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The INSIDER daily digest -- Feb. 20, 2020
By John Liang
February 20, 2020 at 1:53 PM

This Thursday INSIDER Daily Digest has news on a counter-A2/AD missile for the Joint Strike Fighter, the Army's Modular Active Protection System program, hypersonic missile development and more.

The Air Force wants to put money into a Navy-developed Joint Strike Fighter missile program:

USAF wants $1.1B over FYDP, industry proposals to upgrade counter-A2/AD missile for F-35

The Air Force is looking to invest more than $1 billion over the next five years and will publish a request for proposals this spring to upgrade a developmental Navy guided missile that's intended to enhance the F-35 fighter jet's performance against anti-access/area-denial defenses.

The Army wants to use the Modular Active Protection System, with an open systems architecture design, as "the basis for future APS by allowing industry to develop and integrate solutions onto a platform without the need for a complete APS":

Army seeking proposals for MAPS

The Army is issuing a request for prototype proposals for the Modular Active Protection System, according to a recent notice.

The Defense Advanced Research Projects Agency is seeking $116 million in FY-21 for a competitive effort to develop a tactical-range, hypersonic boost-glide weapon for the Air Force and Navy, a decrease from the $152 million allocated to the TBG project in FY-21:

Pentagon eyes key milestones in FY-21 for tactical hypersonic weapon development

The Defense Department plans major advances in fiscal year 2021 for its Tactical Boost Glide project, including manufacture of Raytheon's first air-launched flight test vehicle and critical design review of Lockheed Martin's ship-launched variant.

The Missile Defense Agency is not requesting any money for its "Directed Energy Demonstrator Development" (DEDD) project this year:

Pentagon punts MDA's laser ambitions, shifts funding toward OSD-led 'laser scaling'

The Pentagon's technology chief has pumped the brakes on the Missile Defense Agency's move toward an airborne, ballistic missile-killing laser, instead consolidating "laser scaling" efforts under the umbrella of his own office.

The Defense-Wide Review, which examined $99 billion in total spending managed by the Office of the Secretary of Defense, resulted in a $500 million cut to OSD's $4.7 billion research, development, test and evaluation programs:

Defense-wide budget review claims three classified weapons programs

An internal Pentagon review that resulted in $5.7 billion in savings has led to the termination of three classified weapons programs managed by the secretive Strategic Capabilities Office, according to newly released budget documents.

Document: DOD's defense-wide review

KBR reports quarterly sales decline, profit increase in government solutions group
By Marjorie Censer
February 20, 2020 at 1:14 PM

KBR said today sales in its government solutions unit during the most recent quarter totaled $939 million, down almost 5% from the same three-month period a year earlier.

The unit's quarterly profit hit $118 million, up about 22% from the prior year.

In 2019, the government solutions group posted sales of $3.9 billion, up almost 14% from 2018. The unit's profit for the year totaled $430 million, up about 23% from 2018.

The company attributed the sales growth in the business "to the commencement of new programs, including holistic human and psychological performance services for the U.S. Special Operations Forces under the Preservation of the Force and Family program; networking, communications and training services for the U.K. Ministry of Defence; and launch range operations services at NASA's Wallops Flight Facility."

KBR said the unit also benefited from about $150 million in sales related to disaster recovery work at Tyndall Air Force Base, FL.

ManTech reports increased sales, profit
By Marjorie Censer
February 20, 2020 at 12:26 PM

ManTech International said this week sales in its most recent quarter reached $604 million, up 22% from the same three-month period a year earlier.

The contractor reported quarterly profit of nearly $41 million, about double its profit the prior year.

For 2019, ManTech said sales reached $2.2 billion, up 13% from 2018. Profit for the year totaled $114 million, up 39% from 2018.

The company said its profit benefited from a $12 million reduction to its income tax expense "resulting from the reassessment of current and prior years research and development tax credits."

U.S. government accuses Russian military of hacking Georgia
By Justin Doubleday
February 20, 2020 at 11:14 AM

The State Department and the Pentagon today publicly accused the Russian military of conducting "a widespread cyberattack" against the country of Georgia last fall.

The cyberattack occurred on Oct. 28, 2019, according to a statement from Pentagon spokeswoman Lt. Col. Carla Gleason. The Pentagon attributed the attack to the Russian General Staff Main Intelligence Directorate, also known by the Russian acronym GRU.

