The Insider

By John Liang
March 1, 2019 at 5:00 AM

Check out these must-reads from this week's issue of Inside the Air Force:

1. The Pentagon estimates it will cost about $2 billion over the next five years to stand up a Space Force, including $72 million in fiscal year 2020 for a new headquarters, according to a strategic overview document that will accompany the Defense Department's forthcoming legislative proposal.

Full story: Pentagon estimates new Space Force will cost $2 billion over five years

2. ORLANDO, FL -- Air Force Secretary Heather Wilson told reporters this week she still has several questions about the call from the Office of the Secretary of Defense for a new Space Development Agency, including how the new agency would differ from the existing Space and Missile Systems Center.

Full story: Air Force secretary questions rationale for Space Development Agency

3. Funds used to repair damages at Tyndall Air Force Base, FL, taken from existing operations and maintenance accounts, will likely not be diverted to pay for President Trump's southern border wall, an Air Force official told a House subcommittee this week.

Full story: Official: Highly unlikely Tyndall reconstruction funds will go to border wall

4. The Navy is moving ahead with plans to explore a second life-extension of the Trident II D5 submarine-launched ballistic missile, a project that would keep the strategic weapon system -- which began full-scale development in 1983 -- in service for the life of the new Columbia-class submarine fleet through 2083, potentially stretching the life of the Trident across a century.

Full story: Navy readies another Trident missile SLEP, stretching program across a century

By Marjorie Censer
February 28, 2019 at 9:17 PM

Kratos Defense & Security Solutions said today it has acquired an 80.1 percent interest in Florida Turbine Technologies and FTT Core, which specialize in advanced turbine engines, for $60 million.

Under the terms of the deal, Kratos paid $33 million in cash and $27 million in company common stock. Kratos said it has the option to acquire the remaining 19.9 percent of FTT in the future.

FTT, based in Jupiter, FL, will be part of the Kratos Turbine Technologies division, which the company said will "be focused on the development and production of small, affordable, high-performance, jet engines for the next generation of tactical weapon systems and tactical jet unmanned aerial systems."

The KTT division will be part of Kratos' government solutions segment.

Additionally, Kratos said today it has named Stacey Rock president of the KTT division. He most recently served as senior vice president of the weapons and defense solutions business unit within Kratos' defense rocket support services division.

By Justin Katz
February 28, 2019 at 3:43 PM

The Navy plans to hold an industry day following the publication of a draft solicitation for its next-generation frigate to review the vessel's requirements and how the service plans to evaluate proposals, according to a Feb. 22 Federal Business Opportunities notice.

The notice also states the service will publish the draft request for proposals "in or around" March. The final request for proposals is due to be published in the fourth quarter of fiscal year 2019, and a contract award is expected in FY-20.

The first detail design and construction contract will purchase up to 10 of the 20 ships that make up the program of record.

By John Liang
February 28, 2019 at 2:44 PM

This Thursday INSIDER Daily Digest has news on the proposed Space Force and more.

We start off with some big space news:

Pentagon estimates new Space Force will cost $2 billion over five years

The Pentagon estimates it will cost about $2 billion over the next five years to stand up a Space Force, including $72 million in fiscal year 2020 for a new headquarters, according to a strategic overview document that will accompany the Defense Department's forthcoming legislative proposal.

Document: Space Force Strategic Overview

Air Force secretary questions rationale for Space Development Agency

ORLANDO, FL -- Air Force Secretary Heather Wilson told reporters today she still has several questions about the call from the Office of the Secretary of Defense for a new Space Development Agency, including how the new agency would differ from the existing Space and Missile Systems Center.

Here is some defense business news:

SAIC seeks faster, more integrated approach to technology development

Science Applications International Corp.'s "Innovation Factory," established last year, marks the first step in the company's effort to adapt to a faster pace for defense technology development, the contractor's chief technology officer said this week.

DOD IG finds TransDigm earned $16 million in excess profit on $26 million in sales of 46 parts

The Pentagon inspector general, in a new report, finds that TransDigm earned $16.1 million in excess profit for 46 parts sold to the Defense Logistics Agency and the Army for $26.2 million between 2015 and 2017.

