The Insider

February 9, 2018 at 11:09 AM | Tony Bertuca

The White House Office of Management and Budget will submit the fiscal year 2019 budget request Monday and is updating it to reflect the two-year, $300 billion spending agreement Congress reached early this morning, according to a senior OMB official.

"After we finalized the budget, Congress reached agreement to significantly raise the spending caps in FY-18 and FY-19 in the Bipartisan Budget Act, and the President has signed the new caps into law," the official said. "In light of this agreement, we are modifying our FY-19 budget request to account for these new cap levels."

The official also said OMB will release an "addendum" with the administration's "roadmap for how to account for the increased spending caps in a responsible manner."

The roadmap will include additional FY-19 funding for a "limited set of administration priorities as well as proposals to fix certain budget gimmicks used to circumvent the spending caps," the official said.

OMB did not immediately respond to questions about whether it would alter its guidance for the Pentagon's Overseas Contingency Operations account. OMB Director Mick Mulvaney has long deried the OCO account as a "gimmick" and a "slush fund" because it is not subject to the spending caps.

The congressional deal, meanwhile, provides $700 billion in total defense spending for FY-18 and $719 billion for FY-19, a $165 billion increase above the caps set by the 2011 Budget Control Act.

The Defense Department's base budget will be $600 billion for FY-18 and $617 billion for FY-19, breaking the respective caps of $549 billion and $562 billion for those years. A congressional staffer said the OCO request for FY-19 would $69 billion.

The new agreement also adds $63 billion more than the BCA cap to non-defense spending in FY-18 and $68 billion in FY-19.

Defense Secretary Jim Mattis, citing an ongoing Pentagon audit, pledged Thursday to "wisely" spend the $165 billion in additional defense funding.

"We have never had a full audit," he told reporters at the Pentagon. "I'm very comfortable that we are going to find problems in how we are spending money and we'll correct on every one of those. We are going to find every problem and we're going to keep finding them and we're going to spend the money wisely."

February 9, 2018 at 10:23 AM | Courtney Albon

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

1. Air Force officials plan to recommend a slate of tactical and training changes by Feb. 11, following a study on the future of command-and-control assets at Nellis Air Force Base, NV.

Full Story: C2 stakeholders craft recommendations to keep systems relevant

2. The Defense Department is in the midst of several test and training range upgrades in preparation for F-35 initial operational test and evaluation as well as to support the fifth-generation aircraft's long-term range needs.

Full Story: DOD investing in range improvements to support F-35 IOT&E

3. As Raytheon's Small Diameter Bomb II moves through its test program, the new weapon performed well against moving targets but still had problems hitting static and maritime targets, the Pentagon's director of operational test and evaluation said in his annual report published last month.

Full Story: Air Force to field SDB II software upgrades to improve accuracy

February 9, 2018 at 9:44 AM | Marjorie Censer

Bruce Tanner, Lockheed's chief financial officer, said this week Sikorsky's sales, particularly in commercial, are lower than expected.

Speaking at a conference hosted by Cowen, Tanner said it's hard to distinctly identify Sikorsky's performance as some Lockheed work has been merged into Sikorsky. Lockheed acquired Sikorsky in 2015.

But he acknowledged the organization still has seen a tougher time.

“Sikorsky's revenue is probably a little lower than we had expected when we acquired it; definitely in the commercial side it's lower than when we first acquired it,” Tanner said.

He said Lockheed is expecting Sikorsky's commercial sales to remain flat for the next several years.

“We don't have any expectation of commercial bouncing back . . . in that three-year period at all,” he said. “Anything that happened on top of that would be very fortuitous for us.”

February 9, 2018 at 8:11 AM | Tony Bertuca

Congress, after a short government shutdown last night, has approved a two-year budget agreement that would provide an additional $165 billion in defense spending. 

The Senate, which saw its vote delayed for hours by Sen. Rand Paul (R-KY), approved the measure 71-28 after 1 a.m.  The shutdown began at midnight. 

