The Insider

As much as the idea of social network analysis is en vogue in defense circles, officials at the Joint Improvised Explosive Device Defeat Organization still have a lot to learn in that department, according to the outfit's new boss.

Familial and tribal relationships in Afghanistan, for example, are “very, very foreign to most of us Westerners,” Army Lt. Gen. Michael Oates told defense bloggers today. “Fundamentally, our challenge with social networking in Afghanistan and in Iraq is still driven by significant cultural ignorance,” he said. “We have a long way to go.”

The assessment comes as U.S. coalition forces a face sharp increase in the number of IEDs planted on the roads of Afghanistan, Oates said. For JIEDDO, the point of using social network analysis techniques is to identify, track and neutralize individuals who are key in insurgent bomb emplacement operations.

Pentagon acquisition chief Ashton Carter just told the Senate Armed Services Committee that the F-35 Joint Strike Fighter will breach critical Nunn-McCurdy spending caps.

Defense Department Director of Cost Assessment and Program Evaluation Christine Fox said in prepared testimony that officials Nunn-McCurdy notification is expected by April 1 and certification should be complete by June.

Fox also just told lawmakers that F-35s will cost between $80 million and $95 million per copy using 2002 dollars. Back in 2002, the planes were expected to cost $50 million per copy.

In addition to Carter and Fox, Pentagon Director of Operational Test and Evaluation Michael Gilmore and DOD Acting Program Executive Officer for the Joint Strike Fighter Program Air Force Maj. Gen. Clyde Moore and Michael Sullivan from the Government Accountability Office are all testifying this morning.

An "interim" version of the Pentagon's 2010 Space Posture Review was signed today by a senior Defense Department official, according to Air Force space programs chief Gary Payton.

Payton told the Senate Armed Services strategic forces subcommittee this afternoon that officials from the office of the director of national intelligence have not yet approved the report. Once that is done, a copy will be made available to Congress, he added.

As Inside the Air Force reported in January, the service is conducting its own soup-to-nuts review of its space policies, programs and operations with plans to have a final slate of recommendations ready for review by Air Force Secretary Michael Donley by the end of the year.

Donley outlined the parameters and prime objectives of the review in a service-wide memo issued on Dec. 9, 2010, ITAF reported, adding:

Service officials have conferred with DOD regarding the ongoing Air Force review, according to the service official, who declined to comment on what kind of impact the DOD-led review would have on the service assessment, or how the service review would be incorporated into the Pentagon’s work.

“It has been a positive discussion, and I’ll just leave it at that,” the official said.

While the review is on pace to meet the mid-2010 deadline set by Donley in the Dec. 9 memo, the official said no preliminary versions of the report’s recommendations have been issued. “I do not think it is going to work like that,” the source said. “I think it is going to be more of an iterative process.”

Two analysts with Oppenheimer's Equity Research department weigh in on Northrop Grumman's decision not to bid on the tanker competition:

Northrop Grumman decided not to pursue the US Air Force's large aerial refueling contract, which they had won during the last competition. However, that was then and this is now and a new CEO at NOC is facing a different leadership team at the Pentagon, a different RFP (request for proposal) and contract structure. In the end, we think the decision came down to economics that left NOC with the choice to submit a token bid in the name of competition or try to compete on price with a more expensive (but more capable) aircraft, and potentially, end up with a fixed price contract that could dramatically increase the risk profile of NOC's future earnings/cash flows.

More:

Listening to NOC management over the past few months, and seeing the changes in leadership and incentives, we weren't entirely surprised by the move not to bid. This contract has always been a must-win for Boeing and nice-to-have for NOC. The change to fixed price (vs. prior cost-plus) further softened the risk/reward for NOC.

We expect the DoD/AF will now enter into sole-source discussions with BA over a desirable tanker. Under those discussions, we do expect the DoD to obtain better pricing, cost discovery data, which will likely get over the hurdle of a blown competition in the end.

