The Insider

Senate takes up defense authorization bill
By Tony Bertuca
June 7, 2016 at 1:38 PM

The Senate has begun debate over the fiscal year 2017 defense authorization bill, which Majority Leader Mitch McConnell (R-KY) wants passed by the end of the week.

"I would encourage my colleagues to put aside partisan politics and work together to bring this [bill] across the finish line this week," he said Monday night. "We may pass the bill on Friday. We may pass it sooner, but we'll pass it this week."

The Senate began Tuesday with speeches from senators proposing various amendments. Among them is one offered by Senate Armed Services Committee Chairman John McCain (R-AZ) to increase the Defense Department's overseas contingency operations budget by $17 billion. A congressional staffer did not expect McCain's amendment to get a vote Tuesday.

"While the [bill] conforms to last year's budget agreement at present, I have filed an amendment to increase defense spending above the current spending caps," he said Monday on the Senate floor.

"This amendment will reverse short-sighted cuts to modernization, restore military readiness, and give our service members the support they need and deserve," he continued. "I do not know whether or not this amendment will succeed. But the Senate must have this debate. And senators must choose a side."

Meanwhile, McCain sparred Tuesday with Sen. Dick Durbin (D-IL), who offered an amendment to undo a section of the proposed bill that would prohibit DOD from spending $900 million on medical research unless it is subjected to standard audits and certified by the defense secretary as having a direct impact on the state of the U.S. military.

Durbin, the highest-ranking Democrat on the Senate Appropriations defense subcommittee, argued such a provision amounted to "red tape" for programs that helped members of the U.S. military as well as veterans and civilians.

McCain said he knew Durbin was likely to succeed, but argued that the money should come from another part of the federal budget, despite being for worthy causes.

"All of these are worthy causes," McCain said. "They have nothing to do with a defenseless nation."

Still, he added: "I expect to lose and I congratulate the lobbyists ahead of time."

Lockheed tops BGOV200
By Marjorie Censer
June 7, 2016 at 8:05 AM

Bloomberg Government this morning released its list of the top 200 contractors, topped this year by Lockheed Martin with $36.6 billion in fiscal year 2015 obligations.

The top five is unchanged from the previous year; following Lockheed are Boeing, General Dynamics, Raytheon and Northrop Grumman. (The ranking only includes prime contracts and does not include classified contract actions.)

However, merger and acquisition activity provided boosts for some companies. Harris, for example, jumped from 29th on the list to 14th, following its acquisition of Exelis. Orbital ATK, the combination created by merging Orbital Sciences with ATK's aerospace and defense units, was 24th, up from 35th the prior year.

Bloomberg cautioned that the list doesn't include transactions concluded after the end of FY-15; Lockheed's ranking, for example, does not take into account its purchase of Sikorsky. Also not included is Lockheed's pending divestiture of its information systems and global services unit.

The report notes that spending in FY-15 on medical supplies increased, bolstering companies like McKesson and AmerisourceBergen, while fuel spending declined. Additionally, the study states total contract spending in FY-15 was down 1.5 percent from the prior year, marking "probably the last year-over-year contract [spending] decline we will see for a while."

Read the full report.

Au revoir, 'Telegram'
By John Liang
June 6, 2016 at 3:00 PM

The Defense Department, General Services Administration and NASA want to bring communications terminology into the 21st century.

Accordingly, the three organizations are proposing the elimination of the use of the words "telegram," "telegraph," "telegraphic," and related old-school terminology from the Federal Acquisition Regulations.

As a June 6 Federal Register notice states:

The word "telegram" emerged shortly after the invention of the electrical telegraph in the 1840s. This terminology and way of communicating was incorporated into the first issue of the FAR, effective April 1, 1984. The emergence of electronic means of communication, starting with the facsimile machine, and then followed by email and mobile-phone text messages in the 1990s, resulted in the sparing use of telegraph services and use of telegrams. On this basis, the Councils are proposing to delete telegraphic services from the FAR and replace these terms with an option for electronic communications.

