The Insider

Inside the Pentagon highlights
By Tony Bertuca
February 11, 2016 at 9:00 AM

Here are a few must-reads from this week's edition of Inside the Pentagon:

1. A business consulting firm is about halfway through an assessment of the Defense Department's laboratories, a DOD official told Inside Defense Tuesday.

Full story: Consulting firm assessing Pentagon's laboratories as part of BBP initiative

2. The Pentagon is requesting $6.7 billion for cyber operations in fiscal year 2017 -- nearly $900 million more than the amount Congress enacted last year, according to the department's budget overview released Tuesday.

Full story: Pentagon seeks $900M boost for cyber operations in FY-17

3. Following years of constrained budgets and heavy operational demands, the services have a long road back to full-spectrum readiness, according to the director of force structure, resources and assessment for the Joint Staff.

Full story: DOD official: Full readiness not expected until 'early portion of the next decade'

CSRA CEO optimistic about 'predictable' government spending
By Marjorie Censer
February 10, 2016 at 5:37 PM

The chief executive of CSRA struck a positive note today, praising improved certainty around the federal budget as well as cost savings found within the company.

The contractor reported quarterly earnings for the first time since it was formed late last year by merging Computer Sciences Corp.'s U.S. public sector work with SRA International.

Larry Prior, CSRA's chief executive, said the company's customers "are operating with appropriated budgets that show growth."

"Despite the backdrop of a presidential election coming up, government spending should be fairly predictable," he said.

Additionally, Prior said the newly created business has already realized its anticipated annual savings of $80 million through synergies.

"As we are trimming our infrastructure . . . we are continuing to prioritize our investments in business development," he added.

The company reported quarterly sales of $1.03 billion, up 3.3 percent from the same period last year, because of the addition of one month of SRA sales.

Navy financial activity
By John Liang
February 10, 2016 at 5:34 PM

The Navy recently issued an annual report that looks at the service's financial activity.

"Financial improvement is progressing with the Navy undergoing the first audit of its Schedule of Budgetary Activity for fiscal year 2015 appropriations," the report, dated November 2015, reads. "This key milestone is a significant step forward in addressing the congressional mandate to achieve audit ready financial statements by September 30, 2017."

The "Fiscal Year 2015 Annual Financial Report" further states:

The path to auditability will result in improved stewardship, reduced cost of business operations, and compliance with Congressional direction. While executing DoD Financial Improvement and Audit Readiness (FIAR) activities, the DON continues to focus efforts to ready people, processes, and business systems for a financial audit. The DON understands fundamental improvements that establish tighter internal controls and more standardized processes are needed within its operations. The DON has employed control gap analysis to identify when a command's processes and/or controls differ significantly from suggested controls, allowing the DON to track and address significant deviations.

Here's a chart from the report that describes accounting weaknesses the service found in FY-15:

NCI reports boost in sales, profit
By Marjorie Censer
February 10, 2016 at 4:53 PM

NCI said today sales in 2015 hit $333 million, up from $317 million the prior year.

Profit too grew in 2015, hitting $12.2 million, an increase of 44 percent from 2014.

The contractor attributed the sales increase in part to its acquisition of Computech. NCI saw a decrease in revenue from the PEO Soldier program, which represented nearly 10 percent of all sales.

During a call with analysts this afternoon, Brian Clark, NCI's chief executive, said 2015 was a "stabilizing year."

"We see pockets of opportunity for growth now that there is greater budget certainty," he said, adding that he's seeing "incremental" movement away from the lowest-priced, technically acceptable contracting approach.

The INSIDER daily digest
By John Liang
February 10, 2016 at 2:00 PM

We kick off this Wednesday INSIDER Daily Digest with a recap of our budget stories from yesterday. Click here for a full list of budget documents.

OSD:

Pentagon cuts $11B in weapons programs to pay for FY-17 shortfall

The Pentagon was forced to cut $11.2 billion from modernization programs to help plug a $17 billion shortfall in fiscal year 2017, according to Defense Department Comptroller Mike McCord.

Obama's final defense plan exceeds statutory budget caps by $110 billion through FY-21

The Obama administration has proposed a five-year spending plan that exceeds spending caps by nearly $110 billion, effectively charting a course for the next administration to consider an approach that calls for growing annual weapon system investments from $183.8 billion in FY-17 to $196 billion in FY-21, according to the administration's FY-17 budget request.

Pentagon targets $184 billion for modernization in FY-17

The Pentagon is seeking $184 billion in total weapon system modernization for fiscal year 2017, up from $177 billion sought in FY-16, according to newly released budget documents.

MDA on pace for 44 GBIs; plans ICBM intercept test in November

The Missile Defense Agency's fiscal year 2017 budget request, which totals $7.5 billion, represents some concessions to budget constraints, but strikes "the right balance," according to the agency's director.

