The Insider

By John Liang
April 26, 2016 at 3:55 PM

Humvees, the Littoral Combat Ship, the defense industrial base and other issues highlight this Tuesday INSIDER Daily Digest.

At least one House lawmaker supports the SECDEF's wish to cut the LCS program:

Speier amendment would codify Carter's cut to LCS program

An amendment to the House Armed Services Committee's version of the defense policy bill would codify Defense Secretary Ash Carter's cut to the Littoral Combat Ship program that capped procurement at 40 ships and directed the Navy to downselect to one variant of the small surface combatant.

Document: Rep. Speier's LCS amendment

A new industrial base study should be getting underway soon:

Lynn set to lead CNAS study on U.S. defense industrial base

A new task force, organized by the Center for a New American Security, is set to explore how the next administration can best manage the changing U.S. defense industrial base.

House authorizers want more active-duty Army humvee ambulances:

Lawmakers direct humvee ambulance recap for active Army

Lawmakers have proposed $50 million to recapitalize ambulance variants of active-Army humvees, pushing the service to consider expanding the program in future years.

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

Keep an eye out for the finalization of Lockheed's spinoff of its IT services business and subsequent merger of that unit with Leidos:

Lockheed: One review of competition impact remains for Leidos deal

With the successful clearance of the U.S. government antitrust review, the deal to merge Lockheed Martin's IT services business with Leidos is moving closer to completion, according to Lockheed chief executive Marillyn Hewson.

CYBERCOM could become a full-fledged COCOM soon:

Lawmakers want to elevate CYBERCOM, review relationship with NSA

The House Armed Services Committee intends to elevate U.S. Cyber Command to a unified combatant command, but wants the Defense Department to review whether the chief of CYBERCOM should remain a dual-hatted job with the National Security Agency director.

Some front-page news from this week's issue of Inside the Navy:

Navy finalizing new plan for LCS mine countermeasure developments

A plan laying out a new path forward for the Littoral Combat Ship's mine countermeasures mission package is nearly complete, as House lawmakers propose forbidding the Navy from retiring its older anti-mine ships until the LCS capability is ready.

BAE Systems installs new engine for next-gen amphib vehicle offering

YORK, PA -- BAE Systems has made one modification to its next-generation amphibious vehicle offering before building prototypes it will deliver to the Marine Corps next spring -- a new engine that provides an additional 150 horsepower.

By Courtney Albon, John Liang
April 26, 2016 at 11:51 AM

President Obama has nominated Air Force Gen. David Goldfein to become the service's next chief of staff, according to a Pentagon statement issued this morning.

Goldfein is serving as the service's vice chief of staff. Prior to that position, he was director of the Joint Staff.

If confirmed, Goldfein would replace outgoing chief Gen. Mark Welsh when the latter retires his post July 1.

Goldfein is a command pilot, flying a number of manned and unmanned aircraft including the F-16, F-117 and MQ-9.

He has also served as the head of Air Forces Central Command from 2011-2013, and from 2009 to 2011 was director of operations at Air Combat Command.

By John Liang
April 26, 2016 at 11:47 AM

House authorizers want the Missile Defense Agency to take a second look at the Sea-Based X-Band Radar.

The report accompanying the House Armed Services Committee's draft mark of the fiscal year 2017 defense authorization bill released this week states:

The committee is aware that the platform has been under-utilized and encourages the Missile Defense Agency (MDA) to more fully employ the SBX to address increasing threats and provide support to a greater number ongoing operations and testing events, if required and cost-effective. Further the committee understands that for what could be a small investment in software updates and technology refresh, the SBX could provide a more robust sensor capability for homeland defense.

Therefore the committee directs the Director of the Missile Defense Agency to provide a briefing to the Committees on Armed Services of the Senate and the House of Representatives not later than January 15, 2017, on MDA's historical utilization rates for SBX; the requirements, if any, for increased operational vailability, and resultant costs of such increase; and hardware and or software improvements MDA may pursue to address obsolescence and modernization needs of the SBX, and to obtain enhanced sensor capability (and costs and schedule for such improvements) to address warfighter requirements, if any.

SBX was developed by MDA and in December 2011 the agency transferred responsibility for the vessel's management and physical security to the Navy's Military Sealift Command. MDA retains responsibility for communications, the X-band radar and mission integration.

The floating radar tracks, discriminates and assesses long-range ballistic missiles as a component of the Ground-Based Midcourse Defense system.

MDA Director Vice Adm. James Syring said in 2014 that the SBX would eventually be moved to the East Coast once the Long-Range Discrimination Radar was developed and deployed.

By Tony Bertuca
April 26, 2016 at 11:10 AM

Editor's note: An earlier version of this story incorrectly stated the F-35 would make its first air show appearance at Farnborough Air Show. The aircraft will first appear at the Leeuwarden Air Show in the Netherlands in June.