Pentagon increasing collaboration with private sector, but military won't be 'panacea' in cyberspace

The Defense Department is increasing collaboration in cyberspace with the private sector through several "pathfinder" projects, but the military should not step in to solve security issues that are largely the responsibility of private industry, according to a DOD official.

Should the Navy retire one of its Nimitz-class aircraft carriers soon? At least one lawmaker isn't so sure:

Gallagher: 'I'm not sure it makes sense' to retire Nimitz-class carrier early

Rep. Mike Gallagher (R-WI), a member of the House Armed Services seapower and projection forces subcommittee, said today he doesn't think "it makes sense" to retire the Nimitz-class aircraft carrier Truman early.

Expect some lawmakers to oppose cuts to military construction projects in their districts to pay for a southern border wall:

DOD to give Congress state-by-state list of MILCON projects being deferred for border wall

Pentagon officials told lawmakers today they will soon provide Congress with a state-by-state list of military construction projects slated to be deferred so $3.6 billion can be tapped to build a wall on the southern border.

. . . But Tyndall Air Force Base will get to continue reconstruction in the wake of a major hurricane:

Air Force official: Highly unlikely funds for Tyndall AFB reconstruction will go to border wall

Funds used to repair damages at Tyndall Air Force Base, FL, taken from existing operations and maintenance accounts, will likely not be diverted to pay for President Trump's southern border wall, an Air Force official told a House subcommittee this week.

The Marine Corps will soon be fielding its first Joint Light Tactical Vehicle:

Marine Corps to field first JLTV, is addressing DOT&E concerns

The Marine Corps will begin fielding its Joint Light Tactical Vehicle this week and is addressing concerns highlighted last month by the Pentagon's top weapons tester.

Lockheed Martin has received a Navy contract to build a submarine-launched hypersonic booster:

Navy plunks down $846 million to begin building hypersonic booster

The Navy has awarded Lockheed Martin a potential $846 million contract to begin building a new booster for a submarine-launched, maneuvering hypersonic payload, marking a significant development in the Pentagon's plans to ready a new class of ultra-fast conventional weapons to strike high priority, fleeting targets.

By Jason Sherman
February 28, 2019 at 2:24 PM

Lockheed Martin said in a statement today that its radar shop has been selected to participate in the Army's Lower Tier Air and Missile Defense Sensor event at White Sands Missile Range, NM, this spring.

"Lockheed Martin can confirm it has been selected and plans to participate in the U.S. Army's Sense Off demonstration," said Rae Fulkerson, a company spokeswoman. "We look forward to continuing to support the Lower Tier Air and Missile Defense Sensor mission and future capabilities based on our proven Active Electronically Scanned Array and Gallium Nitride-fielded technology."

Raytheon last week announced it was participating in the LTAMDS "sense off," a high-stakes assessment that could deliver a multibillion-dollar reward for the major project to modernize the Army's Patriot radar inventory.

By Justin Katz
February 28, 2019 at 1:12 PM

Lawmakers are denouncing plans by the Trump administration to submit an inflated Overseas Contingency Operations budget as a "gimmick."

"I think fundamentally when we're playing gimmicks with our budget -- putting money in OCO that belongs in base defense -- we're just not being honest with ourselves," Rep. Seth Moulton (D-MA) said yesterday during a moderated discussion at the Hudson Institute.

"The services come to us every single year and say don't put fundamental investments we should be making in the future of the force in OCO because . . . we can't predict whether the money will even be there next year, so we can't do any long-term planning," he continued.

Moulton's committee assignments include both the House Armed Services Committee and the Budget Committee giving him influence on both military policy and funding.

Inside Defense first reported earlier this month the administration will send an OCO budget of $174 billion as a way to circumvent the defense spending caps put in place by the 2011 Budget Control Act. The OCO fund, currently $69 billion, is exempt from those statutory caps.

House Budget Committee Chairman John Yarmuth (D-KY) and House Armed Services Committee Chairman Adam Smith (D-WA) issued a statement earlier this week denouncing the plan after an Office of Management and Budget official penned an op-ed that effectively confirmed the administration's plans for a large OCO budget without stating a dollar figure.

"This is nothing more than a blatant attempt to make a mockery of the federal budget process, obscure the true cost of military operations, and severely shortchange other investments vital to our national and economic security," they said Monday in a joint statement.

