The Insider

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February 12, 2009 at 5:00 AM

Given the state of the economy, voting for the economic stimulus package will essentially be equivalent to voting to reduce defense spending, Rep. J. Randy Forbes (R-VA) said today.

After listening to defense experts explain what needs to be done in Afghanistan, House lawmakers questioned whether or not there would be sufficient resources to meet the military's operational objectives.

Can victory still be achieved in Afghanistan and Iraq with dramatic cuts to defense spending, Forbes asked at today's House Armed Services Committee hearing.

As it stands, Congress plans to vote on the economic stimulus package of about $789 billion tomorrow so that it can reach President Obama's desk by Monday.

The hearing panel included CSIS' Anthony Cordesman, Council on Foreign Relation's Stephen Biddle, retired Army Gen. Jack Keane, and Janet St. Laurent from the Government Accountability Office.

Keane said that when troops' lives are on the line, the resources they need will be met; however the Defense Department has to make budget choices based on the money made available to them.

"I don't believe operations and maintenance dollars will be cut," said Keane.

Where Defense Secretary Robert Gates does have discretion is in his investment and capital accounts, Keane told lawmakers.

"That's where he'll go to make cuts to live within the budget given to him," said Keane.

-- Kate Brannen
 

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February 12, 2009 at 5:00 AM

The Senate tonight unanimously confirmed Leon Panetta as director of the Central Intelligence Agency, Sen. Diane Feinstein's office just announced.

-- Jason Sherman
 

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February 11, 2009 at 5:00 AM

It may have taken a little longer than some expected, but the Senate today voted 93-4 to confirm the nomination of William Lynn for the No. 2 spot at the Pentagon.

Click here and here for our coverage of his nomination saga.

-- John Liang
 

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February 11, 2009 at 5:00 AM

Milan Vodicka, a Czech journalist, is using the platform of The Wall Street Journal's op-ed page today to warn the United States against turning its back against his country on missile defense, after so much political capital was spent getting the agreement to base an X-band radar there.

If the United States builds a radar system in the Czech Republic as part of the missile defense program developed by the Bush administration, it's likely that the Russians will target the Czech Republic with their tactical nuclear missiles. But many Czechs are fearful of an even greater danger than Russia: The possibility that the U.S. may decide not to deploy the defense system. Unfortunately, Vice President Joseph Biden suggested this prospect last week in Munich when he said, "We will wait for what the experts say and then we will see."

Czech politicians and their Polish counterparts have invested a lot of political capital in the missile defense project. If the Obama administration doesn't follow through, supporters of the missile shield would feel abandoned by the U.S.

What's worse, Czech and Polish leaders would lose credibility among their opponents and, most importantly, Russia. Moscow would see the failure to build the radar system as proof of its influence over Central Europe, and as recognition of its veto power over European security policy.Mr. Biden doesn't seem to appreciate that the missile defense project isn't just about American interests. It's about the Czechs and the Poles, too.

But the juiciest line comes later:

It's beginning to look as though the Americans were taking us for a ride. Now that there's a new driver in the White House, they think they can just drop us off at the curb.

Last week, we reported on a presentation by Stanford academic Dean Wilkening, who argues that Bush-era plans to station ballistic missile defense assets in Poland and the Czech Republic offer European nations less protection from Iranian missiles than defense officials have claimed publicly. Inside Missile Defense was able to interview Wilkening yesterday, and today's issue features an updated version of the story.

-- John Liang

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February 11, 2009 at 5:00 AM

This just in from the Senate Select Intelligence Committee:

WASHINGTON, DC -- Today Senators Dianne Feinstein (D-Calif.), chairman of the Senate Intelligence Committee, and Christopher (Kit) Bond (R-Mo.), vice chairman of the committee, announced that the committee has approved the nomination of Leon Panetta to be the next Director of the Central Intelligence Agency.

“Leon Panetta will mark a new beginning for the CIA as its next Director. He has the integrity, the drive and the judgment to ensure that the CIA fulfills its mission of producing information critical to our national security, without sacrificing our national values,” Senator Feinstein said.

“He has promised the Senate Intelligence Committee that he will not allow coercive interrogation practices, secret prisons, or the transfer of terrorist suspects to countries that may use torture. And he has pledged to surround himself with career professionals, to keep Congress fully and currently informed, and to give the President unvarnished, independent advice. I am confident that the President and the nation will be well-served by Mr. Panetta as our next CIA Director.”

