The Insider

House lawmakers today passed the fiscal year 2012 intelligence authorization bill by a 384-14 vote. As a committee statement reads:

The passage of the FY-11 Intel Authorization Bill marked the first time since FY-04 a complete Intelligence Authorization Bill was enacted, and today's House passage [of the FY-12 bill] marks a commitment to returning to the normal business of oversight of the Intelligence Community.

The bill "provides oversight and authorization" for the following intelligence activities, according to the statement:

* Global counter-terrorism operations, such as the one that took out Osama bin Laden;

* Tactical intelligence support to combat units in Afghanistan and Iraq;

* Cyber defense by the National Security Agency;

* Court-ordered wire taps against terrorists and spies;

* Detecting and countering the proliferation of weapons of mass destruction;

* Designing, launching and operating of spy satellites;

* Global monitoring of foreign militaries, weapons tests, and arms control treaties;

* Real-time analysis and reporting on events such as the unrest in the Middle East; [and]

* Research and development of new technology to maintain our intelligence agencies' technological edge, including work on code breaking and spy satellites.

In a separate statement, House Speaker John Boehner (R-OH) lauded the bill's passage:

This important measure ensures the men and women of our intelligence community have the tools, the authorities, and the resources needed to keep America secure, today and in the future. The threats against our nation and the American people haven't ebbed -– rather, as events around the world continue to show, the need for a robust intelligence community that enhances our national security is as critical as ever. I'm hopeful the Senate will quickly pass this measure and send it to the president's desk for his signature.

That presidential signature, however, comes with a caveat. In a Sept. 7 statement of administration policy, the White House announces that if the bill "includes, but does not adequately address, the specific provisions of the Senate classified annex," the president's senior advisers would recommend a veto.

The Pentagon has begun to assess whether its "should-cost" goals are being met. As Inside the Pentagon reports this morning:

It is too early to tell whether weapons programs working to implement the Pentagon's should-cost policy -- a key element of the Defense Department's better-buying-power initiative -- are successfully meeting challenging targets for affordability, according to a DOD official.

"What we're seeing with the should-cost policy is the ink is still a little wet," said the acquisition directorate's deputy director of program acquisition and strategic sourcing, Stuart Hazlett. "I think the should-cost is excellent, but as you get into it, the goal for your particular program . . . it's not just are those goals achievable but are they challenging you enough," Hazlett said in a brief interview. "They've got to be stretched goals."

Hazlett said that as DOD director of pricing Shay Assad and his team review data from program officers, they are seeing programs establishing "the right kind of goals." But "the proof is in the pudding," he added. "I've heard senior leaders say, 'We've already got it,' but, OK, then start today or the next."

Earlier this week, Inside the Navy reported that service officials have begun identifying and working toward "should-cost" goals for their programs under a new directive from Navy acquisition chief Sean Stackley as the service seeks to squeeze out savings wherever it can. Further:

Stackley, in a July 19 memo titled "Implementation of Should-Cost Management," states that all programs falling under acquisition category (ACAT) I through III should establish a "will-cost" and "should-cost" estimate. The former will be the baseline cost estimate for the program, whereas the latter "will identify specific, discrete and measurable actions or initiatives that achieve savings against the will-cost estimate," the memo states.

ITN interviewed BJ White-Olson, deputy assistant secretary of the Navy for management and budget, for that story:

The directive stems from Pentagon acquisition czar Ashton Carter's "better buying power" initiatives unveiled last summer, one of the pillars of which was a target affordability and controlled cost growth push toward will-cost and should-cost management, White-Olson said in an Aug. 31 interview. A subsequent memo late last year provided more specific guidance to the service acquisition executives on how to establish such goals beyond major ACAT I acquisition programs, leading to Stackley's memo.

Individual program managers will be tasked with coming up with should-cost goals based on their knowledge of their programs, and there is no penalty if they fail to meet them.

"There are no targets given to program managers," White-Olson said. "It's up to them to identify where they believe they can drive the savings out."

Asked what the program manager's incentive is to achieve savings, she said she believed program managers would want to exercise due diligence and seek to "get the most value for our dollar and . . . bring the savings back to the department so they can look at other programs."

For more on our past coverage of the "should-cost" issue, check out these stories:

• Assad To Advise Major Programs In New Pricing Role
• Affordability Trumps 'Should-Cost' Goals In Early Weapon Development
• Navy Program Managers Setting 'Should-Cost' Goals To Achieve Savings
• Increased Focus On Pricing Prompts DOD To Give Assad New Role
• PM: Ground Combat Vehicle Already A 'Should-Cost' Model Program
• DOD Considers Shifting 'Should Cost' Savings To Meet Urgent Needs
• DOD Plans Pilot Programs On New Funding Approach For Weapons

The Defense Intelligence Agency recently published a new strategic plan outlining the way it will do its job over the next five years.