The INSIDER daily digest
By John Liang
June 6, 2016 at 2:57 PM

A Navy task force on interoperability, the Army urging better contractor supervision and more highlight this Monday INSIDER Daily Digest.

Keep an eye out for upcoming conclusions from a Navy task force on interoperability:

Navy commissions task force to examine interoperability between platforms

The Navy last month organized a new task force to study the interoperability between the service's various platforms, weapons and sensor systems, according to an official involved in the effort.

Keeping a tighter leash on contractors might be necessary:

Army leaders concede necessity of contracting, but call for controls

Amid recent criticism of the costs associated with the military use of contractors, Army leaders said June 2 that contracting is essential, but must be managed effectively.

If the funding comes, expect the submarine industrial base to expand in the coming years:

Stackley: Sub industry will have to expand facilities for increased workload

The submarine industrial base will have to expand in order to simultaneously build Ohio-class replacement ballistic missile submarines and Virginia-class attack submarines with a payload module.

CENTCOM doesn't have enough munitions:

Logistician: CENTCOM lacks 'munitions sufficient to execute the fight'

U.S. Central Command is "short" on munitions and is struggling to adequately resource the fight, according to its chief logistician.

Some Air Force news from late last week:

EPIE study could help build requirements for Air Force DCGS

A recent draft study published by the under secretary of defense for intelligence examining the European Partner Integration Enterprise could have implications for the future of the Air Force's Distributed Common Ground System, according to the service's director for DCGS.

Air Force expects FAB-T airborne terminal cost capability analysis in 2017

The Air Force anticipates it will complete a cost capability analysis in 2017 for procuring airborne terminals as part of its Family of Beyond Line of Sight Terminal program -- a requirement it stripped from the central program of record in 2014.

F-35 ALIS exercise next week will test USAF IOC deployability requirements

The Air Force will deploy the F-35 Autonomic Logistics Information System to Mountain Home Air Force Base, ID, next week for the second time this year, and will use data from the deployment to inform an impending initial operational capability decision.

Senate report highlights need for sustained hypersonic testing capabilities

Senate authorizers proposed funding in their mark of the fiscal year 2017 defense policy bill to support key hypersonics testing facilities, pointing to a larger effort to maintain critical test infrastructure and accelerate hypersonic weapons development.

Carter to meet privately with Elon Musk
By Tony Bertuca
June 6, 2016 at 12:33 PM

Defense secretary Ash Carter is scheduled to meet privately with Space X CEO Elon Musk on Wednesday, Pentagon Press Secretary Peter Cook confirmed today.

Cook said there was no set agenda for the meeting.

"The focus is on innovation, obviously," Cook said, noting that Carter has had meetings with a number of business executives and entrepreneurs from the technology community.

"Musk is one of the most innovative minds in this country," Cook said.

When pressed by reporters on what protections could be provided that Carter would not discuss acquisition or contract matters with Musk, whose company competes against United Launch Alliance, Cook said Carter was well aware of the rules.

"The secretary knows very well the rules and regulations required and how to keep those issues separate and apart and transparent," Cook said. "He absolutely understands those rules and abides by them. The secretary knows his responsibilities here."

Cook said it was possible he might be able to provide the press with more information about the meeting after it took place.

John Bryant is the new head of Oshkosh Defense
By John Liang
June 6, 2016 at 12:08 PM

Oshkosh Corp. announced today that John Bryant has been promoted to president of Oshkosh Defense, effective immediately.

Prior to his promotion, Bryant was senior vice president of defense programs for Oshkosh Defense. As president, he will lead all aspects of the company's global defense segment, including all tactical wheeled vehicle programs, manufacturing and operations, new product development, vehicle life-cycle sustainment and aftermarket services, according to an Oshkosh statement.