"The incident disrupted government and private websites and broadcast systems and affected the Georgian population at large," Gleason wrote.

In a separate statement, Secretary of State Mike Pompeo attributed the attack specifically to the GRU's Main Center for Special Technologies, or GTsST, also known as Unit 74455 and Sandworm.

"This action contradicts Russia's attempts to claim it is a responsible actor in cyberspace and demonstrates a continuing pattern of reckless Russian GRU cyber operations against a number of countries," Pompeo said. "These operations aim to sow division, create insecurity, and undermine democratic institutions."

The attack "disrupted operations of several thousand Georgian government and privately run websites and interrupted the broadcast of at least two major television stations," according to Pompeo.

The statements released today are notable for the level of public attribution provided by the U.S. government. Neither the Pentagon nor the State Department released more specific, forensic details on how they attributed the attack to Russia's GRU.

General Dynamics CFO says GDIT 'strategically exited' two lines of business
By Marjorie Censer
February 19, 2020 at 3:08 PM

General Dynamics Information Technology has sold or exited more than $1 billion in sales, according to General Dynamics' chief financial officer.

Speaking at a Barclays conference today, Jason Aiken said GDIT has undertaken "meaningful portfolio shaping" since its 2018 acquisition of CSRA.

"I think most are aware that we sold -- in the course of probably three or four transactions -- roughly $1 billion of annual revenue in the aftermath of that acquisition," he said. "Probably a little bit less well understood is that last year GDIT deliberately exited -- strategically exited -- two lines of business that they deemed to be not core."

Aiken said those business lines "represented $250 million in annualized sales that was just sort of left behind."

The two business lines are its citizen-engagement center assets, which were sold to Maximus, and its state and local government Next Generation 911 business, which was sold to Comtech.

As a result of selling and divesting businesses, he said, GDIT’s sales are "on the flatter side this year."

ONR seeking anti-sub surveillance technology
By Justin Katz
February 19, 2020 at 3:00 PM

The Office of Naval Research is soliciting industry for proposals and white papers about various anti-submarine surveillance systems and is planning a classified industry day next month, according to a notice published today by the Navy.

"The Affordable Mobile [Anti-submarine warfare] Surveillance System (AMASS) program shall design, build, demonstrate, and produce a persistent, deep water, active ASW system that can detect new emerging threat submarines at extended ranges," according to the notice.

ONR is seeking proposals that address five specific challenges including a concept of deployment for the system via a shipping container and automatic deployment of large aperture sonar arrays from a buoy. Proposals should also address "persistent presence" of a buoy by keeping it powered for an extended period of time while in one location; a method to minimize "array deformation" as well as maintaining an affordable total cost, the notice said.

The industry day, which will be by invitation only, is scheduled for March 11.

"Although not required, white papers are strongly desired for all offerors seeking funding," the notice said.

The program's preliminary schedule concludes with a funding award being made in October.

Esper meets with defense contractor CEOs
By Marjorie Censer
February 19, 2020 at 2:59 PM

Defense Secretary Mark Esper met yesterday and today with the chief executives of some of the largest defense contractors.

Esper tweeted a photo yesterday with the chief executives of Boeing’s defense business, General Dynamics, Lockheed Martin, Northrop Grumman and Raytheon.

He said he “hosted a productive discussion with defense industry executives focused on our continued partnerships.”

“With the emergence of new technology, we must remain agile and ready, through innovation and investment in the best tools for our Warfighters,” Esper continued in his tweet.

He also tweeted today that he met this morning with executives “to discuss ways to partner to empower our Service Members with the best knowledge, equipment and platforms to fight and win.”

Speaking at a Barclays conference this afternoon, Bill Brown, the CEO of L3Harris Technologies, said he attended this morning’s breakfast with Esper.

“What we were talking about this morning is really around the budget,” Brown said, adding that attendees discussed aligning budget with strategy.

The INSIDER daily digest -- Feb. 19, 2020
By John Liang
February 19, 2020 at 2:04 PM

This Wednesday INSIDER Daily Digest has budget news on the Pentagon's Strategic Capabilities Office as well as Air Force Grey Wolf helicopters and a nascent Navy "Stem-to-Stern Review."

