The Insider

C-27Js for Australia
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.

'Dead Money'
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.

Missile Alert
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."

Tendered
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.

Bearish Appropriations (Updated)
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.

Authorized
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.

GOP Defense Bill
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.

'Corroding Hanger Queens'
By Jason Sherman
December 15, 2011 at 8:19 PM

Sen. John McCain, in a speech prepared for the Senate floor highlighting flaws in the Pentagon's acquisition practices, said today that the Air Force's F-22As -- marquee assets that have yet to see combat -- “may very well become the most expensive corroding hanger queens ever in the history of modern military aviation.”

McCain, ranking member of the Senate Armed Services Committee, did not actually deliver those remarks as he skipped over parts of his prepared text while his allotted time to speak in the chamber expired.

Before offering that pithy summation of the F-22 program, McCain -- a former Navy pilot – walked through through the history of the Raptor program, which he said will eventually cost $67.3 billion and deliver 186 new fighters.

Another example of how flawed the Pentagon’s weapons procurement process is can be found in the F-22 RAPTOR program.  When the Pentagon and the defense industry originally conceived of the F-22 in the mid-1980s, they intended it to serve as a revolutionary solution to the Air Force’s need to maintain air superiority in the face of the Soviet threat during the Cold War. The F-22 obtained “full operational capability” twenty years later -- well after the Soviet Union dissolved.  When it finally emerged from its extended testing and development phase, the F-22 was recognized as a very capable tactical fighter, probably the best in the world for some time to come. But, plagued with developmental and technical issues that caused the cost of buying to go through the roof, not only was the F-22 twenty years in the making, but the process has proved so costly that the Pentagon could ultimately afford only 187 of the planes -- rather than the 750 it originally planned to buy.

Unfortunately, the F-22 also ended up being effectively too expensive to operate compared to the legacy aircraft it was designed to replace.  It also ended up largely irrelevant to the most predominant current threats to national security -- terrorists, insurgencies, and other non-state actors. In fact, if one were to set aside the F-22’s occasional appearances in recent big-budget Hollywood movies where it has been featured fighting aliens and giant robots, the F-22 has to this day not flown a single combat sortie -- despite that we have been at war for 10 years as of this September and recently supported a no-fly zone in Libya.

Politically engineered to draw in over 1,000 suppliers from 44 states represented by key Members of Congress and, by the estimates of prime contractor Lockheed Martin, directly or indirectly supporting 95,000 jobs, there can be little doubt that the program kept being extended far longer than it should have been -- ultimately to the detriment to the taxpayer and the warfighter.  As such, it remains an excellent example of how much our defense procurement process has been in need in reform. We may fight a near-peer military competitor with a fifth-generation fighter capability someday, but we have been at war for 10 years and until a few months ago had been helping NATO with a no-fly zone in Libya.  And, this enormously expensive aircraft sat out both campaigns.

Moreover, as a result of problems with its OBOG (On-Board Oxygen Generating) system, which has caused pilots to get dizzy or, in some cases, lose consciousness from lack of oxygen, on May 3, 2011, the Air Force grounded its entire fleet of F-22s. While this grounding was lifted earlier this year, exactly why F-22 pilots have been experiencing hypoxia remains unknown -- but similar unexplained incidents continue.

And then, there is the issue of the sky-rocketing maintenance costs to the Air Force in trying to sustain a barely adequate “mission capable rate” for the F-22. Its seems that the “plug and play” component maintenance features that were supposed to reduce costs for the Air Force over the life cycle of the aircraft doesn’t really play well. And, each time a panel is opened for maintenance, the costs to repair the “low-observable” surface in order to maintain its stealthiness have made this critical feature of the aircraft cost-prohibitive to sustain over the long-run. Finally, it seems that the engineers and technicians designing the F-22 forgot a basic law of physics during some point of the development phase -- that dissimilar metals in contact with each other have a tendency to corrode. The Air Force is now faced with a huge maintenance headache costing over hundreds of millions of dollars-and-growing to keep all 168 F-22s sitting on the ramp from corroding from the inside out.

One thing is clear: because of a problem directly attributable to how aggressively the F-22 was acquired -- procuring significant quantities of aircraft without having conducted careful developmental testing and reliably estimating how much they will cost to own and operate -- the 168 F-22s, costing over $200 million each, may very well become the most expensive corroding hanger queens ever in the history of modern military aviation.

More Complex
By Jason Sherman
December 15, 2011 at 6:38 PM

Sen. John McCain (R-AZ) today cited the coming 50th anniversary of Eisenhower's farewell address, the Jan. 17, 1961 speech warning against the “acquisition of unwarranted influence . . . by the military-industrial complex,” in delivering a Senate floor speech on the many ways the former president's admonition has not been heeded.

