The Insider

By Tony Bertuca
June 18, 2019 at 1:07 PM

President Trump tweeted that acting Defense Secretary Pat Shanahan has decided to remove himself from the nomination process to become permanent Pentagon chief.

"Acting Secretary of Defense Patrick Shanahan, who has done a wonderful job, has decided not to go forward with his confirmation process so that he can devote more time to his family," Trump tweeted. "I thank Pat for his outstanding service and will be naming Secretary of the Army, Mark Esper, to be the new Acting Secretary of Defense. I know Mark, and have no doubt he will do a fantastic job!"

News of Shanahan's withdrawal comes amid media reports that an FBI background check related to a 2010 domestic violence incident involving him and his ex-wife had delayed his nomination process.

"I never laid a hand on my then-wife and cooperated fully in a thorough law enforcement investigation that resulted in her being charged with assault against me -- charges which I had dropped in the interest of my family," Shanahan said in a statement provided to USA Today.

A Washington Post report provided details about a 2011 incident in which Shanahan’s then-17-year-old son assaulted his ex-wife with a baseball bat.

Shanahan subsequently released a statement this afternoon, saying was resigning to spare his family pain.

"I would welcome the opportunity to be Secretary of Defense, but not at the expense of being a good father," he said. "After having been confirmed for Deputy Secretary less than two years ago, it is unfortunate that a painful and deeply personal family situation from long ago is being dredged up and painted in an incomplete and therefore misleading way in the course of this process,” he said. “I believe my continuing in the confirmation process would force my three children to relive a traumatic chapter in our family's life and reopen wounds we have worked years to heal. Ultimately, their safety and well-being is my highest priority."

Shanahan said he would "coordinate an appropriate transition plan" at the Pentagon, and said he is proud of what DOD has accomplished in the past two years.

"With the leadership of President Trump and the bipartisan support of Congress, the department has made significant progress rebuilding and modernizing the military to compete with China and Russia," he said. "We are developing capabilities that will ensure American military leadership for decades to come in space, cyber, hypersonic missiles, and much more. We have focused the leadership team on delivering results and making real change at scale."

Senate Armed Services Committee Chairman Jim Inhofe (R-OK) said in a statement Trump needs to nominate a permanent replacement for Shanahan as soon as possible.

"As I've said before, for the sake of our national security, we need a confirmed Secretary of Defense --not just an acting -- and I hope we can get to that point as quickly as possible," he said.

Inhofe said Trump made a good choice naming Esper as acting defense secretary.

"Secretary Esper has a long history of dedicated service to this nation, and he has shown excellent judgment in his current position, which I expect will continue as he assumes the role of Acting Secretary of Defense," he said.

House Armed Services Committee Ranking Member Mac Thornberry (R-TX) said in a statement the position needs to be filled in "a matter of a week, not months."

"However well-qualified Secretary Esper may be, it is critical that the president nominate, and that the Senate confirm, a permanent Secretary of Defense as quickly as possible," Thornberry said. "The uncertainty surrounding this vacant office encourages our enemies and unsettles our allies. Our country and our troops are facing an unprecedented array of threats around the world. We urgently need a Secretary of Defense that has the confidence of the President, the Congress, and the country."

Chief Pentagon spokesman Jonathan Hoffman issued a statement saying June 23 will be Shanahan's final day in office.

"Under Executive Order 13533, Secretary of the Army Esper will become the Acting Secretary of Defense immediately thereafter," Hoffman said. "As the Acting Secretary of Defense beginning at 12:01 AM June 24, 2019, Dr. Esper will exercise all of the authorities and powers of the Secretary of Defense. Acting Secretary Shanahan and Secretary of the Army Esper are committed to an orderly transition that ensures our men and women in uniform have the leadership and resources they need to keep our nation safe."

Hoffman said acting Deputy Defense Secretary David Norquist will remain in place.