The Pentagon is seeking to cut the budget for the Strategic Capabilities Office:

DOD proposes dramatic cuts to SCO funding in FY-21

The Defense Department is moving to rein in the Strategic Capabilities Office by slashing the organization's fiscal year 2021 budget to $767 million -- a one-third decrement compared to the SCO's $1.1 billion this year -- in the latest twist in an bureaucratic brawl over the future of the organization.

Some Air Force budget news on Grey Wolf helicopters, countering small drones and the next-generation ICBM:

Air Force estimates spending $1.9 billion to buy 54 Grey Wolf helicopters across FYDP

The president's fiscal year 2021 budget proposal gives the first peek into the Air Force's acquisition plans for new utility helicopters that will patrol the military's intercontinental ballistic missile silos -- showing an anticipated expenditure of $1.9 billion on 54 MH-139 Grey Wolf aircraft across the future years defense program.

Air Force to spend up to $490 million on R&D to counter small commercial drones

The Air Force is moving forward with a contracting solution worth up to $490 million for research and development of capabilities that can combat commercial off-the-shelf small unmanned aerial systems.

GBSD to immediately start using DevSecOps after EMD contract award this summer

Software developers for the military's next intercontinental ballistic missile system will be able to begin using DevSecOps right after a manufacturing contract is awarded this summer, giving the program a head start on writing code.

The Navy is looking to save $40 billion:

Modly announces Navy program review seeking $40B in savings

Acting Navy Secretary Thomas Modly yesterday announced the service would conduct a "Stem-to-Stern Review" of the Navy's programs with the goal of finding $40 billion in savings.

Document: Modly memo on 'stem-to-stern' review

Last but certainly not least, some defense industry cyber news from our colleagues at Inside Cybersecurity:

Industry lawyer says 'go forward' with cyber certification as DOD program takes shape

A leading industry lawyer on federal contracts is advising companies to move forward with cybersecurity audits and to adopt the use of draft standards as the Pentagon completes working on setting up its landmark certification program unveiled last month.

DOD IG to evaluate CENTCOM's ability to defend against missiles, UAS
By John Liang
February 19, 2020 at 1:04 PM

The Defense Department inspector general has begun an evaluation of whether U.S. Central Command can properly defend itself against missiles and unmanned aircraft systems.

"The objective of this evaluation is to determine whether U.S. Central Command is prepared to defend critical assets within its area of responsibility against missile and unmanned aircraft system threats," a Feb. 18 DOD IG memo states.

The IG will "perform the evaluation in the United States, and the U.S. Central Command area of operations. We will coordinate with U.S. Central Command, U.S. Central Command's Service Component Headquarters, and other DOD agencies or commands," the memo reads, adding: "We may identify additional locations to perform fieldwork during the scoping process of our evaluation."

In his command's posture statement submitted to Congress last March, CENTCOM chief Gen. Joseph Votel said his organization would "continue to support our regional partners developing processes and procedures to counter ballistic missiles (CBM) and counter unmanned armed aerial systems (C-UAS) to help mitigate threats to civilian populations and critical infrastructure."

CENTCOM's 2019 posture statement also highlighted the Defense Threat Reduction Agency's Joint Improvised Threat Defeat Organization. JIDO "provides a best-in-class example of a successful, nimble, and responsive capability in support of the warfighter. CENTCOM relies heavily on the critical, life-saving training, technology, and expertise JIDO provides to safeguard U.S. and allied forces from many of the most dangerous, emerging threats on the battlefield, including improvised explosive devices; unmanned, armed aerial and maritime vehicles; and other improvised threats. JIDO's functions are not replicated in any of the services, demonstrate enormous value, and are worthy of continued resourcing through DTRA."

Judge rejects Huawei challenge to federal ban of its products
By Rick Weber
February 19, 2020 at 11:29 AM

A federal judge in Texas has rejected China-based tech giant Huawei's challenge to a ban on government purchases of its products based on national security concerns, upholding the authority of Congress to establish the ban through the Fiscal Year 2019 National Defense Authorization Act.

