The Insider

By Marjorie Censer
October 23, 2019 at 5:42 PM

Lockheed Martin said today it has agreed to sell its distributed energy solutions group to TRC Companies.

"The sale is part of Lockheed Martin Energy's strategy to focus on products and technology for the energy marketplace and the Department of Defense," the company said.

The distributed energy solutions business is a commercial business that works with electric and gas utility customers, Lockheed said.

The company did not disclose the price of the transaction.

By Courtney Albon
October 23, 2019 at 5:25 PM

The KC-46 has officially entered initial operational test and evaluation, as prime contractor Boeing and the Air Force work to address the tanker's remaining critical deficiencies.

The service said in a statement today the program executive officer for tankers officially certified the aircraft’s transition into IOT&E on Tuesday.

"The Air Force continues to test the new weapon system while Boeing corrects identified deficiencies in parallel as the most expeditious means of achieving full operational capability," the service said. "Air Force leadership remains concerned with Boeing's slow progress resolving issues limiting the KC-46's operational capability and continues to work with Boeing to ensure the KC-46 meets all essential mission requirements."

The Air Force last month banned the KC-46 from carrying any cargo or passengers due to a problem with its cargo lock system identified during pre-IOT&E. Boeing has been testing a hardware fix and the Air Force is expected to evaluate the design for suitability this month. Following that review, the service will make a plan to retrofit the fix across the fleet.

Those flight restrictions remain in place, Air Mobility Command confirmed to Inside Defense today.

The service has designated the cargo lock issue as a category 1 deficiency. Other remaining high-level deficiencies include two involving the KC-46 boom and one related to the tanker's remote vision system.

By Marjorie Censer
October 23, 2019 at 5:19 PM

Raytheon today said Roy Azevedo and Wesley Kremer will lead the Raytheon businesses that will be consolidated as part of the merger with United Technologies.

Azevedo will serve as president of the intelligence, space and airborne systems business, which combines Raytheon's space and airborne systems; intelligence, information and services; and Forcepoint units. The new unit will have 2019 sales of about $15 billion.

Kremer will be president of the integrated defense and missile systems unit, which combines missile systems with integrated defense systems. This business will have 2019 sales of about $16 billion.

"The Raytheon business unit consolidation will be effective upon merger close, which is expected in the first half of 2020," Raytheon said.

Azvedo, who joined Raytheon in 1989, is president of the space and airborne systems unit. Kremer, who joined the company in 2003, is president of the missile systems unit.

By Tony Bertuca
October 23, 2019 at 4:51 PM

Senior defense officials said today the Pentagon is honoring the White House's assertion of executive privilege as grounds for refusing to comply with a subpoena for documents sought in the House impeachment inquiry into President Trump.

"We're really in uncharted territory here," one official said. "This is very unprecedented."

Another official said the Defense Department cannot provide House impeachment investigators the documents and information they seek regarding Trump's decision to withhold $400 million in aid to Ukraine for several months until the "constitutional concerns" listed in an Oct. 8 letter sent to Congress by White House Counsel Pat Cipollone are addressed.

"Until those [concerns] are addressed, we will continue to collect and review internally responsive documents," the second official said. "But executive privilege is only for the White House to assert and we will have to follow their lead regarding executive privilege."

Along with claiming executive privilege, a key argument Cipollone made in the letter is that the impeachment inquiry is illegitimate because it was never subject to a formal vote in the House.

When asked if the legal analysis of DOD's own attorneys squared with Cipollone's assessment, the defense officials declined to comment, saying his letter represents the administration’s position.

The department, however, continues to gather and preserve all documents and information related to the matter for possible use in the future.

"We wanted to make sure that the record is preserved," one official said. "We are good there, we think. We want to make sure that we're doing our due diligence."

House impeachment investigators say they are examining whistleblower allegations that Trump held back the aid to pressure Ukraine to investigate former Vice President Joe Biden and his son Hunter. Biden is a leading candidate for the 2020 Democratic presidential nomination.

The White House's refusal to cooperate has prompted concern about a constitutional crisis, as the U.S. Constitution gives the House "sole power of impeachment."

Meanwhile, Laura Cooper, the deputy assistant secretary of defense for Russia, Ukraine and Eurasia, testified today before impeachment investigators in a closed hearing after a five-hour delay caused by House Republicans who forced their way into the secure room where the hearing was being held.

