The Insider

By John Liang
October 23, 2015 at 11:48 AM

Highlights from this week's issue of Inside the Air Force:

1. The F-35 joint program office may have the option to initiate a block buy, even if the services are unable to invest until after fiscal year 2017.

Full Story: Air Force: F-35 JPO could initiate block buy without FY-17 investment

2. The Air Force Office of Transformational Innovation is leveraging parallel contracts for two battle management command-and-control platforms, the Compass Call and Joint Surveillance Target Attack Radar System, to explore a common business jet option.

Full Story: Air Force explores common business jet for JSTARS and Compass Call

3. The Air Force could save more than $100 million by pursuing a joint life-of-program buy with the Navy for new warhead fuzes, according to the materiel lead and program manager for the Air Force's Mk21 fuze modernization program.

Full Story: Common Air Force, Navy strategy would save $100M for ICBM

By Tony Bertuca
October 23, 2015 at 11:42 AM

Defense Secretary Ash Carter is scheduled to brief the Pentagon press corps today at 1:45 p.m., according to a Defense Department announcement.

Carter's briefing comes one day after Army Master Sgt. Joshua Wheeler became the first U.S. servicemember to die in Iraq since 2011 after taking part in a mission that rescued 70 hostages from a prison controlled by the Islamic State of Iraq and the Levant. Wheeler is also the first U.S. servicemember to be killed in action while supporting Operation Inherent Resolve.

The incident has spurred questions in that the Pentagon has avoided stating that Wheeler died in a "combat" mission. Rather, DOD is hewing closely to the message that the operation to free the hostages was part of the military's stated "advise and assist" mission in Iraq.

"I would not suggest you should look at this as some change in tactics on our part," Pentagon Press Secretary Peter Cook said yesterday. "This was a unique circumstance in which very close partners of the United States made a specific request for our assistance."

By Marjorie Censer
October 22, 2015 at 4:52 PM

Highlights from this week's edition of Inside the Pentagon:

1. Deputy Defense Secretary Bob Work has tasked the Defense Businss Board with determining a better way for the DOD to contract federally funded research and development centers, with an emphasis on enhancing innovation.

Full Story: Work tasks business board with examining FFRDC contracts

2. The Defense Department inspector general is set to audit the military services' spending in support of Operation Inherent Resolve, the anti-ISIL campaign.

Full Story: Pentagon inspector general to audit counter-ISIL mission spending

3. As contractors seek to improve their relationships with small businesses, Harris is solidifying its relationship with small business Government Tactical Solutions and providing the company office space.

Full Story: As contractors look to small businesses, Harris embraces GovTact

By Justin Doubleday
October 22, 2015 at 2:34 PM

The Pentagon's top acquisition executive has backed the Navy's plan to install a new tactical afloat network on the majority of its warships.

On Oct. 13, Pentagon acquisition chief Frank Kendall approved a Full Deployment Decision for the Navy's Consolidated Afloat Network and Enterprise Services (CANES), according to an Oct. 22 Navy statement. With Kendall's decision, the service can install CANES on its "full inventory objective of ships, submarines and shore sites," the statement says. The approval also transfers oversight of the program from Kendall's office to the Navy.

CANES has been installed on 25 ships so far, according to the Navy, with 153 vessels left before the installations are complete in 2024.

Between August 2014 and January 2015, the Navy awarded seven companies contracts to compete for CANES production units, Inside the Navy has previously reported:  BAE Systems Technology Solutions & Services, General Dynamics C4 Systems, Global Technical Systems, Northrop Grumman, Serco Inc., CGI Federal and DRS Laurel Technologies. The estimated cumulative value of all seven contracts is $2.5 billion. 

The service has been installing CANES on its aircraft carriers, cruisers, destroyers and amphibious ships, among other platforms. But because CANES uses the Windows XP operating system, the Navy is revisiting whether to install the tactical network on its newer ships, like the Littoral Combat Ship and the Joint High Speed Vessel, ITN reported earlier this year. The Navy is aggressively moving away from Windows XP to the newer Windows 7.0.

By Marjorie Censer
October 22, 2015 at 12:52 PM

Welcome to Throwback Thursday, Inside Defense's weekly look back at what was happening on or around this day in years past.