Army:

Spending on Army aviation drops in FY-17 budget request

While the Army says it wants to modernize and maintain its Apache, Black Hawk and Chinook helicopter fleets next year, the service's aircraft portfolio as a whole is set to drop by $2.25 billion from this fiscal year to the next, according to the fiscal year 2017 budget request.

Budget request sheds light on two new Army vehicle developments

The Army is proposing for the first time to budget for two new vehicle-development programs in fiscal year 2017, the Mobile Protected Firepower project and the Ground Mobility Vehicle.

Army's proposed FY-17 budget continues slow burn toward a smaller force

The Army is requesting $125 billion for its fiscal year 2017 base budget and $23 billion for war spending, continuing a trend of pursuing only selective modernization investments in favor of increased readiness of a shrinking force.

Navy:

Navy plan reveals $11.7B for new ballistic missile sub, including $9.2B for procurement

The Navy has earmarked $11.7 billion in its new five-year spending plan for a next-generation ballistic missile submarine, a sum that includes $2.4 billion for continued development and $9.2 billion to finance four years of advanced procurement and buy the lead boat in fiscal year 2021.

Navy wants $773 million in FY-17 to start procuring first Ohio-replacement submarine

The Navy is allocating $773 million in advanced procurement funds for the lead ship in the Ohio replacement program in fiscal year 2017, the first year the service has set aside shipbuilding money for the 12-boat strategic deterrent program, according to budget documents released by the Pentagon.

Navy unveils new cruiser modernization strategy that would save $3B

The Navy has unveiled a new cruiser modernization strategy the service says will save $3 billion.

Navy faces 3.5 percent cut in FY-17 budget request topline numbers

The Navy faces a 3.5 percent cut in its fiscal year 2017 budget request topline compared to the previous year, according to a service official.

Air Force:

Air Force FY-17 $120B budget request defers JSF, boosts space and missile procurement

The Air Force's fiscal year 2017 budget request deals a blow to the F-35 Joint Strike Fighter and Long-Range Strike Bomber, while increasing investment in munitions procurement and modernization.

Air Force says 45 aircraft cut won't affect overall F-35 quantities

The Air Force said Tuesday that its move to reduce F-35 Joint Strike Fighter procurement by 45 aircraft over the next four years won't impact the service's overall plan to buy a total of 1,763 jets.

USAF: LRS-B reduction reflects more accurate cost estimate
By Courtney Albon
February 10, 2016 at 11:13 AM

The Air Force's fiscal year 2017 budget request issued this week proposes a more-than-$3-billion reduction in Long-Range Strike Bomber development spending between FY-17 and FY-20 than it had proposed in its FY-16 request.

Service officials told reporters during a Feb. 9 Pentagon briefing that the lower proposal does not represent cuts to the program, but rather a more accurate cost estimate. Before awarding the new bomber development contract to Northrop Grumman last October, the service conducted a new independent cost estimate that pegged per-aircraft costs at $564 million -- $40 million less than its average procurement unit cost requirement of $606 million in 2016 dollars -- and its development cost at $23.5 billion.

Carolyn Gleason, a budget deputy in the service's financial management office, reiterated during the briefing that the plan laid out across the FY-17 future years defense plan does not change the scope of the effort, but simply reflects the more accurate cost estimate -- which takes into account Northrop's winning proposal.

After Northrop won the contract last fall, its competitor -- a Boeing-Lockheed Martin team -- protested the award. A Government Accountability Office decision is expected Feb. 16.

Protest spotlight
By Marjorie Censer
February 10, 2016 at 10:33 AM

(This regular feature highlights protests decided by the Government Accountability Office.)

Agency: Defense Information Systems Agency

Awardee: Segovia, doing businesses as Inmarsat Government

Protester: Intelsat General

What GAO found: Intelsat General protested DISA's award of a contract to Segovia for comprehensive commercial satellite services for the Navy, arguing the awardee's proposal "failed to materially conform to the [request for proposals]," according to GAO.

Intelsat claimed it had received better ratings in the area of terrestrial services requirements and in past performance, but had a higher price at about $440 million, compared to Segovia's $330 million.

According to the GAO decision, the source-selection authority reasoned that even though technical and past performance factors were more important than price, "'I believe the price difference of 25 percent, or approximately $110M, is so significantly high as to diminish the benefits of [Intelsat General's] one strength in its technical approach and its higher confidence rating under past performance.'"

Intelsat argued the agency's evaluation "failed to account for multiple deficiencies" and that DISA participated in misleading discussions.

GAO sustained the protest, finding that DISA's interpretation of the RFP's requirements "changed over the course of the procurement" and agreeing that its discussions with Intelsat were misleading.

"We conclude that Intelsat was prejudiced by DISA’s actions here because, but for the agency’s misleading discussions and erroneous determination that Segovia’s proposal satisfied the requirements of the RFP, in this best-value procurement, Intelsat, which submitted a technically acceptable proposal, would have had a substantial chance of receiving the award," GAO adds.