“I have supported Mr. Panetta after receiving his assurances that he will lean forward in the fight against terrorism to keep our nation safe,” Senator Bond said. “He has committed to using all appropriate and lawful means to do so, including the use of contract employees when the agency does not have a qualified government employee to perform the job, exploring the use of enhanced interrogation techniques on high-value detainees that may warrant going beyond the Army Field Manual in certain situations, and the lawful rendition of detainees to countries who have assured our State Department that they will not engage in torture.”

Panetta’s confirmation in the full Senate is expected to take place "as soon as possible," according to Feinstein's and Bond's joint statement.

-- John Liang
 

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February 10, 2009 at 5:00 AM

Textron's sales of the V-22 Osprey and other products to the Defense Department may be one of the few things keeping the company's debt rating from truly tanking, according to a report issued yesterday by debt-rating agency Fitch Ratings:

Fitch Ratings has downgraded the Issuer Default Ratings (IDR) and long-term debt ratings for Textron Inc. (TXT) and Textron Financial Corporation (TFC) to ‘BBB-’ from ‘BBB’. In addition, the short-term IDRs and commercial paper ratings have been downgraded to ‘F3’ from ‘F2’. The Rating Outlook is Negative.

At the same time, Fitch has downgraded and simultaneously withdrawn its ratings for TXT’s preferred securities due to the small amount outstanding. Debt and preferred securities totaled nearly $11 billion at Jan. 3, 2009, including $2.5 billion at TXT and $8.3 billion at TFC. . . .

The downgrade of TXT’s and TFC’s ratings recognizes execution risks related to TFC’s plans to exit its non-captive finance business, as well as difficult economic conditions that could pressure TFC’s asset quality and financial performance at TXT’s manufacturing businesses. These factors could lead to liquidity pressures in 2010 in the absence of asset sales or capital market transactions. Other developments considered in the ratings include the full drawdown of the company’s committed bank facilities and the recently announced management changes, which emphasize the broad challenges facing the company.

Here's what Fitch had to say about Textron's manufacturing business, of which the V-22 is a big part (through its Bell Helicopter subdivision):

At TXT, the ratings incorporate Fitch’s view that TXT’s manufacturing businesses will generate positive free cash flow, albeit at lower levels than in the past due to weaker demand at Cessna and for the Industrial segment. In late January 2009, TXT lowered its estimate for deliveries in 2009 to 375 aircraft, a nearly 20% reduction from the 467 jets that were delivered in 2008. In Fitch’s view, the reduction understates the decline in demand because the mix of low-end Mustangs has been increasing. As a result of higher deferrals and sharply lower orders, deliveries could potentially remain at lower levels for a sustained period. However, the impact is partly offset by Cessna’s large backlog that totaled $14.5 billion at the end of 2008 after peaking at $15.6 billion in September 2008. The outlook for TXT’s Bell and Defense & Intelligence segments is more stable, helping to mitigate concerns about declining demand for business jets and difficult conditions in TXT’s Industrial segment.

While Textron's overall defense business looks safe, implementing the Pentagon's earned-value management rules has been a challenge, as Inside the Pentagon reported late last month:

When contractors fail to follow the rules, they risk losing their certification. That happened to Bell Helicopter Textron in March 2006; the company has struggled ever since to earn it back. Bell again failed to reach this goal during ((the Defense Contract Management Agency's)) most recent review of the company last November. The next such review is slated for March.

Fitch put out the rating in the wake of Textron's reshuffling of the folks in charge of its soon-to-be-defunct financing business earlier this morning. In December, the company announced it was getting out of the financing business altogether.

At the very least, yesterday’s news should make the company's presentation today at an industry conference in Miami Beach, FL, rather interesting.

-- John Liang
 

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February 10, 2009 at 5:00 AM

President Obama has asked Bruce Riedel from the Brookings Institute to chair an interagency review of U.S. policy toward Afghanistan and Pakistan, White House spokesman Robert Gibbs said today.

Riedel is working at the White House for 60 days while on temporary leave as a senior fellow at Brookings' Saban Center for Middle East Policy. The study is to be completed before the NATO summit in April, according to the White House transcript of Gibbs' remarks on board Air Force One.