On Oct. 26, 2001, the Pentagon announced Lockheed Martin had been awarded a $19 billion contract to build the next-generation stealthy Joint Strike Fighter. The company defeated Boeing for the largest procurement program in DOD history.

Fourteen years later, Boeing and Lockheed, working as a team, are waiting for a decision on the Long-Range Strike Bomber, which officials say is imminent. The team is competing against Northrop Grumman for the award.

Story link: Lockheed Martin Defeats Boeing For $19 Billion Joint Strike Fighter Contract

By Marjorie Censer
October 22, 2015 at 11:35 AM

Bell Helicopter said today it has named Lisa Atherton executive vice president of military business, succeeding Mitch Snyder, who has been named Bell Helicopter's chief executive.

Atherton joined the company in 2012 and has served as V-22 program manager and vice president of global military business development. Before that, she was vice president of area attack at Textron Defense Systems and spent eight years at Air Combat Command's requirements directorate.

By John Liang
October 22, 2015 at 11:19 AM

Today's recap includes news on the price of the Joint Strike Fighter, the LRS-B program and more.

Joint Strike.

The price of the F-35 Joint Strike Fighter could go up:

Price of each F-35 would go up by $1M if Canada decreases buy

The price for each Joint Strike Fighter would increase by $1 million per jet for the entire F-35 enterprise if Canada or another country decides to decrease its purchase by 65 aircraft, a senior Pentagon official revealed this week.

Bomber Contract.

Keep an eye out in the coming days for a big Air Force bomber contract:

Air Force: Long-Range Strike Bomber award 'really, really close'

The Air Force is "really, really close" to awarding a contract for the Long-Range Strike Bomber, according to the service's top acquisition executive.

The Commish.

The head of a commission on the future of the Army is firing back at critics:

Army Commission chairman shoots back at congressional critics: 'I am at a loss'

The chairman of the National Commission on the Future of the Army has responded to congressional critics by way of a sharply worded letter, arguing that accusations of the panel missing its mark are unfounded.

Document: Army Commission Chairman's Letter To Lawmakers

The Unmanned.

The Navy really, really needs unmanned underwater vehicles:

Admiral: Navy has 'imperative' to pursue underwater drones

The Navy has an "imperative" to pursue unmanned underwater vehicle technology to address numerous challenges and shortfalls the service will face in the coming decades, according to the director of naval reactors.

Gates On The Hill.

The former SECDEF didn't pull any punches at a hearing this week:

Gates targets AT&L in return to Capitol Hill

Former Pentagon chief Bob Gates, who famously cut billions of dollars in modernization programs and rapidly procured fleets of armored trucks outside the Defense Department's traditional acquisition system, returned to Capitol Hill on Wednesday to advise Congress on the future of defense reform.

Document: Senate Hearing On The Future Of Defense Reform

Missile Defense.

News on the Missile Defense Agency's upcoming tests:

MDA forges ahead with ground-based interceptor updates

The Missile Defense Agency is working to update its Ground-based Missile Defense system ahead of a pair of critical tests in the coming years.

By Tony Bertuca
October 22, 2015 at 10:07 AM

President Obama is scheduled to veto the defense authorization bill today, according to his daily schedule released by the White House.

The veto is planned for 3:45 p.m., the schedule states.

Meanwhile, the Pentagon has planned a press briefing for 1:30 p.m.

By John Liang
October 21, 2015 at 5:59 PM

The Missile Defense Agency has awarded Lockheed Martin a $784.3 million contract to develop and operate the Long Range Discrimination Radar.

The nine-year contract includes "options to develop, deploy, test, and operate" the LRDR, according to an Oct. 21 Defense Department statement.

The new radar "will provide persistent discrimination capability to the Ballistic Missile Defense system to support the defense of the homeland," and will be based at Clear Air Force Station, AK, according to DOD. MDA has obligated $35.5 million in fiscal year 2015 research, development, test and evaluation funds to start.

In its FY-16 budget request, MDA asked Congress for $138 million for the LRDR program. The system is a mid-course tracking radar that would provide persistent sensor coverage and "improve discrimination capabilities against threats to the homeland from the Pacific theater," according to the agency's budget overview.

By Tony Bertuca
October 21, 2015 at 2:30 PM

Former Defense Secretary Bob Gates took Congress to task today for its continued legislative paralysis over the future of the federal budget.

