The Insider

Montana's two Democrat senators have introduced a stand-alone bill that would give the Defense Department long-term contracting authority to purchase aviation biofuels and synthetic fuels -- something the Pentagon has sought and the biotechnology industry is hailing as a way to provide financial certainty to investors backing biofuels production, sister publication Defense Environment Alert reports today:

The bill, S. 3807, was introduced by Sens. Max Baucus and Jon Tester Sept. 20. The bill would give DOD authority to enter into contracts for up to 20 years to purchase liquid synthetic or biomass-derived aviation fuels or fuel blends that are domestically produced, do not interfere with food stocks, and meet EPA renewable fuel standards, according to the legislation. Current law generally limits DOD to signing five-year contracts with one-year extension options.

DOD has been seeking to lengthen contract terms in order to propel private investments in renewable and alternative fuels for mobile uses. Earlier this year, the White House approved a DOD proposal to seek legislation in the fiscal year 2011 defense authorization bill that would allow for longer contracting authorities as a way to boost private sector investments in renewable and alternative fuels. But House lawmakers in their passage of the defense bill declined to fulfill the request, instead directing DOD to produce a report on whether existing contracting authorities are adequate. The Senate has not yet completed work on its version of the defense bill, with plans to take up the bill on the floor again after the November elections.

Long-term contracting authority would allow developers of alternative and renewable fuels to point to long-term contracts with DOD as a way to persuade financial institutions to support loans for developing facilities to produce the fuels. Brent Erickson, with the Biotechnology Industry Organization, said in a Sept. 23 press statement that such a measure could provide the needed certainty for leading companies and investors to provide capital for large-scale biofuel production. While advanced biofuel producers are already working with the military to test their fuels for aviation and other uses, "efforts to commercialize advanced biofuels have been hampered during the recent recession by lack of access to institutional funding," he said.

Sources with the Coal-to-Liquids Coalition could not be reached for comment on how the bill might aid coal-to-liquids (CTL) production. CTL has been controversial among environmentalists and some lawmakers because CTL emits significantly more lifecycle greenhouse gas emissions than fuels from petroleum if carbon capture technology is not used.

It was unclear at press time whether the bill, if passed, could revive a plan abandoned by the Air Force in 2009 to site a CTL fuel production facility at Malmstrom Air Force Base in Montana. A spokeswoman for Baucus' office did not respond by press time to questions on the issue.

The Air Force cited operational concerns and worries over security when it backed out of the plan. The project, the brainchild of Bush-era officials who have since left the Air Force, had been under review for some time, but it courted controversy because of the questionable environmental credentials of CTL fuels and possible related legal difficulties stemming from a requirement in a 2007 energy law that bans the federal government from using fuels with lifecycle greenhouse gas emissions higher than those of conventional petroleum.

InsideDefense.com reported in July about a new study by retired admirals and generals that urged the Pentagon to play a leading role in the development and testing of clean energy technology and forge a new partnership with the Energy Department -- just as the two departments are poised to announce tighter ties:

The report, titled "Powering America's Economy: Energy Innovation at the Crossroads of National Security Challenges," states that the Defense Department's size, energy consumption and innovation track record would enable it to "provide the testing ground and the economies of scale necessary to begin the innovation that could ultimately change the course of the country."

The study is slated for release by the CNA Military Advisory Board July 27, hours before Navy Secretary Ray Mabus and Energy Secretary Daniel Poneman and other senior administration officials are scheduled to participate in a White House forum on clean energy and energy security. The same day, DOD and DOE will also sign a memorandum of understanding on these issues, an industry source said.

The CNA study calls on the defense and energy secretaries to ensure the departments closely align their research and development work, funding and "intellectual capital."

We mentioned it in this morning's INSIDER, but in case you missed it, DefenseNews ran a story today about the Pentagon's reshuffling of its information technology efforts:

The Pentagon's top high-tech directorate will officially close its doors next March, according to a Defense Department memo that describes how its surviving functions and personnel will be split among four other DoD entities.

Robert Rangel, a senior aide to Defense Secretary Robert Gates, has tapped Gen. James Cartwright, Joint Staff vice chairman, and Christine Fox, director of DoD's Cost Assessment and Program Evaluation, with overseeing a process that will culminate with the shuttering of the Pentagon's Networks and Information Integration (NII) directorate on March 31, 2011.

Closing NII is part of Gates' push to eliminate $101 billion in unnecessary organizations and costs and transfer those savings to weapon programs over five years. He also wants to shutter U.S. Joint Forces Command (JFCOM), the Pentagon's Business Transformation Agency and the Joint Staff's Command, Control, Communications, & Computer Systems (J6) directorate. The Business Transformation Agency and the networks and information shop both are part of the Office of the Secretary of Defense.