Amb. Richard Holbrooke and newly minted Under Secretary of Defense for Policy Michèle Flournoy have been appointed as co-chairs of the review, according to Gibbs. Riedel will report directly to the president and National Security Adviser James Jones, Gibbs added.

The proposed study is separate from the military review slated for completion this month. U.S. Central Command chief Gen. David Petraeus is overseeing that one.

Given that the economy has been pretty much dominating today's news as well as this morning's press gaggle, here's the only question that was asked at the White House (or should we say Air Force One) briefing about Riedel's Afghanistan-Pakistan study:

Q: Robert, just a quick question on the Afghanistan panel. How broad is that mission going to be? Is it going to look at troop increases and things like that? Or is it more going to look at --

MR. GIBBS: Well, obviously, there's a review that overlaps also with what General Petraeus is doing. I think everyone has mentioned that in order for us to change the direction that we see in Afghanistan, we can't simply focus on just the military aspects, that we have to focus on the diplomatic, the civil society, the reconstruction.

So I think with what Bruce is doing, and what other military planners are doing, is looking at the Afghanistan and Pakistan policies in a -- not just in how many troops, but in a broad sense of what is possible and what needs to happen in order to change the direction.

-- John Liang
 

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February 10, 2009 at 5:00 AM

Here's hoping the new under secretary of defense for policy, Michèle Flournoy, does something about her organization's Web site.

The home page features an "Announcements" box right in the middle, highlighting "News, Speeches, Items of Interest."

The most recent news: March 27, 2007.

Latest "Public Statements": Sept. 28, 2006.

And the latest "Special Report": The Quadrennial Defense Review. From 2006.

At least the site does reflect that Flournoy is, finally, the under secretary following her confirmation this week -- though it spells her name without that tricky accent. Just one more update to be made.

-- Dan Dupont

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February 10, 2009 at 5:00 AM

While Iran's satellite launch last Monday has defense leaders worried, the move is not necessarily a sign that Tehran already has the know-how to build a long-range missile capable of reaching the United States, according to Gen. James Cartwright, the vice chairman of the joint chiefs of staff.

The leap from satellite program to missile program is "not an automatic," Cartwright told reporters today. "It doesn't happen in a day or two."

"((T))he work that they have done thus far is, at best, rudimentary -- very low orbit, very minimal energy to get up there," Cartwright said. "This is not a long- range missile, but it is the path toward that, so we have to worry about that."

-- Sebastian Sprenger

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February 9, 2009 at 5:00 AM

Facing tighter budgets and a greater emphasis on fuel efficiency, the military vehicle industry has a challenging year ahead, according to industry panelists at last week's tactical wheeled vehicles conference in Monterey, CA.

“We're going to be all together facing an uncertain future with unpredictability as the main theme,” Pat MacArevey, Navistar's director of government business and government affairs, said during the Feb. 2 panel. “I think the challenge is for our industry to behave like our customer and be on our toes in an era of persistent conflict.”

In particular, the panelists -- including retired Gen. Paul Kern, president and chief operating officer of AM General; John Stoddart, executive vice president and president for defense at Oshkosh; Dennis Dellinger, president for mobility and protection systems at BAE Systems; and MacArevey -- said the industry needs to look toward lightweight materials that provide vehicle protection and increased fuel efficiency.

Additionally, Kern touched on the need to constantly improve vehicles -- in his company's case, the humvee -- to meet threats in theater, while Dellinger looked toward the need to repair damaged vehicles. He favored recap, which allows new technology insertions, instead of reset, which simply returns vehicles to their original configurations.

Stoddart suggested the companies may consider future collaborations.

“We know that collectively we can do what our national strategy calls for us to do, and don't be surprised if you see the four of us working more closely together in the future,” he said.

For more coverage of the Monterey conference, check out this week's Inside the Army.

-- Marjorie Censer

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February 9, 2009 at 5:00 AM

Accelerating equipment reset is one way that military spending can help play a role in the country's economic recovery, states a new memo from the Center for American Progress, a progressive Washington-based think tank. The authors recommend adding $50 billion to equipment reset in fiscal year 2010 as part of the economic recovery package.

After years of use in Iraq and Afghanistan, the services' equipment -- its tanks, trucks and helicopters -- have undergone significant combat damage and require either replacement or repair.

"There is no reason that this reset cannot be done much more rapidly," reads the memo.