The “military-industrial complex has become much worse than President Eisenhower originally envisioned:  it's evolved to capture Congress,” the ranking member of the Senate Armed Services Committee said. “So, the phenomenon should now rightly be called, the 'military-industrial-congressional' complex.”

The Arizona lawmaker outlined parts of this network of influence -- spanning the executive and legislative branches and encompassing the defense industry -- and said it props up unnecessary defense spending. McCain, a longtime critic of funding set aside in spending bills by lawmakers for projects in their home districts, called such earmarks “the currency of corruption.”

The movement of high-ranking Defense Department personnel to defense firms and vice versa is “another manifestation” of the military-industrial-congressional complex, McCain said, before turning his attention to how the Pentagon buys its largest weapon systems -- a $1.7 trillion portfolio.

To be clear, the military-industrial-congressional complex does not cause programs to fail.  But, it does help create poorly conceived programs -- programs that are so fundamentally unsound that they are doomed to be poorly executed.  And, it does help keep them alive -- long after they should have been ended or restructured. . . .

With the federal budget deficit having hit $1.3 trillion for the 2011 budget year and facing the fact that the defense budget will likely not grow to any significant extent in the near-term, we in Congress must be mindful of how the military-industrial-congressional complex can negatively affect decisions to buy and keep major weapon systems.

McCain discussed efforts under way to improve defense acquisitions, then enumerated programs with procurement issues that have led to rising costs: the F-35 Joint Strike Fighter, the Expeditionary Fighting Vehicle, the V-22 Osprey, the Space-Based Infrared System High, the Advanced Extremely High Frequency satellite, the Evolved Expendable Launch Vehicle, the Future Combat System, the Littoral Combat Ship, the F-22 Raptor and the DDG-100 Zumwalt Class Destroyer.

With his allocated speaking time running expiring, McCain skipped over many of the conclusions about how to improve procurement so the Senate could proceed to debating the fiscal year 2012 defense authorization bill. But the full version of his prepared remarks contains a lot more:

So, going forward, what can be done to prevent the havoc the military-industrial-congressional complex can wreak on how we buy major weapon systems?  Well, little can be done to disrupt the inherent biases of those who are the major forces in the military-industrial-congressional complex to maximize their own particular interests.  But, we can help the Department of Defense reform itself by developing a weapons procurement process that directly responds to the root causes of failure by, for example, starting programs on a solid foundation of knowledge with realistic cost and schedule estimates and budgeting to those estimates; locking in sufficiently defined requirements early; managing the cost, schedule and performance trade-space effectively to ensure that needed capability is procured within a fixed, reasonably short period of time; insisting on early and continued systems engineering; leveraging mature technologies and manufacturing processes; not procuring weapon systems that promise generational leaps in capability in a single bound; and definitely not doing so under cost-plus contracts.

We must also ensure transparency and accountability throughout, and use competition to encourage industry to produce desired outcomes and better incentivize the acquisition workforce to do more with less.  We should also embrace initiatives geared at making the government as skilled and knowledgeable a buyer as Industry is a seller.  With the right leadership, such approaches may help overcome the negative, pernicious effects of the military-industrial-congressional complex on how we buy major weapon systems.  And, given how tightly woven the military-industrial-congressional complex is into the fabric of our society and economy, this is all we can really hope for.

Only after implementing such an approach over a period of time and under the right leadership can one hope to see the most elusive of all behavioral improvements—enduring cultural change.  But, if achieved—and it most certainly can be—cultural change would be a powerful panacea to the “unwarranted influence” of the military-industrial-congressional complex in the defense procurement process.

Eying Guam
By Christopher J. Castelli
December 15, 2011 at 2:47 PM

Pentagon policy chief Michèle Flournoy released a statement Wednesday night concerning plans to shift Marines from Japan to Guam:

The United States is committed to Guam's role as a strategic hub, and to that end a U.S. Marine Corps presence in Guam remains an essential part of our Pacific strategy.

In fulfilling our regional commitments, we will continue to consult and coordinate with our allies and partners and stakeholders within the U.S. government - including Congress - to address concerns, while ensuring our forward presence in the region is geographically distributed, operationally resilient, and politically sustainable.

Within this context, we welcome the Government of Japan's assurances that it is preparing to move forward with the steps necessary for the Futenma Replacement Facility (FRF), specifically filing the necessary environmental impact statement by the end of the year. Progress on the FRF plan is necessary to build confidence about the viability of our realignment efforts.

