The Insider

Welcome to Throwback Thursday, Inside Defense's occasional look back at what was happening on or around this day in years past.

During this month two years ago, Chuck Hagel, the defense secretary at the time, unveiled the long-term research and development investment strategy being shaped by Deputy Defense Secretary Bob Work.

During a speech before the Southeastern New England Defense Industry Alliance, Hagel said the Pentagon must "do everything necessary to sustain and renew our military superiority."

"One of the many reasons I wanted Deputy Secretary Bob Work as a partner in helping lead [the Defense Department] was his thorough understanding of the operational and technological challenges facing our military," Hagel said. "He also has a deep knowledge of the 'offset' strategies developed by national security thinkers in the 1950s and 1970s to ensure our military's superiority -- first the New Look, which prioritized nuclear deterrence, and then the Long-Range Research & [Development] Planning Program, which shaped future investments in leap-ahead capabilities like standoff precision strike, stealth, wide-area surveillance, and networked forces."

"As we see those advantages begin to erode, I've asked Bob to move forward with an initiative to develop a third, game-changing offset strategy," Hagel continued.

Two years later, the Third Offset remains underway. Work is set to appear at the Air Force Association's annual conference next week to discuss the initiative.

Read the original story here.

Senate Armed Services Committee Chairman John McCain (R-AZ) spoke this morning of the collective responsibility Congress bore for being unable to compromise on the future of government spending, forcing lawmakers to continue to stick to the spending caps set by the 2011 Budget Control Act.

"We lied to the American people," McCain said during a hearing with the military service chiefs.

"The Budget Control Act and sequestration have done nothing to fix our national debt," he continued. "This is just math. And what’s worse, the people we have punished for our failure are none other than the men and women of our armed services, and many other important agencies.”

McCain expressed dismay at the high likelihood of an eighth continuing resolution to avoid a government shutdown at the end of the current fiscal year.

"Far too often, Washington is governed by crisis and stopgap deals like continuing resolutions, omnibus spending bills, and episodic budget agreements that are a poor substitute for actually doing our jobs," he said.

Chief of Naval Operations Adm. John Richardson and Marine Corps Commandant Gen. Robert Neller, who testified at the hearing, hammered the government's reliance on continuing resolutions.

In written testimony before a Sept. 15 Senate Armed Services Committee hearing, Richardson wrote: "The impact of continuing resolutions is significant." He compared the Navy's budget to the size of a "Fortune 10 Company" operating on "what amounts to three fiscal quarters per year."

"This compromises our mission, and drives inefficiency and waste into all that we do," Richardson's testimony states. "For example, a short term continuing resolution requires us to break what would otherwise be single annual contract actions into multiple transactions."

The additional contracts results in a 20 percent increase in the number of funding documents the Navy must produce for activities like base support and facilities maintenance, Richardson continued. He added that it also "fails to take advantage of savings from contractors who could better manage their workload and pass on lower costs to the Navy."

The threat of a continuing resolution has become expected, and a short-term continuing resolution of three months or less is "undesirable but manageable," Neller wrote in his testimony.

However, a continuing resolution lasting longer than three months "dramatically" increases risk for the Marine Corps and disrupts the service's ability to execute a five-year budget plan, according to Neller's testimony.

McCain laid the blame at the feet on Congress and President Obama.

"Five years ago, rather than confronting the real driver of our ballooning debt, which is the unsustainable growth of entitlement spending, we looked the other way," he said. "We failed to make tough choices and necessary reforms, and the result was the Budget Control Act, which imposed arbitrary caps on discretionary spending, including defense spending, for a decade. And when we failed to fix the real problem, we doubled down on these reckless cuts with mindless sequestration."

With budget debates "looming ahead," McCain said he hoped Congress and the White House would find "the courage we’ve lacked for five long years . . . the courage to put aside politics, to chart a better course, to adopt a defense budget worthy of the service and sacrifice of those who volunteer to put themselves in harm's way on our behalf."

Army Secretary Eric Fanning has issued a report describing the effectiveness of internal controls over financial management and other accounting methods.

Fanning's Sept. 1 cover letter accompanying the report states that for the most part, the Army met its financial management obligations, with a few exceptions.