GAO recommends DISA review the RFP and revised proposals and make a new award if necessary.

Read the decision: http://www.gao.gov/assets/680/675061.pdf

Report criticizes Pentagon waste
By Marjorie Censer
February 10, 2016 at 7:00 AM

A new report set for release this morning takes aim at Pentagon waste, calling for greater oversight and departmental auditability.

In particular, the report, produced by the Center for International Policy and authored by William Hartung, takes aim at the Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System -- or JLENS -- which last year pulled free of its mooring.

Hartung writes that "this was only the latest instance in a troubled program."

"One thing that Congress can and should do is hold more regular oversight hearings on Pentagon spending," the report contends. "But perhaps the most important thing Congress can do to prevent waste, fraud and abuse at the Pentagon is to pass legislation that gives the Department of Defense financial incentives to get its books in order so that it can finally pass an audit."

Full report: http://ow.ly/Y8hpd

DOD's budget documents
By John Liang
February 9, 2016 at 2:02 PM

Today's INSIDER Daily Digest is collecting all the numbers the Pentagon has released on the FY-17 budget request. Keep checking back for more.

First off, we have the "Consolidated DOD FY-17 budget fact sheet" issued by the Office of Management and Budget.

More docs:

DOD's FY-17 budget overview

On Feb. 9, 2016, the Defense Department released an overview of its fiscal year 2017 budget request.

DOD's FY-17 major weapon systems budget document

On Feb. 9, 2016, the Defense Department released its fiscal year 2017 major weapon systems budget document.

DOD's FY-17 RDT&E budget book

On Feb. 9, 2016, the Defense Department issued its fiscal year 2017 budget book for research, development, test and evaluation (R-1).

DOD's FY-17 procurement budget book

On Feb. 9, 2016, the Defense Department issued its fiscal year 2017 budget book for procurement (P-1).

DOD's FY-17 O&M budget book

On Feb. 9, 2016, the Defense Department issued its fiscal year 2017 budget book for operations and maintenance (O-1).

DOD's FY-17 personnel budget book

On Feb. 9, 2016, the Defense Department isssued its fiscal year 2017 budget book for personnel (P-1).

MDA's FY-17 budget highlights

On Feb. 9, 2016, the Missile Defense Agency released broad details of its fiscal year 2017 budget request.

Air Force's FY-17 RDT&E budget justification books

On Feb. 9, 2016, the Air Force released its fiscal year 2017 research, development, test and evaluation budget justification books.

Air Force's FY-17 procurement budget justification books

On Feb. 9, 2016, the Air Force released its fiscal year 2017 procurement budget justification books.

Air Force's FY-17 O&M budget justification books

On Feb. 9, 2016, the Air Force released its fiscal year 2017 operations and maintenance budget justification books.

Air Force's FY-17 personnel budget justification books

On Feb. 9, 2016, the Air Force released its fiscal year 2017 personnel budget justification books.

Navy's FY-17 RDT&E budget justification books

On Feb. 9, 2016, the Navy released its fiscal year 2017 research, development, test and evaluation budget justification books.

Navy's FY-17 procurement budget justification books

On Feb. 9, 2016, the Navy released its fiscal year 2017 procurement budget justification books.

Navy's FY-17 OCO budget justification book

On Feb. 9, 2016, the Navy released its fiscal year 2017 Overseas Contingency Operations budget justification book.

Navy's FY-17 O&M budget justification books

On Feb. 9, 2016, the Navy released its fiscal year 2017 operations and maintenance budget justification books.

Navy's FY-17 personnel budget justification books

On Feb. 9, 2016, the Navy released its fiscal year 2017 personnel budget justification books.

Army's FY-17 RDT&E budget justification books

On Feb. 9, 2016, the Army issued its fiscal year 2017 research, development, test and evaluation budget justification books.

Army's FY-17 procurement budget justification books

On Feb. 9, 2016, the Army issued its fiscal year 2017 procurement budget justification books.

Army's FY-17 OCO budget justification books

On Feb. 9, 2016, the Army issued its fiscal year 2017 Overseas Contingency Operations budget justification books.

Army's FY-17 O&M budget justification books

On Feb. 9, 2016, the Army issued its fiscal year 2017 operations and maintenance budget justification books.

Army's FY-17 personnel budget justification books

On Feb. 9, 2016, the Army issued its fiscal year 2017 personnel budget justification books.

Army FY-17 budget overview

On Feb. 9, 2016, the Army released an overview of its fiscal year 2017 budget request.

Navy FY-17 budget overview

On Feb. 9, 2016, the Navy released an overview of its fiscal year 2017 budget request.

Air Force FY-17 budget overview

On Feb. 9, 2016, the Air Force released an overview of its fiscal year 2017 budget request.

