The Insider

By Pat Host
September 17, 2010 at 3:57 PM

The European Aeronautic Defence and Space Co.'s defense and security division is being rebranded Cassidian as part of the company's 10th anniversary.

The Netherlands-based EADS is also reinforcing itself as the "umbrella brand" of its four divisions with a common visual identity: Airbus, Eurocopter, Astrium and Cassidian. Airbus produces aircraft, Eurocopter produces helicopters and Astrium provides civil and defense space systems and services.

"This brand renovation embodies exactly the spirit of Vision 2020, our strategy for EADS' next ten years: Reinforce each of the four divisions, give them the visibility they need to market their business and at the same time materialize the strength and unity of the group," said EADS CEO Louis Gallois in a company statement.

EADS is also modernizing its logo and branding scheme as part of its 10th anniversary.

By John Liang
September 16, 2010 at 9:20 PM

The Senate Appropriations Committee is proposing a $425 million funding reduction for the Terminal High Altitude Area Defense System, according to the report released today that accompanies the committee's fiscal year 2011 defense spending bill.

"The committee is aware that due to several issues, in particular the Laser Initiated Ordnance System (LIOS) and microcracks in the Heat Shield, THAAD production is about one year behind schedule," the report states, commending the Missile Defense Agency and Office of the Secretary of Defense "for delaying the production decision until the missile has been thoroughly evaluated.

"Due to the production delay, the committee recommends a reduction of $425 million in fiscal year 2011 and directs MDA to keep the congressional defense committees informed on the progress of THAAD production and any schedule changes for outfitting the Army's THAAD batteries as a result of the production delay," the report continues.

By Jason Sherman
September 16, 2010 at 9:19 PM

Reps. Robert Andrews (D-NJ) and K. Michael Conway (R-TX), the chairman and ranking member of the House Armed Services Committee's acquisition reform panel, are urging colleagues to support funding in the Pentagon's FY-11 budget for the F136 engine, the alternate Joint Strike Fighter propulsion package.

Backed by Defense Secretary Robert Gates, who believes the alternate engine is an example of wasteful DOD spending,

Still, the lawmakers argue there are sound public policy reasons to support continued development of the engine, built by a General Electric/Rolls Royce industry team.

Citing the recommendations of the Quadrennial Defense Review Independent Panel, as well as former Pentagon Acquisition Executive Jacques Gansler's views, as expressed recently to Inside the Pentagon's Amanda Palleschi, the lawmakers “strongly encourage your support for the Joint Strike Fighter competitive engine program.”

Competition is precisely what we need today for the $100 billion JSF engine program. Funding for the engine is already 75 percent complete. Let's complete the program, allow real engine competition to occur and enjoy the benefits that will result.

By John Liang
September 16, 2010 at 7:10 PM

The Senate Appropriations Committee just finished marking up the $669.9 billion fiscal year 2011 defense spending bill and approved it by a party-line 18-12 vote. The total is $8.3 billion less than what the Obama administration is asking for.

The defense subcommittee approved the bill on Sept. 14. The $669.9 billion in the Senate bill includes $157.7 billion for the cost of the wars in Iraq and Afghanistan and counterterrorism efforts worldwide.

The House Appropriations defense subcommittee approved a $670.9 billion bill on July 22, $7.2 less than what the administration wanted, but the full committee has not yet approved the legislation.

By Jason Sherman
September 16, 2010 at 3:19 PM

Sen. Carl Levin (D-MI), chairman of the Senate Armed Services Committee, today is touting a new GAO assessment that could complicate Defense Secretary Robert Gates' bid to halt funding for the Joint Strike Fighter alternate engine, a program Gates believes is an example of wasteful DOD spending but one that many supporters in Congress argue is pivotal to sound acquisition policy.

The Michigan lawmaker today issued a statement reacting to the GAO finding, made public yesterday, stating that DOD's estimate of an additional $2.9 billion and six years needed to complete development of the F136 engine “could be lower.” Our coverage of that assessment is here.

Specifically, Levin said, the findings in the report “add to economic arguments in favor of competition.”

But economic benefits “are not the only argument in favor of competition,” he added:

That is why I strongly supported enactment of the Weapons System Acquisition Reform Act of 2009 (WSARA), which, among its main directions to the Defense Department, calls for competition throughout the life cycle of major acquisition programs.  Since the JSF program is the single largest DOD acquisition program, the JSF engine is a great place to begin implementing WSARA.

By Jason Sherman
September 15, 2010 at 9:03 PM

Sen. Jim Webb (D-VA) today announced plans to introduce legislation to “freeze action” on Defense Secretary Robert Gates' bid to eliminate the Virginia-based U.S. Joint Forces Command. Webb, who earlier this month announced plans for a Senate Armed Services Committee hearing on JFCOM and other DOD efficiencies, issued a press release today, stating:

Today I have again called on the White House to refrain from making a final decision on the future of the U.S. Joint Forces Command until Congress has satisfactorily obtained a firm understanding of the process by which Secretary of Defense Gates arrived at his recommendation.