By Tony Bertuca
June 18, 2019 at 11:08 AM

The Senate Armed Services Committee wants the Defense Department to review the Army's Logistics Civil Augmentation Program, a massive services contract that provides food, sanitation, housing, maintenance, and power generation for military operations and associated civilian support.

The committee, in a report accompanying its version of the fiscal year 2020 defense authorization bill, says DOD has faced persistent challenges with LOGCAP, including: "limited insight into the nature and extent of reliance on contractors; cost and requirements growth; and military commanders' inconsistent understanding of their roles and responsibilities in theater."

Lawmakers want the Government Accountability Office to review LOGCAP with an eye toward the understanding what "lessons the department learned" from earlier LOGCAP contracts that were incorporated in the fifth installment of the contract.

Additionally, GAO should determine whether DOD developed plans to transition services being provided under LOGCAP IV to the LOGCAP V contract.

The committee wants a report on preliminary findings from GAO no later than Feb. 28, 2020.

LOGCAP V was in the news recently when the Army awarded contracts on the program to KBR, Vectrus, Fluor and a PAE-Parsons team. DynCorp International, AECOM, Fluor and the PAE-Parsons team have filed protests with GAO. KBR, Fluor and DynCorp International were the incumbents on the previous version of the program.

By Sara Sirota
June 18, 2019 at 11:00 AM

The B61-12 nuclear warhead life extension program has experienced a schedule delay and the W80-4 LEP’s cost estimate has been raised to $12 billion, according to a watchdog investigation.

National Nuclear Security Administration officials said the B612-12 LEP first production unit's completion date would be pushed back due to potential problems with an electrical part discovered during testing in April, the Government Accountability Office found in a report released yesterday.

NNSA previously estimated the first production unit would be finished this September. The GAO report did not specify the electrical issues that led to the delay.

Meanwhile, as of last January, NNSA projected the W80-4 LEP cost as $12 billion, $2.6 billion higher than the $9.4 billion estimate published in November 2017.

Both these programs reflect joint efforts between the Air Force and Energy Department to maintain the nuclear stockpile. The B61-12 LEP seeks to integrate a Boeing tail kit assembly, while the W80-4 LEP is intended to upgrade the W80-1 warhead for use on the long-range standoff cruise missile.

By Tony Bertuca
June 18, 2019 at 10:36 AM

The Defense Department announced today it plans to provide $250 million in military aid to Ukraine, including a variety of small arms, maritime surveillance systems, night vision equipment and electronic warfare detection and secure communications systems.

"This reaffirms the long-standing defense relationship between the United States and Ukraine and will bring total U.S. security assistance to Ukraine to $1.5 billion since 2014," the Pentagon said.

In February 2014, Russian-backed forces invaded Ukraine and annexed the Crimean Peninsula, ratcheting up military tensions with the Europe and the United States.

The new military aide has been approved because of Ukraine's "continued progress" in adopting institutional military reforms that "align" with Euro-Atlantic principles, according to DOD.

"The United States remains committed to helping Ukraine implement provisions of Ukraine's 2018 Law on National Security to strengthen democratic civilian control of the military, promote command and control reforms, enhance transparency and accountability in acquisition and budgeting, and advance defense industry reforms," DOD said. "These reforms will bolster Ukraine's ability to defend its territorial integrity in support of a secure, prosperous, democratic, and free Ukraine."

By Sara Sirota
June 18, 2019 at 10:32 AM

The cost for the engineering and manufacturing development phase of the Air Force’s intercontinental ballistic missile replacement system is $25 billion, according to a justification and approval document released yesterday.

The document allows the service to limit competition for the EMD contract of the Ground Based Strategic Deterrent to the two sources conducting the ongoing technology maturation and risk-reduction phase: Boeing and Northrop Grumman. It was signed in February by Air Force Assistant Secretary for Acquisition, Technology and Logistics Will Roper.

In addition to Boeing and Northrop Grumman, the service received responses from four sources to a request for information published in March 2018 for the EMD phase, but none of the others "expressed an interest in, or ability to, compete as a prime for the GBSD EMD contract," the J&A document states.