We look forward to working with Congress on the critical elements to the realignment of our forces in Japan and Guam, which will result in a reduced number of Marines in Okinawa and a consolidation of our bases in Okinawa, both of which will lessen the impact in Okinawa. U.S. forces in Japan and Guam are also vital to our efforts to maintain a strong forward-deployed presence in the Pacific region.

Inside the Pentagon has some news this week on Guam:

House and Senate authorization conferees this week agreed to a Senate provision that would prevent the obligation or expenditure of funds to execute the realignment of Marine Corps personnel from Okinawa, Japan, to Guam until certain conditions are met.

But the final agreement, which follows a recent Pentagon appeal on the issue, also adds certain exceptions.

Meanwhile, the White House has been privately urging the Navy to defer the acquisition of land for the relocation project, according to guidance obtained by Inside the Pentagon.

This week's conference agreement for the fiscal year 2012 defense authorization bill urges the defense secretary to promptly provide lawmakers with a master plan, as well as a cost-mitigation strategy, for the realignment of forces to Guam. The provision calls for the Marine Corps commandant to provide lawmakers his preferred force lay-down for the U.S. Pacific Command area of responsibility. Also, the defense secretary would have to provide a master plan for the construction of facilities and infrastructure to execute the commandant's preferred force lay-down on Guam, including a detailed description of costs and a schedule for such construction.

In addition, the defense secretary would have to certify to Congress that "tangible progress" has been made regarding the related relocation of Marine Corps Air Station Futenma. The bill also calls for a federal plan detailing descriptions of work, costs and a schedule for completion of construction, improvements and repairs to the non-military utilities, facilities and infrastructure on Guam affected by the realignment of forces. The final version of the provision also requires the defense secretary to obtain a specific authorization for the use of appropriated funds in FY-12 to be used to construct or acquire public infrastructure on Guam.

Down Payment
By John Liang
December 14, 2011 at 10:24 PM

House Armed Services Committee Chairman Buck McKeon today introduced a bill that would "pay for the first year of sequestration cuts without doing serious harm to America's military," according to a just-released panel statement. "The bill holds to the spirit of the Budget Control Act  (BCA) and leaves total sequestration caps in place. The bill is co-sponsored by leading Republican members of the defense committees," the statement adds. The legislation is H.R. 3662, the "Down Payment To Protect National Security Act." The committee further states:

Last month's failure of the supercommittee to find $1.2 trillion dollars in savings over ten years triggered equivalent cuts in discretionary spending. America's military funding will be cut by $500 billion, compounded on the $465 billion already cut this year.

In addressing the perilous cuts facing the military, McKeon said, "America's military commanders have warned us that these cuts will cripple our ability to defend the nation.  After cutting almost $500 billion from defense, we are clearing a lot of waste, fat, and even muscle out of the military.  Going into sequestration cuts us to the bone.  It forces us to break faith with the men and women who have been at war for a decade now. We can and should have a national conversation about our role in the world and how our military is configured. That conversation should come before we cut the budget, not after."

The Down Payment To Protect National Security Act imposes a reduction of federal workforce by 10% through attrition and applies the savings to pay for one year of sequestration, for defense and non-defense categories.  A 10% reduction will be achieved over 10 years by only hiring one federal bureaucrat for every three who retire.

Unlike other sectors of the government, the Department of Defense must plan for personnel costs, weapons systems, and other operational needs years before they are needed.  Decisions that will impact the FY 13 budget are being made now.  Many of those decisions, like canceling procurement projects, separating troops, and closing facilities, are irrevocable.

"The coming political year is likely to be marked with gamesmanship and brinksmanship.  My bill gives Congress a shot at statesmanship.  Over half of the deficit reduction efforts to date have come out of the military," McKeon said.  "The troops simply don’t have any more to give. It is time we address our debt crisis sensibly, by literally shrinking the size of government.  At the same time, we will meet our commitment to saving $1.2 trillion over ten years.  That should be enough to persuade the Commander in Chief to put politics aside and protect our troops."

By The Numbers:

Defense Cuts Since 2011

·         2011 Gates Efficiencies: $178 Billion

·         BCA Tier 1 Cuts: over $465 Billion

·         Sequestration Cuts: Over $500 Billion

·         Sequestration Cuts for FY 13: $55 Billion

Down Payment On National Security Act

·         Savings Through 10% Attrition: $127 Billion

·         Available Funding for Defense: $55 Billion

·         Available Funding for Non-Defense Discretionary: $55 Billion

·         Available funding for Deficit Reduction: $17 Billion

Blakey On Sequestration
By John Liang
December 14, 2011 at 4:30 PM

Aerospace Industries Association CEO Marion Blakey thinks sequestration will ravage the aerospace and defense industry. In a year-end Q&A with SmartBrief, she said:

We believe the cuts will be devastating to our national security, economy and industry. With more than 1 million jobs at stake, our only option is to keep fighting. That means more rallies, more outreach to the press and ongoing efforts to educate policymakers and stakeholders across the country about the disastrous consequences of gutting the U.S. aerospace and defense industry. Aerospace and defense is Second to None and we intend to keep it that way.