The GOP lawmakers said they were angry that the impeachment investigation is happening behind closed doors and not at public hearings. Democrats say public hearings will follow the investigation.

The DOD officials said they do not know what Cooper plans to say because she immediately retained a private attorney upon agreeing to voluntarily appear before the investigators. DOD lawyers are also barred from appearing with government employees during depositions, per House regulations.

"She hired private counsel almost immediately," one official said.

The officials said the administration is concerned Cooper could discuss matters over which the White House has asserted executive privilege.

Cooper's appearance follows explosive testimony Tuesday by acting U.S. Ambassador to Ukraine William Taylor, who told House impeachment investigators that he was told Trump was going to withhold the aid package until the Ukrainian president made a public announcement to investigate the Biden family and the 2016 U.S. election.

Democrats say Taylor's account undermines the president's claims that there was never a "quid pro quo."

Trump has repeatedly denied doing anything wrong and has likened the impeachment inquiry to a "witch hunt."

By John Liang
October 23, 2019 at 1:35 PM

This Wednesday INSIDER Daily Digest has news on two big defense contractors' quarterly earnings, the multibillion-dollar A4 Sentinel radar contract, mine warfare and more.

We start off with quarterly earnings news from General Dynamics and Boeing:

General Dynamics CEO: Despite significant revenue tied up in protest, company remains 'comfortable'

General Dynamics has about $1 billion in sales under protest, the company's chief executive said today.

It doesn't look like Raytheon will be protesting the multibillion-dollar A4 Sentinel radar contract it lost to Lockheed Martin:

Raytheon not protesting A4 Sentinel Radar award to Lockheed

Raytheon appears to have missed the window to protest the Army's award to Lockheed Martin of the A4 Sentinel radar upgrade, conceding defeat in the estimated $3 billion project the same week the company won a potentially larger Army radar program, the Lower Tier Air and Missile Defense Sensor.

Sam Taylor, the senior leader for mine warfare at the program executive office for Littoral Combat Ships, spoke this week at the National Defense Industrial Association's annual Expeditionary Warfare conference:

Navy relying on maritime accelerated acquisition for Hammerhead mine program

ANNAPOLIS, MD -- The Navy is employing its maritime accelerated acquisition process for a new mine system known as Hammerhead.

The co-chairmen of the new "Future of Defense" task force spoke to the media this week:

New task force to ask 'tough questions' of Pentagon's strategy for China, future threats

A new task force established by the House Armed Services Committee expects to ask "tough questions" about the Defense Department's strategy, investments and structure for addressing future threats, with a heavy emphasis on China.

Navy acquisition executive Hondo Geurts and Naval Sea Systems Command chief Vice Adm. Thomas Moore testified this week to the House Armed Services readiness subcommittee about ship and submarine maintenance:

Navy expects Hawaii shipyard's 'digital twin' to reach 'full capability' early next year

The Navy used the recent maintenance availability of the fast-attack submarine Asheville (SSN-758) to build a "digital twin" of its Hawaii-based public shipyard, an effort it plans to replicate elsewhere next year, according to two senior service officials.

Document: Navy testimony on ship, sub maintenance

By Marjorie Censer
October 23, 2019 at 10:44 AM

LMI Ventures said this week it has partnered with The Climate Service to help LMI customers assess climate risks. The partnership marks LMI Ventures' second announced to date.

LMI Ventures, a venture capital fund established by LMI, said the partnership will allow LMI to use The Climate Service's Climanomics analytics software, which analyzes climate risks from the costs associated with moving to carbon-neutral policies to the likelihood of flooding.

"The partnership includes an equity investment by LMI Ventures to help TCS scale its capabilities to meet growing market demand," LMI said.

Initially, LMI added, the partnership will "buttress LMI's ongoing support to the Office of the Secretary of Defense, assessing climate risks to the operational readiness of the F-35 Joint Strike Fighter, including F-35 installation resiliency and mission assurance requirements."

LMI Ventures previously announced a partnership with Immuta.

By Justin Doubleday
October 22, 2019 at 4:17 PM

Defense Secretary Mark Esper has recused himself from making decisions on the Pentagon's controversial Joint Enterprise Cloud Infrastructure program due to his son's employment with IBM.