"Because . . . no other offerors were interested in being a prime," the redacted notice continues, "the [Air Force] concludes only Boeing and [Northrop Grumman] are capable of fulfilling the prime role for GBSD EMD requirements."

It also states limiting competition will save the Air Force about $197 million. If the service used a different contractor, that company would have to complete a year's worth of TMRR work to obtain the needed information to accomplish tasks associated with a preliminary design review, and the service would be responsible for some of the associated costs, according to the J&A document.

It further details the Air Force’s approach to obtaining competitive pricing for the EMD contract, stating it will include options for both low-rate initial production and full-rate production.

The service will also pursue several contract types, including a cost-plus incentive fee arrangement for the majority of EMD and a fixed-price incentive firm plan for production.

The EMD stage will start following the completion of the TMRR phase, expected to finish by the end of fiscal year 2020. Inside Defense reported last month the Air Force anticipates releasing an EMD request for proposals in July.

By Jaspreet Gill
June 18, 2019 at 10:11 AM

The Army awarded two other transaction agreements late last week for the Synthetic Training Environment’s Common Synthetic Environment.

According to a recent Federal Business Opportunities notice, VT MAK of Cambridge, MA, will perform the training management tool and simulation software capabilities for $95 million and Vricon Systems, LLC of McLean, VA, will perform the one world terrain capability for $94.7 million. The awards were made June 14.

The Common Synthetic Environment includes the STE’s Training Management Tool, Training Simulation Software capabilities and One World Terrain. It is estimated to be fielded to over 400 locations and will allow soldiers to conduct realistic training anywhere in the world and enable interoperability with future operational capabilities like mission command systems. An initial operational capability for the Common Synthetic Environment is expected by September 2021.

According to the notice, a follow-on production effort may be awarded after the prototype effort is completed. The effort "could involve, though is not limited to, the potential requirement for continued development and baseline management, further scaling of the solution, integration of the capability to fit within the Department of Defense’s future state of operation and training environments."

The first round of OTAs was awarded last June to Applied Research Associates, Bohemia Interactive Simulations, Bugeye Technologies, Calytrix, Lockheed Martin, Northrop Grumman and Tenosar.

By Tony Bertuca
June 17, 2019 at 2:54 PM

Just eight months ago, the Pentagon was planning for two defense budgets -- and both were lower than the $750 billion now being advocated by congressional Republicans.

Now, Democrats and Republicans in the House and Senate are at odds over whether the Pentagon needs that amount for fiscal year 2020 or could make do with $733 billion -- the topline the Defense Department originally sought.

Meanwhile, the spending battle that has enveloped the FY-20 defense budget threatens to stall Congress' must-pass defense authorization bill. The debate has also politicized the findings of a bipartisan strategy commission and has called into question how the Pentagon justifies its need for more money.

Read the full story -- now available to all.

By Jaspreet Gill
June 17, 2019 at 2:27 PM

The Senate Armed Services Committee is recommending an increase of $105 million for the Army to buy three AH-64 Apache Block IIIB new-build aircraft, differing from the service's request.

The committee, in the report accompanying its version of the fiscal year 2020 defense policy bill, said the Army should field the aircraft "as quickly as possible across the 24 attack battalions in the active component and the Army National Guard."

The Army did not ask for funding its FY-20 budget request, arguing the new-build aircraft "are procured at a significantly higher cost" than the AH-64E remanufactured aircraft, which are the same configuration and are procured using the same contracts.

The authorizers are also recommending a decrease of $140 million below the service's request for UH-60M Black Hawk procurement, citing concerns with "the utility helicopter industrial base and the dramatic downturn in production of UH–60M aircraft through the proposed future years defense program."

"The committee believes that the Army should take advantage of the current multiyear contract that will expire in fiscal year 2021 and more equitably distribute procurement to limit a steep production cut from fiscal year 2020 to fiscal year 2021," the report states.

