The Insider

By John Liang
January 14, 2019 at 5:05 AM

Some must-reads from this week's issue of Inside the Navy:

1. Expeditionary warfare officials aim to identify funding in a future budget to start proving out concepts necessary to design a new maintenance and modernization model for big-deck amphibious ships, according to a Navy official.

Full story: New LHA, LHD overhaul model may see funding in FY-23 for 'beta test'

2. The Navy estimates the MQ-25 Stingray unmanned aircraft system -- the service's first operational unmanned aircraft for the aircraft carrier fleet -- will cost $15.2 billion to acquire, up nearly $2 billion from a $13.3 billion price tag the service tallied last year.

Full story: Navy sets MQ-25 price tag at $15.2B, nearly $2B higher than service cost position

3. The Army is coordinating with the Marine Corps to integrate the Ground/Air Task Oriented Radar (G/ATOR) with the Integrated Air and Missile Defense program, a sign of new confidence by the Army that its $7.9 billion IAMD program -- beset two years ago by a string of serious developmental setbacks and schedule delays -- has turned a corner and is "on track" for fielding in 2022 or sooner.

Full story: Army, Marine Corps exploring IBCS-G/ATOR integration

4. The Pentagon says allegations that acting Defense Secretary Pat Shanahan, a 31-year executive at Boeing, has acted improperly to benefit his former employer or is biased in favor of the company are unfounded and untrue.

Full story: Pentagon fires back on allegations Shanahan is favoring Boeing

By John Liang
January 14, 2019 at 5:00 AM

Some must-reads from this week's edition of Inside the Army:

1. As Army Futures Command's new Futures and Concepts Center prepares to craft over the next year the follow-up to its recent "multidomain operations 1.5" concept, the center's director says the Army hopes to "pull the other services in" to solve the "multidomain command-and-control problem."

Full story: AFC's concepts shop seeking more joint service involvement

2. The Army will acquire two Iron Dome batteries to provide ground forces an interim capability by 2020 against unmanned air vehicles, mortars, rockets, artillery and cruise missiles as well as explore full adoption of the Israeli-developed system for the Indirect Fire Protection Capability Increment 2-Intercept program and incorporation with the Integrated Battle Command System by 2023.

Full story: Army picks Israel's Iron Dome for interim CMD, eyes long-term adoption

3. The Army has set plans to integrate a high-energy laser weapon into its short-range air and missile defense arsenal by 2027, making room for a directed-energy capability alongside guided-missile interceptors in the Indirect Fire Protection Capability Increment 2 system.

Full story: Army eyes laser weapon for short-range air and missile defense by 2027

4. Leonardo DRS announced last week they and Israeli partner Rafael have received a $79.6 million award to deliver additional Trophy active protection systems to the Army and Marine Corps for Abrams tanks.

Full story: Army places additional $80M order for Trophy APSs

By John Liang
January 11, 2019 at 5:23 PM

Stockholders for both Science Applications International Corp. and Engility have approved the multibillion-dollar merger of the two companies.

"More than 98 percent of the shares voting at the SAIC special meeting of stockholders voted in favor of the proposal to issue shares of SAIC common stock to Engility stockholders in connection with the merger, and more than 99 percent of the shares voting at the Engility special meeting of stockholders voted in favor of the proposal to approve and adopt the merger agreement," a joint statement reads.

Today's meetings -- announced in November -- were held at the companies' respective headquarters.

SAIC announced the proposed merger -- a $2.5 billion billion deal that creates a $6.5 billion government services contractor -- in September.

By Rick Weber
January 11, 2019 at 4:37 PM

The Defense Department's inspector general has issued a summary of past reports that includes a review of the Pentagon's implementation of the Federal Information Security Modernization Act and reiterates concerns about a lack of management oversight of cybersecurity risks.

"However, the DOD needs to continue focusing on managing cybersecurity risks related to governance, asset management, information protection processes and procedures, identity management and access control, security continuous monitoring, detection processes, and communications," the IG states in its summary of reports from July 2017 through June 2018 issued last week.

