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The INSIDER daily digest
By John Liang
July 7, 2016 at 4:51 PM

The FY-17 defense policy bill and the FY-16 omnibus reprogramming request highlight this Thursday INSIDER Daily Digest.

Looks like the FY-17 defense authorization bill won't get through the conference process until September:

Thornberry sets sights on September for closing $18B authorization bill gap

House Armed Services Committee Chairman Mac Thornberry (R-TX) wants to meet with his Senate counterparts to discuss as many items as possible in their respective fiscal year 2017 defense authorization bills, while leaving the biggest impediment -- an $18 billion gap between the bills -- on hold until September.

The Congressional Budget Office looks at DOD's rising operations and maintenance costs:

Congressional Budget Office challenged to explain rising O&M cost

The Congressional Budget Office is working to analyze why the Defense Department's operations and maintenance budget continues to grow, despite a concurrent decrease in the size of the U.S. military force structure.

Document: CBO presentation on DOD O&M spending trends

Continuing our coverage of DOD's FY-16 omnibus reprogramming request:

Air Force seeks additional $39 million to keep latest GPS OCX remedial effort on track

The next-generation Global Positioning System ground component program needs an additional $39.2 million in fiscal year 2016 -- bringing total spending on the Operational Control Segment program to $363.8 million -- in order to execute a 24-month schedule adjustment the Air Force, Raytheon and the Pentagon acquisition chief identified this spring to address deficiencies uncovered during testing.

Air Force seeks $144M to replenish precision munitions spent in Iraq, Syria

The Air Force, expending more precision munitions in the fight against the Islamic State than anticipated, is seeking congressional permission to shift funds between accounts to place $144 million in new orders to replenish supplies of Boeing- and BAE Systems-built weapons, including "nearly depleted" stocks of the Small Diameter Bomb I.

Pentagon seeks cash infusion to support FY-17 milestone for sixth-gen fighter program

The Air Force needs an immediate cash infusion to support plans to initiate an F-22A follow-on acquisition project in fiscal year 2017. The funds would be used to support analysis needed to proceed with identifying potential technologies for a new fighter aircraft program -- or a package of new air superiority capabilities -- to ensure U.S. control of the skies in 2030 and beyond.

DOD seeks approval to move $36.4M to mitigate SOF shortfalls in ISR

The Pentagon seeks congressional approval to move $36.4 million to U.S. Special Operations Command to purchase four systems that will be installed on unmanned drones to help enhance intelligence, surveillance and reconnaissance capabilities.

DOD: $20M needed to combat critical threat of ISIL turning drones into IEDs

As the Islamic State of Iraq and the Levant begins to turn commercial drones into improvised explosive devices, the Pentagon wants congressional approval to move $20 million to the Joint Improvised Explosive Device Defeat Fund to help guard against this "critical" and "unanticipated" capability gap.

Inside the Navy determined how much work Ingalls Shipbuilding got compared to NASSCO:

Ingalls Shipbuilding awarded three times more hours for LX(R) design than NASSCO

Huntington Ingalls Industries' Ingalls Shipbuilding unit was awarded three times the number of hours for dock landing ship replacement design work compared to General Dynamics NASSCO.

U.S. Special Operations Command is seeking commercial capabilities for hosting geospatial data:

SOCOM seeks commercial capabilities that can host SOF-specific data

Responses are due Friday to a U.S. Special Operations Command request for information on whether there are commercial capabilities that can host special operations forces-specific geospatial data to help enhance warfighting information dominance and impact a business case analysis.

Document: SOCOM RFI on the geospatial cloud

Coverage of a House hearing on military aviation readiness:

'Class C' aviation mishap rate up across Navy, Marine Corps

The instances of minor but still costly mishaps occurring across Navy and Marine Corps aircraft squadrons are increasing, according to service officials.

Army task force performing 'holistic' assessment of aviation

The Army has undertaken a "comprehensive assessment" of service aviation, and a final report is forthcoming, according to the deputy chief of Training and Doctrine Command.

Throwback Thursday: McCain and Thornberry
By Tony Bertuca
July 7, 2016 at 3:07 PM

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

Nearly a year ago, Senate Armed Services Committee Chairman John McCain (R-AZ) said during an appearance at the Heritage Foundation that he hoped to convince his House counterpart Rep. Mac Thornberry (R-TX) to support his acquisition reform proposals in the fiscal year 2016 defense authorization bill.

