The Insider

Senate Armed Services Committee Chairman Carl Levin (D-MI) this week sent a letter to Defense Secretary Robert Gates regarding the Wikileaks.org website's release of thousands of classified documents on the war in Afghanistan.

"Since classified information is, by definition, material that reasonably could be expected to cause damage to the national security if made publicly available, I am concerned about the nature and extent of the damage caused by the release of these documents and the steps that the Department of Defense is taking to address the problem," Levin wrote July 28.

Specifically, the senator wants to know the following:

1. What is the Department's assessment of the extent to which the documents disclosed on Sunday contain information that was not previously available in the public domain? In the Department's judgment, what are the most significant new disclosures resulting from the release of these documents?

2. What is the Department's assessment of the extent to which sources and methods were divulged as a result of the release of these documents?

3. Has the Department conducted a damage assessment to determine the extent to which individuals may have been put at risk, the enemy may have learned about our tactics and techniques, our allies may be less cooperative in the future, or we may have suffered other specific damage as a result of the release of these documents?  If so, what are the conclusions of that assessment?

4. What steps is the Department taking to identify the individual or individuals who released these documents and to prevent future leaks of this kind?

In a Pentagon briefing yesterday, Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said:

The sheer size and scope of the collection now demands a careful review to determine the degree to which future tactical operations may be impacted, and the degree to which the lives of our troops and Afghan partners may be at risk. And I think we always need to be mindful of the unknown potential for damage in any particular document that we handle.

Mullen then had a few choice words for Julian Assange, the editor of Wikileaks:

Mr. Assange can say whatever he likes about the greater good he thinks he and his source are doing, but the truth is they might already have on their hands the blood of some young soldier or that of an Afghan family. Disagree with the war all you want, take issue with the policy, challenge me or our ground commanders on the decisions we make to accomplish the mission we've been given, but don't put those who willingly go into harm's way even further in harm's way just to satisfy your need to make a point.

In an interview this morning on NBC's Today show, White House spokesman Robert Gibbs admitted the administration doesn't have much leverage with Wikileaks in stopping the organization from releasing another batch of classified documents:

Well, we can do nothing but implore the person that has those classified top-secret documents not to post any more. As you mentioned, what Admiral Mullen said -- and I talked to him about that yesterday when we had our meeting about Afghanistan and Pakistan -- and, look, you have Taliban spokesmen in the region today saying they're combing through those documents to find people that are cooperating with American and international forces to bring peace to Afghanistan. They're looking through those for names. And they said they know how to punish those people.

U.S. Joint Forces Command this week kicked off an annual intelligence, surveillance and reconnaissance interoperability exercise "that showcases emerging ISR capabilities, and provides vital lessons learned to improve joint and combined ISR interoperability to support warfighters at the tactical edge," according to a command statement.

Empire Challenge 10 runs from July 26 to Aug. 13, and "focuses on near-term capabilities that can be delivered rapidly to Afghanistan," the statement reads. "Requirements from Afghanistan will drive the event schedule, venues and scenarios, which are conducted through a combination of modeling and simulation, laboratory and live events."

The event itself is not limited to one location, according to a command fact sheet:

USJFCOM will host EC10 at Fort Huachuca, Ariz., and Naval Air Weapons Station China Lake, Calif., with locations at the Joint Intelligence Lab and Joint Systems Integration Center in Suffolk, Va.; the Combined Air Operations Center-X at Langley Air Force Base, Va.; service Distributed Common Ground/Surface System (DCGS) labs; coalition sites in the United Kingdom, Canada and Australia; and the NATO Consultation, Command and Control Agency in the Netherlands.

The fact sheet also lists the exercise's purpose and objectives:

EC10 Purpose

* Demonstrate and assess interoperability of the DCGS enterprise

* Evaluate sensor developers on data intake into DCGS and coalition ground station/enterprise

* Demonstrate and assess coalition interoperability

* Demonstrate and evaluate multinational data sharing

* Explore emerging ISR capabilities that can address warfighter requirements

* Explore joint and coalition ISR interoperability with command and control from national operations centers to deployed warfighters

EC10 Objectives

* Provide assessments of the DCGS enterprise, the capability-based interoperability of multinational systems, and the quality of intelligence support to command and control

* Enable a quick reaction capability and optimize the live-fly phase of EC

Defense Secretary Robert Gates' spokesman, Geoff Morrell, issued a statement responding to the House Appropriations defense subcommittee's decision today to add $450 million in its version of the Pentagon's fiscal year 2011 spending bill to fund the Joint Strike Fighter alternate engine program:

I don't know what more we can say or do to make clear that this is something we don't want, we don't need and we can't afford. However, despite today's vote, I can assure you Secretary Gates will do whatever it takes to make sure we don't continue to throw good money after bad in pursuit of the extra engine and he enjoys the full support of the president in that effort.