Lt. Gen. Christopher Bogdan, chief of the F-35 joint program office told the Senate Armed Services Committee today that the JPO budget covers 2,590 civilians at an annual cost of $70 million, though committee Chairman John McCain (R-AZ) said it was his understanding that the number of civilians is closer to 3,000 at an annual cost of $300 million.

McCain, however, did not explore the numerical differences, instead saying he was alarmed at the high cost of the JPO, regardless of the differing sums.

In his opening statement, McCain said "the F-35 program’s record of performance has been both a scandal and a tragedy with respect to cost, schedule, and performance. And it's a textbook example of why this committee has placed such a high priority on reforming the broken defense acquisition system."

Meanwhile, Bogdan told the committee he was confident the F-35 would participate in the Farnborough International Air Show in the United Kingdom from July 11 to July 16. Prior to that, the F-35 is expected to fly at the Leeuwarden Air Show in the Netherlands in June, marking its first-ever airshow appearance.

He noted that five F-35s would go to Farnborough -- two A models and three B models, one of which will be configured for the U.K. military.

The ongoing hearing can be viewed live here.

By Tony Bertuca
April 25, 2016 at 4:36 PM

The head of Pentagon services contracting wants to explore a new policy that would mandate the creation of special small business set-asides for all services contracting administration work.

Ken Brennan, the deputy director of services acquisition, said the Defense Department's ongoing effort to more widely establish Service Requirement Review Boards (SRRBs) had uncovered data indicating that most DOD purchasers of administrative services procure it in "little chunks."

"I'm actually contemplating and working through the potential development -- I don't want to get too far out ahead of this; it's not endorsed through the decision process -- but, the kinds of things I'm thinking about are issuing a policy guidance memo that says, 'Hey, if you're going for admin, you really ought to be going only small business, it ought to be local and it ought to likely be a set-aside or within the small-business rules,'" he said Monday during a joint event hosted by the Professional Services Council and Inside Defense.

"There is probably some real benefit there to do a strategic sourcing or category management for that capability and create a vehicle that meets those things I just mentioned -- small business," he continued. "We'll see how that goes; that's the kind of thing that would definitely go out for public comment. That's the kind of mindset I'm thinking though."

Brennan participated in Monday's event in an aim to explain in greater detail DOD's recent policy changes for services contracting, which stem from a desire to get a better handle on managing the area. The Pentagon spent $145 billion on services in FY-15, and the contracts typically account for half of DOD's acquisition budget.

A key aspect of the new policy is the broad establishment of SRRBs, which are expected to save $3 billion over the next five years, according to the Pentagon's FY-17 budget submission. Various "tripwires" that trigger SRRB intervention include labor rates and performance, bridge contracts, use of subcontractors, single-bid procurements and best-value, source-selection premiums.

Brennan said recent policy changes to establish greater DOD oversight on services contracts were only in the early stages of a process that could take more than a decade.

"It's a 15-year effort that we're about three years into," he said. "There's a lot of room for growth yet, but it's going to be a decade at least. My goal is that services becomes less of a standalone and more part of general culture and policy. We'll see if I'm successful on that."

Alan Chvotkin, the executive vice president and counsel of the Professional Services Council who appeared alongside Brennan, said he hoped DOD could institutionalize its process a lot sooner, given the rapidly changing nature of the commercial marketplace where many services companies also work.

"I hope it doesn't take 15 years to memorialize this," he said. "The nature of services changes a lot. I'm really concerned it'll take much too long, and want to see what we can do to accelerate it if at all possible."

By John Liang
April 25, 2016 at 3:45 PM

Our coverage of the House Armed Services Committee chairman's mark of the fiscal year 2017 defense policy bill dominates this Monday INSIDER Daily Digest.

A broad-strokes look at the proposed bill:

House panel would boost FY-17 investment accounts through major OCO reallocation

In a major change to the Pentagon's fiscal year 2017 budget submission, a draft House Armed Services Committee bill would reallocate 40 percent of the Defense Department's war spending proposal for routine base budget needs, raising the Obama administration's $5 billion request to $23 billion.

Drilling down into the service-specific portions of the legislation:

House mark-up would restrict Air Force plans to fund new launch vehicle

The House Armed Services Committee's mark of the fiscal year 2017 defense policy bill takes a strong stance against the Air Force's plan to use FY-17 funds to broaden the scope of its RD-180 engine replacement effort.

House authorizers propose using OCO to fund Huey sole-source, F-35 buy-back

The House Armed Services committee seeks to use Overseas Contingency Operations funding to support a number of plus-ups to Air Force procurement efforts -- including an unrequested $80 million boost to speed up the UH-1N Huey replacement program and support the sole-source acquisition of Army UH-60M Black Hawks.

