The Insider

Defense Secretary Ash Carter today praised the work of hundreds of "white-hat" hackers who participated in a pilot program to "hack the Pentagon" in search of cyber vulnerabilities.

More than 1,400 friendly hackers were declared eligible to participate in the "bug bounty" program, while 250 found and submitted at least one cyber vulnerability, Carter said. In total, the pilot discovered and reported 138 "legitimate and unique" vulnerabilities.

"No federal agency had ever offered a bug bounty," he said. "Through this pilot we found a cost effective way to supplement and support what our dedicated people do every day."

Carter said the $150,000 crowd-sourced program would have cost upwards of $1 million if the Defense Department had hired a private firm to conduct a full cybersecurity audit.

"It's a lot better than either hiring somebody to do that for you or finding out the hard way," he said. "What we didn't fully appreciate before this pilot was how many white-hat hackers there are."

Carter said DOD had plans to encourage defense contractors to submit their programs and products for independent security reviews and bug bounty programs before they deliver them to the government.

Defense policy bills, a billion-dollar reprogramming, unmanned systems and more highlight this Thursday INSIDER Daily Digest.

The House and Senate versions of the FY-17 defense policy bill will have lots of issues to iron out in the conference process:

House and Senate defense policy bills head to conference with major differences

House and Senate lawmakers are in the early stages of considering how to best reconcile dueling defense policy bills with significant differences, including an $18 billion delta in how much the Pentagon would be authorized to spend in fiscal year 2017, and a host of acquisition reform measures that could significantly impact the defense industry.

The low price of fuel has enabled DOD to shift money to pay for operations in Afghanistan and against ISIL:

Pentagon reprograms $1.5B in fuel savings to fund Afghanistan and counter-ISIL fights

The Pentagon plans to transfer $1.5 billion in savings it achieved from lower-than-budgeted fuel costs in fiscal year 2016 to fund ongoing military activities in Afghanistan and the operation to counter the Islamic State of Iraq and the Levant.

Document: DOD reprogramming request for Afghanistan, counter-ISIL fight

The Navy's LDUUV acquisition strategy is being altered:

Navy leadership alters LDUUV acquisition strategy with hands-on approach

Navy leadership has decided to alter the acquisition strategy for the Large Displacement Unmanned Undersea Vehicle by shifting from a traditional, competitive phase between industry prime contractors to one that uses a government system integrator.

More unmanned systems news:

Initial UAS flights using GBSAA system at Ft. Hood have been delayed

A major milestone in the Army's quest to fly unmanned aircraft without the use of a visual observer or chase plane to avoid other aircraft has been delayed because the Gray Eagle units meant to conduct these flights have been deployed elsewhere, according to an Army official.

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Keep an eye out for an LRSO milestone A decision in the next couple weeks:

Long-Range Standoff Weapon milestone A decision expected this month

A milestone A decision on the Air Force's Long-Range Standoff Weapon is expected this month, service officials told Inside the Air Force this week.

The next administration will likely have the same audit-readiness effort:

DOD working to preserve audit-readiness progress as administration transitions

The Pentagon is working to ensure its audit-readiness progress will be preserved to help a new presidential administration meet the September 30, 2017, deadline, though a favorable audit opinion remains "many years" off, Defense Department Comptroller Mike McCord told the House Armed Services Committee on June 15.

Document: House hearing on DOD's FIAR plan

The House has passed a fiscal year 2017 defense appropriations bill, embracing a fiscal maneuver that has drawn a veto threat from the White House because it relies on transferring billions from the Pentagon's warfighting account to pay for increased weapon system procurements and boosts to military end strength.

The bill, which passed with a 282-138 vote, provides the Defense Department with a base budget of $533 billion and $43 billion in overseas contingency operations money, relying on a $16 billion OCO-to-base transfer in the hopes that a new presidential administration will authorize supplemental emergency OCO spending before the account runs dry next April.

“This bill fulfills the Congress’s most important responsibility -- providing for the common defense. And it does so responsibly -- funding those military needs that must be addressed now, planning and preparing for the future, and respecting the taxpayer by making commonsense budgeting decisions,” House Appropriations Committee Chairman Hal Rogers (R-KY) said in a statement.

The White House, however, has threatened to veto the bill, alleging that it “gambles” with OCO funds during a time of war and “unravels” the 2015 Bipartisan Budget Agreement, which set limits for base and OCO defense spending.

Meanwhile, Senate appropriators have advanced a defense spending bill that does not feature the $16 billion OCO shift, but instead conforms to caps set by the BBA. The bill has yet to be considered by the full Senate.

Both the House and Senate authorization committees have passed defense policy bills that would transfer $18 billion in OCO funds to the Pentagon's base budget.

Defense Secretary Ash Carter announced Wednesday that new authority was being granted to U.S. military forces in Afghanistan to allow troops to accompany Afghan units on missions and provide close-air support.

"In practical terms, this means U.S. forces will have more opportunities to accompany and enable Afghan conventional forces, just like we have already been doing with Afghan special operations forces," he said during a Brussels press conference. "Regarding U.S. troop levels for future years, the current plan announced last August is for 9,800 U.S. service members to remain in Afghanistan for most of this year and . . . to draw down that number to 5,500 by the end of the year."

News on the Fire Scout, U.S. Special Operations Command and more highlight this Wednesday INSIDER Daily Digest.