The two found some common ground in the FY-16 National Defense Authorization Act, but McCain faces a similar task this year. He and his committee have put forth an FY-17 defense authorization bill that is far more prescriptive in terms of proposed reforms.

Last year, McCain's committee sought to blunt the influence of the Defense Department's under secretary for acquisition, technology and logistics and drive more acquisition decision authority to the military services. This year, McCain's committee has proposed eliminating the AT&L position entirely.

Thornberry said today at the Heritage Foundation that the committees would take things one provision at a time as they head into summer conference sessions in the hope of having a final bill by September.

Thornberry added that he is open to discussing the elimination of AT&L with McCain.

"On the AT&L, there is a strong sentiment, both sides of the Capitol, both sides of the aisle, that our processes and bureaucracy are not adequate for the world in which we live," Thornberry said.

EELV Review
By John Liang
July 7, 2016 at 2:45 PM

The Defense Department inspector general's office this month will conduct a "quality management system inspection" of the Air Force's Evolved Expendable Launch Vehicle program, according to a June 15 memo.

"The objective of the inspection is to determine if the EELV Program conforms to AS9100C, 'Quality Management System -- Requirements for Aviation, Space and Defense Organizations' as contractually required," the IG's memo states, adding: "This project will include, but is not limited to, site inspections, documentation review and interviews with DOD, United Launch Alliance, and SpaceX personnel."

Leidos-Lockheed deal set for Aug. 8 vote
By Marjorie Censer
July 7, 2016 at 1:39 PM

The proposed merger between Leidos and Lockheed Martin's IT services business is set to face a vote at Leidos' annual stockholders' meeting on Aug. 8, according to a new filing with the Securities and Exchange Commission.

Stockholders will be asked to authorize the issuance of Leidos common stock in connection with the transaction.

Read the SEC filing.

Omnibus reprogramming request
By John Liang
July 7, 2016 at 11:31 AM

The Defense Department last week submitted its fiscal year 2016 omnibus reprogramming request to Congress.

Check out the request.

Our coverage, so far:

DOD seeks blessing from lawmakers to shift $2.6 billion between accounts

DOD: $20M needed to combat critical threat of ISIL turning drones into IEDs

DOD seeks approval to move $36.4M to mitigate SOF shortfalls in ISR

SOCOM cites urgent need for new 'suicide drones'

DOD aims to shift more than $630 million for Navy ship, aircraft maintenance

Pentagon wants $30M cut from Navy's unmanned tanker, citing 'underexecution'

Inside the Pentagon highlights
By John Liang
July 7, 2016 at 9:00 AM

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

1. President Obama's new plan to leave 8,400 U.S. troops in Afghanistan, which was not immediately accompanied by a plan to pay for them, drew harsh criticism from GOP defense hawks, including House Armed Services Committee Chairman Mac Thornberry (R-TX), who demanded the president immediately submit a supplemental budget request to finance the new strategy.

Full story: Obama's new Afghanistan troop plan raises budget questions amid OCO fight

2. The Pentagon is seeking congressional permission to shift $2.6 billion between budget accounts as part of an annual reallocation of funds the U.S. military has in hand, launching five new-start projects, including a new machine-gun round for the F-35 Joint Strike Fighter, adding new capabilities to the Tomahawk cruise missile and an Army study for a new heavy equipment transporter.

Full story: DOD seeks blessing from lawmakers to shift $2.6 billion between accounts

3. The House Armed Services Committee's top Democrat has become a vocal opponent of the Pentagon's plans to modernize the nuclear triad, arguing that the United States needs to more smartly prioritize national security spending.

Full story: Smith argues for 'downsizing' national security ambitions, starting with nukes

4. As the Islamic State of Iraq and the Levant begins to turn commercial drones into improvised explosive devices, the Pentagon wants congressional approval to move $20 million to the Joint Improvised Explosive Device Defeat Fund to help guard against this "critical" and "unanticipated" capability gap.

Full story: DOD: $20M needed to combat critical threat of ISIL turning drones into IEDs

The INSIDER daily digest
By John Liang
July 6, 2016 at 4:35 PM

News on problems with the tactical wheeled fleet as well as the OCO budget headline this Wednesday INSIDER Daily Digest.