"John has been an invaluable leader in our Defense segment and instrumental in the return to growth of our Defense business including a portfolio of heavy, medium and mine-resistant tactical wheeled vehicles for the U.S. Department of Defense," Wilson Jones, Oshkosh president and CEO, said in the statement. "Most recently, John led our strategy to enter the light tactical wheeled vehicle market by winning the U.S. Joint Light Tactical Vehicle (JLTV) program. With his extensive military and industry track record, I’m confident that he will inspire a continuum of future success in Defense."

Bryant has been with Oshkosh Defense since 2010. Prior to that, he was a professor of program management at the Defense Acquisition University. Bryant retired from the Marine Corps as a colonel with 28 years of service. 

Industry groups seek rulemaking pause
By Marjorie Censer
June 6, 2016 at 11:26 AM

The Council of Defense and Space Industry Associations has sent a letter to Claire Grady, director of defense procurement and acquisition policy, asking that the Defense Acquisition Regulations Council suspend the rulemaking process for technical data rights issues until a congressionally mandated government-industry advisory panel submits a report to Capitol Hill.

"This will make it more likely that any future proposed regulations reflect the Panel's recommendations to appropriately balance government and industry interests, and maximize the efficiency of the rulemaking process," states the May 31 letter, signed by the Aerospace Industries Association, the National Defense Industrial Association and the Professional Services Council, among others.

The council says the suspension would put on hold two cases, one meant to address the presumption of development at private expense for commercial items and the other focused on issues such as deferred ordering and the use and disclosure of technical data needed for "segregation/reintegration," the letter adds.

"CODSIA respectfully recommends that the DAR Council suspend the rulemaking process for both cases at their current procedural state," the letter states.

L-3 hires Heidi Wood
By Marjorie Censer
June 6, 2016 at 10:55 AM

L-3 Communications said today it has named Heidi Wood to the newly created position of vice president and chief analytics officer.

Wood "will perform operational analysis and support the company's business development and merger and acquisitions strategy," the announcement says. She will report to Chris Kubasik, L-3's chief operating officer, and will also work with Ralph D'Ambrosio, L-3's chief financial officer.

Wood previously was at Spirit AeroSystems, handling strategy, M&A and investor relations. She also was managing director and global head of aerospace and defense equity research at Morgan Stanley.

The week ahead
By Tony Bertuca
June 6, 2016 at 10:52 AM

The Senate is back and set to take up the fiscal year 2017 defense policy bill some time this week.

Monday

Congress returns to session.

Tuesday

Charlie Mitchell, editor at Inside Cybersecurity, is in Dallas this week moderating on the future of network security and signing copies of his new book, "Hacked: The Inside Story of America's Struggle to Secure Cyberspace."

Wednesday

The ACQUIRE Conference & Expo kicks off at the Walter E. Washington Convention Center.

Leanne Caret, chief of Boeing's defense unit; Kelly Ortberg, chief executive of Rockwell Collins; and Mike Petters, chief executive of Huntington Ingalls, are among those scheduled to present at the Deutsche Bank 2016 Global Industrials and Materials Summit.

Philip Breedlove, the former head supreme allied commander of NATO, headlines a panel at the Atlantic Council on NATO englargement and new frontiers in European security.

The Atlantic Council will also host Richard Ambrose, executive vice president for space systems at Lockheed Martin, in a discussion focused on how companies can thrive in the evolving space sector.

Thursday

The House Armed Services Committee will hold a hold hearing on terrorism finance.

Matt Klein, the chief financial officer of Vectrus, is slated to speak at the Drexel Hamilton aerospace and defense conference.

Friday

The Defense One Tech Summit is held at the Newseum. Among those scheduled to speak are Defense Secretary Ash Carter and Richard Ledgett, deputy director of the National Security Agency.

Inside the Navy highlights
By John Liang
June 6, 2016 at 9:05 AM

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

1. A new plan signed out earlier this month by Navy leadership identifies shortfalls in the Littoral Combat Ship's capabilities and details efforts to close those gaps in the coming years.

Full story: Navy lays out LCS science and technology plan

2. The submarine industrial base will have to expand in order to simultaneously build Ohio-class replacement ballistic missile submarines and Virginia-class attack submarines with a payload module.