"The largest number of weaknesses identified in this year's summary were related to governance, which allows an organization to inform its management of cybersecurity risk through the policies, procedures, and processes to manage and monitor the organization's regulatory, legal, risk, environmental, and operational requirements," the Jan. 9 report states.

The IG warns that failure to effectively manage cybersecurity risks undermines the military's overall mission.

"Without proper governance, the DOD cannot ensure that it effectively identifies and manages cybersecurity risk as it continues to face a growing variety of cyber threats from adversaries, such as offensive cyberspace operations used to disrupt, degrade, or destroy targeted information systems," the summary report states. "The DOD must also ensure that cybersecurity risks are effectively managed to safeguard its reliance on cyberspace to support its operations and implement proper controls and processes where weaknesses are identified to improve the overall cybersecurity."

FISMA requires every federal agency to conduct an annual independent evaluation to determine the effectiveness of information security programs and practices, and the IG offers its summary review as meeting that independent assessment.

"We used this summary report to develop the annual DOD OIG independent evaluation and to meet the reporting requirement, which we communicated to the DOD Chief Information Officer on October 31, 2018," the report states.

"We found that DOD Components implemented many of the agreed-upon corrective actions necessary to improve system weaknesses identified in issued reports summarized in our FY 2017 cybersecurity summary report; however, recently issued cybersecurity reports indicate that the DOD still faces challenges in managing cybersecurity risk to its network," IG concludes.

By John Liang
January 11, 2019 at 3:34 PM

This Friday INSIDER Daily Digest has a free story on the Pentagon's response to allegations about former longtime Boeing executive and current acting Defense Secretary Pat Shanahan, plus articles on the cost of the Navy's MQ-25 Stingray unmanned aircraft system, performance payments to the defense industry and more.

We start off with a story available to all:

Pentagon fires back on allegations Shanahan is favoring Boeing

The Pentagon says allegations that acting Defense Secretary Pat Shanahan, a 31-year executive at Boeing, has acted improperly to benefit his former employer or is biased in favor of the company are unfounded and untrue.

The Navy's MQ-25 Stingray unmanned aircraft system will cost $2 billion more than previously projected:

Navy sets MQ-25 price tag at $15.2 billion, nearly $2 billion higher than service cost position

The Navy estimates the MQ-25 Stingray unmanned aircraft system -- the service's first operational unmanned aircraft for the aircraft carrier fleet -- will cost $15.2 billion to acquire, up nearly $2 billion from a $13.3 billion price tag the service tallied last year.

Performance payments are back on the table for the Pentagon and defense industry:

Pentagon re-opens debate with defense industry over performance payments, contract financing

The Pentagon is seeking ideas for how it can incentivize better performance from defense contractors after a controversial proposal to reduce customary progress payments was quashed last year.

It looks like Eglin Air Force Base will be the temporary home of the Air Force's F-22 Formal Training Unit:

Air Force to house displaced F-22 training unit at Eglin prior to formal beddown approval

The Council on Environmental Quality has approved an Air Force request for an interim beddown of its F-22 Formal Training Unit at Eglin Air Force Base, FL -- a move the service said was necessary after damage from Hurricane Michael displaced the unit.

The Army last October sent Congress a report on IFPC Inc. 2, the mobile, ground-based air and missile defense system designed to provide protection in all directions against cruise missiles, unmanned aircraft, rockets, artillery and mortar threats that would replace the venerable Avenger system:

Army eyes laser weapon for short-range air and missile defense by 2027

The Army has set plans to integrate a high-energy laser weapon into its short-range air and missile defense arsenal by 2027, making room for a directed-energy capability alongside guided-missile interceptors in the Indirect Fire Protection Capability Increment 2 system.