A decision of this magnitude poses significant implications for joint training and the development of joint war-fighting capabilities that are essential for successful 21st-century combat operations.  Any proposal to close or realign the command should be guided by a clear process and analytical basis that everyone can understand.  This is particularly important in light of Secretary Gates’s stated intention to consider consolidating or closing other military bases and facilities across the country.

In addition to the Senate Armed Services Committee hearing now promised to address the full range of the proposed defense efficiency initiatives, I will be introducing legislation to require the Secretary of Defense to provide full justification to Congress before any action is taken to close the Joint Forces Command.  This is fully consistent with Congress’s constitutional oversight responsibility as we work to improve our military’s joint warfare capabilities and operations.

Last month, Webb and other members of the Virginia delegation challenged the legal basis of Gates' recommendation to close JFCOM, urging the defense secretary to reconsider and “conduct a more complete review of JFCOM’s mission and activities without a predisposed intent to close the command.”

By John Liang
September 15, 2010 at 7:00 PM

Army Gen. Carter Ham has been nominated to become the next head of U.S. Africa Command, according to a Pentagon statement released this afternoon. Ham, the commanding general of U.S. Army Europe and Seventh Army in Germany, would replace AFRICOM's first-ever commander, Army Gen. William "Kip" Ward.

According to Ham's biography, the general has served as the deputy director for regional operations on the Joint Staff. Ham assumed command of the 1st Infantry Division at Ft. Riley, Kan. in August 2006 and served there until July 2007, when he was again assigned to the Joint Staff as director for operations, J3.

Ham began his Army service as an enlisted infantryman in the 82nd Airborne Division before attending John Carroll University in Cleveland, OH, according to the bio, and was commissioned in the Infantry as a Distinguished Military Graduate in 1976.

No word yet on what Ward's next assignment will be.

By Marcus Weisgerber
September 15, 2010 at 6:22 PM

Pentagon acquisition executive Ashton Carter said the Defense Department plans to wrap up source selection of the Air Force's next-generation aerial refueling tanker this fall, but had not set a specific date.

As acquisition officials review KC-X proposals from Boeing and EADS, they have not set a specific date for selecting a winner, Carter said during a speech at an Air Force Association-sponsored conference in National Harbor, MD.

"It'll be done when it's done," Carter said. "Anyone that gives you a specific date doesn't know what they're talking about."

By John Liang
September 15, 2010 at 6:11 PM

Sen. Richard Shelby (R-AL) just released a statement on a World Trade Organization ruling where he contends the WTO "confirmed that Boeing has in fact received subsides for aircraft development." The senator, whose state would host a facility run by European aerospace giant Airbus should the company beat Boeing for the Air Force's next-generation airborne refueling tanker, further says:

Today's preliminary ruling clearly states that Boeing was involved in practices prohibited by the World Trade Organization. While the confidential nature of this report will allow Boeing supporters to attempt to spin the facts in the media, it is clear that they can no longer rationally claim that this trade dispute is one sided. In fact, it is quite the contrary.  However, as I have continuously said, we must not allow either report to delay the tanker replacement program or muddy the competition with politics. Our goal must remain the same –- deliver the best, most capable aircraft for the warfighter at the best value for the taxpayer.

As sister publication Inside U.S. Trade reported this summer, the European Union on July 21 notified the WTO that it is appealing virtually every aspect of the June 30 WTO panel finding that EU member states provided subsidies to Airbus. Further:

Sources close to the EU said that, due to the complexity of the appeal, they expect the Appellate Body to take longer than 90 days to review the appeal, which is the timetable outlined in the WTO's Dispute Settlement Understanding. They noted that the appeal of the U.S. cotton subsidies case took 136 days, and the U.S. hormones case appeal took 140 days.

In a July 20 background briefing for reporters, sources close to the EU said it is highly unlikely that the Appellate Body would rule on the Airbus case appeal before mid-September, when an interim ruling is expected in the separate WTO case filed by the EU against alleged subsidies provided to Boeing, the rival of Airbus.

These sources denied that the EU planned to file such an extensive appeal in order to drag out the litigation process. One source said the EU will appeal virtually every aspect of the case because the panel had erred so extensively.

Some sources argue that it is in the EU's interest to drag out the appeals process in light of the fact that the Air Force is expected to decide by mid-November whether Boeing or the European Aeronautic Defense and Space (EADS) company, the parent company of Airbus, will win a $35 billion aerial refueling tanker contract. An EU source denied that the tanker contract played any role in the appeals process.

