The Insider

By John Liang
May 6, 2019 at 2:23 PM

This Monday INSIDER Daily Digest has coverage from the Navy League's Sea-Air-Space conference, Pentagon supply-chain security concerns, the Air Force's launch services request for proposals and more.

The Navy's top uniformed officer spoke this morning on his service's about-face on retiring an aircraft carrier early:

Richardson: 'Environment' required Truman retirement reversal

Chief of Naval Operations Adm. John Richardson today said the "environment" indicated the Navy should overturn its decision to retire a Nimitz-class aircraft carrier nearly two decades early.

Navy leaders won't reveal results of a high-tech artillery fly-off:

Guided artillery fly-off from Navy 5-inch gun informing new NSFS analysis

The Navy last summer conducted a fly-off of three different long-range, satellite-guided rounds originally designed for ground forces as part of a continuing analysis to give service leaders options for how to extend the reach of the 5-inch guns on destroyers and cruisers to best support Marine Corps operations ashore.

Inside Defense takes a deep dive into military supply-chain security:

Pentagon struggles to balance supply-chain security concerns with commercial innovation push

The Pentagon has moved in recent years to better secure key technologies from potential adversaries like China, but those efforts are increasingly coming into conflict with the Defense Department's attempts to work with commercial businesses.

A launch services request for proposals came out late Friday, despite some in Congress and industry pushing for a delay:

Air Force releases launch services RFP; concerns about competition remain

The Air Force has formally released a request for proposals to buy launch services, setting in motion a competition that will shape the future government launch market.

Twenty-five House lawmakers and three senators are requesting answers on why the Pentagon canceled a special contract with an independent, self-selecting group of scientists:

Lawmakers press Pentagon on decision to cut ties with JASON scientists

House and Senate lawmakers are pressing acting Defense Secretary Pat Shanahan on the Pentagon's decision to abruptly end its long-term contract with the group of scientists known as "JASON."

Defense Department acquisition chief Ellen Lord appeared alongside members of the Defense Innovation Board late last week to brief the press on recommendations in the final Software Acquisition and Practices Study submitted to Congress:

Pentagon asking Congress for new appropriations rules for software

Pentagon acquisition chief Ellen Lord said the Defense Department is asking Congress to create new appropriations rules for the development and procurement of software, which would begin with pilot programs in fiscal year 2020 and transition to a new process in FY-21.

The Navy's prototype SPY-6(V)1 radar is a lot more sensitive than originally thought:

Navy determines SPY-6 radar three times stronger than original requirement

The Navy is confronting a welcome challenge -- what to do with a new radar that is three times better than expected. Government testers recently completed developmental evaluation of the SPY-6(V)1 radar and concluded the new, Raytheon-built sensor is nearly 100 times more sensitive than the legacy SPY-1 radar, built by Lockheed Martin.

Marine Corps Lt. Gen. David Berger, tapped to become the service's next commandant, was on Capitol Hill last week:

Berger: Marine Corps 'not sized' to achieve National Defense Strategy

The Marine Corps is not currently "sized, structured, and resourced" to fully achieve the Trump administration's new National Defense Strategy, according to the general tapped to serve as the next commandant.

By Tony Bertuca
May 6, 2019 at 2:17 PM

The Democrat-led House Appropriations defense subcommittee plans to fund defense in fiscal year 2020 at about $701 billion, a less-than-3% increase from FY-19.

The appropriators plan to fund the Defense Department's base budget at $622.6 billion, military construction at approximately $10 billion and Overseas Contingency Operations at $69 billion, a congressional source confirmed for Inside Defense. The information was first reported by CQ, which obtained a copy of the committee's draft "302b" allocations.

The appropriations amounts are expected to align with the $733 billion topline the House Armed Services Committee is eying for its bill, which covers total U.S. defense spending, not just the Pentagon.

The Trump administration has requested $750 billion in total defense spending for FY-20, and the Republican-run Senate Armed Services Committee is expected to mark its bill accordingly.

Meanwhile, Democrats and Republicans must still carve out a deal by Jan. 15 to raise mandatory budget caps on defense and non-defense spending, or risk massive sequestration cuts.