Full story: Stackley: Sub industry will have to expand facilities for increased workload

3. The Navy last month organized a new task force to study the interoperability between the service's various platforms, weapons and sensor systems, according to an official involved in the effort.

Full story: Navy commissions task force to examine interoperability between platforms

4. The Office of Naval Research is seeking outside help to develop an automated ship capable of refueling and transferring data from unmanned surface vessels at sea, according to a recent Broad Agency Announcement.

Full story: Navy researchers want 'mother ship' for refueling unmanned vessels

Inside the Army highlights
By Courtney McBride
June 6, 2016 at 9:00 AM

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

1. U.S. Central Command is "short" on munitions and is struggling to adequately resource the fight, according to its chief logistician.

Full story: Logistician: CENTCOM lacks 'munitions sufficient to execute the fight'

2. The Army is evaluating the first capability set in its Future Vertical Lift program, a complete overhaul of the service's aviation platforms, with input from senior leaders.

Full story: Future Vertical Lift gets AROC review on June 3

3. The Defense Department has published draft findings of its search for a potential East Coast missile defense site -- a notional $3 billion to $4 billion project to emplace 60 Ground-based Interceptors in New York, Ohio or Michigan that the Missile Defense Agency does not believe is necessary but is exploring in accordance with a statutory mandate.

Full story: MDA issues draft EIS on potential East Coast GMD site study

4. Congressional bills for defense spending and policy remain in play on Capitol Hill, but key differences over political and social issues, including the size of the Pentagon's budget, could mean Washington lawmaking will be stalled until after the outcome of the presidential election in November.

Full story: Progression of defense bills again in doubt amid partisan debates

The INSIDER daily digest
By
June 3, 2016 at 4:28 PM

Closing out the week: DOD revalidates the planned F-35 inventory, further cost scrutiny for the Air Force's new ICBM, and new insights from defense industry CEOs.

Pentagon examining Long-Range Standoff Weapon acquisition strategy

The Pentagon's top procurement official is asking the Air Force to further examine the cost of the Long-Range Standoff Weapon, but there is no question the Defense Department will move ahead with the program, according to the service's deputy chief of staff for strategic deterrence and nuclear integration.

Novakovic: Ohio replacement program 'kind of blocks the sun for us'

General Dynamics is ramping up its work on the Ohio-class replacement program, a Navy initiative so large that the contractor's chief executive joked Friday that it “kind of blocks the sun for us.”

Bush: Northrop is 'biasing more of our capital' toward internal investments

After a “wave” of spending on share repurchases, Northrop Grumman is now looking toward greater internal investments, the contractor's chief executive said Friday.

Former DOD officials lament shortcomings in relationship with contractors

Former Pentagon officials on Friday discussed ways to strengthen the government's relationship with defense contractors, identifying as problem areas a culture of “overenthusiastic compliance” and a serious lack of useable data.

Inside the Air Force Highlights
By Leigh Giangreco
June 3, 2016 at 1:06 PM

Highlights from this week's Inside the Air Force:

1. The Pentagon has provided a report to Congress revalidating plans to procure 1,763 F-35s for the Air Force and 680 variants for the Navy and Marine Corps, sources told Inside Defense. That study still includes a caveat and the acquisition objective could change.

Full story: Source: Pentagon revalidated requirement for 2,443 JSF aircraft

2. The Air Force will use a small-scale wind tunnel, which can simulate a Mach 2 flight environment, at Kirtland Air Force Base, NM for its Beam Control and Aero-Effects Research and Development effort.

Full story: USAF to conduct high-energy laser beam control testing at Kirtland AFB

3. The Air Force is now in the process of both crafting an overarching strategy for force element terminals acquisition and conducting a cost capability analysis.

Full story: Air Force expects FAB-T airborne terminal cost capability analysis in 2017

Air Superiority
By Courtney Albon
June 3, 2016 at 8:00 AM

The Air Force hopes a 2017 analysis of alternatives considering offensive counterair capabilities will offer a deeper understanding of whether re-starting the F-22 production line fits into its air superiority strategy.