Defense spending for equipment reset, which could cost up to $100 billion, should be prioritized, according to the report, because it could spur medium- to long-term economic growth.

Reset is a major issue for the services, especially the Army. Inside the Army reported this week that reset is a "non-negotiable" priority for the service, despite serious funding challenges that lie ahead.

The first step to effective reset is determining what kinds of equipment are essential for the military to successfully defeat current and future threats, states to the memo.

"The vehicles most in need of reset are those seeing service in Iraq and Afghanistan. These include M1 Abrams tanks, M113 Armored Personnel Carriers, Stryker combat vehicles, military Humvees, and various support vehicles," write the authors.

Accelerating reset can bring employment for mechanics and machinists in states such as Texas, California, Oregon, Utah, Ohio, Michigan, Pennsylvania and Alabama, states the memo.

CAP also calls for accelerating the spending of funds already authorized for military construction, as well as an extra $25 billion for fiscal year 2010 for projects in the next five years.

And to combat unemployment, CAP recommends increasing the ground forces to projected levels as quickly as possible.

"In 2010, the Army and Marines should attempt to add all 48,000 troops to their roles without lowering standards. This will increase military personnel expenditures by an estimated $5 billion in 2010 alone," reads the report.

-- Kate Brannen

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February 9, 2009 at 5:00 AM

President Obama's national security adviser, James Jones, yesterday delivered his most detailed public remarks to date on his plans for leading the National Security Council. Speaking in Munich to the annual conference on security policy, Jones said the NSC is paying increased attention to the United States' capability to counter weapons of mass destruction as well as “placing a far higher priority on cyber security.”

From the transcript:

The President has made clear that to succeed against 21st century challenges, the United States must use, balance, and integrate all elements of national influence:  our military and our diplomacy, our economy and our intelligence, and law enforcement capacity, our cultural outreach, and as was mentioned yesterday, the power of our moral example, in short, our values.  Given this role, the NSC is by definition at the nexus of that effort.  It integrates on a strategic sense all elements of our national security community towards the development of effective policy development and interagency cooperation.  But to better carry out the president’s priorities, the National Security Council must respond to the world the way it is and not as we wish it were.  And it must consider the fusion of our national priorities within the broader international context and interest.  The NSC’s mission is relatively simple.  It should perform the functions that it alone can perform and serve as a strategic center – and the word strategic is operative here – for the President’s priorities.  

Jones, retired Marine four-star general, also said the NSC must adapt to evolving challenges.

There are traditional priorities that we will manage.  But we must also update our outlook and sometimes our organization to keep pace with the changing world.  To give you just a few examples, the NSC today works very closely with President Obama’s National Economic Council, which is led by Mr. Larry Summers, so that our response to the economic crisis is coordinated with our global partners and our national security needs.  The NSC has worked closely with the White House Counsel’s office as we implement the President’s orders to ban torture and close the detention center at Guantanamo Bay.  The National Security Council is undertaking a review to determine how best to unify our efforts to combat terrorism around the world while protecting our homeland.  And this effort will be led by Mr. John Brennan.

The National Security Council will be at the table as our government forges a new approach to energy security and climate change that demand broad cooperation across the U.S. Government and more persistent American leadership around the world.  And the NSC is evaluating how to update our capacity to combat the proliferation of weapons of mass destruction while also placing a far higher priority on cyber security. There is no fixed model that can capture the world in all of its complexity.  What’s right today will have to be different four years from now or eight years from now.  And that’s precisely the point.  The NSC’s comparatively small size gives it a unique capacity to reinvent itself as required and to pivot on the key priorities of our time. 

-- Jason Sherman

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February 9, 2009 at 5:00 AM

This just out from Senate Armed Services Committee Chairman Carl Levin's (D-MI) spokesman (note the last sentence):

This evening, February 9, 2009, the Senate voted to confirm:

Robert F. Hale to be Under Secretary of Defense (Comptroller) and Chief Financial Officer;

Michèle Flournoy to be Under Secretary of Defense for Policy; and

Jeh Charles Johnson to be General Counsel, Department of Defense, reported out of Committee on February 5, 2009.

The Senate did not take action on the nomination of William J. Lynn III to be Deputy Secretary of Defense, also reported out of Committee on February 5, 2009.

-- John Liang

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February 6, 2009 at 5:00 AM

A new survey conducted by the National Research Council and the American Association for the Advancement of Science queried scientists about their attitudes toward research that could be used for both good and evil.