If the appeal in the Airbus case concluded prior to the issuance of this contract, and if it upheld panel findings that EU member states provided subsidies to Airbus in violation of WTO rules, it would bolster arguments by Boeing supporters in the U.S. Congress that the Air Force should not award the contract to EADS, these sources said.

By John Liang
September 15, 2010 at 3:08 PM

The Pentagon inspector general's office this week released a more-detailed response to a Senate report that called the Defense Department's accounting system "broken."

In its preliminary response released last week, the IG wrote that he was "refocusing" his office's audit priorities, InsideDefense.com reported on Monday:

Last week, Senate Finance Committee Ranking Member Charles Grassley (R-IA) released a report that "identified one all-important, central element that is adversely affecting every facet of the OIG audit program -- the DOD's broken accounting system."

"This dysfunctional system is driving the audit freight train," the report states. "The success or failure of an audit turns on the quality of financial data available for audit by competent examiners. Unfortunately, the quality of the financial data presented to OIG auditors by DOD during the period reviewed by the staff should probably be rated as poor to non-existent."

In a Sept. 10 letter to Grassley, DOD Inspector General Gordon Heddell promises to "carefully review" the report's recommendations.

"As you know, early last year as Acting Inspector General, I reached out to your office to share my vision for the future of the DOD Inspector General and welcomed an independent look at the focus and processes within Audit," Heddell's letter states. "The observations and recommendations in your report will be a valuable supplement to the efforts I have already initiated to reach my goal of providing timely, accurate, and relevant information to both the Congress and the Department."

In his more-detailed Sept. 13 letter to Grassley, Heddell writes that he has "directed the deputy inspector general for auditing and her staff to make concrete and specific proposals on how your report can be used to improve the time lines, focus and relevance of audit reports. Furthermore, I have directed that these proposals, to be completed no later than Oct. 15, 2010, are supplemented by a detailed plan listing specific initiatives to be implemented at the earliest possible date. The recommendations in your report will be an important tool in the transformation I have initiated since being confirmed as inspector general."

By Marcus Weisgerber
September 14, 2010 at 3:09 PM

EADS reached a critical milestone last week when one of its Airbus A330-based tankers passed fuel at a 12,000 gallon-per minute rate, according to a top company official.

The in-flight transfer happened last week, according to Ralph Crosby, chairman of EADS North America.

Crosby's comments -- made during a breakfast meeting with reporters at an Air Force Association-sponsored conference in National Harbor, MD -- come as the Air Force is evaluating bids from EADS and Boeing in the service's KC-X next-generation tanker competition.

The 12,000 gallon-per minute transfer rate is one of more than 370 requirements in the Air Force KC-X competition.

Because bids for the competition are already in, the company could only tout the accomplishment to the Air Force in final proposal revisions, should the service ask for them.

By John Liang
September 14, 2010 at 2:50 PM

The National Defense Industrial Association recently released an updated guide for conducting integrated baseline reviews. According to its executive summary, the document "describes the purpose of the Integrated Baseline Review (IBR). It describes the overall, ongoing IBR process and specifically describes the IBR event, which is the formal review jointly conducted by the customer and supplier teams."

Further, the Sept. 1 document states:

While the overall IBR is a continuous process of analysis of the Performance Measurement Baseline (PMB) and its executability, the IBR event is a formal review that occurs at a point in time. Specific conditions within a project’s life cycle warrant an IBR event. These include the initial establishment of the project PMB, either before contract award (when a pre-award IBR is required) or after contract award as determined by the customer, as well as significant changes to the original PMB, e.g., a significant contract modification or a major project replan. IBR events may also recur any time a PMB assessment determines the need for a subsequent IBR. Recurring IBRs can be initiated by the customer Project Manager (PM) or supplier PM.

An effective IBR process leads to a better understanding of project risks and opportunities. With the common definitions and framework provided by this guide, the expectations and objectives of the customer and supplier will be better aligned and key stakeholder engagement will be enhanced. The IBR process enables PMs to effectively assess the PMB and to determine its adequacy for successful project execution.

Pre- or post-award IBRs are directed on all projects requiring Earned Value Management Systems (EVMS). The solicitation will specify which type of IBR applies. For pre-award IBRs, the supplier must establish the PMB and the organization that will manage it prior to contract award. For post-award IBRs the supplier must establish a PMB as soon as possible after receipt of the Authorization to Proceed (ATP) and begin preparations for the initial post-award IBR event. Both types of reviews should follow the structured approach for conducting the IBR review as described in this guide.