The defense committees are scheduled to begin marking up their appropriations and authorization legislation this month, with the House Appropriations defense subcommittee slated for May 15 and the Senate Armed Services Committee scheduled for the week of May 20.

By Sara Sirota
May 6, 2019 at 10:23 AM

The State Department on Friday approved a foreign military sale to Bahrain for an estimated cost of $750 million, according to the Defense Security Cooperation Agency.

Bahrain's government requested various weapons to support its new procurement of F-16 Block 70 aircraft and upgrades to existing F-16V aircraft.

The possible sale includes 32 AIM-120C-7 Advanced Medium-Range Air-to-Air Missiles, 32 AIM-9X missiles, 20 AGM-84 Block II Harpoon missiles, 50 AGM-88B High-Speed Anti-Radiation Missiles, 100 GBU-39 250-pound Small Diameter Bomb-I all-up-rounds, 120 KMU-572 tail kits, 100 DSU-38 proximity sensors and other weapons and support equipment.

"Bahrain will use these capabilities as a deterrent to regional threats and to strengthen its homeland defense," a DSCA news release states. "This proposed sale and upgrade will improve interoperability with U.S. forces and other regional allies."

The primary contractors will be Lockheed Martin Aeronautics, Raytheon Missile Systems and Boeing.

Arms sales to Bahrain -- a member of the Saudi-led coalition fighting a war in Yemen -- have met resistance from lawmakers in the past.

Sen. Rand Paul (R-KY) sought to prevent a $300 million weapons sale last fall due to mass civilian suffering in that conflict. His resolution was voted down.

By Tony Bertuca
May 6, 2019 at 5:00 AM

The week ahead is packed with congressional hearings, including an appearance by acting Defense Secretary Pat Shanahan. Additionally, senior Pentagon officials are scheduled to appear at the Navy League's Sea Air Space conference.


The Navy League's Sea Air Space conference begins at National Harbor, MD, and runs through Wednesday.


The Association of the United States Army hosts a breakfast in Arlington, VA, with Army Futures Command chief Gen. John Murray.

The Center for Strategic and International Studies hosts a panel on Army air and missile defense.


The Senate Appropriations defense subcommittee holds a DOD budget hearing with Shanahan and other senior Pentagon leaders.

Kratos Defense & Security Solutions executives are set to discuss quarterly earnings.

The House Armed Services strategic forces subcommittee holds a hearing on the U.S. missile defense budget.

The 2019 Cloud Computing Brainstorm conference begins.

The Senate Armed Services strategic forces subcommittee holds a hearing on atomic defense activities and programs.


The House Armed Services readiness subcommittee holds a hearing on DOD's readiness budget.

Maxar Technologies executives will discuss quarterly earnings.

By Tony Bertuca
May 3, 2019 at 3:37 PM

Acting Defense Secretary Pat Shanahan today released a statement bidding farewell to Bob Daigle, the Pentagon's outgoing director of cost assessment and program evaluation.

“Bob and his CAPE team have been key architects of the investment strategies that ensure our military is ready to compete, deter, and win in any high-end fight of the future,” Shanahan said. “These investments have formed the foundation for our Department's [fiscal year 20]19 and FY-20 strategy-driven budgets, enabling DOD to field new technologies and weapons systems at the speed of relevance. We wish Bob and his family all the best in his future endeavors. His strong leadership will be missed across the department.”

Foreign Policy earlier this week first reported Daigle's plan to resign.

Daigle's exit means the Pentagon will be without yet another senior leader.

Shanahan has been acting defense secretary since Jan. 1, with Pentagon comptroller David Norquist serving as his deputy. Elaine McCusker, meanwhile, is serving as acting comptroller. Chief Management Officer Jay Gibson resigned in November, and his deputy Lisa Hershman has been acting CMO since then.

Daigle, a former staffer on the House Armed Services Committee, was confirmed as CAPE director in August 2017.

Along with Shanahan and Norquist, Daigle was one of the primary architects of the Pentagon's budget, which, among other modernization decisions, called for retiring the Harry S. Truman aircraft carrier (CVN-75) and procuring fewer F-35 Joint Strike Fighters in favor of more F-15Xs.