The award of the JEDI contract has been held up by Esper’s review of the program initiated shortly after he was confirmed as defense secretary in August. The review has included "informational briefings" on the Pentagon's cloud computing plans, according to Chief Pentagon Spokesman Jonathan Hoffman.

"Although not legally required to, he has removed himself from participating in any decision making following the information meetings, due to his adult son's employment with one of the original contract applicants," Hoffman said in a statement released today.

A LinkedIn account connected to Esper’s son, Luke, lists him as a "digital strategy consultant" for IBM.

Hoffman said that "out of an abundance of caution to avoid any concerns regarding impartiality," Esper has delegated decisions on the JEDI cloud program to Deputy Defense Secretary David Norquist.

"The JEDI procurement will continue to move to selection through the normal acquisition process run by career acquisition professionals," he said.

IBM originally bid on the JEDI contract last October. The company also protested the terms of the contract with the Government Accountability Office. GAO ultimately dismissed IBM’s protest when a similar protest from Oracle America went to the Court of Federal Claims.

DOD has since determined only Amazon Web Services and Microsoft Azure are able to meet the requirements of the potential 10-year, $10 billion contract for global cloud services across all classification levels. The Pentagon did not provide any update on when the JEDI contract award will move forward.

By Justin Katz
October 22, 2019 at 3:24 PM

The Navy today said it will need in the range of $1 billion to $2 billion per year to support its long-term shipyard infrastructure optimization plan.

Vice Adm. Thomas Moore, Naval Sea Systems Command chief, said the Navy's current request is based on the work it plans to do in FY-20, but acknowledged more money would be needed in future years. Moore was testifying to the House Armed Services readiness subcommittee.

He said Rep. Doug Lamborn (R-CO) was "spot on" with the lawmaker's suggestion that the program must be funded to roughly between $1 to $2 billion per year.

Inside Defense reported earlier this year that the Navy requested $454 million in the fiscal year 2020 budget and planned to request $2.7 billion throughout the future years defense program.

Moore also said the program will receive a "substantial uptick" in FY-22 and FY-23 and will eventually stabilize at about $1.5 billion per year.

After the hearing while speaking to reporters, Moore and Navy acquisition executive Hondo Geurts challenged Lamborn's characterization of the program being "underfunded." They contended the current request supports all of the activities the Navy plans to execute in FY-20.

Lamborn also questioned whether the money would be protected during the budgeting process in future years.

Moore and Geurts, who was also testifying to the subcommittee, said the money has been "fenced off" by putting it into a single program. In the past, according to the Navy officials, the four public shipyards have submitted separate requests for funding, which resulted in the facilities competing against each other.

By Marjorie Censer
October 22, 2019 at 3:04 PM

Neil Mitchill, the chief financial officer of Pratt & Whitney, will become acting CFO of United Technologies on Nov. 1, according to UTC’s chief executive.

In a call with analysts this morning, Greg Hayes said Akhil Johri, United Technologies' current CFO, will step down on Nov. 1. Mitchill will serve as acting CFO until the company's merger with Raytheon Technologies is complete.

Raytheon CFO Toby O'Brien is set to serve as CFO of the merged Raytheon Technologies.

By Justin Katz
October 22, 2019 at 2:21 PM

The Navy announced today that Sean Burke will serve as the service's deputy assistant secretary for sustainment.

Burke most recently served as the deputy program executive officer for tactical air programs, according to his Navy biography.

Navy acquisition executive Hondo Geurts made the announcement during a House Armed Services readiness subcommittee hearing.

Geurts said last month that he was standing up the new sustainment position.

By John Liang
October 22, 2019 at 1:36 PM

This Tuesday INSIDER Daily Digest has news on Lockheed Martin's quarterly earnings, Army missile defense, the effect of the continuing resolution on the Marine Corps budget, and more.

Lockheed Martin's CEO spoke about the Joint Strike Fighter program during an earnings call this morning:

Lockheed CEO says risk associated with replacing Turkey F-35 suppliers is covered by government

As Lockheed Martin works to replace Turkish suppliers on the F-35 program, the company's associated risk is covered by the U.S. government, according to the contractor's chief executive.