"Based on the results of this assessment, the Army is able to provide a qualified statement of reasonable assurance that the internal controls over financial reporting as of June 30, 2016, were operating effectively" in spite of finding 28 "material weaknesses," the cover memo states, adding: "The findings associated with the weaknesses have assisted the Army in mapping out the corrective actions required to address the material weaknesses identified in the audit swiftly. The Army continues to show progress in strengthening the internal control environment through leadership involvement, Army Headquarters, and Army Command immersion in addressing corrective action requirements and audit readiness training efforts."

The Small Diameter Bomb, Lockheed Martin's services business and more highlight this Wednesday INSIDER Daily Digest.

Looks like the Air Force aims to spend more money on the Small Diameter Bomb than originally planned:

Air Force expands plans for SDB production, awards Boeing $700M contract

The Air Force has awarded Boeing a $700 million contract for three new production lots of Small Diameter Bomb Increment I precision munitions -- a sum that appears to effectively reverse a 2010 decision to slash the original program of record by half -- and follows strong demand for the Boeing-built weapon in the air campaign against the Islamic State of Iraq and the Levant.

Leidos didn't take all of Lockheed Martin's services business:

Lockheed reorganizes remaining services work following Leidos deal

Though much of Lockheed Martin's services work went to Leidos in a deal completed last month, the contractor retained several key units that have been realigned within Lockheed.

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The Defense Department has established a new DIUx location:

Carter opens third DIUx outpost in Austin

Defense Secretary Ash Carter was in Austin, TX, Wednesday to reveal the city would be the site of his third Defense Innovation Unit Experimental outpost, where he announced the organization had $65 million in prototyping projects "in the pipeline."

The carrier variant of the Joint Strike Fighter will be getting more testing in November:

F-35C will begin flight testing in November to assess design fix

The Joint Strike Fighter program will begin flight testing a design fix in November aimed at providing greater support for the weight of the AIM-9X air-to-air missile, an issue that was highlighted in a recent memo by the Pentagon's chief weapons tester.

Document: DOT&E memo on the JSF program

Everybody seems to love dock landing ships:

Marines, industry, House authorizers support LPD-29 or accelerating LX(R)

The Marine Corps, industry and one of the congressional defense subcommittees support either accelerating the Navy's dock landing ship replacement or building an additional San Antonio-class transport dock.

The United States is giving India pointers on how to build an aircraft carrier:

U.S. Navy sharing basics of aircraft carrier design with India

The U.S. Navy's program executive office for aircraft carriers is helping the government of India understand the basics of how to construct an aircraft carrier after the two governments reached an information exchange agreement earlier this year.

A new CRS report is out:

CRS: APS and MPS systems might not be 'financially viable'

The Army's efforts to develop systems to counter evolving threats, such as rocket-propelled grenades and anti-tank guided missiles, may be limited by "budgetary restraints," according to a report recently sent to Congress.

Document: CRS report on Army, Marine Corps active protection system efforts

The Harpoon missile may have a new platform soon:

Navy testing extended-range, air-launched Harpoon with data link

The Navy is in the midst of operationally testing an extended-range, networked version of the Harpoon anti-ship missile on F/A-18 fighter jets, according to a Boeing official.

A new report issued by the Special Inspector General for Afghanistan Reconstruction paints a bleak picture of U.S. efforts to aid a country rife with "systemic corruption."

The SIGAR report -- "Corruption in Conflict: Lessons from the U.S. Experience in Afghanistan" -- is the first in a series of "lessons learned" studies the organization plans to issue. It looks at how the Defense, State, Treasury and Justice departments as well as the U.S. Agency for International Development dealt with corruption in Afghanistan, and the lessons that can be applied to future foreign operations. Specifically:

Our analysis reveals that corruption substantially undermined the U.S. mission in Afghanistan from the very beginning of Operation Enduring Freedom. We found that corruption cut across all aspects of the reconstruction effort, jeopardizing progress made in security, rule of law, governance, and economic growth. We conclude that failure to effectively address the problem means U.S. reconstruction programs, at best, will continue to be subverted by systemic corruption and, at worst, will fail.

The report identifies five main findings:

1. Corruption undermined the U.S. mission in Afghanistan by fueling grievances against the Afghan government and channeling material support to the insurgency.

2. The United States contributed to the growth of corruption by injecting  tens of billions of dollars into the Afghan economy, using flawed oversight and contracting practices, and partnering with malign powerbrokers.

3. The U.S. government was slow to recognize the magnitude of the problem, the role of corrupt patronage networks, the ways in which corruption threatened core U.S. goals, and that certain U.S. policies and practices exacerbated the problem.

4. Even when the United States acknowledged corruption as a strategic threat, security and political goals consistently trumped strong anticorruption actions.