The Trump administration recently reversed the decision to retire the Truman after blowback from Capitol Hill. The decision to procure fewer F-35s has also proven controversial with lawmakers, some of whom sit on the House Appropriations Committee.

By Marjorie Censer
May 3, 2019 at 1:33 PM

Today's INSIDER begins with news on the Pentagon's annual review of China's military and includes the latest on the THAAD and F-35 programs.

China announced a 2018 defense budget of $176 billion, but the Pentagon says it is clear Beijing spent more as published figures omit several categories of expenditure such as research and development and foreign weapons procurement:

China's military spending pegged at $200B; industrial espionage continues

China spent about $200 billion on defense in 2018 and will likely grow that by an average of 6% through 2022, according to the Pentagon's annual report on Chinese military strength.

Pentagon warns companies of ‘trade-offs’ in doing business with China

The Pentagon remains concerned about China’s pursuit of new technologies that could be put to military use, warning U.S. companies that doing business with Beijing could bring risks in terms of cyber espionage and limited opportunities for future work with the U.S. government.

Gen. James McConville, Army vice chief of staff, told Congress this week a new study directed by the 2019 Missile Defense Review, due to be complete next month, will consider whether the service needs more THAAD batteries:

McConville: Without additional funding, THAAD could squeeze Army modernization

A statutory requirement for the Missile Defense Agency to transfer the Terminal High Altitude Area Defense program to the Army within a year could impinge on the Army's high-priority modernization plans unless the Defense Department increases the service's overall budget allocation in fiscal year 2021, according to a senior service official.

Vice Adm. Mat Winter told reporters this week an Office of the Secretary of Defense per-flying-hour price target for the F-35A is a “stretch goal”; prime contractor Lockheed Martin thinks they can meet it:

Pentagon officials: F-35A $25K flying hour cost target not achievable by 2025

The head of the Pentagon's cost assessment office and the F-35 program executive officer said today the program isn't likely to meet an Office of the Secretary of Defense target to reduce the A-model jet's cost per flying hour to $25,000 by fiscal year 2025.

Lockheed says Pentagon's $25K flying-hour target is reachable by 2025

F-35 prime contractor Lockheed Martin said this week the Pentagon's goal to reach a $25,000 cost per flying hour for the A variant by 2025 is achievable and fits into its broader strategy to reduce the fifth-generation aircraft's sustainment costs.

Army Futures Command chief Gen. Mike Murray appeared before the House Armed Services tactical air and land forces subcommittee this week:

Murray: Army to increase rotational deployments to Europe

The Army is seeking to increase its presence in Europe to deter Russian aggression, according to the head of Army Futures Command.

By Courtney Albon
May 3, 2019 at 12:05 PM

F-35 prime contractor Lockheed Martin said this week the Pentagon's goal to reach a $25,000 cost per flying hour for the A variant by 2025 is achievable and fits into its broader strategy to reduce the fifth-generation aircraft's sustainment costs.

“We are taking action to deliver on the $25,000 cost-per-flight-hour goal by 2025 -- and see a path to achieving this target,” spokesman Mike Friedman said in a May 2 statement. “Lockheed Martin represents less than half of total [operation and sustainment costs], and we are partnering with our customers to further reduce costs across the enterprise to meet these joint goals.”

The company's statement comes after Defense Department officials on Thursday told House lawmakers it's not likely the program will reach the 2025 cost target, which was established earlier this year in the F-35's life-cycle support plan.

“The department doesn't see a path to get to $25,000 per flying hour by FY-25,” Bob Daigle, head of the Pentagon's cost assessment and program evaluation office said during a House Armed Services tactical air and land forces subcommittee hearing.

The F-35A's current CPFH is $44,000. Program Executive Officer Vice Adm Mat Winter said during the hearing he is targeting a $34,000 CPFH by 2024. Daigle said CAPE estimates the jet's flying-hour cost will drop to $36,000 by 2024 and then increase slightly to $37,000 in 2025.

By Sara Sirota
May 3, 2019 at 11:57 AM

The Air Force this week awarded an $89 million cost plus fixed fee contract to Black River Systems for operational counter-small unmanned aerial systems open architecture software and hardware.