"As the saying used to go, 'It's a hell of a way to run a railroad,'" he told the Senate Armed Services Committee.

At present, Congress is operating under a continuing resolution set to expire Dec. 11, at which point the absence of a deal that would lift the 2011 Budget Control Act caps for defense and other areas of government could result in a government shutdown, or an extended CR that locks the Defense Department into BCA-level spending.

"Given the harm of all this politically driven madness inflicts on the U.S. military, the rhetoric coming from members of Congress about looking out for our men and women in uniform rings very hollow to me," Gates said. "All the smart defense reforms you can come up with will be of little use if the military is unable to plan, set priorities and manage its resources in sensible and strategic way."

Gates noted that he submitted five separate budgets to Congress in his time as defense secretary and that not one of them resulted in an appropriation for the beginning of the fiscal year.

"Hardly anybody in this city ever gets fired because they didn't do their job well enough," he said, noting that scandals and gaffes had resulted in far more Washington resignations than had poor performance.

Gates' criticism comes as Republicans and Democrats remain deadlocked over a fiscal year 2016 appropriations plan. The GOP has proposed spending bills that circumvent the BCA caps for defense, but honor them for all other areas of government. Democrats have vowed to block a bill that does not equally lift the caps, but anti-spending advocates in the House GOP's Freedom Caucus have pledged to oppose any bill that would do so.

Gates said the current state of congressional gridlock was embarrassing the United States in the eyes of the world.

"Our system of government -- as designed by the founders who wrote and negotiated the provisions of the Constitution -- is dependent on compromise to function," Gates said. "To do so is not selling out -- it's called 'governing.'"

By Marjorie Censer
October 21, 2015 at 1:09 PM

Boeing reported today that sales in its defense unit in its most recent quarter grew.

The defense business announced quarterly revenue of $8.4 billion, up 6 percent from the same period the prior year. Operating earnings surged 19 percent to reach just over $1 billion.

Boeing's military aircraft unit saw the largest sales improvement, which Boeing attributed to F-15 contract negotiations. The network and space systems also saw bolstered revenue because of increased Commercial Crew program sales.

Dennis Muilenburg, Boeing's chief executive, told analysts in a call today that the company has a "healthy defense business."

"Now, it's a tough marketplace, and we've acknowledged that," he said. "But our defesne business overall is a healthy portfolio. We like the program structures we have, we're growing internationally and we're investing for the long run."

Boeing said the backlog in its defense business hit $59 billion, about 40 percent of which are orders from international customers.

By Courtney Albon
October 21, 2015 at 12:21 PM

Lockheed Martin confirmed Oct. 21 that it has reached a verbal agreement with the Air Force on a multiyear contract to purchase 83 C-130Js.

"We have reached a verbal agreement on the C-130J multiyear II contract," company spokesman Stephanie Stinn told Inside Defense in an Oct. 21 statement. "Our goal from now until the end of this year is to compete the remaining contract actions and certifications, including the congressional notification process, prior to award."

The contract was expected this summer, but negotiations have continued past that target. Service officials, including acquisition executive William LaPlante, remain concerned that because the contract calls for a quantity increase, a yearlong continuing resolution could disrupt the production plan.

"The C-130J multiyear plans to procure 13 more aircraft in FY-16 than in FY-15," spokesman Maj. Robert Leese told Inside Defense in an Oct. 20 email. "That increase would be prohibited under a yearlong CR without an exemption from Congress permitting an increase in production quantities."

Leese said the service does not need an exemption from the current short-term CR in order to award and begin executing the contract, but if the CR continues into next year, it would begin to disrupt the plan to increase production over FY-15 levels. In that case, the service may be forced to "break" the contract, as LaPlante alluded to in a presentation earlier this month, and renegotiate it. Leese said such a scenario "could lead to a loss of savings from the multiyear contract."

Lockheed officials have said there is a precedent for an exemption for multiyear production increases, particularly in cases where the service has already made significant investments in advanced procurement, which is true in the case of the C-130J.

By John Liang
October 21, 2015 at 11:39 AM

Today's recap includes news on Lockheed's quarterly earnings and more.

Earnings.