Separately, Rep. Mike Gallagher (R-WI), a member of the House Armed Services Committee, said today at the American Enterprise Institute the tactic would "create enormous problems."

"That’s like an order of magnitude change in the amount of OCO we had" last year, he said, referring to the $174 billion figure. "It's going to make it harder to get a bipartisan budget deal done."

Additional reporting by Mallory Shelbourne.

By John Liang
February 28, 2019 at 5:00 AM

Here are some must-reads from this week's issue of Inside the Pentagon:

1. Pentagon officials told lawmakers this week they will soon provide Congress with a state-by-state list of military construction projects slated to be deferred so $3.6 billion can be tapped to build a wall on the southern border.

Full story: DOD to give Congress state-by-state list of MILCON projects being deferred for border wall

2. The Pentagon has delineated exactly how the chief information officer and the chief management officer will share overseeing the Defense Department's $42 billion in annual IT spending, according to DOD officials.

Full story: Pentagon delineates responsibilities over $42 billion IT budget

3. The Pentagon has 19 pathfinders, ranging from individual weapon systems to program executive offices, leveraging the work of a new initiative to make agile software development tools available across the Defense Department, according to the official in charge of the effort.

Full story: DOD boosts agile software development with 'DOD DevSecOps Initiative'

4. The head of U.S. Strategic Command said this week that regardless of where the Defense Department locates a new combatant command for space, a portion of that work will continue to be performed at STRATCOM headquarters in Nebraska.

Full story: Hyten indicates SPACECOM will retain space ops hub at STRATCOM HQ

By Justin Katz
February 27, 2019 at 3:08 PM

The Navy completed developmental testing for a mine-hunting sonar system that will be incorporated into a new mine countermeasures unmanned surface vehicle, according to a Navy statement.

The AQS-20C sonar "delivers high-definition images of bottom mines, providing the operator with both range and contrast data that combine to form a three-dimensional image during post-mission analysis to aid in mine identification," according to the Feb. 27 statement.

"Test results will now undergo scoring and performance assessment leading up to a final developmental testing report that is expected to be completed in the spring. Findings from this report will be used for future performance improvements of the system," the statement continues.

The Raytheon-built sonar will be incorporated onto the Mine Countermeasures Unmanned Surface Vehicle, a Textron-built craft that consolidates several mine warfare-related projects.

The Unmanned Influence Sweep System, which is one of those projects, was an acquisition category III program, and was subsumed by MCM USV, an ACAT II program, in October. The designation signifies the MCM USV program will have increased oversight and greater funding in the Navy's budget.

Further, a Textron executive told Inside the Navy last month the company is working with the service to develop weapons that would equip the company's USV for a fires and indirect fires mission.

By John Liang
February 27, 2019 at 2:08 PM

This Wednesday INSIDER Daily Digest has news on the Air Force's moving an air traffic control system operations center, Army Futures Command, DOD's IT budget and more.

The Air Force is taking measures to mitigate a delay to an air traffic control system operations center:

D-RAPCON program schedule delayed as operations center moves to Tyndall AFB

The operations center of the Air Force's deployable air traffic control surveillance system will move temporarily to Tyndall Air Force Base, FL, resulting in a four-month delay to the program schedule, according to a service spokeswoman.

Army Futures Command has a new maneuver requirements division:

Army creates new Maneuver Requirements Division under Futures Command

The Army's new Maneuver Requirements Division places requirements authority previously held by Training and Doctrine Command capability managers under Futures Command, a move in line with a handful of authority transfers the service has made to consolidate and streamline pre-acquisition functions.

The House Armed Services intelligence, emerging threats and capabilities subcommittee held a hearing this week on Defense Department information technology, cybersecurity, and information assurance:

Pentagon delineates responsibilities over $42 billion IT budget

The Pentagon has delineated exactly how the chief information officer and the chief management officer will share overseeing the Defense Department's $42 billion in annual IT spending, according to DOD officials.

The House Armed Services readiness and seapower and projection forces subcommittees held a joint hearing this week on warship collisions:

Pacific Fleet boss: Navy canceled two deployments due to training issues

The head of U.S. Pacific Fleet said today that he cancelled two Navy ship deployments, citing a lack of sufficient training.