The Navy's expeditionary warfare requirements office (N95) plans to conduct a "beta test" on a big-deck ship in fiscal year 2023 during an already-scheduled maintenance availability:

New LHA, LHD overhaul model may see funding in FY-23 for 'beta test'

Expeditionary warfare officials aim to identify funding in a future budget to start proving out concepts necessary to design a new maintenance and modernization model for big-deck amphibious ships, according to a Navy official.

By Marjorie Censer
January 11, 2019 at 12:21 PM

General Dynamics said today Robert Helm, its senior vice president for planning and development, will become special adviser to the chief executive, effective April 1.

Thomas Kirchmaier will become senior vice president for planning, communications and trade compliance, while Betsy Schmid will lead the government relations organization. All three will report to the CEO.

Helm joined General Dynamics in 2010. In his new role, he “will provide counsel to the CEO on emergent issues and continue to support General Dynamics’ strategic initiatives,” the contractor said.

Kirchmaier, who has been with the company since 1978, has worked in multiple roles, including president of General Dynamics Advanced Information Systems and senior vice president of General Dynamics Information Technology. Since 2015, he has served as vice president for strategic initiatives.

Schmid came to General Dynamics in 2015. She has also worked at the Aerospace Industries Association, the Senate Appropriations defense subcommittee and the Office of the Secretary of Defense.

By Marjorie Censer
January 11, 2019 at 11:43 AM

Harris Corp. said today the Justice Department, which is reviewing its planned merger with L3 Technologies, has requested "additional information and documentary materials."

The request, made yesterday, "extends the waiting period under the [Hart-Scott-Rodino Antitrust Improvements Act] until 30 days after both Harris and L3 have complied with the Second Request or such later time as the parties may agree with the DOJ, unless the waiting period is terminated earlier," the company said in a Securities and Exchange Commission filing.

According to the filing, the deal is still expected to close in mid-2019.

By Tony Bertuca
January 11, 2019 at 11:17 AM

President Trump has appointed former defense industry executive Charles Kupperman to serve as deputy to national security adviser John Bolton, according to a White House announcement.

Kupperman worked previously as vice president for business development of missile defense systems for Boeing, and as vice president of Washington space operations for Lockheed Martin.

Kupperman replaces Mira Ricardel, who was ousted from the position after extraordinary public criticism from First Lady Melania Trump.

"It is the position of the Office of the First Lady that she no longer deserves the honor of serving in this White House," Stephanie Grisham, the first lady's spokeswoman, said in a November statement.

The White House notes Kupperman also served in the Reagan administration in the Executive Office of the President, NASA, and the President's General Advisory Committee on Arms Control and Disarmament. Kupperman also advised Reagan's presidential campaign on defense and foreign policy matters.

"Charlie Kupperman has been an adviser to me for more than 30 years, including during my tenure as national security adviser to President Trump," Bolton said in a statement. "Charlie's extensive expertise in defense, arms control and aerospace will help further President Trump's national security agenda."

By Justin Katz
January 11, 2019 at 11:08 AM

Chief of Naval Operations Adm. John Richardson is meeting with his Chinese counterpart in Beijing next week, the Navy said today.

Richardson will meet with Chinese navy chief Vice Adm. Shen Jinlong and Central Military Commission leadership during a three-day visit from Jan. 13 to 16.

The goal of the trip is continuing "a results-oriented, risk-reduction-focused dialog between the two militaries," a Navy statement reads.

Richardson previously met the Chinese admiral at a seapower symposium last year and has conducted three discussions through video teleconference.

By Tony Bertuca
January 11, 2019 at 10:18 AM

The Pentagon is pushing back on allegations that acting Defense Secretary Pat Shanahan is somehow tipping the scales toward Boeing, his former employer of more than 30 years.

The allegations that Shanahan "intentionally or not, is putting his finger on the scale when it comes to Pentagon priorities," were reported earlier this week in a Politico story that quotes two unnamed former government officials as saying they heard Shanahan praise Boeing and denigrate rival Lockheed Martin, specifically its F-35 Joint Strike Fighter program.