OMB's FY-17 detailed budget estimates for DOD

On Feb. 9, 2016, the White House Office of Management and Budget released detailed fiscal year 2017 budget estimates for the Defense Department

OMB's FY-17 detailed budget estimates for OCO spending

On Feb. 9, 2016, the White House Office of Management and Budget released detailed fiscal year 2017 budget estimates for Overseas Contingency Operations spending.

Intel budgets
By John Liang
February 9, 2016 at 2:01 PM

The Pentagon is asking Congress for $16.8 billion to spend on fiscal year 2017 military intelligence programs.

That total includes Overseas Contingency Operations funding, according to a Defense Department statement. 

"The department determined that releasing this top line figure does not jeopardize any classified activities within the MIP," the DOD statement reads, adding: "No other MIP budget figures or program details will be released, as they remain classified for national security reasons."

Separately, the office of the director of national intelligence announced today that it would ask lawmakers for $53.5 billion, which also includes Overseas Contingency Operations funding.

Marines cut 77 JLTVs from FY-17 budget request
By Lee Hudson
February 9, 2016 at 12:55 PM

The Marine Corps is cutting 77 Joint Light Tactical Vehicles in its fiscal year 2017 budget request in an effort to balance affordability across the service's portfolio, according to a service official.

The FY-16 budget request projected the service would buy 269 vehicles in FY-17. A Marine Corps official told Inside Defense Feb. 9 the FY-17 president's budget submission requests 192 JLTVs.

However, the service intends to maintain 5,500 vehicles as its total program acquisition objective, the official added.

BRAC Attack
By Courtney McBride
February 9, 2016 at 11:56 AM

As part of a broader effort to increase efficiency and cut costs, the Obama administration will request a new Base Realignment and Closure (BRAC) round in 2019.

The move, designed to eliminate “excess infrastructure and facilities,” was outlined in a fact sheet accompanying the president's fiscal year 2017 budget request, released today.

“Successfully executing the defense strategy requires prioritizing every dollar and spending it effectively,” the Office of Management and Budget explains in the full budget submission. “The Budget supports this goal by adjusting force structure, modernizing DOD’s health care system, and further reducing wasteful overhead and infrastructure. The 2017 reform proposals build on the success of recent initiatives, such as the effort with the Congress to slow growth in compensation costs and enact a modern, military retirement system featuring both defined benefit.”

Intel chief on the Hill
By John Liang
February 9, 2016 at 10:33 AM

In the hours before the Pentagon is scheduled to release its fiscal year 2017 budget request, Director of National Intelligence James Clapper is testifying before Congress.

On cybersecurity, Clapper's prepared testimony states.

The consequences of innovation and increased reliance on information technology in the next few years on both our society's way of life in general and how we in the Intelligence Community specifically perform our mission will probably be far greater in scope and impact than ever. Devices, designed and fielded with minimal security requirements and testing, and an ever-increasing complexity of networks could lead to widespread vulnerabilities in civilian infrastructures and U.S. Government systems. These developments will pose challenges to our cyber defenses and operational tradecraft but also create new opportunities for our own intelligence collectors.

Check out his prepared testimony here.

New Tomahawk numbers
By John Liang
February 9, 2016 at 10:24 AM

Last week, Defense Secretary Ash Carter said the Navy would invest $2 billion to procure 4,000 Tomahawk missiles across the future years defense program starting in fiscal year 2017. Turns out, that number was way off the mark.

A defense official -- speaking on condition of anonymity because the budget had not yet been officially released -- clarified Carter's statement, saying the Navy would procure 100 Tomahawk missiles in FY-17 and none thereafter.

The official added that Carter meant to highlight how the FY-17 Tomahawk purchase will bring the Navy's inventory of the tactical cruise missile to above 4,000.

Read the updated story here.

Lockheed seeks to seal JLTV record
By Sebastian Sprenger
February 8, 2016 at 4:11 PM

Lockheed Martin wants to make sure that a key record related to its protest of the Joint Light Tactical Vehicle contract award to Oshkosh by the Army remains permanently sealed.

At issue is the transcript of a Jan. 20 hearing before Court of Federal Claims judge Charles Lettow at which all parties involved argued their cases, presumably in great detail.

According to an order issued by Lettow and filed on Feb. 5, Lockheed's request to have the transcript sealed is legitimate because the proceedings that day included so much information about “nascent military technology and competitively sensitive data” that making a heavily redacted document available to the public wouldn't be “meaningful.”

There is a silver lining, however, for those who might bemoan the lack of public access to the full case record. Lettow ordered the beginning portion of the transcript -- 12 pages and 12 lines -- to be published. Ironically, that portion of the transcript contains only an exchange between a reporter and court officials in which the reporter unsuccessfully argues that most of the hearing should be conducted in the open.