The military's tactical wheeled fleet is having problems with faulty transparent armor ballistic glass:

Marine Corps seeks vehicle transparent armor solution from industry

The Marine Corps is seeking a solution from industry on faulty transparent armor ballistic glass across the tactical wheeled vehicle fleet, Inside Defense has learned.

Document: Transparent armor for MRAP Cougar RFI

Coverage of the ongoing OCO fight:

Smith argues for 'downsizing' national security ambitions, starting with nukes

The House Armed Services Committee's top Democrat has become a vocal opponent of the Pentagon's plans to modernize the nuclear triad, arguing that the United States needs to more smartly prioritize national security spending.

Obama's new Afghanistan troop plan raises fresh budget questions amid OCO fight

President Obama's new plan to leave 8,400 U.S. troops in Afghanistan, which was not immediately accompanied by a plan to pay for them, drew harsh criticism from GOP defense hawks, including House Armed Services Committee Chairman Mac Thornberry (R-TX), who demanded the president immediately submit a supplemental budget request to finance the new strategy.

More of our omnibus reprogramming coverage:

SOCOM cites urgent need for new 'suicide drones'

The Pentagon has alerted Congress that U.S. Special Operations Command has an urgent need to replenish its stock of Lethal Miniature Aerial Missile Systems, often called "suicide drones" because they are essentially small, flying warheads that can be steered by operators with the aid of an onboard camera.

Document: DOD's LMAMS reprogramming request

Keep an eye out for an MDA study on defending Aegis Ashore sites in Europe from aerial attacks:

MDA studying anti-air warfare capabilities for Aegis Ashore sites

The Missile Defense Agency is studying the best way to defend the Aegis Ashore sites in Europe from aerial attacks, U.S. European Command confirmed.

It's still up in the air whether a liaison element between the Navy-Marine Corps team and U.S. Special Operations Command is needed:

Naval forces, SOCOM continue requirement discussion on SOF LE

The Navy and Marine Corps continue to develop relationships with U.S. Special Operations Command through a liaison element, but it has not yet been determined whether the capability is an enduring requirement, according to an official.

A bunch of Army generals met last week:

Army generals convene for 'four-star forum'

The Army's top leaders assembled in Washington last week for a series of high-level conversations.

Army Science Board to host partially closed meetings
By John Liang
July 6, 2016 at 4:14 PM

The Army Science Board plans to hold a pair of meetings later this month to discuss five congressionally mandated studies.

The meetings will be held in Irvine, CA, on July 27 and July 28, with the former being closed to the public and the latter being open, according to a July 6 Federal Register notice.

"The purpose of the meeting is for all members of the Board and its subcommittees to meet and present five of six Fiscal Year 2016 (FY16) studies to the voting members for their consideration, deliberation, and vote," the notice reads.

The studies for discussion and vote will be on "The Military Benefits and Risks of the Internet of Things"; "Robotic and Autonomous Systems-of-Systems Architecture"; "Countering Enemy Indirect Fires, Target Acquisition Using Unmanned Aerial Systems, and Offensive Cyber/Electronic Warfare Capabilities"; "Future Armor/Anti-Armor Competition"; and "Army Efforts to Enhance Soldier and Team Performance," according to the notice.

Obama: U.S. will keep 8,400 troops in Afghanistan
By Tony Bertuca
July 6, 2016 at 11:15 AM

President Obama is ordering 8,400 U.S. troops to remain in Afghanistan through the end of 2016, a departure from plans to draw down to 5,500 driven by a resurgence of Taliban forces.

"Today's decision best positions my successor to make future decisions about U.S. presence in Afghanistan," he said during a White House press conference, flanked by Defense Secretary Ash Carter and Chairman of the Joint Chiefs Gen. Joseph Dunford.

Obama said the U.S. mission to train, advise and assist the Afghan military and government would remain unchanged.

"It is up to Afghans to defend their country," he said. "Because we have emphasized training their capabilities, we have been able to end our major ground war there."

While paying tribute to the more 2,200 Americans who died in the conflict, Obama warned the gains of the past could deteriorate if the United States exits Afghanistan completely. He also stressed that the only path for success must involve reconciliation between the Afghan government and the Taliban.