Service spokeswoman Ann Stefanek told Inside the Air Force June 2 that while the service thinks the option is cost prohibitive, it may have a role in helping the service "stay ahead of the threat," and will be considered as part of the AOA process.

Stefanek said the service's air superiority strategy is meant to focus less on "generational leaps," such as a sixth-generation fighter capability, and more on approaches that incorporate rapid development.

Inside the Air Force reported earlier this week that the AOA will focus on identifying the right mix of range, payload, survivability, lethality and affordability for a future PCA capability that would provide key data to a variety of weapon systems as well as perform strike missions, according to the report released May 26. ITAF further reported:

It's unclear whether the capability would be a new platform or a payload that could be hosted on a number of platforms, but the service notes that the analysis will explore options for rapid development.

"Consistent with an agile acquisition mindset designed to deliver the right capability on the required time line, this AOA will include options to leverage rapid development and prototyping in order to keep ahead of the threat," the report states.

The report is the unclassified result of the service's first enterprise capability collaboration team -- a new step in the service's capability development process meant to consider options for addressing future threats and technology gaps. The first ECCT focused on future air superiority, in the 2030 time frame, and briefed top service leadership on the results last week.

The INSIDER daily digest
By John Liang
June 2, 2016 at 4:49 PM

News on Future Vertical Lift, overseas contingency operations and more highlight this Thursday INSIDER Daily Digest.

The Army's Future Vertical Lift program will be looked at tomorrow:

AROC to review Future Vertical Lift on June 3

The Army is preparing to evaluate the first capability set in its Future Vertical Lift program, a complete overhaul of the service’s aviation platforms, with input from senior leaders.

The Air Force is still figuring out how to sanction Boeing for delays to the KC-46 tanker program:

Air Force: No predefined penalty for KC-46 tanker delivery delay

Despite holding the KC-46 tanker's required assets available milestone as a key deadline for the struggling program, the Air Force said this week it is unclear whether Boeing will face a penalty for missing the milestone by more than a year.

Continued coverage of the FY-17 defense bills:

Progression of defense bills again in doubt amid partisan debates

Congressional bills for defense spending and policy remain in play on Capitol Hill, but key differences over political and social issues, including the size of the Pentagon's budget, could mean Washington lawmaking will be stalled until after the outcome of the presidential election in November.

Senate appropriators seek to consolidate OCO train and equip funds

The Senate Appropriations Committee, aiming to reduce redundancy and improve oversight, is proposing to consolidate $1.7 billion from several disparate funds in the Defense Department's overseas contingency operations account that are focused on training and equipping U.S. allies in the Middle East.

Senate panel seeks quarterly reports on DOD's wargaming initiatives

Senate appropriators want the defense secretary to provide quarterly reports on the Defense Department's wargaming efforts to help boost U.S. military superiority and operations.

Senate panel seeks DOD CIO plans for cloud computing efforts

Senate appropriators are adding to the chorus of lawmakers who want more information about the Pentagon's cloud computing efforts following findings by the Defense Department inspector general's office that DOD has failed to establish a standard cloud computing definition and an integrated repository for contracts.

A draft environmental impact statement for basing missile defense interceptors on the East Coast is out:

MDA issues draft environmental impact statement on potential East Cost site study

The Defense Department has published draft findings of its search for a potential East Coast missile defense site -- a notional $3 billion to $4 billion project to emplace 60 Ground-based Interceptors in New York, Ohio or Michigan that the Missile Defense Agency does not believe is necessary but is exploring in accordance with a statutory mandate.

Document: MDA's draft EIS for continental U.S. GMD site

MDA wants more THAAD missiles:

MDA to purchase additional THAAD interceptors

The Missile Defense Agency is seeking additional interceptors for its Terminal High Altitude Area Defense system, according to a June 1 request for proposals.