The judge said Huawei failed to show how Congress violated the company's constitutional rights by legislating a ban under Section 889 of the FY-19 NDAA, citing findings by a congressional commission that Chinese tech companies pose "a threat as they 'are directly subject to direction by the Chinese Communist Party,'" according to the order issued Tuesday by the U.S. district court for eastern Texas.

"Huawei challenges Section 889 as unconstitutional on three grounds. Namely, Huawei asserts that Section 889: (1) violates the Bill of Attainder Clause; (2) violates the Due Process Clause; and (3) violates the Vesting Clauses. The Government maintains that Section 889 is constitutional on all challenged grounds," the court said in summarizing the case. "The Government further seeks dismissal of the individual defendants, which Huawei opposes."

Judge Amos Mazzant granted the government's request by finding that Huawei failed to show how Congress violated the U.S. Constitution's separation of powers.

The judge said: "It makes 'no difference' to the separation-of-powers analysis whether Congress legislates generally or with particularity," according to the order. "Indeed, Congressional action that is particularized is not presumptively nonlegislative."

Also, the court rejected Huawei's characterization of NDAA Section 889 as restricting executive and judicial branch functions.

"What Huawei pejoratively labels as Congress unconstitutionally adjudicating facts is better characterized as a thorough congressional investigation into a potential threat against the nation's cybersecurity," according to the order. "Congress's investigation led to the passing of a defense-appropriations bill as a prophylactic response to that threat."

In a statement yesterday, a company spokesman said: "Huawei is disappointed in today's ruling and while we understand the paramount significance of national security, the approach taken by the U.S. Government in the 2019 NDAA provides a false sense of protection while undermining Huawei's constitutional rights. We will continue to consider further legal options."

The ruling is a blow for Huawei, but not likely the final word in its full-court press in challenging multiple federal efforts to block the company's components from U.S. buildout of 5G networks. Huawei in December filed a complaint with U.S. Court of Appeals for the Fifth Circuit challenging the Federal Communications Commission's ban on the use of a federal fund to purchase its products mostly by rural telecom companies.

Trump says Rood is out
By Tony Bertuca
February 19, 2020 at 11:13 AM

President Trump today tweeted that Under Secretary of Defense for Policy John Rood will be leaving his post.

"I would like to thank John Rood for his service to our Country, and wish him well in his future endeavors!" Trump tweeted.

In his resignation letter to Trump, Rood reveals that the president directed his departure.

"It's my understanding from Secretary Esper that you request my resignation from serving as Under Secretary of Defense for Policy,” Rood wrote. “Senior administration officials appointed by the president serve at the pleasure of the president, and therefore, as you have requested, I am providing my resignation effective February 28, 2020.”

Rood will be succeeded by James Anderson, the current senior official performing the duties of the deputy under secretary of defense for policy.

"I would like to thank John Rood for his service to the department," Defense Secretary Mark Esper said in a separate statement. "John has played a critical role on a wide range of DOD issues including modernizing our nuclear deterrence capability, efforts to increase burden sharing by our NATO allies, our Missile Defense Review and implementing the National Defense Strategy. I wish him all the best in his future endeavors."

When asked what Rood did to incur Trump's displeasure, Jonathan Hoffman, the Pentagon's chief spokesman, said the law allows the president to "make a decision to go in a different direction." Hoffman did not elaborate further.

Rood, a former Lockheed Martin executive who has held the post since January 2018, played a role in the events leading up to Trump’s impeachment by the House.

Last May, Rood sent a memo to Congress certifying that Ukraine was eligible to receive $250 million in military assistance after having made sufficient progress on anti-corruption activities.

The aid, however, was temporarily blocked by the White House, an action that led to Trump's impeachment amid allegations that the money was used as leverage to force Ukraine to investigate former Vice President Joe Biden.

Trump was acquitted by the Senate earlier this month of abuse of power and obstruction of Congress.

Following the acquittal, the president has removed government officials who testified during the House impeachment investigation, including Lt. Col. Alexander Vindman and U.S. Ambassador to the European Union Gordon Sondland.

Meanwhile, there is an unconfirmed report from the New York Post that the nomination of Elaine McCusker to be Pentagon comptroller will be withdrawn.

McCusker continues to serve as the Pentagon's acting comptroller, but internal emails show McCusker opposed the White House decision to withhold the aid from Ukraine.