A May 2 Defense Department notice gives further details, stating, “This contract provides for system analysis, simulation and modeling, technique development, hardware and software rapid prototyping, integration, test, demonstration, data analysis, transition, operational assessment, and hardware and software enhancement relative to the objective.”

At the time of award, about $15 million is being obligated using fiscal year 2018 and FY-19 research, development test and evaluation and procurement funds. The award is the result of a small business innovation research contract. Work is expected to be complete by May 2022 and will be performed in Utica, NY.

In a reprogramming request submitted to Congress last month, the Air Force sought $12 million to purchase C-UASs for physical security of “priority sites.”

By Marjorie Censer
May 3, 2019 at 9:26 AM

Maxar Technologies said today its insurance carriers have accepted its $183 million claim for loss related to the WorldView-4 satellite on-orbit failure.

They “have agreed to pay the company that full amount under their insurance policies,” Maxar added.

“Insurance proceeds have already been received from several insurers and full payment is expected to be delivered within 30 days,” the company said. “Maxar will use the proceeds to invest in its pre-existing capital priorities, including the development of its innovative WorldView Legion constellation.”

By Thomas Duffy
May 2, 2019 at 3:51 PM

The Pentagon this afternoon released its latest annual report on China's military and security developments. The report notes: "China’s leaders seek to align civil and defense technology development to achieve greater efficiency, innovation, and growth." Stay with Inside Defense for further news and analysis.

By Thomas Duffy
May 2, 2019 at 2:55 PM

This Thursday INSIDER begins with a look at a new technology development effort tied to multi-domain operations, a Navy laser program, a new federal group tasked with protecting the government's supply chain, a missile defense laser program, and we finish up with F-35 news.

The Pentagon's advanced technology group is making news:

DARPA advancing 'Assault Breaker II' to test technologies underpinning multi-domain operations

The Defense Advanced Research Projects Agency is moving forward with the “Assault Breaker II” program to provide the “technical underpinning” for multi-domain operations and counter anti-access, area-denial strategies employed by Russia and China.

A Navy laser effort has a big review coming up:

HELIOS set for critical design review this year, delivery in May 2021

A high-energy laser destined for an Arleigh Burke-class destroyer is set to undergo a critical design review later this year, and is on track to be delivered to the Navy in May 2021, according to the weapon's prime contractor.

A new government group is trying to protect the supply chain:

Federal Acquisition Security Council, created under 2018 tech law, holds first meeting

The Federal Acquisition Security Council held its first meeting this week to begin developing a national strategy for securing the government's supply chain from cyber and other threats, with the Defense Department's strict cybersecurity rules likely to serve as a model.

The Missile Defense Agency is working with lasers:

Following 'successful' laser lethality demo, MDA advances LPLD program

The Missile Defense Agency is hailing a “very successful” March ground test of laser technology that a senior official said penetrated a threat-representative ballistic missile component, buoying support within the agency for a new speed-of-light weapon and hopes for a future capability to destroy an enemy target immediately after launch.

Finally, Lockheed is pitching improvements to the F-35 Strike Fighter:

Lockheed Martin developing new internal weapons rack for Air Force, Navy F-35s

Lockheed Martin today revealed an independent research and development effort to increase the ammunition capacity of the Air Force and Navy variants of the F-35 Joint Strike Fighter.

By Marjorie Censer
May 2, 2019 at 2:14 PM

Services contractors CACI International and ManTech International both this week reported increases in quarterly sales and profit.

CACI International said sales during the most recent three-month period reached $1.3 billion, up close to 13% from the same period a year earlier. The company's quarterly profit hit $68.1 million, up 6% from the prior year.

CACI attributed its sales growth to “acquired revenue, new business wins, and on-contract growth.” The contractor said its profit benefited from lower 2019 tax rates.

ManTech International said this week sales in its most recent quarter reached $502 million, up 6% from the same three-month period a year earlier.

The company's quarterly profit hit $21.1 million, up nearly 5% from the prior year.

By Ashley Tressel
May 2, 2019 at 12:22 PM

The Army has identified about 500 military and civilian personnel that could be considered for transfer to a potential Space Force in fiscal year 2022, under the Trump administration's proposal for the new service, according to the Army's vice chief of staff.