Document: Navy joint testimony on surface forces readiness

Document: Navy's RROC 'one year later' report

U.S. Strategic Command's long-awaited move into a headquarters facility will take place soon:

STRATCOM headquarters to begin move into new facility next week

U.S. Strategic Command's long-awaited move into a headquarters facility at Offutt Air Force Base, NE, will likely begin next week, the head of the organization told lawmakers at a Senate Armed Services Committee hearing today.

Document: Senate hearing on STRATCOM, NORTHCOM

By Marjorie Censer
February 27, 2019 at 9:57 AM

Vectrus said this week sales in its most recent quarter reached $308 million, up 14 percent from the same three-month period a year earlier.

The contractor's quarterly profit hit $9.9 million, up 70 percent from the prior year.

Vectrus reported its 2018 sales hit $1.3 billion, an increase of 15 percent from 2017.

"The increased revenue was attributable mainly to activity in our U.S. programs of $103.2 million (consisting of a $112.3 million increase related to our acquisition of SENTEL), $45.1 million from our European programs and $16.2 million from our Middle East programs," the company said.

Vectrus' 2018 profit totaled $35.3 million, down about 41 percent from 2017.

In a call with analysts Tuesday afternoon, Chuck Prow, Vectrus' chief executive, said the company's diversification strategy is yielding dividends. He said in 2018 the company made progress in growing its Air Force business.

"We have done a great job expanding our presence with the Air Force," Prow said. "We are currently executing a similar campaign with the U.S. Navy. We are seeing early progress with our Navy campaign."

Additionally, Vectrus said it last month received notification from the government of an extension of its Kuwait Base Operations and Security Support Services contract. The effort will now be extended until March 2020 with an additional option period to push it through September 2020.

Prow said the company is expecting in April notification of awards for the Logistics Civil Augmentation Program, dubbed LOGCAP V.

By Jason Sherman
February 26, 2019 at 3:13 PM

Northrop Grumman has submitted a proposal for the Air Force's B-52 Radar Modernization Program, proffering its AN/APG-83 SABR system for a project that aims to refresh technology to outfit Global Strike Command with modern capabilities to fully utilize the capabilities and payload of the legacy bomber fleet.

On Feb. 25, Northrop Grumman announced it has submitted a bid that leverages its Active Electronically Scanned Array radar product line to Boeing -- which was tapped by the Air Force in 2017 to be the source-selection authority for the new B-52 radar.

"The SABR and SABR-Global Strike family of radars provides differentiating capability for air dominance and strike missions," said Tom Jones, vice president and general manager for Northrop Grumman's airborne C4ISR systems, in a statement. "Our hot production and sustainment lines are already in place to support our current and future customers' needs to support our current and future customers' needs for decades to come."

The B-52 radar upgrade effort aims to support both nuclear and conventional operations by upgrading or replacing -- in whole or in part -- the current APQ-166 radar Line Replaceable Units on the B-52H aircraft.

The Air Force has stated a desire for a new radar that could support existing missions and also incorporate new capabilities such as ground moving target indicator/moving target track, surface target search/surface target track and electronic protection. The service also desires a system that provides a growth path for new and enhanced capabilities.

Northrop Grumman is looking to expand sales of its SABR radar beyond the current F-16 upgrade programs -- both to the Air Force and international customers -- by locking in sales to the bomber fleet.

Along with proposing a SABR variant for the B-52H, Northrop has also developed a version of the radar for the B-1B bomber, according to the statement.

In addition, Northrop Grumman is vying against Raytheon for a chance to replace the Marine Corps' venerable AN/APG-73 radar in nearly 100 older-model F/A-18 Hornets. Northrop is offering a SABR variant and Raytheon is offering its APG-79 radar.

By Justin Katz
February 26, 2019 at 3:06 PM

The Navy will need time to field its largest unmanned undersea vehicles before the service can make a determination about whether unmanned vessels should be counted toward its 355-ship fleet goal, according to a top submariner.

Rear Adm. John Tammen, director of undersea warfare requirements (N97), speaking today at the Heritage Foundation said the service has not yet introduced large and extra large UUVs "at scale."

"I think once we have appropriate run time with those vehicles, then we'll start those discussions," Tammen said.

Discussions about whether the service should include unmanned vessels in its official ship count have been more prevalent lately for two reasons: the service has made the total number of warships in its fleet the center of a public campaign, and is also in the middle of another force-structure assessment that will update that number, which was derived from the previous FSA in 2016.