When asked about the prospects for U.S. competitiveness in the international marketplace, she responded:

To preserve and expand on our industry’s historical export surplus (more than $51 billion in 2010) requires a level playing field. Adequate access to export financing and robust U.S. government advocacy for civil, space and defense exports are fundamental necessities. Implementation of the administration’s Export Control Reform initiative in 2012 will also be critical.

The lack of predictability, efficiency and transparency in the current licensing system has damaged our industrial base in many key sectors and hurts our national security and foreign policy cooperation with close allies and partners. Even with the best technology, our members tell us that they’ve lost business to international competitors, with small businesses being most impacted.

Clean Fuels
By Suzanne Yohannan
December 13, 2011 at 8:49 PM

Lawmakers conferencing the fiscal year 2012 defense authorization bill have decided to maintain a 2007 energy law provision that bans federal purchases of carbon-intensive alternative fuels, rejecting an attempt by the House to repeal the ban as it applies to the Defense Department.

The conferees' rejection of the House measure to block DOD compliance with section 526 of the energy law is referenced in the House-Senate conference report for the fiscal year 2012 defense authorization bill, released last night by the House Armed Services Committee. The House "recedes" in its attempt to exempt DOD from the section 526 alternative fuel procurement requirement, the conferees say in their final report.

Section 526 bars federal agencies from purchasing alternative fuels with higher greenhouse gas (GHG) emissions than conventional fuel. DOD is currently studying the lifecycle GHG emissions of fuels it purchases containing Canadian tar sands, in light of section 526 requirements.

But industry and other critics have sought to repeal the provision, charging it hampers demand for nonconventional fuels like tar sands, oil shale and coal-to-liquid fuels. Supplies of these fuels, especially Canadian tar sands, are expected to increase given two pipelines already approved by the State Department in recent years, and the possible approval of the controversial Keystone pipeline.

"Failure to repeal Section 526 will increase the nation's dependence on imported oil, while jeopardizing thousands of American jobs that depend on the continued flow of Canadian oil," the American Petroleum Institute (API) said in a press release earlier this year.

But earlier this year, former military officials publicly criticized the 526 repeal proposal, saying it would impede the military's move toward clean energy and maintain the military's reliance on oil and gas.

Rep. Adam Smith (D-WA), ranking Democrat on the House Armed Services Committee, opposed repeal during House floor debate last May on the defense bill. Section 526 bars "tax dollars from being used to purchase fuels that have a higher pollution emission than conventional fuels," Smith said. "As the largest federal agency, exempting DOD from 526 is a step backward in this effort."

The House sought to revoke section 526, as it applies to DOD, when it passed the defense bill in May. But the provision was rejected by the Senate Armed Services Committee earlier this year, with a committee spokesperson saying the panel lacked jurisdiction over the issue.

The conference report now goes to the House and Senate for votes on its final passage.

Sitting With The Big Boys
By John Liang
December 13, 2011 at 5:29 PM

National Guard Association of the United States President Gus Hargett is lauding the decision by House and Senate conferees to include language in the fiscal year 2012 defense authorization conference report that would allow the head of the National Guard to become a member of the Joint Chiefs of Staff.

In a statement released today, Hargett, a retired major general, says:

The passage of the fiscal 2012 defense authorization bill conference report last night brings the National Guard to the cusp of its greatest legislative victory in more than a century. Not since the Militia Act of 1903 created the modern, dual-mission National Guard have we seen approval of legislation that could have such a significant positive impact on our force.

But this is so much more than about giving the Guard a voice at the Pentagon by adding the chief of the National Guard Bureau to the Joint Chiefs of Staff. It's about ensuring our civilian leaders have access to expertise on the Guard's domestic-response capabilities in a crisis.

On this, the 375th birthday of the National Guard, we thank the conferees for honoring the will of the House and the Senate by keeping the fundamentals of National Guard Empowerment intact in their final report.

