leadership.

The investigating officer found that U.S. forces, given what information they had available to them at the time, acted in self defense and with appropriate force after being fired upon. He also found that there was no intentional effort to target persons or places known to be part of the Pakistani military, or to deliberately provide inaccurate location information to Pakistani officials.

Nevertheless, inadequate coordination by U.S. and Pakistani military officers operating through the border coordination center -- including our reliance on incorrect mapping information shared with the Pakistani liaison officer -- resulted in a misunderstanding about the true location of Pakistani military units. This, coupled with other gaps in information about the activities and placement of units from both sides, contributed to the tragic result.

For the loss of life -- and for the lack of proper coordination between U.S. and Pakistani forces that contributed to those losses -- we express our deepest regret. We further express sincere condolences to the Pakistani people, to the Pakistani government, and most importantly to the families of the Pakistani soldiers who were killed or wounded.

Our focus now is to learn from these mistakes and take whatever corrective measures are required to ensure an incident like this is not repeated. The chain of command will consider any issues of accountability. More critically, we must work to improve the level of trust between our two countries. We cannot operate effectively on the border -- or in other parts of our relationship -- without addressing the fundamental trust still lacking between us. We earnestly hope the Pakistani military will join us in bridging that gap.

By John Liang
December 21, 2011 at 5:24 PM

The Pentagon recently issued a new instruction laying out its supply chain materiel management policy. According to the Dec. 14 memo:

a. DoD materiel management shall operate as a high-performing and agile supply chain responsive to customer requirements during peacetime and war while balancing risk and total cost. The DoD supply chain shall provide best-value materiel and services in support of rapid power projection and operational sustainment of U.S. forces as required by the National Military Strategy. Potential disruptions within and outside the DoD supply chain shall be identified, monitored, and assessed in order to mitigate risk to supply chain operations. Life-cycle management controls shall be applied to guard against counterfeit materiel in the DoD supply chain. Energy efficient products or services shall have preference in all procurements, except those products or services procured for combat or combat-related missions.

b. Resourcing for all elements of the DoD supply chain shall be optimized through collaboration between support providers and customers. DoD investment shall be sufficient throughout the life cycle of new or existing weapons systems, equipment, and major end items to respond to warfighter needs. Performance and cost evaluations of supply chain operations and inventory shall be conducted periodically with the objective of ensuring that assets are available for use or reuse in the DoD supply chain to satisfy customer requirements.

c. Accountability, control, and DoD-wide visibility of materiel shall be maintained throughout the DoD supply chain, with the required level of physical protection and identification of the materiel at minimal cost. However, the highest levels of accountability, control, visibility, protection, and identification shall apply to the stewardship of controlled inventory items (CII) including nuclear weapons-related materiel (NWRM) commensurate with the risk of materiel release. All materiel recurrently used, bought, stocked, or distributed, including NWRM, shall be cataloged with an accountable record.

By Jason Sherman
December 20, 2011 at 5:13 PM

The Pentagon yesterday announced a potential C-27J aircraft sale to Australia worth nearly $1 billion, a package that would include 10 fixed-wing cargo planes plus logistics support.

The Defense Security Cooperation Agency on Dec. 16 notified lawmakers of the potential foreign military sale for the aircraft and associated equipment, to include Rolls Royce engines, electronic warfare self-protection suites, radar, radios and mission planning systems, according to a Dec. 19 statement.

“The proposed sale will allow the Australian Defense Force (ADF) to improve its capability to meet current and future air mobility needs and humanitarian operations and disaster relief efforts in Southeast Asia,” the DSCA notice states. “The ADF retired its fleet of 14 DHC-4 Caribou aircraft in 2009 and will soon retire 12 C-130H aircraft. The proposed sale of C-27J’s will provide the capability needed to meet operational needs and emerging requirement. Australia will have no difficulty absorbing the C-27J and support into its armed forces.”