According to an NRC statement, "rapid advances in the biological sciences over the last several decades have yielded great benefits such as medical therapies and vaccines. But some of these same scientific advances could also be used for malicious purposes, a threat that has become more salient to the science and policy communities since the terrorist attacks of 2001."

To that end, the survey "also explored actions the scientists might support to reduce the risk of misuse of research, as well as steps that scientists may already be taking in response to these concerns," the statement continues. The survey's results are summarized in a new NRC report that "includes recommendations for next steps."

While the survey had "a low response rate and uncertainties about whether the sample reflects the broader life sciences community limit the ability to generalize from the responses about the full U.S. life-sciences community” the survey results are nonetheless said to be “useful and informative," according to the statement.

The results suggest that survey respondents perceive a potential but not overwhelming risk of a bioterror attack in the next five years, a risk they believe is greater outside the U.S. Most respondents do not believe it is likely that dual-use knowledge, tools, or techniques will facilitate a bioterror attack in that time period.

Survey results also indicate that some respondents -- more than the committee had expected -- have been so concerned about dual-use issues that they have already taken action to try to avert misuse of research in the life sciences, even in the absence of guidelines or government restrictions. Some respondents reported that they had broken collaborations, not conducted some research projects, or not communicated research results.

Many of respondents' precautionary actions were taken during design, collaboration, and initial communication stages of research, before reaching the publication stage, the report notes. Of particular interest and concern to the committee, a few respondents offered comments about foreigners as potential security risks, which may be reflected in the reported avoidance of some collaborations.

"The fact that some scientists are changing their research activities may indicate that the life sciences community is responsibly responding to reduce the risk of misuse of science," said committee chair Ronald Atlas, professor of biology and public health at the University of Louisville. "But it is also possible that some scientists are overreacting to the perceived threat, for example by breaking collaborations and excluding foreigners from their laboratories. Our committee feels that it's important to further investigate how research activity is being changed in response to dual-use concerns."

With regard to future actions that the life sciences community would support to reduce the threat of misuse of research, the survey results indicate that life scientists in the U.S. may be more willing to consider mechanisms to reduce risks if they are developed and implemented by the scientific community itself. Most respondents favor their professional societies prescribing a code of conduct to help prevent misuse of life science research, for example, while a minority supported greater federal oversight. Among possible government restrictions, respondents were more supportive of restrictions on access to biological agents and certification of researchers than of any control of scientific knowledge generated from the research.

In addition, respondents showed support for mandatory training by institutions for practicing life scientists regarding dual-use concerns, as well as education materials and lectures for students.

The Carnegie Corp., the Alfred P. Sloan Foundation and the National Academies' Presidents' Circle Communications Initiative sponsored the project.

-- John Liang
 

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February 6, 2009 at 5:00 AM

The Massachusetts Institute of Technology recently released the results of a Federal Aviation Administration-sponsored study looking into the feasibility of using alternative fuels for civil and military aviation and the results (no surprise here) weren't pretty.

The report -- eloquently titled "Life Cycle Assessment of Greenhouse Gas Emissions from Alternative Jet Fuels" -- concluded that every single alternative jet fuel available for use in the next decade fails to meet federal greenhouse gas emission standards. The report has a particular impact on coal-base jet fuels which the Air Force had been pushing to adopt for stateside training missions by 2016. The service has been working to certify its aviation fleet to fly on the coal-to-liquids (CTL) fuel for several years now. However, the production process for these fuels emits far more greenhouse gases than standard aviation fuel.

Current law prohibits the service from buying any fuel that pollutes more than regular jet fuel. The study also claims that non-algae based biofuels such as those made from soy or palm oil would also pollute far more than current jet fuel.

However, Inside the Air Force recently reported that the service is moving to certify its fleet to fly on algae-based biofuels. This move came after Congress denied the service permission to sign long term contracts with CTL fuel makers -- something coal-based synthetic fuel makers say is necessary to offset the tremendous costs of building and operating CTL refineries.

The service dealt another blow to the CTL-fuel industry last month when it decided scrap its plan to build a CTL plant at Malmstom Air Force Base in Montana. If built, the plant would have produced 20,000 gallons of coal-based synthetic fuel per day and sold it to the Air Force at a discount.

-- John Reed