Sound familiar? That's because InsideDefense.com reported it a couple weeks ago:

Defense Secretary Robert Gates intends to disestablish the major Pentagon offices that handle computer networks by transferring many of their functions to the Defense Information Systems Agency and other organizations, according to a recent memo issued as part of Gates' Pentagon efficiency initiative.

The Sept. 1 memo tasks the vice chairman of the joint chiefs of staff and the director of the cost assessment and program evaluation (CAPE) shop with leading the working group that develops the implementation plan to disestablish the assistant secretary of defense for networks and information integration (NII) and the Joint Staff's J6 function, both of which deal with enterprise information technology and hardware issues.

House members are expected to unveil legislation this week aimed at tackling the perennial issue of interagency reform. While most officials would agree the U.S. government must do a better job working in concert to solve today’s national security problems, they'd likely also concede there's been little progress toward that goal. Members of the Project on National Security Reform, who have been developing solutions since 2006, thought a breakthrough was afoot when newly elected President Obama picked Jim Jones and other experts affiliated with the group to serve in top national-security related slots. But with two wars going on and an economic crisis ravaging the country, interagency reform was unable to rise to the top of the new administration's agenda.

The effort could get a new boost this week, as House Armed Services Committee Chairman Ike Skelton (D-MO) and Rep. Geoff Davis (R-KY) are slated on Thursday to unveil a bill to "overhaul interagency national security coordination," according to an statement from Skelton's office. The lawmakers view the legislation as "the largest reform since the 2004 reorganization of the intelligence community," the statement reads.

The White House this week nominated Lt. Gen. Larry James to succeed retired Lt. Gen. David Deptula as the new chief of the Air Force's intelligence, surveillance and reconnaissance shop, according to a Sept. 23 Pentagon announcement. James will leave his current post as the commander of 14th Air Force at Air Force Space Command to assume the new A2 position. As the 14th Air Force chief, James was also dual-hatted as the commander of U.S. Strategic Command's Joint Functional Component Command - Space.

Maj. Gen. Susan Helms is slated to receive her third star and replace James as the head of the 14th and the JFCC-S. Prior to her nomination, Helms was the director of STRATCOM's policy and programs directorate (J5) at Offutt Air Force Base, NE.

The administration's announcement come on the heels of a major restructuring of the air service's senior leadership. As first reported by Inside the Air Force, those moves culminated in the nomination of Lt. Gen. Phillip Breedlove to become the Air Force's new vice chief of staff and Gen. Robert Kehler's selection to replace Gen. Kevin Chilton as the head of U.S. Strategic Command.

Deptula officially resigned his post as the A2 chief in August.

A story in today's Wall Street Journal highlights U.S. national security officials' concerns about China's control of certain minerals and metals that are used in a whole bunch of applications -- from jet fighter engines to flat panel displays:

China's control of a key minerals market has U.S. military thinkers and policy makers alike worried about access to materials that are essential for 21st-century technology like smartphones—and smart bombs.

The concern over supplies of so-called rare-earth elements was highlighted this week by a report that Chinese customs officials had blocked exports of the materials to Japan. On Thursday, Beijing denied those reports. "China doesn't block rare-earth exports to Japan," said Chen Rongkai, a spokesman for China's Ministry of Commerce.

At issue is a group of 17 metallic elements with magnetic properties suited for high-tech applications such as computer hard drives and digital cameras. Rare-earth elements are also key to "green" technology: Energy-efficient light bulbs use europium and yttrium, while hybrid car batteries and wind-power turbines use neodymium.

While rare-earth ore deposits are found around the globe, China's dominance in mining and processing the elements has raised alarms in Washington. According to an April 2010 Government Accountability Office report, China now produces approximately 97% of the world's rare-earth oxides, the raw materials that can be further refined into metals and blended into alloys that can be made into finished components.

Over the past year, China has imposed global export quotas on the elements. Its Commerce Ministry has said total exports for the year would be capped at just under 30,300 metric tons, down 40% from last year. Only 7,976 tons of that were allocated for the second half of this year. Experts say much of that has already been shipped.

That has spurred anxiety among government officials and industry executives. Delegations from the U.S., Germany, and Japan have implored Beijing to recognize how critical they consider sustained supply. . . .

The fiscal year 2010 defense authorization bill contains a provision that, if passed, would direct the Pentagon to address national security issues related to rare-earth materials in the defense supply chain. As Inside the Pentagon reported in June:

A congressionally mandated Government Accountability Office report on rare earth materials in DOD's supply chain, issued in April, said that current capabilities to process rare earth metals into finished materials (such as precision-guided munitions, lasers, communication systems and radar systems) are "limited mostly to Chinese sources" and bolstered vertical integration may "increase China's total market power and dominance."