The House then voted 240-186 hours later to send the bill to President Trump. 

The deal was attached to a six-week continuing resolution that will give appropriators time to craft final legislation for fiscal year 2018. 

February 8, 2018 at 4:47 PM | Ashley Tressel

Army Under Secretary Ryan McCarthy said today the service is considering candidates to serve as chief scientist for its new Futures Command.

During a talk at the Brookings Institution on Army modernization, McCarthy said he has already met with a few "world-class" scientists who are "very keenly interested" in the opportunity.

McCarthy also gave more insight as to the location of Futures Command -- which has sparked debate among Army leaders -- saying it will probably be in a major city, where academics and technology innovators feel comfortable.

"The type of command we're looking for? It doesn't have flags out front or old tanks in front of it," he said.

February 8, 2018 at 2:45 PM | Courtney Albon

The Air Force today announced it plans to release a request for proposals for the second phase of GPS III Follow-On satellite production "on or about" Feb. 13.

The RFP was expected in December 2017, but was held up as officials worked to solidify requirements. The solicitation is expected to result in a contract for up to 22 GPS III Follow-On satellites in the 2019 time frame.

During the first phase of competition, the service awarded contracts to three companies to propose satellite and payload options.

Lockheed Martin is on contract to build the first 10 GPS III satellites, the first of which is slated to launch later this year.

February 8, 2018 at 2:08 PM | John Liang

The Defense Department's upcoming missile defense assessment, the two-year budget deal, DARPA and more highlight this Thursday INSIDER Daily Digest.

The Pentagon's upcoming missile defense review will look at more than just ballistic missiles:

Coming DOD missile defense assessment drops focus on 'ballistic' from title

The Defense Department is dropping the "ballistic" from the Ballistic Missile Defense Review President Trump asked for last year, a change that reflects the assessment -- set to be released soon -- aims to provide a new policy, strategy and architecture blueprint accounting for a wider array of threats than one released in 2010.

A new budget deal, according to congressional sources, would raise the limit on national defense spending in FY-18 by $80 billion and in FY-19 by $85 billion:

Two-year budget deal would lift spending caps, boost DOD base budget above $600B

Senate leaders today broke a political logjam over federal spending, announcing a two-year budget agreement that would raise statutory caps on defense spending for fiscal years 2018 and 2019 by $165 billion, a deal that -- if agreed to by the House and enacted -- would exceed increases for the Pentagon proposed last year by the Trump administration.

A possible failure by Congress to pass the two-year budget agreement raising the spending caps for defense "would be devastating," senior Army leaders testified this week:

Generals address Army's pursuit of modernization priorities, seek further reforms

During a Feb. 7 hearing of the Senate Armed Services airland subcommittee, a quartet of Army senior leaders issued a familiar call for funding increases and budget stability, while seeking greater flexibility to pursue the service's modernization priorities.

Document: Senior Army leaders' joint testimony on modernization

The Defense Advanced Research Projects Agency has been working on a "duality of research both in the platform domain, as well as in the pure autonomy domain":

DARPA focused on platforms with 'a significant amount of autonomy'

The Defense Advanced Research Projects Agency is focused on developing platforms and systems containing a "significant amount of autonomy," as the Defense Department pushes for technological breakthroughs in artificial intelligence and manned-unmanned teaming.

The Pentagon's Strategic Capabilities Office wants to produce a modern, reliable and reasonably priced torpedo that can transition to industry with minimal or no redesign:

SCO embarks on effort to increase MK 48 heavyweight torpedo range

The Strategic Capabilities Office is embarking on a new project, dubbed the Contender, to help the Navy increase the range of the MK 48 heavyweight torpedo.

Document: SCO solicitation on MK 48 heavyweight torpedo

Over time, the amount of funding needed to add onto vehicle platforms built for AI could become insurmountable without the right planning, according to the head of TARDEC:

TARDEC director lays out strategy for Army AI integration

The Army's Tank Automotive Research, Development and Engineering Center is figuring out the expanses of artificial intelligence as it applies to ground vehicles and is forming a strategy for implementation, according to its director.