Air Force to spend up to $125 million on software updates for AMRAAM inventory
By Sara Sirota
February 19, 2020 at 11:01 AM

The Air Force is planning to spend up to $125 million for software updates to its inventory of AIM-120 Advanced Medium Range Air-to-Air Missiles.

According to a presolicitation notice published today, the Air Force will sole-source an award to AMRAAM provider Raytheon.

The service is eyeing a five-year indefinite-delivery, indefinite-quantity contract with an ordering period from October 2020 through September 2024 and a performance period not to extend past September 2026.

"Delivery orders issued under this IDIQ contract will include, but not be limited to, software development enablers, such as the Candidate Selection Program (CSP); other risk reduction or special interest studies," the notice states.

The work will also entail "modeling and simulation activities, to include lethality analysis and hardware-in-the loop/lab test environment upgrades; software development and studies to counter emerging threats; and the ability to develop foreign military sales software version if required," the notice continues.

DOD leaders to defend budget on Capitol Hill
By Tony Bertuca
February 19, 2020 at 10:53 AM

Defense Secretary Mark Esper and Chairman of the Joint Chiefs of Staff Gen. Mark Milley are slated to testify Feb. 26 before the House Armed Services Committee.

Overall, the total national defense budget, which includes the Defense Department and other federal agencies like the Energy Department, is $740.5 billion and adheres to a bipartisan spending deal. The Pentagon's FY-21 base budget is $636.4 billion, while its Overseas Contingency Operations account is $69 billion.

The Pentagon's research, development, test and evaluation request is $106.6 billion for FY-21, a $2.3 billion increase above the FY-20 request. Meanwhile, the procurement request is $136.9, a $6.2 billion reduction from the previous year.

But lawmakers on the House Armed Services Committee have voiced concerns about various aspects of the budget proposal, including cuts to shipbuilding and military construction.

Additionally, lawmakers on the committee have voiced bipartisan opposition to the Pentagon's decision to divert $3.8 billion from weapons programs toward construction of a wall on the U.S.-Mexico border.

Oshkosh nabs $407M JLTV contract modification
By John Liang
February 18, 2020 at 3:48 PM

The Army late last week awarded Oshkosh Defense a $407.3 million contract modification to buy Joint Light Tactical Vehicles "and associated kits."

"Work will be performed in Oshkosh, Wisconsin, with an estimated completion date of Jan. 31, 2022," according to a Feb. 14 Defense Department contract announcement. "Fiscal [year] 2018 and 2020 other procurement, Army; procurement, U. S. Marine Corps; and Foreign Military Sales (Lithuania and Slovenia) funds in the amount of $407,335,834 were obligated at the time of the award."

Last August, the State Department approved of Lithuania purchasing 500 JLTVs at an estimated cost of $170.8 million.

"This proposed sale will support the foreign policy and national security objectives of the United States by helping to improve the military capability of Lithuania, a NATO ally that is an important force for ensuring political stability and economic progress within Eastern Europe," the Defense Security Cooperation Agency said at the time. "The proposed sale of the Joint Light Tactical Vehicle (JLTV) will help improve Lithuania's light tactical vehicle fleet and enhance the capabilities to meet current and future enemy threats. Lithuania will have no difficulty absorbing this equipment into its armed forces."

Army seeking $45 million to put Israeli missiles on Apache
By Jaspreet Gill
February 18, 2020 at 2:09 PM

The Army is asking for $45 million in fiscal year 2021 for the Long Range Precision Munition, a new-start missile procurement program for use on the AH-64 Apache helicopter.

The service plans to field 205 of Rafael's Spike Non-Line-of-Sight missiles on the attack helicopters in FY-21.

Brig. Gen. Wally Rugen, director of the future vertical lift cross-functional team, said in January the Army Requirements Oversight Council had approved the decision to field the Israeli missiles as an interim solution.

The LRPM "will provide Army aviation with improved and longer range weapons, sub-systems and munitions that can rapidly respond in a combat environment improving the survivability of the warfighters and weapon systems in an anti-access/area denial and positioning, navigation and timing denied environment," according to the service's budget justification documents.

Army spokeswoman Sarah Tate told Inside Defense in a statement in January the Army is drafting a capability development document for a permanent system on the Apache.