As a result, the Senate Armed Services Committee wants DOD acquisition chief Ashton Carter to report to Congress on national security issues related to rare earth materials in the defense supply chain by March 15, 2011.

The report must include the steps that DOD has taken to identify and address national security risks due to the department's dependence on Chinese sources for rare earth materials and which DOD plans to take within the next two years to identify and address such risks, authorizers add. The DOD report should also indicate whether direct investment by the U.S. government is needed to minimize national security risks associated with an interruption of supply and when the department plans to have a comprehensive plan to deal with these risks, the committee states.

Last month, the Federation of American Scientists' Secrecy News blog highlighted a Congressional Research Service report on rare earth elements. According to the report:

The concentration of production of rare earth elements (REEs) outside the United States raises the important issue of supply vulnerability. REEs are used for new energy technologies and national security applications. Is the United States vulnerable to supply disruptions of REEs? Are these elements essential to U.S. national security and economic well-being?

There are 17 rare earth elements (REEs), 15 within the chemical group called lanthanides, plus yttrium and scandium. The lanthanides consist of the following: lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium. Rare earths are moderately abundant in the earth’s crust, some even more abundant than copper, lead, gold, and platinum. While more abundant than many other minerals, REE are not concentrated enough to make them easily exploitable economically. The United States was once self-reliant in domestically produced REEs, but over the past 15 years has become 100% reliant on imports, primarily from China, because of lower-cost operations.

In February 2009, a Pentagon board ruled that specialty metals are not materials critical to national security for which only a U.S. source should be tapped, eliminating a national security reason for the Defense Department to ensure a long-term domestic supply of such materials. As InsideDefense.com reported at the time:

John Young, the defense acquisition executive, submitted the finding to Congress in a Jan. 26 report mandated by lawmakers. The report followed a Dec. 12 meeting of the Strategic Materials Protection Board, chaired by Young and composed of representatives from the Office of the Secretary of Defense, the service acquisition executive offices and the under secretary of defense for intelligence.

The Strategic Materials Protection Board discussed and approved the definitions of strategic and critical materials proposed by the executive secretary during its meeting, the report states.

"As a result of the modified definition for critical materials, any material designated as critical will require a risk assessment and a strategy to ensure domestic availability," the committee explains.

The status of specialty metals used to make sensors, armored vehicles, satellites and other items has long been a congressional concern. The Fiscal Year 2007 Defense Authorization Act mandated the creation of the Strategic Materials Protection Board to oversee their use.

A year later, the FY-08 Defense Authorization Act directed the board to assess the extent to which domestic producers of strategic materials are investing in a sustained way in the processes, infrastructure, workforce training and facilities needed for the continued domestic production of such materials.

The Jan. 26 report concludes that the critical nature of a material is a function of its importance in DOD applications. It also assesses the extent to which department actions are required to shape and sustain the market and the impact and likelihood of supply disruption.

Looks like the Pentagon's operational test and evaluation office has rejoined the Internet age.

For most of the past decade, the Defense Department only released its annual OT&E reports via paper copy, which InsideDefense.com would then dutifully scan and post online.

Apparently, though, DOT&E has changed its tune, as the office's website now has posted every report from 1999 through 2009.

Not only that, DOT&E this week released its 19-page oversight list of the programs the office monitors. Some interesting entries in the last-page "notes" section, particularly for the KC-130J Harvest Hawk aircraft program:

Due to the unique nature of weaponizing this mostly logistics platform we are closely watching the specific challenges of the Hawk (HH) concept. HH should be contained in the KC-130J section of Annual Report.

Click here to read about some of the recent work DOD has been doing on its C-130 aircraft fleet.

As for the Three-dimensional Expeditionary Long-Range Radar program, the DOT&E oversight list has this note:

3DELRR -- add new programs: Armed Scout Helo (Army); Common Vertical Lift Support Platform (USAF); Hellfire (Army); Massive Ordinance Penetrator (USAF).

Army Gen. Keith Alexander, head of U.S. Cyber Command, made a claim today before the House Armed Services Committee that few of his combatant command counterparts could match: His "area of responsibility" has increased 400 percent over the last decade. In prepared remarks, he said:

In 2009 there were more than 1.8 billion Internet users, and 4.6 billion cellular subscribers; together they sent roughly 90 trillion e-mails. Cyberspace in that sense is "larger" than ever. And yet, at the same time, bandwidth is broader and search engines are more powerful than ever, and so in a different sense cyberspace has become "smaller," with more and more people able to interact with each other in real-time.