The Interoperability Clearinghouse filed a protest with the Government Accountability Office Feb. 5 over DOD's $6.7 million sole-source award to Eagle Harbor Solutions last month:

Pentagon cloud steering group's support contract under protest

The Pentagon's cloud executive steering group's award to an obscure company for "contractor support services" is under protest, raising more questions about the group's push for commercial cloud adoption across the Defense Department.

Defense Business Briefing

Want defense business news delivered straight to your inbox?

Inside Defense's free weekly feature, the Defense Business Briefing, offers the latest in defense industry news.

Read it and sign up today →

Army Lt. Gen. Edward Cardon spoke at an unmanned systems conference this week:

Cardon pushing CFTs on artificial intelligence, unmanned systems

Autonomous systems, artificial intelligence and cyber capabilities "should be central components to future war" and the Army has to prepare to integrate and protect those capabilities, according to the director of the service's Office of Business Transformation.

A senior House lawmaker on Navy physiological episodes regarding service aircraft: "This has got to be fixed":

Navy 'not declaring victory' on physiological episodes

The Navy is "not declaring victory" over the problem of pilots suffering physiological episodes in the T-45C Goshawk trainer or the F/A-18 Hornet and Super Hornet although rates of occurrence have greatly decreased in the trainers.

February 8, 2018 at 12:44 PM | Marjorie Censer

Peraton said today David Myers, formerly chief executive of DataPath, will serve as president of its communications sector, starting Feb. 20.

"In this role, Myers will lead the sector's strategy development and execution, and its focus on continued program performance and profitable growth," Peraton said. "The Communications sector provides mission-critical, advanced communications services to Peraton's intelligence, defense, civil and commercial customers. Additionally, the sector will be responsible for leading the company's continued growth in the government satellite and terrestrial communications markets."

Myers was both president and CEO at DataPath, a spin-out from Rockwell Collins. He has also held executive roles at ITC Global, Harris CapRock Communications and Spacenet, the U.S. subsidiary of Gilat Satellite Networks, Peraton said.

The contractor last month said it was reorganizing from six business groups into four -- two sectors and two business units.

February 8, 2018 at 12:18 PM | Ashley Tressel

(Editor's note: A previous version of this story gave an incorrect title for Thomas Russell. He is the former director of the Army Research Laboratory.)

The Army should first determine how existing technologies fit into its modernization goals before allocating money to new endeavors, according to the deputy assistant secretary of the Army for research and technology.

"It's not about disruptive technology," Thomas Russell said at a science and technology industry breakfast today. "You have to think about, what's the real impact on modernization?"

Russell said he tells those who ask him about budgets the Army "doesn't need any more S&T." Rather, the service should work on aligning its S&T program with its six modernization objectives before deciding it needs more money, he continued.

"The department is great at inventing things, we're just not very good at taking advantage of those inventions," he told Inside Defense.

Russell said he'd like to see more money in the Army's 6.4, or the technology maturation initiative. The 6.4 program element -- under research, development, test and evaluation -- funds the prototyping and demonstration of selected technology enabled capabilities to support advanced ground and aviation systems, precision weapons and soldier equipment.

Russell said the Army only designates about $1 billion to this effort, while other services spend much more. He said there may be an increase to the Army's 6.4 in the coming budget.

February 8, 2018 at 11:46 AM | Justin Katz

Rear Adm. Gordon Peters will be the new boss of Naval Air Systems Command, the Defense Department announced yesterday, along with nearly a dozen other Navy promotions and assignments.

Peters, who will also be promoted to vice admiral, is currently the program executive officer for the air anti-submarine warfare, assault and special mission programs offices. He will replace Vice Adm. Paul Grosklags as the top officer at NAVAIR.

