The Insider

Rep. Maurice Hinchey (D-NY), a member of the House Appropriations defense subcommittee, says he has secured more than $100 million in the fiscal year 2010 defense appropriations bill for the continuation of the mission systems work on Lockheed Martin's VH-71 presidential helicopter program. The funds are part of the conference agreement for the bill, he said in a Dec. 11 statement.

Earlier this year, Hinchey secured $485.2 million in the House's version of the bill, but Senate appropriators did not recommend any funds for the VH-71 program, which the Pentagon terminated this year. During the conference process, senators strongly resisted the House position, according to Hinchey.

"Although I was not able to achieve my complete objective, which was to fully continue all aspects of Lockheed Martin's Increment 1 presidential helicopter, this funding will save about 250 jobs in Owego that would have been lost without it," Hinchey said in a statement. "The funding included in the conference agreement will help ensure that $1 billion already spent to develop the necessary mission systems technology for the next presidential helicopter does not go to waste. The agreement ensures that the VH-71 remains a viable contender to replace the current fleet as the administration considers new options. I will continue to do all that I can to support this program this year and in next year's appropriations process."

The Defense Department expects to restart the acquisition process for the new presidential helicopter program next spring, stressing realistic requirements and improved affordability, Pentagon acquisition chief Ashton Carter said last month.

Thinking about getting into the unmanned aerial systems market? It may be tough -- but it can be done, according to a new analysis from Frost & Sullivan:

Defense companies that wish to claim a stake in the intensely competitive unmanned aircraft system (UAS) market will find the task challenging. Mature technologies, coupled with increasing consolidation, are making the UAS market a difficult space to enter. These challenges are not likely to hold back the market, especially with the Department of Defense's (DoD's) demand for UAS at an all-time high due to the ongoing war operations in Iraq and Afghanistan.

Additionally:

"By focusing on UAS subsystems, the U.S. defense industry will still be able to take advantage of a market space that is rapidly changing both technologically and competitively," says Frost & Sullivan Industry Analyst Lindsay Voss. "Six years after the onset of rapid UAS procurement, the U.S. DoD is still demanding more persistent intelligence, surveillance, and reconnaissance (ISR) assets in the air. This ensures growth in the UAS space while many other areas of aerospace and defense are contracting."

But while the "overwhelming demand for constant ISR from warfighters has kicked the UAS market into overdrive, stimulating dramatic growth for key UAS companies," don't think it will be an easy market to get into, the Frost & Sullivan statement reads:

New participants are not likely to find the going as easy as the entrenched competitors. Companies that could provide an 80 percent UAS solution ten years ago dominate the market today across all key platform categories. Market domination by well-established companies has already driven some participants out of the market and forced others to diversify their product and/or service offerings.

"Diversification is proving to be an important strategy as new market participants seek to be profitable in the UAS space," observes Voss. "Companies that are able to offer value to their military customers through current product offerings while expanding into key UAS market sub-segments are improving their competitive positions."

Inside the Pentagon had a UAS-related story in this week's issue:

JROC To Review ICDs For Air Force UAS Flight Plan, MQ-X In Early 2010
The Joint Requirements Oversight Council is slated early next year to review two key initiatives tied to Air Force efforts to bolster unmanned aerial system capabilities on the battlefield, a service official tells Inside the Pentagon.

Service officials expect to brief the JROC, which is headed by Vice Chairman of the Joint Chiefs of Staff Gen. James Cartwright, on the initial capabilities documents (ICDs) for its UAS flight plan and its next-generation UAS, dubbed MQ-X, according to the official.

“The MQ-X initial capabilities document, we are doing a little rewrite on that and take it back through,” the official said. “It will be the same timing as the flight plan ICD, and my guess ((is)) it will hit the JROC around February or March.”

Newly minted Army Lt. Gen. Michael Oates will take the helm of the Joint Improvised Explosive Device Defeat Organization on Dec. 30, according to JIEDDO spokeswoman Irene Smith. Oates is the former commander of the 10th Mountain Division (Light) and Ft. Drum, NY. He succeeds Army Lt. Gen. Thomas Metz, who is retiring.

Oates comes on board at JIEDDO as defense officials rethink their approach to countering IEDs. Defense Secretary Robert Gates last month established a department-wide IED task force of Defense Department leaders that could very well reassign some crucial authorities among the various organizations involved in keeping U.S. forces safe from the hidden bombs.