Tammen declined to comment directly on the FSA's timing, but Chief of Naval Operations Adm. John Richardson has previously said he expects the assessment to conclude this year. He's also indicated that the 355-ship figure is subject to change.

By John Liang
February 26, 2019 at 2:17 PM

This Tuesday INSIDER Daily Digest has news on the proposed U.S. Space Command, funding the southern border wall, BWX Technologies' quarterly earnings and more.

STRATCOM chief Gen. John Hyten told lawmakers during a Senate Armed Services Committee hearing this morning that the Defense Department is working to minimize any negative impact of the transition to a new U.S. Space Command:

Hyten indicates SPACECOM will retain space operations hub at STRATCOM HQ

The head of U.S. Strategic Command said today that regardless of where the Defense Department locates a new combatant command for space, a portion of that work would continue to be performed at STRATCOM headquarters in Nebraska.

Army Under Secretary Ryan McCarthy said earlier today that he and other officials plan to meet with acting Defense Secretary Pat Shanahan and Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford to discuss how the southern border wall will be funded:

Military officials to meet this week about using MILCON funds for border wall

Pentagon leaders are meeting this week to address how the military services would finance construction of a southern border wall, which is set to require $3.6 billion in diverted military construction funds following the president's national emergency declaration.

The CEO of BWX Technologies discussed his company's quarterly earnings this morning:

BWX Technologies CEO: Missile tube business 'hasn't been especially kind to us so far'

BWX Technologies' chief executive said today the company's missile tube rework efforts are on track, noting the majority of the repairs are scheduled to be complete by mid-year.

Navy research chiefs have new authority to award contracts of a certain size:

Geurts gives Navy research chiefs flexibility in awarding contracts

The Navy's acquisition executive has delegated authority to the service's research chiefs to award contracts up to $1 million for technology and prototype development, and to purchase a variety of materials for "experimental or test purposes," according to two memos obtained by Inside Defense.

Inside Defense yesterday received a statement from a Microsoft representative who said the company intends to continue developing an augmented reality display system for the Army:

Microsoft to continue working with Army on IVAS, despite employees' call to withdraw

Despite some employees' reservations, Microsoft says it will continue working on the Army's augmented reality display called the Integrated Visual Augmentation System.

Jeff Nebel, the Fire Support Coordination team lead at Marine Corps Systems Command, recently spoke about the service's Organic Precision Fires-Mounted capability:

Marine Corps to move to EMD stage for Organic Precision Fires in FY-20

The Marine Corps plans to move into the engineering and manufacturing development stage for its Organic Precision Fires-Mounted capability in fiscal year 2020, with a goal of fielding the system in FY-22.

By Ashley Tressel
February 26, 2019 at 1:09 PM

The Army's new five-year spending plan contains a shift of about $22 billion in "cuts or terminations" and $8 billion in "cost avoidance" from nonpriority programs, the service's under secretary said today.

The newly estimated total of more than $30 billion is set to be "backloaded" across the plan, also called the future years defense program.

Army Under Secretary Ryan McCarthy said at an Association of the U.S. Army breakfast this morning there will be "a pretty dramatic shift" to new development toward the end of the FYDP.

McCarthy told a group of reporters after the breakfast the sum is closer to $31.5 billion, which is $6.5 billion more than senior leaders previously announced.

Army Secretary Mark Esper told reporters last month the service needs about $4 billion to $5 billion a year to start developing new systems for its modernization priorities, overseen by Army Futures Command.

Esper said the funding comes from canceled or reduced programs in “every single budget,” from training to installations to manning and equipment.

The Pentagon, meanwhile, is expected to release its fiscal year 2020 budget request the week of March 11.

By Marjorie Censer
February 26, 2019 at 12:55 PM

KBR said today sales during the most recent quarter in its government services group hit $984 million, up 78 percent from the same three-month period a year earlier.

The unit's quarterly profit reached $76 million, up 81 percent from the prior year.

KBR attributed the growth to "on-contract growth, take-away wins, and new work awarded under our portfolio of well-positioned contracting vehicles."

For 2018, the government services business recorded sales of $3.5 billion, up 58 percent from 2017. The unit's profit in 2018 totaled $280 million, up 81 percent from 2017.