Inside Defense chatted with Lt. Gen. James Dickinson, head of Army Space and Missile Defense Command as well as the Joint Functional Component Command for Integrated Missile Defense, during last week's AUSA annual meeting:

Army's top air defender remains confident in GBI fleet after RKV termination

The Army's top air defender -- a key player in overseeing day-to-day operations of the Ground Based Midcourse Defense System -- voiced continued support for the fleet of ballistic missile interceptors in the wake of the Pentagon's decision to terminate the Redesigned Kill Vehicle, a move that will delay plans to modernize the current interceptor fleet.

Army sets new THAAD requirement in the wake of $10B dispute

The Army, which two years ago said it needed an additional $10 billion to fully fund its Terminal High Altitude Area Defense requirements, has recalibrated its need for the ballistic missile defense system that "balances" operational requirements and affordability, according to a senior service official.

Lt. Gen. Eric Smith, who leads Marine Corps Combat Development Command, spoke this morning at the National Defense Industrial Association's annual Expeditionary Warfare conference:

Marine Corps general: Stopgap CR is 'insanity'

ANNAPOLIS, MD -- A top Marine Corps official today slammed the stopgap continuing resolution that is keeping the government funded while the Senate remains stalled in the appropriations process.

Boeing's work on the Air Force's Ground Based Strategic Deterrent program is pretty much done:

Boeing: Air Force ends funding for GBSD technology-maturation contract

The Air Force has informed Boeing it will no longer provide funding toward the company's ongoing contract for the Ground Based Strategic Deterrent, essentially ending its work supporting the nuclear program.

Despite the Defense Department's refusal to comply with a House subpoena seeking documents related to a previous decision to withhold nearly $400 million of U.S. aid to Ukraine, a DOD official will still be deposed by House investigators this week:

Pentagon official will testify in House impeachment probe

A senior Pentagon official who oversees military policy on Ukraine is slated to testify this week before House committees conducting an impeachment inquiry into President Trump.

Our colleagues at Inside Cybersecurity have continuing coverage of a proposed federal acquisition rule that would prohibit the government from buying electronics from China:

Industry coalition calls for 'annual certification' in federal ban on China-based IT products

A coalition of industry groups is urging the Defense Department, General Services Administration and NASA to revise a federal acquisition rule issued this summer that bans the government from purchasing IT and video surveillance products from China, calling for an "annual certification" process to assist small businesses as well as other steps to make those requirements more specific.

By Ashley Tressel
October 22, 2019 at 11:42 AM

The Army's newest fiscal stewardship program is making progress in educating the force on how to responsibly manage appropriations, according to a senior official.

Army Comptroller Lt. Gen. Thomas Horlander told Inside Defense in an interview last week during the Association of the U.S. Army's annual meeting that the 18-month-old Command Accountability and Execution Review program has seen some "vast improvements" in the way the Army optimizes spending.

"When we look at ourselves, we see areas for great improvement," he said. "We can do a lot better with our supply chain, we can do a lot better with contract management, we can do better with the transportation of equipment and people."

The CAER program was established on Dec. 14, 2017, "to provide commanders a tool for them to see themselves. And right now, I can say with great confidence they can see themselves a lot better than they could two or three years ago."

He added that on Oct. 1 the service realigned Army Financial Management Command, a two-star command, under Army Materiel Command.

AMC commander Gen. Gus Perna has been working with Horlander on the CAER program, since all the contracting commands are under AMC.

Horlander said former Army Secretary Mark Esper's direction to put a block of instruction in the schoolhouses on this program "has been probably one of the biggest benefits . . . to get all the senior leaders moving up through the ranks introduced [to] and understanding what fiscal stewardship really is," he said.

The program will continue to expand its scope as it moves along, he said.

"When problems arise or we start to see things of concern, we can pull it into CAER," Hollander said. "And we say, OK, here's a special interest item that we have . . . and leverage that to take a look at it."

By Justin Katz
October 21, 2019 at 4:09 PM

(Editor's Note: This blog post has been updated to include a comment from a Marine Corps spokeswoman.)

The Navy has been drafting a contracting and acquisition guide for additive manufacturing that it planned to publish last month and implement across the Pentagon, according to a government watchdog report.

"The AM Contracting and Acquisition Guide will include guidance on topics such as AM standards, intellectual property, and acquisition and contracting," a new Defense Department inspector general report states. "According to a Naval Supply Systems Command official, the Navy planned to issue the guide in September 2019."

A NAVSUP spokeswoman said the guidance has not been issued yet.