House authorizers use wartime funding to finance naval services' unfunded priorities and more

The House Armed Services Committee's mark of the fiscal year 2017 defense policy bill would use the Overseas Contingency Operations account to pay for the majority of Navy and Marine Corps unfunded priorities, while also stuffing OCO with hundreds of millions not requested by the services.

House Armed Services Committee seeks to add $1B for Army aviation

The House Armed Services Committee is poised to restore more than $1 billion in funding to Army aviation, closely following the service's unfunded requirements list.

Army may be forced to discontinue its intelligence software

The Army could be forced to halt further development of its intelligence software suite, the Distributed Common Ground System, if lawmakers on the House Armed Services Committee get their way.

In related news, the top Republican and Democrat on the House Armed Services Committee both spoke late last week on the FY-17 defense policy bill:

Thornberry predicts NDAA debate on contractor protest process

House Armed Services Committee Chairman Mac Thornberry (R-TX) expects lawmakers to debate proposals to reform the way defense contractors protest losing bids when the fiscal year 2017 defense authorization bill is considered this week.

Smith 'leaning toward' supporting authorization bill, despite $18B budget 'gambit'

The top Democrat on the House Armed Services Committee told Inside Defense on Friday he is “leaning toward” supporting the fiscal year 2017 defense authorization bill, despite the GOP's plan to transfer $18 billion from the Pentagon's warfighting account into its base budget to pay for additional weapon procurements and other unrequested plus-ups.

By Tony Bertuca
April 25, 2016 at 2:04 PM

The House Armed Services Committee is proposing legislation that would eliminate the Quadrennial Defense Review in favor of a new commission tasked with making recommendations for national security strategy.

The QDR -- also known as the Defense Strategy Review -- would be replaced with the “Commission on National Defense Strategy for the United States,” according to a provision in the committee chairman's mark obtained by Inside Defense.

Lawmakers have long derided the QDR for being inadequate to address the rapidly changing global security environment.

“The committee notes that the strategic environment has evolved since the current defense strategy, as outlined in both the 2012 Defense Strategic Guidance and 2014 Quadrennial Defense Review, was formulated,” according to mark. “For example, the strategy does not reflect a resurgent Russian Federation, the rise of the Islamic State of Iraq and the Levant, or the fragile security environment in the Islamic Republic of Afghanistan.”

The new, bipartisan commission would be composed of 12 members: six (three each) determined by the House and Senate Armed Services Committee chairs and six (three each) determined by the ranking minority members of each committee.

“The committee believes that the nation will benefit from such a bipartisan consensus on national security and that a new administration can leverage the work of the commission in its own defense strategy and posture development,” the mark states.

By Tony Bertuca
April 25, 2016 at 12:32 PM

Insiders should be prepared for a busy week as the House Armed Services Committee considers the proposed fiscal year 2017 defense authorization bill, while Defense Secretary Ash Carter heads to the Hill for back-to-back hearings. Major defense contractors have also scheduled a host of earnings calls.

Tuesday

The Senate Armed Services Committee will hear from Pentagon officials on the progression of the F-35 Joint Strike Fighter program.

Lockheed Martin is set to hold a call on its quarterly earnings at 11 a.m.

Wednesday

The full House Armed Services Committee will begin marking up the proposed FY-17 defense authorization bill at 10 a.m., but is not expected to complete its work until very early the following morning.

Carter and Chairman of the Joint Chiefs Gen. Joseph Dunford are scheduled to testify before the Senate Appropriations defense subcommittee on the FY-17 budget submission

Boeing, General Dynamics, L-3 Communications, Leidos, ManTech International, NCI and Northrop Grumman are set to discuss their quarterly earnings reports.

Thursday

The Senate Armed Services Committee will hear from Carter and Dunford on the current strategy to counter the Islamic State of Iraq and the Levant.

Oshkosh and Raytheon are slated to hold calls on their quarterly earnings.

By
April 25, 2016 at 10:17 AM

The April 2016 document contains the full bill and report language accompanying the House Armed Services Committee's fiscal year 2017 defense authorization legislation.

By Courtney McBride
April 25, 2016 at 9:05 AM

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

1. Lawmakers have adopted legislation tasking the Army to envision fielding new missile types currently banned under a landmark disarmament treaty with Russia.

Full story: Army is tasked to weigh new missiles forbidden under U.S.-Russia treaty

2. The Army general tapped to lead U.S. European Command and serve as NATO supreme allied commander concurred with top military leaders that Russia poses the greatest threat to the United States.

Full story: Top U.S. commander for Europe nominee eyes Russia, hybrid-warfare threats

3. The Defense Department is reevaluating plans to restart a demonstration in October of a large blimp designed to watch for incoming cruise missiles, according to the Obama administration's nominee to lead U.S. Northern Command.