Rep. Jerry Lewis (R-CA), the subcommittee's ranking member who led the effort to support the F136 engine, issued a statement earlier today stating the panel would not be intimidated by veto threats:

There has been much debate on the issue of the second engine, but it all comes down to this: competition saves money. I truly believe that spending a little money today will save a great deal in the future. And, to the question of a possible veto by the president, I say that we cannot let fear and threats keep us from doing what we believe is right for the taxpayers and our troops.

The Pentagon earlier this month agreed to draft new policies that will guide future investments at private shipyards -- which have totaled nearly $2 billion over the last decade, according to a new Government Accountability Office report -- where Navy ships are built, according to Brett Lambert, the Pentagon's industrial policy chief.

In response to a congressional investigation that concluded the Navy lacks a coherent approach to how it allocates incentives to the U.S. shipbuilding industrial sector, Lambert in a July 9 memo said the Navy agreed with the GAO recommendation for such a policy:

The Navy agrees to issue guidance on the intended goals and objectives of investment incentives, criteria for using incentives, and methods for validating outcomes. When shipyard investment is considered, it is done as a part of a holistic approach to negotiating a contract. Recognizing that there is no one-size-fits-all approach for contract incentives, the Navy's guidance will provide direction to the program managers and contracting officers while preserving their flexibility to tailor investment incentives appropriate to their particular program needs.

The GAO, in its July 2010 report published yesterday, “Defense Acquisitions: Guidance Needed on Navy's Use of Investment Incentives at Private Shipyards,” concluded:

The Navy lacks policy to help ensure it achieves goals and objectives from providing facility and equipment investment incentives at private shipyards. Absent this policy, individual program offices and contracting officers make decisions about what type of incentive to use, desired return on investments, and what kinds of investments to support. Without policy, program officers and contracting officers use different methods to validate expected outcomes and safeguard the Navy’s financial support.

Lockheed Martin today announced net sales of $11.4 billion for the second quarter of 2010, up 3 percent over the $11.1 billion in the same period last year, according to a company statement. "Earnings from continuing operations for the second quarter of 2010 were $727 million, or $1.96 per diluted share, compared to $731 million, or $1.87 per diluted share, in 2009," the company said. "Cash from operations in the second quarter of 2010 was $1.2 billion, compared to $1.1 billion in 2009."

Chairman and CEO Bob Stevens said Lockheed "had strong second quarter financial results," and the company is "continuing to implement affordability initiatives that will enhance performance and lower cost, and our dedicated workforce is focused on meeting our commitments. Strategically, we decided to divest two units and realign others to strengthen performance over the long term. In the new reality of escalating demands and increasing constraints on resources, we continue to refine our portfolio of capabilities and services to provide the best, most affordable solutions for our customers, a secure future for our employees and value for our shareholders."

Among its individual business units, Lockheed reported the following:

Aeronautics:

Net sales for Aeronautics increased by 2 percent for the quarter and 4 percent for the first six months of 2010 from the comparable 2009 periods.  In both periods, sales increased in Air Mobility and declined in Combat Aircraft. The increase in Air Mobility primarily was attributable to higher volume on C-130J programs including deliveries and support activities. There were six C-130J deliveries in the second quarter of 2010 (compared to three in the second quarter of 2009) and nine in the first six months of 2010 (compared to six in the comparable period of 2009). The decrease in Combat Aircraft principally was due to lower volume on the F-35 System Development and Demonstration (SDD) contract, F-16 programs, including a decline in deliveries, as well as lower volume on F-22 and other combat aircraft programs. These decreases partially were offset by higher volume on the F-35 production contracts. There were five F-16 deliveries in the second quarter of 2010 (compared to eight in the second quarter of 2009) and 11 in the first six months of 2010 (compared to 16 in the comparable period of 2009). Other Aeronautics Programs sales were relatively unchanged between periods.