The Oct. 17 DOD IG report summarizes the Pentagon's efforts to incorporate additive manufacturing for sustaining vehicle and weapon parts.

The IG notes the military has not standardized what data it collects about parts that are additively manufactured to "ensure consistency in production, reporting requirements for AM equipment and funds spent to understand where the DOD is investing its resources."

The watchdog says the Pentagon's acquisition executive issued an interim policy in March 2019 "which defined the roles and responsibilities of the military services and the [Defense Logistics Agency]." The policy stated a DOD instruction on additive manufacturing would be published in 2020, according to the IG.

However, the IG report notes that neither the policy nor the Navy's guide will effectively standardize the data and reporting requirements as recommended by the IG.

The Pentagon's acquisition chief did not respond to the watchdog's recommendation.

Separately, in its response to the report, the Marine Corps deputy commandant for installations and logistics said the service plans to release "an enterprise-wide policy on AM in the form of a Marine Corps Order during" the first quarter of fiscal year 2020.

"Within this policy, the Marine Corps has outlined specific processes and identified tasks to not only identify appropriate funding and personnel, but also establish processes and capability development to continue to enhance and mature AM throughout the Marine Corps," the report states.

Marine Corps spokeswoman Capt. Karoline Foote told Inside Defense the policy has not yet been published.

By John Liang
October 21, 2019 at 1:36 PM

This Monday INSIDER Daily Digest has news on the Army's Strategic Long Range Cannon, the F-35 Joint Strike Fighter and more.

The Army has a $228 million, three-year spending plan for the Strategic Long Range Cannon:

Army preparing to award contracts for Strategic Long Range Cannon

The Army is forging gun tubes and readying initial contracts for a new system intended to operate with the Long Range Hypersonic Weapon in the opening salvos of a major fight against a near-peer military force. The Strategic Long Range Cannon is a prototype mega-cannon envisioned to fire rounds hundreds of miles at high-priority enemy radar and air-defense sites, namely those of Russia and China.

Pentagon acquisition chief Ellen Lord held a press conference Friday, where she discussed the Joint Strike Fighter, acquisition reform and more:

F-35 full-rate production decision delayed up to 13 months

The Pentagon confirmed today the F-35 Joint Strike Fighter full-rate production decision, which was expected in December, could be delayed by 13 months due to delays in integrating the Joint Simulation Environment.

Lord: Pentagon is 'on the brink' of acquisition transformation

Pentagon acquisition chief Ellen Lord said her office is set to unveil in December "the most transformational acquisition policy change we've seen in decades."

Document: Lord briefing at the Pentagon

ATA Technologies, Boeing, Lockheed Martin, Kord Technologies as well as the Air Force Research Laboratory's Tactical High-Power Operational Responder -- a high-power microwave integrated by BAE Systems -- are being tested for a counter-drone capability:

USAF directed-energy counter-drone demo begins, as program of record discussions progress

The Air Force's directed-energy experimentation campaign has started another round of counter-drone testing with five different systems that management officials are exploring for an anticipated program of record.

Defense Department Special Assistant for Cybersecurity Katie Arrington spoke last week at the Consortium for Information and Software Quality meeting:

Funding DOD through CRs could scuttle cyber certification program, Arrington warns

The Pentagon's landmark cybersecurity certification program could be scuttled if Congress ends up funding the military through a series of continuing resolutions until after the election, according to Defense Department Special Assistant for Cybersecurity Katie Arrington.

By Justin Katz
October 21, 2019 at 11:37 AM

The Senate Armed Services Committee will hold a confirmation hearing Oct. 24 for Vice Adm. Charles Richard, the Navy's top officer overseeing submarine forces, to receive a fourth star and become the new head of U.S Strategic Command.

The committee received the three-star's nomination from the White House last week, but the Senate's website did not disclose Richard's potential new position.

The Navy stopped announcing new general officer nominations this summer and cited issues with its personnel being targets for cyberattacks.

Richard is currently the commander of submarine forces. He previously served as STRATCOM's deputy commander as well as the Navy's director for submarine warfare requirements (N97).

If confirmed, Richard will succeed Air Force Gen. John Hyten as the operational commander overseeing the country's nuclear triad. Hyten was confirmed last month to become the vice chairman of the Joints Chiefs of Staff.