"The DIA 2012-2017 Strategy is to strengthen and unite the agency's core defense intelligence capabilities to best support warfighters and policymakers in an era of persistent international conflict and enduring U.S. fiscal challenges," the document states, adding: "The strategy's theme is One Mission - One Team - One Agency. One Mission, cleanly nested in all-source defense intelligence, is accomplished by One Team, operating as an integrated, agile, and results-oriented force within One Agency, performing as a critical member of the Defense Intelligence Enterprise and committed to excellence in defense of our Nation."

The agency plans to implement its strategy via four main principles, according to the document:

*    Work together as one team within an operational environment that fosters trust, unity of effort, diversity, integration and transparency, adaptability and mental agility, and close proximity to the customers of DIA's output.

*    Focus DIA on its mission-essential capabilities by pursuing efficiencies at every level, including centralized planning with decentralized implementation, aggressive and adaptive restructuring, and redirecting resources to priority mission areas.

*    Grow stronger by leading or joining U.S. whole-of-government efforts to leverage interagency information, expertise, and capabilities, while strengthening and forging stronger partnerships with academia, the private sector, and international partners.

*    Apply performance management to maximize individual, team, and organizational performance to ensure DIA services and products are timely and relevant to customer needs, and hold the workforce accountable for their actions and job performance based on measurable outcomes.

DIA plans to "fundamentally shift its intelligence operations mindset and business practices from focusing on the last war to preparing for the highly complex and uncertain future" in "tangible ways," according to the document. Further:

DIA's core mission resides in four intelligence competencies: all-source analysis; counterintelligence (CI); human intelligence (HUMINT), and measurement and signature intelligence (MASINT). Primarily focused on foreign military and defense-related matters, DIA will:

1.    Provide strategic warning and integrated risk assessment.

2.    Plan and direct defense intelligence activities for all-source analysis; collection management; intelligence, surveillance, and reconnaissance; HUMINT; CI; open source intelligence (OSINT); MASINT; technical collection; and international engagement.

3.    Collect information through HUMINT, CI, OSINT, MASINT, and technical means.

4.    Process and exploit information collected through HUMINT, CI, OSINT, MASINT, and technical means.

5.    Produce all-source intelligence analysis from all available collection means.

6.    Integrate and disseminate defense intelligence products and data.

The strategic plan acknowledges that "current and future adversaries will constantly adapt and seek new ways to challenge U.S. national security interests," and "calls for a more flexible, adaptive, and agile operational culture immersed in critical thinking. It further requires that DIA Officers thrive in an integrated and decentralized structure, embrace civilian-military integration and information sharing, be willing to accept risk, and foster proficiency to adapt operations based on a continuous assessment of the situation."

The August congressional recess hasn't stopped lawmakers from pressuring the Defense Department to continue developing the F-35 Joint Strike Fighter, despite program delays and cost increases.

In an Aug. 31 letter to Defense Secretary Leon Panetta, Sen. Saxby Chambliss (R-GA) calls on Panetta to "fully commit to the expeditious fielding of the F-35 and forego procuring any additional 4th-generation fighter aircraft such as the F-18E/F which will be of limited to no value in any future threat scenario."

Yesterday, Inside the Pentagon reported that Deputy Defense Secretary William Lynn had turned down a plea made by nine senators to reconsider the termination of the second engine for the JSF:

In an Aug. 23 letter, Lynn writes that continuing a competitive acquisition strategy for the fighter's engine does not make sense, even when taking into account General Electric and Rolls Royce's offer to "self-fund" more than $100 million of the development costs for their F136 engine, which the department terminated earlier this year.

Lynn's letter is a response to an Aug. 2 letter sent to Defense Secretary Leon Panetta by Sens. Jim Webb (D-VA), Rob Portman (R-OH), John Kerry (D-MA), Richard Lugar (R-IN), Patrick Leahy (D-VT), Scott Brown (R-MA), Sherrod Brown (D-OH), Dan Coats (R-IN) and Mark Warner (D-VA).

The senators asked Panetta to review the termination decision and to "take no action" on the disposition of government property acquired under the F136 development contract until the fiscal year 2012 defense authorization bill is "fully debated" and passed by the Congress. But Lynn notes that the Pentagon's Cost Assessment and Program Evaluation shop concluded that "the potential life-cycle cost savings from a competitive sourcing of engines does not provide a compelling business case for a second JSF engine."

"Given the austere fiscal environment and increasing pressure to cut future defense spending, it is difficult for the Department to justify making such an investment," Lynn writes.

The Pentagon remains unmoved by General Electric and Rolls Royce's proposal to "self-fund" further development of the F136 with more than $100 million of the contractors' own funds in FY-12. The department estimates that it would require $480 million in FY-12 to continue the development of the F136, Lynn notes.