5. Where the United States sought to combat corruption, its efforts saw only limited success in the absence of sustained Afghan and U.S. political commitment.

SIGAR chief John Sopko writes in the report's introduction:

I believe the lessons learned reports will be a key legacy of SIGAR. Through these reports, we hope to reach a diverse audience in the legislative and executive branches, at strategic and programmatic levels, both in Washington, D.C. and in the field. By leveraging our unique interagency mandate, we intend to do everything we can to make sure the lessons from the United States' largest reconstruction effort are identified, acknowledged, and, most importantly, remembered and applied to reconstruction efforts in Afghanistan, as well as to future conflicts and reconstruction efforts elsewhere in the world.

The actions of Edward Snowden, the former Booz Allen Hamilton contractor who is seeking a presidential pardon after famously leaking information about the U.S. government's highly classified surveillance program, did “tremendous harm” to national security and broke a “special trust,” according to Defense Secretary Ash Carter.

When Carter, who appeared at a technology conference in San Francisco today, was asked whether Snowden should be pardoned he said that was a question he couldn't answer.

“I will say this: All of us who enjoy the public trust and therefore who handle classified information have a responsibility,” he said. “To arrogate to oneself the authority to basically take something that has been entrusted to you . . . that is something I can't condone. We can't all just decide by ourselves and I object to that.”

Snowden, who has emerged as a hero to some in the technology community, made his case for a presidential pardon in a Tuesday interview with the The Guardian.

Carter, however, argued Snowden had “plenty of other avenues” to make his ethical concerns known without putting U.S. security at risk.

“This did tremendous harm to our security, it did tremendous harm to many American companies in the world and complicated our relations with foreign powers,” he said.

Carter's comments came at a technology conference hosted by TechCrunch amid a three-day trip intended to build stronger bridges between the Pentagon and the technology sector.

The secretary told the conference of Silicon Valley insiders that he was aware of “trust issues” between the defense community and private sector technologists, partly driven by the government-run eavesdropping programs revealed by Snowden.

“I understand that and I absolutely respect that,” he said. “There's no way we're going to come up with some right answer to that all by ourselves.”

Carter appealed to engineers and innovators in the audience to consider contacting the Pentagon's Defense Innovation Unit Experimental team with new ideas to improve U.S. security or to spend time in the new Defense Digital Service solving complex military problems.

“What I find out here is that people are doing what they're doing out here because they want to make a difference,” he said. “They don't have to believe we're doing everything right; that's not important. They just have to believe that . . . they can help make it right.”

A recent Congressional Research Service report on the Army and Marine Corps' Joint Light Tactical Vehicle program highlights a greater reduction in the number of trucks purchased in fiscal year 2017 than what was previously announced.

The Marine Corps' acquisition plan is to purchase 5,500 trucks to replace its legacy humvee fleet. However, due to budget constraints the service is purchasing 77 fewer JLTVs than previously anticipated.

"Congress might decide to ask the Marines to provide details on how they plan to acquire the 77 deferred JLTVs, how much this deferment will increase program costs, and how acquiring 77 fewer JLTVs in FY2017 will affect Marine Corps readiness and capabilities," according to the Sept. 9 report, originally obtained by Secrecy News.

Inside the Navy reported in February after the FY-17 budget was released the JLTV program took a hit due to budget constraints. The service reduced its FY-17 buy from 262 to 192 vehicles. The new FY-17 quantity will still support testing and the full-rate production decision in FY-19, Marine Corps spokesman Manny Pacheco wrote in a February email.

"Additionally, with the delay created by the protest and subsequent lawsuit the 77-vehicle reduction will be realigned later in the procurement cycle to ensure that the Marine Corps fully fields its objective of 5,500 vehicles," Pacheco continued.

On Feb. 17, Lockheed Martin announced it had withdrawn its protest against the JLTV contract award to Oshkosh Defense for production. The decision was made days after a judge on the U.S. Court of Federal Claims denied a request by Lockheed to issue a stop-work order for JLTV production until the case was wrapped up.

ITN also reported in February that Marine Corps Commandant Gen. Robert Neller told reporters Feb. 11 the service deferred its JLTV buy in FY-17 to protect high-priority programs like the Amphibious Combat Vehicle and the Ground/Air Task-Oriented Radar.

"There were bills, and we had to make some decisions, so one of the decisions we made was to buy fewer of these vehicles," Neller said.