The U.S. Air Force plans to buy 38 C-27Js, which have been flown on missions in Afghanistan.

The prime contractor for the Australia deal, which DOD estimates will be worth as much as $950 million, would be L-3 Integrated Systems Group, Waco, TX. The aircraft is built by Alenia North America.

By John Liang
December 19, 2011 at 10:45 PM

Analysts at Wall Street firm Credit Suisse issued their 2012 outlook for the aerospace and defense sector. In it, they predict that commercial aerospace will outperform defense for the fourth consecutive year. Specifically on the defense sector, they write:

Defense Likely to be Dead Money:  While we do not believe that the failure of the Super Committee to reach an agreement will actually result in sequestration, we think Congress will use 2012 as a debating year. Consequently, we see the potential for much of the defense sector to be dead money in 2012, before underperforming from 2013 as cuts in the defense budget begin to come through. We view a falling defense budget as bad for defense prime margins as well as revenues, and consequently remain bearish on defense. We also note that 2012 is an election year. When looking at the previous 5 election years, it is found that the defense sector underperformed the market most in 1996, when a Democrat President was seeking re-election. This is similar to today, but today there is a less healthy economy, making it an even more bearish outlook for defense.

By Christopher J. Castelli
December 19, 2011 at 5:30 PM

There are "strong indications" that a North Korean missile test that preceded this weekend's announcement of the death of North Korean dictator Kim Jong Il was "preplanned" and not tied the dictator's death, a senior defense official told reporters today. The official declined to say whether the Pentagon anticipates North Korea will conduct more tests in the coming days.

Defense Secretary Leon Panetta, at home in California following a recent trip abroad, spoke this morning via phone for 15 minutes with the South Korean defense minister about the death of Kim Jong Il. Panetta conveyed "the strong commitment of the United States to peninsular stability and to our alliance," said Pentagon Press Secretary George Little, adding, "He made it clear that the United States stands with the Republic of Korea in this time of uncertainty."

Little said both men "agreed that it was critical to remain prudent with respect to all matters related to our security posture there, and pledged to keep one another informed in the coming days."

By Tony Bertuca
December 19, 2011 at 4:08 PM

General Dynamics announced today it has completed its tender offer to purchase all outstanding shares of common stock in Force Protection Inc., practically consummating the marriage between the two companies. “Force Protection will become a wholly owned subsidiary of General Dynamics as a result of the merger and will become part of General Dynamics Land Systems,” according to a statement from GD.

GD launched its effort to buy the armored vehicle maker on Nov. 18, following a Nov. 7 announcement that the companies had agreed to a merger. GD will pay $5.62 in cash for each single share of FPI, or $360 million.

“General Dynamics will now exercise a 'top up' option, as described in the Offer to Purchase, which will result in General Dynamics owning at least 90 percent of the outstanding shares of Force Protection,” according to the statement. “Once the top-up option is exercised, General Dynamics intends to complete a 'short form' merger under Nevada law.”

FPI, headquartered in Ladson, SC, was first incorporated in Nevada. As one of the earliest makers of mine-resistant trucks, the company enjoyed lucrative contracts during the Pentagon's rush to field Mine Resistant Ambush Protected vehicles in Iraq.

“The acquisition of Force Protection is expected to be accretive to General Dynamics’ earnings in 2012,” the statement reads. “In the merger, each remaining share of Force Protection common stock that was not validly tendered in the tender offer, other than shares owned by General Dynamics or Force Protection, will be canceled and converted into the right to receive the same $5.52 per share in cash that was paid in the tender offer.”

The companies say they expect the merger to be complete by the end of the year. "Once the merger is completed, General Dynamics intends to cause all shares of Force Protection common stock to be delisted from the NASDAQ Capital Market, and Force Protection will no longer have reporting obligations under the Securities Exchange Act of 1934, as amended,” according to the statement.