Gen. James McConville, in a written answer to advance policy questions from senators ahead of a hearing on his nomination as the Army's chief of staff today, states the identified personnel include “satellite operators, planners, and engineers from communications, engineering, and information management career fields directly supporting global space operations,” who “are strategic-level direct or general support to Joint Forces.”

McConville notes the Army space cadre would retain about 2,000 military and civilian personnel across all components who are “organic to Army warfighting organizations,” including space operations specialty officers and air defense artillery, military intelligence and signal soldiers.

While the Pentagon does not currently have service-specific savings estimates associated with the creation of a Space Force, the transfer of 500 personnel would cost the Army $175 million over the future years defense program, McConville writes.

By Sara Sirota
May 2, 2019 at 11:42 AM

Air Combat Command is expected to complete an analysis of alternatives this summer for the Advanced Battle Management System, according to a senior Government Accountability Office official.

ABMS “is in the early stages of planning. The capabilities and the strategy to deliver those capabilities are still to be determined,” Michael Sullivan, director of defense weapon system acquisitions at GAO, stated in his written testimony for a hearing today before the House Armed Services tactical air and land forces subcommittee.

ABMS is intended to provide command and control and surveillance across air, land and sea using an integrated network of sensors. It will enhance the Air Force's Airborne Early Warning and Control System, Joint Surveillance and Target Attack Radar System and Control and Reporting Center.

The upcoming AOA will focus on air-centric mechanisms, such as those provided now by AWACS, while ground target tracking processes will be identified using an existing AOA conducted for JSTARS in May 2012.

Although Sullivan states the Air Force “expects to fully define ABMS” with the AOA scheduled to finish this summer, he does not address how the service plans to assess sea-based capabilities.

The AOA was originally planned to last nine months but was shortened to six, and the service received “conditional approval” to cut the number of alternatives analyzed from five to three, he adds.

Sullivan also discussed the Air Force's plans for the three-phased strategy for ABMS based on interviews with Defense Department officials.

According to an acquisition specialist, technologies associated with the first phase -- which began in fiscal year 2018 and runs through 2023 -- are considered mature, though “there may be risks as the Air Force integrates technologies.”

The second and third phases -- scheduled to begin in 2024 and the mid-2030s respectively -- are not fully developed and will be informed by the results of the AOA.

Sullivan further states the role of the Air Force's chief architect position -- held by Preston Dunlap, who joined in March -- has “not been fully defined.”

By Marjorie Censer
May 2, 2019 at 10:20 AM

Huntington Ingalls Industries said today sales in its most recent quarter reached $2.1 billion, up 11% from the same three-month period a year earlier.

The company's quarterly profit hit $118 million, down 24% from the prior year.

HII attributed its sales growth to increased volume at Newport News Shipbuilding and the addition of acquisitions in its technical solutions group.

The company's technical solutions group reported quarterly sales of $257 million, up 10% from a year earlier, buoyed by the acquisitions of G2 and Fulcrum IT services as well as increased oil and gas sales, according to the contractor.

The unit's quarterly profit reached $5 million, more than double the $2 million in profit the prior year.

In a call with analysts this morning, Mike Petters, Huntington Ingalls' chief executive, said the company is very focused on unmanned work.

“If we're not moving toward a more unmanned future, we're going to miss an opportunity here,” he said. “Eight years ago, we didn't have an unmanned capability to speak of. . . . Now, we're part of the Boeing team that's going to be producing the [Extra Large Unmanned Underwater Vehicle]. We're going to be actually manufacturing them. . . . That has given us a pretty good insight into where the UUV space is going.”

Petters said HII is “intentionally interested” in the unmanned surface vehicle space as well.

Meanwhile, BWX Technologies today said sales in its nuclear operations group, which includes its Navy work, reached $305 million during its most recent quarter, down nearly 4% from the same period a year earlier.

Sales sagged because of the timing of long-lead material purchases and lower missile tube volume, according to the company.

Quarterly profit for the unit hit $57.6 million, down 15%. BWXT attributed the decline to “lower volume and higher expenses associated with on-boarding employees to meet expected increased volume demands.”