The Defense Department said Shanahan abides by a robust ethics agreement and staffers have firewalls in place to ensure he never makes any decisions that directly impact Boeing.

But scrutiny over Shanahan's ties to Boeing comes as the company has had a string of high-profile successes at the Pentagon.

Inside Defense talked to a Pentagon official who said Shanahan is frustrated that Lockheed has not driven more cost out of the F-35, but noted he is an equal opportunity critic of all major defense contractors, including Boeing.

"It is clear that he is applying pressure to industry and demands performance," the official said. "Sometimes this town and sometimes the defense industry would rather make a lot of money than actually perform."

Read the full story here for free.

By Marjorie Censer
January 11, 2019 at 8:56 AM

BAE Systems said this week it plans to open an office at the Georgia Cyber Center to bolster its presence in Augusta.

The company said it already has more than 400 employees in the Fort Gordon/Augusta market.

The Georgia Cyber Center, BAE noted, is home to cybersecurity programs offered by Augusta University and Augusta Technical College. Its tenants also include the Georgia Cyber Range and the Georgia Bureau of Investigation's Cyber Crime Unit.

By John Liang
January 11, 2019 at 5:00 AM

Some must-reads from this week's issue of Inside the Air Force:

1. The Air Force announced this week it has accepted delivery of the Boeing-made KC-46 tanker, but says it has "mechanisms in place" -- including an option to withhold up to $1.5 billion from the company's contract -- to ensure Boeing completes fixes to the remote vision system that were identified during developmental testing.

Full story: USAF approves KC-46 for delivery despite concerns with RVS

2. The Air Force has "restructured" a key upgrade effort for the Joint Space Operations Center Mission System, but is providing little detail on how the program has been reshaped.

Full story: USAF restructures JMS after delays, will feed Space Fence data to legacy system

3. The Pentagon needs to cut about 43 percent of the annual cost to sustain the F-35A by 2036 in order to meet sustainment affordability goals, according to a new report to Congress.

Full story: Pentagon aims to cut cost to sustain F-35A by 43 percent

4. The Air Force sent Congress an update last month on the progress of programs approved for Section 804 authority, and included specific "guardrails" that will trigger congressional notification if the program isn't performing as planned.

Full story: USAF sends Section 804 update, highlighting performance 'guard rails'

By Justin Katz
January 10, 2019 at 4:17 PM

The Navy is seeking information from contractors interested in producing the Surface Electronic Warfare Improvement Program Block III, according to a Jan. 7 notice posted to the Federal Business Opportunities website.

The service is considering two different procurement strategies, according to the notice. One option is a "winner-take-all, single-award contract." The other option is a leader-challenger approach.

"For this strategy, the government would award a higher proportion of work to the leader," the document states. "The challenger would be awarded a smaller proportion of work."

The notional award date for a contract is the third quarter of fiscal year 2020.

General Dynamics, Lockheed Martin and Northrop Grumman developed SEWIP Blocks I, II and III respectively. The subsystem is an early detection, signal analysis, threat-warning system against anti-ship missiles.

While SEWIP Block III did achieve a milestone C decision in 2018, the program also has had its share of challenges in recent years.

The Navy requested Congress allow $20 million be reprogrammed to complete the engineering and manufacturing development phase of SEWIP Block III due to "unanticipated technical challenges,” Inside the Navy reported last July.

Prior to that, a government watchdog agency found SEWIP Block III experienced "significant" cost estimate increases over its engineering and manufacturing development phase from August 2014 to March 2017, ITN reported in November 2017.

By John Liang
January 10, 2019 at 3:28 PM

Some must-reads from this week's issue of Inside the Pentagon:

1. The Army will acquire two Iron Dome batteries to provide ground forces an interim capability by 2020 against unmanned air vehicles, mortars, rockets, artillery and cruise missiles as well as explore full adoption of the Israeli-developed system for the Indirect Fire Protection Capability Increment 2-Intercept program and incorporation with the Integrated Battle Command System by 2023.