Obama's announcement comes one day before the NATO summit in Warsaw, where the U.S. government will push for continued support for the Afghan government and military.

"Afghanistan is not a perfect place," he said. "It is going to continue to take time for them to build up military capacity that we sometimes take for granted. The Afghan people will need the partnership of the world, led by the United States, for many years to come."

The administration's plan to pay for the continued troop presence has not yet emerged, though a senior administration official told reporters on a press call that the White House would work with Congress to fund the mission.

"We will engage in discussion with Congress," the official said. "In the past we've always been able to work collaboratively with Congress."

Meanwhile, House Armed Services Committee Chairman Mac Thornberry (R-TX) released a statement criticizing Obama's new strategy and calling for the immediate submission of a supplemental funding request.

"The precision of the president's new Afghanistan troop cap would be comical were its consequences not so tragic for our mission and military readiness," he said. "It is time that the president level with the American people about what it will really take to achieve our goals in Afghanistan, and how much it will cost. The truth is that many thousands more Americans are performing military functions in Afghanistan -- than even the current troop cap authorizes. The president refuses to pay for them, and his budget does not have room for the troops he is committing. For all of the bluster about funding troops in harm's way, it is the president who proposes to extend the vital mission without any resources behind it. The White House must submit a supplemental funding request to accommodate troop levels in Afghanistan immediately."

Navy to host small business industry day
By Justin Doubleday
July 6, 2016 at 9:00 AM

Naval Sea Systems Command is hosting a small business industry day on Aug. 18 at the Washington Navy Yard, NAVSEA announced last week.

The event will "provide a targeted forum for interested Small Businesses to hear from senior NAVSEA leadership and program executive offices on various NAVSEA programs to create an enhanced understanding of NAVSEA's programs and strategic direction which provide prime and subcontracting opportunities for small businesses," according to the announcement.

While the event is only open to small businesses, the announcement notes this year's forum will include a panel discussion featuring large businesses.

The INSIDER daily digest
By John Liang
July 5, 2016 at 3:32 PM

Our coverage of the Pentagon's FY-16 omnibus reprogramming request dominates this Tuesday INSIDER Daily Digest.

Leading off with a general overview of the reprogramming request:

DOD seeks blessing from lawmakers to shift $2.6 billion between accounts

The Pentagon is seeking congressional permission to shift $2.6 billion between budget accounts as part of an annual reallocation of funds the U.S. military has in hand, launching five new-start projects, including a new machine-gun round for the F-35 Joint Strike Fighter, adding new capabilities to the Tomahawk cruise missile and an Army study for a new heavy equipment transporter.

Switching to the Navy portions of the reprogramming:

DOD aims to shift more than $630 million for Navy ship, aircraft maintenance

The Defense Department's fiscal year 2016 omnibus reprogramming request seeks to shift more than $500 million in funding for ship maintenance and an additional $129 million to fund Navy aircraft flying hours and depot maintenance.

Pentagon wants $30M cut from Navy's unmanned tanker, citing 'underexecution'

The Pentagon is proposing to cut $30 million from the Navy's future unmanned tanker that will operate from an aircraft carrier due to "underexecution," according to the fiscal year 2016 omnibus reprogramming request obtained by Inside Defense.

(Stay tuned for more coverage of the reprogramming in the coming days.)

The Defense Department recently updated its National Industrial Security Operating Manual:

Pentagon requires contractors to establish insider threat programs

The Pentagon in May published a change to the National Industrial Security Operating Manual that "requires contractors to establish and maintain an insider threat program to detect, deter and mitigate insider threats," according to a Defense Security Service letter on the matter.

Document: DOD's national industrial security program operating manual

Keep an eye out for three "fleet architecture" studies being done by the Navy and some outside analysts:

Analysts developing new fleet designs ahead of updated ship requirement

The Navy and a pair of external groups are developing new concepts for the way the fleet should be designed, organized and postured around the world, as the service determines the number of ships it will require in the future.

Looks like the Army will be moving forward with a new counterfire radar system:

Army unit finds Q-53 radar 'exceptionally reliable' in Iraq deployment

The first operational deployment of the Army's new counterfire radar system was highly successful, according to a commander whose unit recently returned from Iraq.

(Want more C4ISR news? Check out our Check out our Notification Center, where you can sign up to receive email alerts whenever a related story is posted.)