We also thank the principle sponsors -- Senator Patrick Leahy and Senator Lindsey Graham in the Senate and Representative Candace Miller and Representative Nick Rahall in the House -- for their support, their leadership and their determination. We know they were inspired by the daily sacrifice and service of our Guard men and women around the globe, and for that all who lead the National Guard are deeply humbled.

Presuming the House and Senate follow historic precedent and approve the conference report, I respectfully urge President Barack Obama to honor his 2008 campaign promise to us and with his stroke of a pen provide the National Guard with a seat at the table.

Conferees Agree
By John Liang
December 13, 2011 at 12:50 AM

House and Senate lawmakers this evening agreed on the conference report for the fiscal year 2012 defense authorization bill. Senate Armed Services Committee Chairman Carl Levin (D-MI) released the following statement:

For five decades, Congress has without fail passed an annual defense authorization act in the interests of protecting our nation and doing right by our troops and their families. The conference report we have just adopted gives us the opportunity to continue that unbroken line, and I am confident it will pass both houses with strong bipartisan support.

I want to thank my partner in the Senate, Senator McCain, as well as Chairman Buck McKeon and Ranking Member Adam Smith, for their extraordinary hard work and cooperation. Assisted by staffers who have worked way beyond the call of duty, we have demonstrated that even at a time of political polarization, and even when dealing with complex and sometimes controversial issues, members of Congress can come together to legislate and do our duty to the people we serve.

Our primary responsibility, this and every year, is to pass a bill that provides for the national defense, ensures that our troops and their families are cared for, and delivers maximum value for taxpayers’ hard-earned dollars.

This agreement authorizes $662 billion for national defense discretionary programs, which is $26.6 billion less than the budget request. That includes $23 billion less than the base budget request, $2.4 billion less than the overseas contingency operations request, and $1.1 billion less than the Department of Energy’s request for national security programs. It includes a 1.6 percent pay raise for all members of the uniformed services and authorizes more than 30 types of bonuses and special pays to encourage enlistment and re-enlistment.

The detainee provisions have generated a great deal of discussion. There were ample assurances in the Senate bill that there would be no interference with civilian interrogations and law enforcement. Those provisions:

* Left it to the president to determine who is connected to al Qaeda and therefore subject to presumed military detention;

* Provided that those procedures not interfere with ongoing intelligence, surveillance or interrogations by civilian law enforcement;

* Left it to the executive branch to determine whether a military detainee is tried by a civilian or military court;

* Gave the executive branch broad waiver authority.

However, to address the perception of some that the Senate bill somehow constrained civilian law enforcement, the conference report provides a number of additional assurances that there will be no interference with civilian interrogations or other law enforcement activities:

* We have added language that says:

'Nothing in this section shall be construed to affect the existing criminal enforcement and national security authorities of the Federal Bureau of Investigation or any other domestic law enforcement agency with regard to a covered person, regardless of whether such covered person is held in military custody.'

* We have changed the title of the section in question from ‘Requirement for Military Custody’ to 'Military Custody for Foreign al Qaeda Terrorists.'

* We have changed the waiver provision so that waiver authority now rests with the president, rather than the secretary of defense.

* And we have changed language that protects interrogations to make clear that it is civilian interrogation generally that is protected from interruption, and not just a single interrogation session.

Conferees adopted Senate language bill language making clear that we are not modifying existing law on the issue of who is an enemy combatant. Existing law on transfer of Guantanamo detainees to foreign countries is maintained, but with added flexibility for the executive branch in the form of a waiver. And existing law on transfer of Guantanamo detainees to the United States is maintained for another year.

After a decade of war against al Qaeda and its affiliates under the Authorization for the Use of Force of Sept. 18, 2001, it is long past time to provide a statutory basis relating to military detention under that authorization.

There are some other major accomplishments of the bill. The conferees have adopted the Senate’s strong provisions applying sanctions against Iran’s Central Bank virtually intact. Provisions from the Senate bill included in the conference report give us confidence that sanctions will not result in a windfall for Iran through increases in the price of oil. At the same time, these provisions will add major pressure on Iran to end its quest for nuclear weapons.

The conference report also includes the strong Senate provisions relating to counterfeit electronic parts in the defense supply chain. The Senate Armed Services Committee’s investigation revealed a flood of counterfeit parts, overwhelmingly traceable to China. That flood endangers our national security, threatens the safety of our troops, wastes taxpayers' money and costs American jobs. This legislation will help stem that tide.

The conferees have also adopted Senate language reauthorizing the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (SBTT) programs. These programs are important for the health of small business and for our ability to grow the economy through innovation. And they are important for our national security. The Department of Defense is the largest user of these programs, and innovations that they produce have made significant contributions to our defense.

Finally, the conference report contains no earmarks.