For Oates, those developments should make for an interesting job.

President Obama has nominated Sharon Burke to become the Defense Department's director of operational energy plans and programs, the White House announced today.

According to her bio as released by the administration:

Sharon E. Burke has had more than twenty years of experience as a national security and energy security professional, including service in the Federal government and non-profit organizations. Currently, she is a Vice President at the Center for a New American Security (CNAS), a Washington-D.C.-based national security research center. At CNAS, Ms. Burke focuses on "Natural Security," a program she originated that examines the national security implications of global natural resources supplies. In that capacity, she has published several studies on energy security and climate change. Previously, she served as a high-level advisor in the United States government, including as a Member of the Policy Planning Staff at the Department of State, a Country Director in the Department of Defense, and a speechwriter to the Secretary of Defense. She also worked in the Energy and Materials program of the U.S. Office of Technology Assessment. Ms. Burke graduated from Williams College and was a Zuckerman Fellow at Columbia University’s School of International and Public Affairs, where she focused on international energy policy and earned a Certificate of Middle Eastern Studies.

With the White House yesterday releasing its open government directive, the Defense Department today issued its own statement highlighting DOD's efforts to keep the public apprised if its activities.

Specifically, the Pentagon last week completed the transition from its old defenselink.mil home page to its new defense.gov home page.

Additionally:

The new Web site provides quick access to information that is most sought by Web site visitors, including DOD social media sites, the Pentagon Channel and DOD news stories. Prominent on the new home page is a new "We Want to Hear From You" that allows visitors to ask questions about the DOD and explore frequently asked questions and answers.

The site also includes an easy-to-use central listing of dozens of Web sites maintained by different offices of the DoD and the military services, listed both by topic and organization. The index is available at http://www.defense.gov/RegisteredSites/RegisteredSites.aspx , and makes it easy for the public to find information on topics ranging from military budgets and manpower to a database of defense-related imagery (photos and videos).

The past year hasn't been so bad for the aerospace and defense industry, according to Aerospace Industries Association CEO Marion Blakey.

"As with most sectors of our economy, the aerospace and defense industry has found the business climate in 2009 very challenging," Blakey writes in today's AIA "Daily Lead" newswire service. "But it is fair to say that A&D has proved its mettle by delivering generally positive results each quarter, with a year-end sales increase still projected. Industry leaders can take credit for applying hard-learned lessons of the past to build a solid foundation that is helping us weather a difficult period."

Blakey continues:

Many analysts believe we will be faced by flat or declining defense aerospace R&D and procurement funding in the coming year, despite the new Defense Department team's recognition of industry's increasing concerns about the defense industrial base. Obtaining adequate funding for the Next Generation Air Transportation System and our manned space program are important, yet uncompleted, priorities.

However, long overdue initiatives to modernize the export control system will enhance interoperability with our allies and make us more competitive. And the first-ever National Aerospace Day Sept. 16 successfully highlighted the contributions of our industry to our economy and national security and put a face on the 844,000 workers who contribute day-in and day-out to make us strong. The tagline of our advocacy outreach says it all simply, but eloquently: Aerospace and Defense – the Strength to Lift America.

Shaun McDougall, international military markets analyst for Forecast International, isn't as optimistic, however.

In a press release today, FI announces:

After years of unprecedented growth, the pace of overall U.S. defense spending appears to have reached a plateau, and will likely commence a steady decline in the coming years. That is not to say that the Pentagon's base budget is due for major cuts in the near term, however. Rather, the basis for this anticipated downturn is a shifting security environment overseas, particularly in Iraq.

Indeed, of the total funding obligated for military operations overseas since 2001, over 76 percent was spent in support of Operation Iraqi Freedom (OIF). The U.S. now has an exit strategy in place, and plans to remove its combat forces from Iraq by August 2010, and all remaining personnel by 2011.

According to Forecast International's latest analysis of the U.S. defense market, "Redeploying U.S. assets in Iraq will be a complex and costly process, and the need to repair or replace equipment damaged or lost in theater will only add to the near-term investment. Nevertheless, the report adds that as combat operations wind down and troops leave Iraq by the thousands, the overall financial burden on the U.S. will slowly begin to ease.