Operating profit for Aeronautics decreased by 7 percent for the quarter and 8 percent for the first six months of 2010 from the comparable 2009 periods.  In both periods, the decline in operating profit primarily was due to decreases in Combat Aircraft, which partially were offset by increases in Air Mobility and Other Aeronautics Programs. The decrease in Combat Aircraft’s operating profit primarily was due to the lower volume on the F-35 SDD contract, F-16 and F-22 programs as well as a decrease in the level of favorable performance adjustments on other combat aircraft programs in 2010 compared to 2009. These decreases more than offset increased operating profit resulting from higher volume and improved performance on F-35 production contracts. The increase in Air Mobility operating profit primarily was due to the higher volume on C-130J and other air mobility programs. The increase in Other Aeronautics Programs mainly was attributable to improved performance in sustainment activities and higher volume and improved performance on P-3 programs.

Electronic Systems

Net sales for Electronic Systems increased by 4 percent for the quarter and first six months of 2010 from the comparable 2009 periods. In both periods, sales increased in GT&L and Missiles &  Fire Control (M&FC) but declined in Mission Systems & Sensors (MS2). The increase at GT&L primarily was due to growth on readiness and stability operations and higher volume on simulation & training programs. The increase at M&FC primarily was due to higher volume on air defense and certain tactical missile programs, which partially were offset in the six month period by lower volume on fire control systems. The decrease at MS2 mainly was due to lower volume on ship & aviation systems and undersea warfare programs, which partially were offset by higher volume on surface naval warfare and radar system programs.

Operating profit for Electronic Systems increased by 2 percent for the quarter and 1 percent for the first six months of 2010 from the comparable 2009 periods. During the quarter, operating profit increased at M&FC and GT&L but declined at MS2. The increase at M&FC mainly was due to higher volume and improved performance on certain tactical missile programs and improved performance on fire control systems, which partially were offset by declines on air defense programs. The increase at GT&L primarily was attributable to higher volume on readiness and stability operations, which partially were offset by lower profitability on certain simulation & training programs in 2010. The decrease at MS2 primarily was attributable to lower volume and performance on undersea warfare system programs and lower volume on ship & aviation system programs, which partially were offset by higher volume and improved performance on radar system programs in 2010.

During the first six months of the year, operating profit increased at M&FC and GT&L but declined at MS2. The increase at M&FC mainly was due to higher volume and improved performance on certain tactical missile programs and higher volume on air defense programs. The increase at GT&L primarily was attributable to higher volume on readiness and stability operations, which partially were offset by the absence in 2010 of a benefit recognized in the first quarter of 2009 from favorably resolving a contract matter at simulation & training programs. The decrease at MS2 primarily was attributable to lower volume and performance on undersea warfare system programs, which partially were offset by higher volume and improved performance on radar system programs in 2010.

Information Systems and Global Solutions:

Net sales for IS&GS increased by 6 percent for the quarter and 3 percent for the first six months of 2010 from the comparable 2009 periods. In both periods, sales increased in Civil but declined in Defense and Intelligence. Civil increased principally due to higher volume on enterprise civilian services. Defense sales primarily decreased due to lower volume on mission and combat systems activities. Sales in Intelligence programs declined slightly mainly due to lower volume on security solutions, which partially were offset by higher volume in enterprise integration activities.

Operating profit for IS&GS increased by 6 percent for the quarter and decreased by 1 percent in the first six months of 2010 from the comparable 2009 periods.  During the second quarter, operating profit increased in Intelligence and Civil but declined in Defense. The increase in Intelligence programs mainly was due to improved performance on security solutions, enterprise integration activities and other intelligence activities. The increase in Civil was mainly due to higher volume on enterprise civilian services. The decrease in operating profit at Defense primarily was attributable to lower volume on mission and combat systems activities.

During the first six months of the year, operating profit increases in Civil and Intelligence were more than offset by a decline in Defense. The increase in Civil was mainly due to higher volume on enterprise civilian services. The increase in Intelligence programs mainly was due to higher volume and improved performance on enterprise integration and other intelligence activities.