This morning, Inside the Air Force reports that JSF program officials recently began to train both pilots and maintainers using classroom and ground exercises as well as test site visits, paving the way for flight training expected to begin in the next two months:

The F-35 has not yet received its formal airworthiness certification from the Air Force Aeronautical Systems Center, a certification that comes with a military flight release, according to Marine Corps Col. Art Tomassetti, the vice commander of the 33rd Fighter Wing at Eglin Air Force Base, FL, the site of the F-35 training program. That license to fly is expected this month, Tomassetti wrote through an Eglin AFB spokeswoman in an Aug. 30 statement to Inside the Air Force.

Once that and other certifications are granted by the Defense Department over the next two months, pilots in training will be allowed to begin practice flights, Tomassetti said. Those are expected to begin in the fall. In the meantime, the two JSF aircraft that have been at at Eglin since July -- Air Force variants known as AF-8 and AF-9 -- are being used primarily for maintenance training.

"Small group tryouts for government maintenance training started in August," Tomassetti wrote. "A handful of maintainers focused on running through the course material needed to teach fuels and avionics. We are also completing installation in our new facilities, ensuring training, support equipment, Autonomic Logistic Information System (ALIS) and personnel are in place."

A State Department official briefed attendees of an international meeting in New York today called the "High Level Workshop Against Nuclear Tests -- From Here to 2015: Meeting the Targets of the NPT Action Plan."

During her briefing, Deputy Assistant Secretary of State for Arms Control, Verification and Compliance Marcie Ries had the following to say about the Comprehensive Test Ban Treaty, including tidbits about some upcoming studies due out soon:

The United States is committed to pursuing U.S. ratification of the Comprehensive Nuclear Test-Ban Treaty (CTBT) and to its entry into force at the earliest possible date. Entry into force of the CTBT is an essential step toward the peace and security of a world without nuclear weapons. While the United States abides by the core prohibition of the CTBT through our nuclear testing moratorium promulgated in 1992, the principal benefit of the Treaty -- that of constraining all states from testing -- still eludes us.

We have begun a deliberate and methodical process of engaging the U.S. Senate and the American public on the importance of the CTBT. Entry into force of the CTBT is an essential step toward the peace and security of a world without nuclear weapons, a vision articulated by the President when he spoke in Prague in 2009. Our recent experience working with the U.S. Senate to gain ratification of the New Strategic Arms Reduction Treaty – New START – with the Russian Federation has prepared us for what is expected to be an equally thorough and robust debate over the CTBT. We do not expect it will be easy or happen quickly, but we will work hard to make it happen.

The Administration commissioned a number of reports, including an updated National Intelligence Estimate and an independent National Academy of Sciences report to assess the ability of the United States to monitor compliance with the Treaty and the ability of the United States to maintain, in the absence of nuclear explosive testing, a safe, secure and effective nuclear arsenal so long as these weapons exist. A public version of the Academy’s report is expected to be released soon. These authoritative reports, together with others, will give the U.S. Senate a wealth of information to assist them in making a determination on the merits of ratification of the CTBT.

The Senate Armed Services Committee plans to hold a hearing to consider Pentagon acquisition chief Ashton Carter's nomination to become deputy defense secretary on Sept. 13, according to a panel statement issued this morning.

The hearing will be held at 9:30 a.m. in room 106 of the Dirksen Senate Office Building, the statement reads.

Carter has recently sought to dispel "understandable confusion" among Defense Department procurement officials about how and when to implement two policies central to the Obama administration's efforts to wring inefficiency and new savings from DOD's procurement process -- "should-cost" targets and  "affordability as a requirement."

In a two-page, Aug. 24 memo to DOD's acquisition community, Carter provides a brief tutorial on how -- particularly early in a program's life cycle -- to calibrate the two policies, both of which are designed to keep the focus on program costs. As InsideDefense.com reported last week:

"The two are compatible, but they must be balanced differently across the product life cycle," Carter writes. "The emphasis prior to milestone B [engineering and manufacturing development] should be on defining and achieving affordability targets. Past this point, the emphasis shifts to defining and achieving should-cost estimates."

The acquisition executive notes that these two policies "have come into conflict early in programs," particularly when affordability requirements are formulated to be in accord with service budget plans, yet when the program is not yet mature enough to clearly define should-cost estimates for future production.

Carter directs that during the early stages of product development, the priority should be on establishing affordability constraints. Should-cost policies, during that early phase, "should not keep us from making sound investments in product affordability," he directs.

Pentagon spokesman Col. David Lapan declined to comment this morning on the substance of the recommendations of the Commission on Wartime Contracting in Iraq and Afghanistan, which the panel previewed today in a Washington Post Op-Ed. The panel's report is due out this week, Lapan said, noting he had not yet seen it and he was unsure whether the panel provided a prepublication copy to the Pentagon. He said the department has been aware of contracting "deficiencies" and has been working to fix them.