Inside the Pentagon reported on June 1 that the F-35 Joint Strike Fighter program is slated to complete an IBR by the second quarter of fiscal year 2011. The review comes in the wake of a Defense Department report to Congress that strongly criticized the Lockheed Martin division that builds the JSF for ignoring key management rules. However, according to Lockheed the department has stopped short of revoking the contractor's management certification. Further:

In a report sent to Congress today, the Pentagon declares Lockheed's aircraft division in Ft. Worth, TX, "was determined to be non-compliant" with the department's standards for earned value management, Pentagon acquisition chief Ashton Carter's preferred tool for managing the cost and schedule of major programs.

The "systemic corporate level problem" is "disappointing and unacceptable," the Defense Department writes, adding that the Pentagon is "challenging Lockheed Martin to deal with this issue on all levels."

Inside the Pentagon obtained a copy of the report, which details plans to continue the troubled F-35 program despite cost increases and schedule delays.

Carter's office uses earned value management to flag problems, forecast cost and schedule performance and get troubled programs back on track. The tool integrates the technical, cost and schedule parameters of a contract, letting program officials develop an integrated baseline and objectively measure progress.

Since late last year, Carter's office has been reviewing the Lockheed sector's failure to fully implement the management rules, as Inside the Pentagon has reported. Defense officials have weighed whether to revoke the sector's certification for its earned value management system (EVMS), which applies to all Lockheed aircraft built in Ft. Worth.

But despite the new criticism in the report, Lockheed spokesman Joe Stout said the contractor remains certified. "We have received no notice that affects our EVMS certification," Stout told ITP.

Lockheed has been working closely with the Defense Contract Management Agency to develop a corrective action plan that "will address all issues and lead to resolution of all concerns," Stout said. The agency is expected to approve details of the plan in the near future, he added, noting that Lockheed "will diligently work to meet the established milestones in the months ahead."

The report states DOD is providing Lockheed with scheduling, program management, technical, and earned value management compliance expertise and assistance. Carter writes that the corrective action plan is due to be completed and accepted by the agency by June 30, and that the plan is supposed to show "measurable progress leading to successful completion" of a compliance review, as determined by the agency, by the first quarter of fiscal year 2011. Successful execution of the integrated baseline review is slated for the second quarter of FY-11.

By Cid Standifer
September 13, 2010 at 8:50 PM

The Senate Armed Services Committee has scheduled a confirmation hearing for Gen. James Amos, who has been nominated by President Obama to be the next commandant of the Marine Corps, on Sept. 21 at 9:30 am.

The exact timing of the transition between current commandant Gen. James Conway and Amos has been a matter of speculation for some time. In March, sources told Inside the Navy that a confirmation hearing was expected this summer and that the new commandant was slated to take over in the September timeframe.

But at a press conference last month, when asked when he would retire, Conway answered, “You do not presume the Senate in my job.”

Sources told Inside the Navy last week that the Marines tentatively planned for Conway's retirement in late October, about 30 days after Amos' confirmation hearing, assuming the Senate approves Amos, but they hadn't yet received the go-ahead from the Senate for a late September hearing.

The transition should pave the way for changes in the Marine Corps that are currently on hold. Lt. Gen. George Flynn briefed the upper leadership of the Marine Corps and Navy in the spring about the Ground Tactical Vehicle Strategy he was tasked with completing, but in June, InsideDefense.com learned that the strategy would not be publicly released until after Conway stepped down. Then in August, Navy Undersecretary Robert Work announced that the Corps would complete a force structure review by the end of the year. Last week, sources told ITN that the vehicle strategy is not likely to be released until after the force structure review is complete.

The confirmation hearing is slated to take place in room SD-G50 of the Dirksen Senate Office Building.

By Jason Sherman
September 13, 2010 at 6:28 PM

Defense Secretary Robert Gates and Ashton Carter, the Pentagon's procurement executive, will roll out “new acquisition and procurement initiatives guidelines” on Tuesday, according to a Pentagon announcement.

On June 28, Carter said he aimed to find as much as $12 billion in annual savings from the Pentagon's procurement of goods and services through more efficient practices, funds that could be plowed back into weapons procurement accounts.

The new initiatives, due to be unveiled at a 2 p.m. press conference at the Pentagon, are expected to reflect ideas proposed from within the defense bureaucracy as well as from suggestions proposed by defense industry. Inside the Pentagon last week reported that Carter will unveil the new efforts to an audience of senior Defense Department acquisition officials in a auditorium at the National Defense University earlier in the day.

By Jason Sherman
September 13, 2010 at 5:08 PM

Tomorrow morning, the Senate Appropriations defense subcommittee will mark up its version of the Pentagon's fiscal year 2011 spending bill, the panel announced today. If you're planning to attend, the meeting is at 10:30 in room 192 of the Dirksen Senate Office Building. The full committee will consider the bill on Thursday, Sept. 16, at 2 p.m. in Dirksen 106.

The House Appropriations defense subcommittee marked up its version of the DOD's spending package on July 27, behind closed doors. No date is set yet for the full committee to consider the panel's FY-11 proposal.