Meanwhile, FPI recently received $150 million in contracts for maintenance of its 3,000 Cougar MRAPs, a fleet of vehicles some analysts say made the company an attractive buy for GD.

By John Liang
December 16, 2011 at 7:43 PM

Wall Street analysis firm Credit Suisse isn't too bullish about the fiscal year 2012 defense appropriations conference agreement, which lawmakers hammered out last night as part of an omnibus spending bill. According to a just-released Credit Suisse research note:

*      Army Most Impacted Given OCO Reliance, but "Network" Capabilities Protected: The Army received $9B in RDT&E (-10% vs. request), $22B in Procurement (-12% vs. request), and $76B in O&M funding (-4% vs. request). Clear winners were communications and electronics, tactical wheeled vehicles, and support equipment. We believe part of the procurement cuts were as a result of the JTRS Manpack delay (GD/COL/BAE), JTRS GMR cancellation (BA), WIN-T delay (GD), and EMARSS cancellation (BA), all of which were previously known.

[UPDATE Dec. 21: Credit Suisse just issued an updated version of its research note, changing the EMARSS language to read: ". . . and EMARSS (BA) procurement funding which was zeroed out from the FY'12 request."]

*      Navy Seems to Weather the Storm Given Program Diversification; at least for the Short-Term:  The USN received $18B in RDT&E (-1% vs. request), $46B in Procurement (-4% vs. request), $46B in USN O&M (-1% vs. request), and $9B in USMC O&M (-2% vs. request). The winner in our view is shipbuilding which was fully funded (HII, GD). We believe cuts to aircraft procurement are partially a result of the presidential helicopter (VXX) manufactured by LMT, flat-lining of F-35 (LMT), and cuts to the weapons account appear to include AMRAAM and Standard Missile (both RTN).

*      Air Force Encounters the Least Turbulence Due to Size of Investment Accounts: The USAF appears to have the greatest resilience of the major services because of the sheer size of investment accounts, plus the ability of its large RDT&E account to absorb punishment to protect the critical procurement account. The service received $27B in RDT&E (-4% vs. request), $41B in Procurement (-2% vs. request), and $46B in O&M (-2% vs. request). In our view, the winner was the aircraft procurement account, with modest cuts to KC-46A tanker program (BA), F-22 upgrades (LMT), and the HH-60 recap (UTX). We believe the reduction in aircraft procurement is also partially attributable to the slowing of F-35 CTOL (LMT).

*      Our View: While the budget offers some modest short-term upside in RDT&E & procurement, the reality is the [Budget Control Act] is being enforced and DoD funding is being flat-lined. This leaves minimal opportunity for substantive growth unless one defense contractor can take work from another.

By John Liang
December 15, 2011 at 9:36 PM

The full Senate just passed the conference version of the fiscal year 2012 defense authorization bill by an 86-13 vote.

The House approved the conference report yesterday; the legislation now moves to the White House, where President Obama is expected to sign the bill into law by tomorrow.

By Christopher J. Castelli
December 15, 2011 at 9:04 PM

House Armed Services Committee Chairman Buck McKeon (R-CA) and other GOP colleagues today held a press conference to promote H.R. 3662, which they have named the "Down Payment To Protect National Security Act." The bill would delay sequestration by one year while also slashing the federal workforce by 10 percent over a decade, McKeon said, noting Defense Department civilians would not be exempt.

The workforce cuts would save $127 billion, enabling the Pentagon to avoid $55 billion in cuts while also sparing non-defense discretionary accounts from $55 billion in cuts and gleaning $17 billion for deficit reduction, according to McKeon. No Democrats have signed up to back the bill, he said, noting this is unlikely to happen given the president's threat to veto legislation that stops sequestration without slashing the federal deficit by $1.2 trillion.

The administration maintains that Congress "cannot simply turn off the sequester mechanism, but instead must pass deficit reduction at least equal to the $1.2 trillion it was charged to pass under the Budget Control Act," Defense Secretary Leon Panetta noted last month.