Also at NAVAIR, Rear Adm. Brian Corey will replace Rear Adm. Mark Darrah as the program executive officer for unmanned aviation and strike weapons, the portfolio encompassing the Navy's MQ-25 Stingray unmanned tanker. Corey is commander of the weapons division at the Naval Air Warfare Center and assistant commander for test and evaluation at NAVAIR.

Meanwhile, Rear Adm. Richard Snyder will be promoted to vice admiral and become the Navy's inspector general. Snyder is currently director of the J5 at Peterson Air Force Base, CO.

February 8, 2018 at 10:40 AM | John Liang

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

1. Senate leaders Wednesday broke a political logjam over federal spending, announcing a two-year budget agreement that would raise statutory caps on defense spending for fiscal years 2018 and 2019 by $165 billion, a deal that -- if agreed to by the House and enacted -- would exceed increases for the Pentagon proposed last year by the Trump administration.

Full story: Two-year deal would lift spending caps, boost DOD base budget above $600B

2. The Defense Department's modernization plans will be driven by the potential for conflict with China and Russia, with some priorities expected to overlap, while others will likely compete, according to DOD's second-highest-ranking officer.

Full story: Selva: Pentagon's plans for China, Russia will compete for resources

3. In its new Nuclear Posture Review, released Feb. 2, the Pentagon calls for lowering the yield of some existing submarine-launched ballistic missile warheads and reinstating the sea-launched cruise missile program to address threats posed by Russia and China.

Full story: DOD's new nuclear strategy lowers yield on SLBMs, re-establishes SLCM

4. The Pentagon has officially disestablished the office of its top acquisition official and will spend the next four months executing a congressionally directed restructuring aimed at separating the management and sustainment of weapon systems and services from research and engineering.

Full story: DOD details acquisition changes ahead of new modernization investments

February 8, 2018 at 9:55 AM | Marjorie Censer

CSRA said this week sales during its most recent quarter reached $1.3 billion, up 7 percent from the same three-month period a year earlier.

The contractor's quarterly profit hit $188 million, up from $126 million a year earlier.

In a call with analysts Wednesday afternoon, Larry Prior, CSRA's chief executive, said the company plans to return savings from the new tax legislation to the bottom line.

"We're investing in our people and our solutions, especially around platforms," Prior said. "The new tax rate derisks that investment and buttresses our ability to remain on the leading edge of technology. The majority of the tax-reform savings will fall to the bottom line."

February 7, 2018 at 2:07 PM | Justin Katz

The Navy has established a four-star-level panel of admirals and senior executives to oversee the implementation of the service's strategic reviews that followed high-profile surface fleet collisions in U.S. 7th Fleet last summer.

"The purpose of the Readiness and Reform Oversight Council (RROC) is to oversee and ensure the implementation of Strategic Readiness Review (SRR) and Comprehensive Review recommendations," according to a charter signed Jan. 30 by Navy Under Secretary Thomas Modly and Vice Chief of Naval Operations Adm. Bill Moran.

Modly and Moran will co-chair the panel that also includes Adm. Philip Davidson, commander of U.S Fleet Forces, Adm. Scott Swift, commander of U.S. Pacific Fleet and the director of the Strategic Readiness Review office. The panel will report to Chief of Naval Operations Adm. John Richardson, Navy Secretary Richard Spencer and Marine Corps Commandant Gen. Robert Neller.

The charter also established two lower-level groups that are overseen by the RROC. The Readiness Reform Steering Group and Readiness Reform Working Groups will collectively approve implementation plans, prepare periodic assessments for Congress and monitor the progress of accomplishing recommended changes.

The charter mandates the RROC provide quarterly updates to Congress on its progress beginning 90 days from Jan. 18.

February 7, 2018 at 1:44 PM | John Liang

The Navy's shipbuilding plans under the Trump administration, DOD's overall FY-19 budget proposal, Army robotics and much more highlight this Wednesday INSIDER Daily Digest.

An Inside the Navy analysis that looks into whether the Trump administration has kept its promise to grow the Navy to 350 ships:

After a year in office, Trump administration yet to lay budget groundwork for 350-ship Navy

President Trump came into office a year ago promising to grow the Navy to 350 ships, a vow cheered by shipbuilders and congressional supporters.