Other alternatives include: Congress demands loosening the RFP to balance the field, the DoD deciding to GFE (government furnished equipment) commercial 767s from Boeing and compete the integration (after clearly favoring the size/performance of the 767), or a very outside chance for EADS to take a shot at the contract on their own.

We're sure that some in Washington will both cheer and jeer at the decision; however, we're of the mind that the company made its goals clear in advance (even in laying out the incentives by which they are governing themselves), stated opposition early, fully evaluated the risk/reward and got to, what we'd agree is the right answer, "No."

President Obama has officially nominated Elizabeth McGrath, the Pentagon's assistant deputy chief management officer, for a promotion to deputy CMO. According to her White House bio, issued Tuesday:

Elizabeth McGrath has served in the Department of Defense (DoD) for over 20 years; her experience spans a variety of business areas including systems acquisition, supply chain, financial and program management. Ms. McGrath currently serves as the Assistant Deputy Chief Management Officer for the DoD where she provides leadership for enterprise-level DoD business transformation and is focused on achieving increased efficiency, greater effectiveness, and improved performance in the Department's business enterprise policies, processes and systems. Ms. McGrath ensures the establishment of performance goals and measures for DoD business functions, is responsible for implementing DoD's Continuous Process Improvement/Lean Six Sigma efforts. She also performs acquisition oversight for large scale business Information Technology systems and oversees the development and implementation of the Business Enterprise Architecture. Ms. McGrath previously held numerous other financial, acquisition and program management positions within DoD and the Department of the Navy. Ms. McGrath holds a B.S. degree in Economics from George Mason University.

On Thursday, McGrath is scheduled to testify alongside Pentagon acquisition chief Ashton Carter, DOD Comptroller Robert Hale and Deputy Under Secretary of Defense for Acquisition and Technology Shay Assad in front of a House Armed Services Committee panel on defense acquisition reform.

Rising oil prices are often assessed for their ability to allow certain countries to increase economic development, but a professor at the Army War College has tackled a different question: Do oil exports fuel defense spending?

That's the title of a new monograph written by Clayton Chun and published by the War College's Strategic Studies Institute. Chun notes that countries that are able to process, export and ultimately control vital raw materials, such as oil, can wield their financial resources to improve the well-being of their citizens -- or to threaten a region through the development of a large military or security capability.

As economies shrink and oil revenues fall, logic suggests that defense spending should shrink. But Chun says this isn't necessarily the case.

Despite periods of falling oil revenues, these countries typically did not lower defense spending. In some cases, defense spending increased sharply, or the rate of decrease was much lower than the drop in oil revenues. This condition creates challenges for national security professionals. If nations face falling oil revenues and still have the will and ability to expand their military or security capabilities, then they might do so through the sacrifice of domestic spending or regional stability. Economic sanctions, worldwide recession, or falling oil demand may not stop these oil-exporting nations from purchasing weapons and creating large security forces.

The Congressional Budget Office is estimating that the Obama administration's fiscal year 2011 budget request, if enacted, would result in deficits of $1.5 trillion in 2010 and $1.3 trillion in 2011, according to a CBO letter sent today to Senate Appropriations Committee Chairman Daniel Inouye (D-HI). "Those deficits would amount to 10.3 percent and 8.9 percent of gross domestic product (GDP), respectively," the letter states, adding: "By comparison, the deficit in 2009 totaled 9.9 percent of GDP."

On the defense side, CBO estimates the following:

From 2010 to 2011, total funding for discretionary defense programs in the President’s budget would grow by $16 billion, or 2.2 percent. Budget authority unrelated to military operations in Iraq and Afghanistan would grow by more than 3 percent, or $18 billion. Partially offsetting that increase, appropriations for the wars would edge down from $161 billion (with the requested supplemental appropriations included) to $159 billion.

For the period after 2011, the Administration’s budget includes a placeholder of $50 billion a year for war-related operations. As a result, proposed funding for defense overall would drop from $733 billion in 2011 to $642 billion in 2012 and would remain below the 2011 amount until 2018. Funding for defense activities other than for military operations in Iraq and Afghanistan would grow by an average of 3 percent annually through 2020.