The decrease in operating profit at Defense primarily was attributable to lower volume on mission and combat systems activities.

Space Systems:

Net sales for Space Systems increased by 1 percent for the quarter and first six months of 2010 from the comparable 2009 periods. In both periods, sales growth at Satellites and Space Transportation partially were offset by declines in Strategic & Defensive Missile Systems (S&DMS). The sales growth in Satellites primarily was attributable to higher volume in government satellite activities. There were no commercial satellite deliveries during the second quarter and first six months of 2010 or 2009. The increase in Space Transportation principally was due to higher volume on the Orion program, which partially was offset by lower volume on the space shuttle external tank program. S&DMS sales decreased mainly due to lower volume on defensive missile and strategic missile programs.

Operating profit for Space Systems increased by 9 percent for the quarter and 5 percent for the first six months of 2010 from the comparable 2009 periods.  Operating profit increased in all three lines of business during the quarter. The increase in Space Transportation mainly was attributable to higher volume on the Orion program, which partially was offset by lower volume on the space shuttle’s external tank program. Satellites’ operating profit increased primarily due to higher volume and improved performance on government satellite programs, which partially was offset by performance on commercial satellite programs. S&DMS operating profit increased mainly due to improved performance on strategic missile programs. Equity earnings represented 26 percent of operating profit at Space Systems in the second quarter of 2010, compared to 28 percent in the second quarter of 2009.

During the first six months of the year, operating profit increases in Space Transportation and S&DMS partially were offset by a decline in Satellites’ operating profit. The increase in Space Transportation mainly was attributable to higher equity earnings on the ULA joint venture and higher volume on the Orion program, which partially were offset by lower volume on the space shuttle’s external tank program. Satellites’ operating profit decreased primarily due to performance on commercial satellite programs and a lower level of favorable performance adjustments on government satellite programs in 2010 as compared to 2009. S&DMS operating profit increased mainly due to improved performance on strategic missile and defensive missile programs. Equity earnings represented 25 percent of operating profit at Space Systems in the first six months of 2010, compared to 22 percent in the first six months of 2009.

The monthly tab for the wars in Afghanistan and Iraq is running about $11 billion, a sum that is 11 percent below last year's $12.3 billion average, but could still climb as U.S. troop levels in Afghanistan climb, according to a new analysis of war costs by the Congressional Research Service.

Amy Belasco, a defense budget expert at CRS, calculates that the burn rate for operations through April -- seven months into fiscal year 2010 -- were $5.4 billion for Iraq and $5.5 billion for Afghanistan, in a July 16 report, "The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11." The report notes:

Congress is currently considering the FY2010 Supplemental request for an additional $36.6 billion for DOD and the State Department, largely to cover the cost of deploying 30,000 additional troops to Afghanistan that President Obama announced on December 1, 2009. Most recently, the House adopted an amended version on June 30th and the Senate passed its version on May 27th, 2010. Instead of a formal conference, the Senate is expected to revise the House version and send it back to the House, in a “ping pong” process, sometime in July.

If the pending FY2010 supplemental request is enacted, cumulative war costs would total $1.1 trillion including $751 billion for Iraq, $336 billion for Afghanistan, and $29 billion for enhanced security. By FY2010, Afghanistan would account for about two-thirds of the cost and Iraq one-third, a reversal of the previous year.

The Senate Armed Services Committee today announced several hearings scheduled to take place before the August recess.

On Tuesday, July 27 at 3:00 p.m., the committee will consider the nomination of Marine Corps Gen. James Mattis to become head of U.S. Central Command. Mattis is currently the head of U.S. Joint Forces Command. If confirmed, he would replace Gen. Stanley McChrystal, who is retiring today under a cloud of controversy following remarks he made in a Rolling Stone magazine article.

Earlier that day, the committee will continue its series of hearings on the follow-on Strategic Arms Reduction Treaty with testimony from Steven Pifer, a senior fellow and director of The Brookings Institution's Arms Control Initiative; independent consultants Franklin Miller and John Foster; and Keith Payne, chief executive officer and president of the National Institute for Public Policy.

On Aug. 3 at 9:30 a.m., the committee will hold a hearing on the Quadrennial Defense Review Independent Panel's report featuring testimony from panel co-chairs William Perry and Stephen Hadley.