With Senate lawmakers nearing an FY-18 budget deal, a look at what the Pentagon's FY-19 spending proposal will be missing:

DOD's FY-19 budget proposal will rest on a key missing figure: An enacted FY-18 amount

The Pentagon's fiscal year 2019 budget request, set to be sent to Congress next week, will be missing a key figure -- the Defense Department's actual prior-year allocation, a figure that not only provides context for the new proposal but also provides a foundation for the military's latest fiscal plan and accompanying four-year projection.

Robotics development could be risky for the Army:

Army trying to fast-track acquisition for robotics programs

The Army is "taking risks in favor of accelerating programs," particularly robotics, according to a service official.

More on Army robotics:

Army official: Robotics funding spike coming in FY-19

Robotics and autonomous systems have quickly taken over a larger share of the Army's investments for modernization and will continue to do so, according to Maj. Gen. John George.

The Pentagon's latest operational test and evaluation report looks at the Tomahawk missile program:

DOT&E: Navy lacks anti-ship Tomahawk missile plans beyond IOC

The Navy intends to field an upgraded Tomahawk missile in fiscal year 2022, but has not provided plans to assess that weapon's lethality against its intended target set, according to a report from the Pentagon's top weapons tester.

Check out Inside Defense's full DOT&E report coverage →

This week will determine how the Air Force addresses physiological problems experienced by pilots flying the T-6 training aircraft:

Air Force to determine way ahead for T-6 return to flight at Feb. 8 meeting

The Air Force will hold a conference this week to determine the next steps for addressing a recent string of physiological events that has grounded the T-6 training jet.

Document: House hearing on military aircraft physiological episodes


The Army Capabilities Integration Center will soon have new leadership:

ARCIC poised for leadership changes

Nearly a year after the departure of its last permanent director, new leaders have been tapped for the Army Capabilities Integration Center.

Power and energy will soon be part of the Defense Innovation Unit Experimental's focus areas:

DIUx adding 'power and energy' to technology portfolios

The Defense Innovation Unit Experimental plans to add power and energy to the list of commercial technologies the organization seeks to cultivate and pull into the defense industrial base, according to a DIUx program manager.

Defense Business Briefing

Want defense business news delivered straight to your inbox?

Inside Defense's free weekly feature, the Defense Business Briefing, offers the latest in defense industry news.

Read it and sign up today →

Fire support for amphibious operations is increasing in importance for the Navy:

Navy revalidating high-volume fires requirements for amphib operations

The Navy is revalidating the requirements for high-volume suppressive fires in support of amphibious operations, according to a top expeditionary warfare official.

Keep an eye out for an upcoming Marine Corps Ground/Air Task Oriented Radar cyber test:

Marines will conduct G/ATOR follow-on cybersecurity assessments

The Marine Corps will conduct a follow-on cooperative vulnerability penetration and adversarial assessment on the Ground/Air Task Oriented Radar.

The Army is looking into additional uses of hydrogen fuel cells:

Army exploring uses for fuel cell technology beyond vehicles

A program using hydrogen fuel cells to reduce a vehicle's detectability has revealed other potential uses for the technology, which the service is exploring.

February 7, 2018 at 1:33 PM | Tony Bertuca

The Senate has reached a two-year, bipartisan budget agreement that would increase defense and non-defense spending, GOP and Democratic lawmakers announced today.

"This bill is the product of extensive negotiations among congressional leaders and the White House," Senate Majority Leader Mitch McConnell (R-KY) said on the Senate floor. "No one would suggest it is perfect, but we worked hard to find common ground."

Initial reports suggest the total deal would provide an additional $300 billion in defense and non-defense spending above the caps set by the 2011 Budget Control Act.

The deal also includes an increase for the debt ceiling, disaster aid, funding to fight the opioid epidemic and four additional years of the Children's Health Insurance Program.

Watch Inside Defense for further reporting.