With earnings season upon us, our first look is at how Lockheed fared during the past quarter:

Lockheed expects to complete Sikorsky buy, services review by end of year

Lockheed Martin executives said Tuesday the defense contractor is on pace to complete two major reshaping initiatives by the end of the year.

Document: Defense Contractors' Third-Quarter 2015 Earnings Statements

Stay tuned for more earnings coverage from Inside Defense Defense Business Editor Marjorie Censer.

Defense Reform.

The chairmen of the House and Senate Armed Services committees spoke this week on the FY-16 defense authorization bill:

McCain, Thornberry preview FY-17 defense reform agenda

After authoring a defense authorization bill with the most comprehensive acquisition reforms in decades, the chairmen of the House and Senate armed services committees said Tuesday that fiscal year 2017 would be another banner year for defense reform.

Osprey.

Some V-22 Osprey news from this week's Inside the Navy:

Navy pushing 'envelope' of V-22 takeoffs, landings on aircraft carrier

The Navy is in the midst of flying the V-22 Osprey from the aircraft carrier Eisenhower (CVN-69) to "expand the envelope" of how the tiltrotor aircraft can take off and land on a carrier.

Marines cannot award V-22 Osprey contract under three-month CR

Under the existing congressional three-month continuing resolution the Marine Corps will not make its December deadline to award a V-22 Osprey tiltrotor contract -- the second time this deal has been in jeopardy -- to Bell-Boeing as part of the second multiyear contract.

Grab Bag.

A couple recent documents of note, in case you missed them:

Army's Combat Vehicle Modernization Strategy

The October 2015 document "establishes the ends for combat vehicle modernization, aligns the ways and prioritizes means. It guides Army programming and budgeting activities and provides the vision for future combat vehicle development."

CRS Report On The JLTV Program

The Oct. 14, 2015, Congressional Research Service report -- originally obtained by Secrecy News -- discusses the Joint Light Tactical Vehicle program.

By Justin Doubleday
October 21, 2015 at 10:56 AM

A U.S. destroyer successfully intercepted a ballistic missile target using a Standard Missile-3 interceptor during a multinational exercise off the coast of Scotland Oct. 20, marking the first intercept of a ballistic missile threat in Europe, according to the Navy.

The intercept occurred as part of the Maritime Theater Missile Defense (MTMD) Forum's At Sea Demonstration (ASD), a month-long exercise involving 10 nations.

As part of the intercept test, the destroyer Ross (DDG-71) fired the SM-3 Block IA at the ballistic missile target after receiving cues from Spanish and Dutch ships, according to an Oct. 20 Navy press release, signifying the first time international ships have transmitted BMD cues to a U.S. destroyer. While the Ross was engaging the ballistic missile, the destroyer The Sullivans (DDG-68) used an SM-2 to destroy an anti-ship cruise missile target.

The Navy stated that the demonstration is also the first time "multinational, beyond-line-of-sight link architecture" has been used for integrated air and missile defense purposes in Europe.

"The execution of the live-fire exercise is a clear demonstration of the forum's ability to safely conduct effective coalition sea-based defense against simultaneous anti-ship and ballistic missile threats within an operational scenario," Adm. Mark Ferguson, commander of naval forces Europe and Africa, said in an Oct. 20 statement on the successful intercept.

Inside the Navy has previously reported on ASD-15, which is ongoing this month. It involves 10 nations: Australia, Canada, France, Germany, Italy, The Netherlands, Norway, Spain, the United Kingdom, and the United States.

By Marjorie Censer
October 21, 2015 at 9:00 AM

A new study by consulting firm Avascent, which interviewed over 200 aerospace and defense executives, found that industry leaders don't feel ready to take advantage of commercial technologies.

The Pentagon has pushed for more innovation, traveling to Silicon Valley in recent months to seek more commercial participation. Jon Barney, the study's author, told Inside Defense "companies across the sector have been trying to figure out what that means for them."

"What's pretty striking is companies, in general, feel the need is high," he said of contractors' desire to access commercial research and development.

However, many feel burdened by lack of awareness, concerns about profit margins and restrictions on intellectual property, he said.

"The biggest obstacle is actually burdensome contracting requirements," Barney added. The administrative piece is "what's really seen as the barrier."

Full report: http://www.avascent.com/wp-content/uploads/2015/10/Out_of_Reach_White_Paper_10132015.pdf