KBR completes Wyle acquisition
By Marjorie Censer
July 5, 2016 at 3:00 PM

KBR said today it has completed its purchase of Wyle for $570 million, after adjusting for tax benefits. Wyle will now operate as KBRwyle.

"The combined brand 'KBRwyle' maintains continuity for Wyle's existing clients and highlights to KBR's clients and the market that together with Wyle's technical capabilities, KBR's Government Services capabilities and service offerings now span the full spectrum of government mission requirements including research and development, testing, engineering, logistics, deployed operations, and life-cycle sustainment," the company said.

KBRwyle will function as a business unit within KBR's government services business, and KBR said it will "maintain much of its current structure," including its management team.

Vectrus: Court of Appeals has overturned Thule decision
By Marjorie Censer
July 5, 2016 at 2:58 PM

Vectrus said last month the U.S. Court of Appeals for the Federal Circuit has reversed the decision of the U.S. Court of Federal Claims, handing the company a victory in its pursuit of a contract to provide base maintenance services at Thule Air Base, Greenland.

Last year, the Court of Federal Claims ruled the Air Force could not proceed with the contract, which was awarded to Exelis. Vectrus was spun off from Exelis in late 2014. 

The contract award to Vectrus had generated concern in Greenland and Denmark (Greenland is part of the kingdom of Denmark) because of the company's U.S. headquarters. Danish competitors have contended that a U.S.-Denmark agreement requires the Air Force award the work to a Danish or Greenlandic company.

Vectrus said in the latest statement that the court decision is under seal. "[H]owever, the company looks forward to working with the U.S. Air Force in support of this contract," it added.

Austal lowers LCS revenue
By Marjorie Censer
July 5, 2016 at 10:52 AM

Austal Limited, whose U.S. unit builds the Littoral Combat Ship, said Monday an extensive review the company undertook found it will cost more than estimated to build the ship to required standards. As a result, it will record a $115 million "downward adjustment to revenue" in fiscal year 2016.

The company said it undertook an "extensive review . . . to gain greater clarity on the costs associated with building to the revised baseline design and to quantify the impact across the life of the LCS program."

That review found that the cost of building the LCS to meet the shock rating standard and U.S. naval vessel rules "is materially more than what was previously estimated," as is the cost of modifying vessels and components the company has already constructed.

"The cost of modifying vessels and components already built has been exacerbated by the concurrent construction schedule with 10 LCS of a total of 11 LCS under contract at various stages of construction since April 2015," the company said. "Modifications to vessels at an advanced construction phase will be more expensive and difficult to implement than pre-launch modifications or modifications to vessels not yet under construction."

Though the associated cost increases will be split with the Navy up to a ceiling price, Austal said the estimate change means too much revenue and profit has been attributed to completed work. Additionally, work in progress is overstated, Austal said. As a result, the company will lower sales and work in progress in FY-16 by $115 million.

"Austal has initiated discussions with the U.S. Navy about increases in design scope that may improve Austal's position," the company added. "Austal has not recognized any value associated with these discussions in its profit calculations due to the preliminary nature of the process."

Inside the Army highlights
By Courtney McBride
July 5, 2016 at 10:29 AM

Some must-reads from this week's edition of Inside the Army:

1. Silicon Valley-based Palantir Technologies has filed suit against the Army in the Court of Federal Claims over the Distributed Common Ground System-Army, rebuking the service's "recurring cycle of irrational procurement decisions."

Full story: Palantir files lawsuit alleging 'irrational' DCGS-A procurement strategy

2. The Armored Multi-Purpose Vehicle -- the largest acquisition program in the Army's current modernization portfolio -- cleared an important milestone in June during a review that demonstrated the design for the new personnel carrier is stable, expected to meet performance requirements and can be executed within the service's $13.8 billion plan to replace the M113 fleet.

Full story: Armored Multi-Purpose Vehicle program clears key EMD milestone

3. The Army has delayed until October the start of operational testing -- originally slated to commence in June -- for the $8 billion Paladin Integrated Management program due to earlier quality control issues with the engine.

Full story: Army delays operational testing for PIM until October

4. Army leaders and Defense Secretary Ash Carter recently discussed plans to implement the recommendations of the National Commission on the Future of the Army, which include new investments in aviation.

Full story: Army leaders huddle with Carter on budget plans