Full story: Army picks Iron Dome for interim CMD, eyes long-term adoption

2. Rep. Mac Thornberry (TX), the top-ranking Republican on the House Armed Services Committee, said Jan. 8 he opposes any plan that would use Defense Department funds to construct a wall on the southern border, per an option that has been floated by President Trump.

Full story: Thornberry won't back Trump if he raids DOD funds to build wall

3. The Defense Department has released a new guide on using other transaction agreements to better define key milestones and terms after a production OTA was successfully protested last year.

Full story: DOD releases new 'other transaction' guidance, clarifies follow-on production

4. Acting Deputy Defense Secretary David Norquist said Jan. 9 the Defense Department has a final budget topline for fiscal year 2020, but would not say what it is amid comments from Pentagon sources saying it will likely be $750 billion.

Full story: Norquist: DOD has final budget topline; Thornberry supports $750B request

By John Liang
January 10, 2019 at 2:18 PM

This Thursday INSIDER Daily Digest has news on the competitors for the Army's Stryker combat vehicle active protection system, Boeing beginning deliveries of the KC-46 airborne refueling tanker, F-35 affordability and more.

Two companies are competing to build an active protection system for the Army's Stryker combat vehicle:

Rheinmetall, Rafael competing in Stryker APS 'rodeo' next month

The Army is deciding between Rheinmetall's Active Defense System and a lighter version of Rafael's Trophy for integration on the Stryker combat vehicle.

The head of Textron Systems spoke with the media this morning:

Seeking expansion, Textron Systems chief pushes more focused research approach

Textron Systems is looking to its purchase of ground robotics company Howe and Howe as well as more focused independent research and development spending to help it grow, Lisa Atherton, the unit's president, told reporters today.

Boeing can now begin delivering KC-46 airborne refueling tankers to the Air Force:

Air Force approves KC-46 for delivery despite continued concerns with RVS and boom performance

The Air Force announced today it has accepted delivery of the Boeing-made KC-46 tanker, but says it has "mechanisms in place" -- including an option to withhold up to $1.5 billion from the company's contract -- to ensure Boeing completes fixes to the remote vision system that were identified during developmental testing.

It's unclear whether the Air Force's Joint Space Operations Center Mission System program has been canceled, absorbed by other modernization efforts or simply delayed:

Air Force restructures JMS after delays, will feed Space Fence data to legacy system

The Air Force has "restructured" a key upgrade effort for the Joint Space Operations Center Mission System, but is providing little detail on how the program has been reshaped.

A new DOD report to Congress, crafted by Pentagon acquisition chief Ellen Lord, updates the department's F-35 affordability "constraints," using a cost-per-tail-per-year metric to track long-term sustainment cost targets:

Pentagon aims to cut cost to sustain F-35A by 43 percent

The Pentagon needs to cut about 43 percent of the annual cost to sustain the F-35A by 2036 in order to meet sustainment affordability goals, according to a new report to Congress.

The Army has selected the Israeli-developed Iron Dome system to provide ground units with a cruise missile defense capability:

Army picks Iron Dome for interim CMD, eyes long-term adoption of Israeli system

The Army will acquire two Iron Dome batteries to provide ground forces an interim capability by 2020 against unmanned air vehicles, mortars, rockets, artillery and cruise missiles as well as explore full adoption of the Israeli-developed system for the Indirect Fire Protection Capability Increment 2-Intercept program and incorporation with the Integrated Battle Command System by 2023.

The Defense Department has taken a step toward protecting its cyber supply chain:

Pentagon hands lawmakers a list of critical technologies to protect from cyber adversaries

The Defense Department has submitted a list of technologies that must be protected from cyber and foreign adversaries such as Russia and China, according to a spokesman for the House Armed Services Committee, a move that is intended to guide efforts to secure the military's cyber supply chain and reform the acquisitions process.