The Fire Scout UAV's maritime search radar contract award is being protested:

Navy issues stop-work order for MQ-8C maritime search radar contract

The Navy issued a stop-work order June 7 for the maritime search radar that will be integrated on the MQ-8C Fire Scout after Telephonics Corp. filed a bid protest with the Government Accountability Office.

There's only one company that can supply SOCOM with a small glide munition:

Dynetics only source to fulfill urgent SOCOM need for small glide munition

U.S. Special Operations Command plans to field a new precision-guided munition, the small glide munition built by Dynetics, on its AC-130J and AC-130W gunships by April 2017, according to industry and SOCOM officials.

Document: Air Force limited-sources justification of small glide munition contract

The Air Force's outgoing chief of staff spoke at a Defense Writers Group breakfast this morning:

Welsh: Shift away from 'next-generation' thinking driven by urgency

Driving the Air Force's shift away from "next-generation" thinking in its vision for future air superiority is a need to field rapid, adaptable capabilities in a budget-restrained, evolving threat environment, according to the service's top uniformed official.

Document: Air Force's air superiority 2030 flight plan

The White House doesn't want to add more money for Israeli BMD:

OMB links sharp increase for Israeli missile defense with cuts to needed U.S. BMD

The Obama administration has registered a first-ever explicit objection to an Israeli missile defense funding increase after lawmakers added $455 million -- more than 200 percent above the White House's fiscal year 2017 proposal -- while simultaneously cutting $324 million needed to improve U.S. ballistic missile defense.

Document: Statement of administration policy on the House's FY-17 defense spending bill

Lockheed Martin will be ramping up torpedo upgrade production:

Lockheed earns new deals for torpedo upgrades, anti-sub training targets

Lockheed Martin's Sippican division is preparing to re-start its production line for guidance control sections after earning a potential five-year, $425 million contract from the Navy last month to upgrade the service's torpedoes.

The builder of the Joint Strike Fighter's engine recently conducted a test:

Pratt & Whitney recently conducted F135 corrosion engine test

HARTFORD, CT -- F-35 engine manufacturer Pratt & Whitney recently completed a test on its corrosion engine test article as part of the overall component improvement program.

Keep an eye out for a NAVAIR contract that will allow Boeing to begin adding Harpoon missiles to Saudi F-15 fighters:

NAVAIR prepping contract for Harpoon integration on Saudi F-15s

Naval Air Systems Command is planning to award a contract to Boeing this month to begin integrating the legacy Harpoon anti-ship missile onto Saudi Arabia's F-15SA strike fighters.

House Armed Services seapower and projection forces subcommittee Chairman Randy Forbes (R-VA) lost his primary Tuesday evening.

Virginia state Del. Scott Taylor (R) had 53 percent of the vote to Forbes' 41 percent for the Republican primary in Virginia's 2nd District.

Forbes currently serves Virginia's 4th District but decided to run for reelection in the 2nd District after redistricting made his old seat heavily Democratic.

Rep. Duncan Hunter (R-CA) serves as the House Armed Services seapower and projection forces subcommittee vice chair and is now in line to take Forbes' place as chairman.

The House's version of the FY-17 defense appropriations bill and more highlight this Tuesday INSIDER Daily Digest.

Coverage of the House version of the FY-17 defense spending bill:

White House threatens to veto House defense spending bill

White House officials will recommend that President Obama veto the proposed House defense appropriations bill if it is passed in its current form, citing opposition to a fiscal maneuver that would shift $16 billion from the Pentagon's warfighting account to its base budget, according to a new statement of administration policy from the Office of Management and Budget.

Document: Statement of administration policy on the House's FY-17 defense spending bill

House lawmakers paving way for U.S.-Israel cooperation on directed-energy weapons

House lawmakers are paving the way for a significant expansion of missile defense cooperation with Israel that could require the Pentagon to begin working with the defense ministry in Tel Aviv on directed-energy projects, adding a new dimension to efforts to assist Israel in developing and improving an indigenous capability to shoot down ballistic and cruise missiles, rockets and more.

Looks like the Air Force will be conducting a study of its space-based weather monitoring capability:

JROC wants Air Force to explore 'material solution' for weather gaps

The Joint Requirements Oversight Council has directed the Air Force to explore a "material solution" as an option to address two glaring gaps in the service's space-based weather monitoring capability, and the service expects to return with a refined list of opportunities by the fall.

Private equity M&A activity is good for services contractors:

CEOs praise private equity and consolidation in contracting industry

The chief executives of four services contractors said Tuesday the market isn't getting easier, but their private-equity ownership has proved helpful.

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A timeline for when the Navy's final demonstration for the Fuel Burn Reduction program will take place:

P&W Exec: Final demo for F135 Fuel Burn Reduction program slated for 2017

HARTFORD, CT -- The final demonstration for the Navy's Fuel Burn Reduction program on the Joint Strike Fighter engine is slated for the first half of calendar year 2017, according to a Pratt & Whitney executive.

A preview of Ohio-class replacement ballistic missile submarine program funding:

HII CEO predicts SSBN(X) funding will become an annual discussion

Huntington Ingalls industries chief executive officer predicts funding the Ohio-class replacement ballistic missile submarine program will be an annual discussion unless a mechanism is created similar to the Pentagon's wartime funding account.