Full story: NORTHCOM nominee: Pentagon reconsidering antimissile-blimp plans

4. Legislation proposed by the House Armed Services strategic forces subcommittee aims to restrict funding for the Patriot antimissile system in fiscal year 2017 until key issues related to system compatibility and the acquisition strategy are resolved.

Full story: Lawmakers place caveats on Patriot antimissile-system spending

By Lee Hudson
April 25, 2016 at 9:00 AM

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

1. A plan laying out a new path forward for the Littoral Combat Ship's mine countermeasures mission package is nearly complete, as House lawmakers propose forbidding the Navy from retiring its older anti-mine ships until the LCS capability is ready.

Full Story: Navy finalizing new plan for LCS mine countermeasure developments

2. The Navy for the first time has detailed how it would use a congressionally created fund and its special acquisition authorities to pay the tab for the Ohio-class submarine replacement program, which officials now say carries an estimated $122 billion in procurement costs.

Full Story: Navy detaiils envisioned use of National Sea-Based Deterrence Fund

3. BAE Systems has made one modification to its next-generation amphibious vehicle offering before building prototypes it will deliver to the Marine Corps next spring -- a new engine that provides an additional 150 horsepower.

Full Story: BAE Systems installs new engine for next-gen amphib vehicle offering

4. House authorizers are concerned the Navy's amphibious ships may act as a limiting factor for the Marine Corps to leverage the full capability of the Joint Strike Fighter.

Full Story: House authorizers concerned amphib fleet may limit F-35 capabilities

By Tony Bertuca
April 22, 2016 at 2:00 PM

A full house is expected Monday when Inside Defense and the Professional Services Council will jointly host a discussion on DOD's landmark services acquisition policy -- the directive from earlier this year that promises to reshape the way the Pentagon buys services.

Ken Brennan, the Pentagon's deputy director for services acquisition, will talk about “DOD's governance, management and oversight of services, including the new 5000.74 directive." Following Brennan's remarks, a panel will take a deeper look at the Pentagon's plans as well as their potential effect on contractors.

The lineup:

Ken Brennan, deputy director, services acquisition, Department of Defense

Alan Chvotkin, executive vice president and counsel, Professional Services Council

Marjorie Censer, defense business editor, Inside Defense

The details:

When: Monday, April 25, 2016 from 8:30 AM to 11:00 AM (EDT)
Where: CACI Conference Center 4300 Wilson Blvd, Ste 750, Arlington, VA 22203

Sign up here today (only a few seats remain).

By Jason Sherman
April 22, 2016 at 1:18 PM

Leading the Friday update are a few items from the front page of today's Inside the Air Force.

USAF expects enterprise ground migration in next five years

The Air Force is moving forward with its implementation plan for a new space Enterprise Ground Services concept, and expects to release a request for information later this month that will allow industry to help set standards and shape future ground system architecture.

USAF Scientific Advisory Board completes directed energy maturity study

The Air Force Scientific Advisory Board completed its fast-track study on directed energy April 19 and will brief the service's top leadership May 2, according to the board's chair.


Nellis AFB testers to complete F-35A IOC readiness tests by end of month

The test units tasked with conducting a key F-35 initial operational capability assessment are poised to complete test exercises by May after wrapping up a series of tests meant to demonstrate the Joint Strike Fighter's operational performance.

And before we punch out, two more:


Army is tasked to weigh new missiles forbidden under U.S.-Russia treaty

Lawmakers have adopted legislation tasking the Army to envision fielding new missile types currently banned under a landmark disarmament treaty with Russia.

DBB: Law creating new business management secretary should be changed

Legislation that requires the Pentagon's deputy chief management officer and chief information officer to be consolidated and elevated into a new position starting next February will not achieve its desired results and should be changed, an influential advisory panel concluded.

By Marjorie Censer
April 22, 2016 at 1:04 PM

Under Secretary of Defense for Policy Christine Wormuth will step down in June, according to a statement issued today by Defense Secretary Ash Carter.

Wormuth will leave "to spend more time with her family," Carter said in the statement.

He said Brian McKeon, Wormuth's principal deputy, will serve as acting under secretary of defense for policy, and David Shear, assistant secretary of defense for Asian and Pacific security affairs, will assume McKeon's responsibilities.

By Marjorie Censer
April 22, 2016 at 12:15 PM

Nonprofit research and development organization SRI International said this week it has spun off a venture dubbed Superflex to develop cutting-edge wearable robotics.

Superflex technology was originally developed for the DARPA-funded "Warrior Web" program, the corporation said.

The new venture will be led by Rich Mahoney, who has spent more than seven years as the director of SRI Robotics. SRI said Superflex plans to announce its product focus by the end of the year.