The committee is further seeking to increase funding for L and V Black Hawks, by $35 million, to accelerate conversion to the V model, "which provides enhanced situational awareness," so the service can "optimize training and reduce operation and sustainment costs," according to the report.

By John Liang
June 17, 2019 at 2:17 PM

This Monday INSIDER Daily Digest has a scoop on the ouster of the Strategic Capabilities Office director, plus more coverage of the Senate Armed Services Committee's fiscal year 2020 defense authorization bill and more.

We start off with this scoop posted late last night:

Griffin ousts SCO director, escalating fight with COCOMs and Congress

Mike Griffin, the Pentagon's top weapons development official, ousted Strategic Capabilities Office Director Chris Shank on Friday, escalating a bureaucratic fight over the fate of the SCO. Griffin wants to fold the organization into the Defense Advanced Research Projects Agency -- a change opposed by key combatant commands and now congressional committees.

Senate authorizers are concerned that civilian leaders at the Defense Department lack the tools to "overcome the interests" of the military services, which may balk at the kind of transformation required to execute the National Defense Strategy's call for "urgent change at a significant scale":

Senate lawmakers worry DOD's 'anemic' force planning would hamper China, Russia strategy

The Senate Armed Services Committee remains concerned the Pentagon does not have a process in place to prioritize what it needs to implement the National Defense Strategy and its new focus on China and Russia, according to a report accompanying the committee's version of the fiscal year 2020 defense authorization bill.

Inside Defense recently witnessed a major Marine Corps air assault exercise:

Marines return to their 'roots' in largest East Coast air assault exercise in 10 years

BOGUE, NC -- The Marine Corps recently took a crucial step aimed at readying the service to execute larger air assaults in potential future military operations.

The Government Accountability Office's annual report on missile defense disclosed delays to the Standard Missile-3 Block IB interceptor program, marking an inauspicious prelude to the Missile Defense Agency's plans to execute its first-ever multiyear procurement contract in fiscal year 2019, an estimated $2 billion block buy of the SM-3 Block IB that is still in the works:

Raytheon's SM-3 Block IB deliveries halted for half a year, stumbling production start

Raytheon -- after securing permission to begin production in late 2017 of the Standard Missile-3 Block IB after years of engineering challenges, repeated technical setbacks and schedule delays -- stumbled right out of the gate last year, delivering only a third of the new guided missile interceptors the U.S. government planned to buy in fiscal year 2018.

In case you missed this defense budget analysis from late last week, check it out here, available to all:

A tale of two -- or three -- toplines emerges as budget battle consumes defense bill

Just eight months ago, the Pentagon was planning for two defense budgets -- and both were lower than the $750 billion now being advocated by congressional Republicans.

By Marjorie Censer
June 17, 2019 at 1:17 PM

AECOM announced today it will spin off its management services segment into a standalone government services company. The transaction is set to be complete in the second half of fiscal year 2020.

The company said it expects the new company to "leverage its considerable intelligence, cybersecurity, IT, nuclear remediation and O&M expertise to continue to deliver value and best-of-class services primarily to national government clients, including the U.S. Departments of Defense and Energy and various intelligence and other agencies."

The segment has more than 25,000 employees and generated sales of $3.7 billion in FY-18.

AECOM said John Vollmer, who heads the management services segment, and his team are expected to continue to lead the standalone company. Randy Wotring, AECOM's chief operating officer, has been tapped to serve as chairman of the new company's board of directors.

In a call with analysts Monday, Mike Burke, AECOM's chief executive, said 75 percent of the business' sales comes from the Pentagon and the Energy Department.

He said the separated company will benefit from a "sharpened focus on its core capabilities" and a board of directors more tailored to its work.

"The business will also be in a position to participate in the ongoing consolidation of the government services sector," Burke said.

The transaction is expected to be tax-free, according to AECOM.

By Sara Sirota
June 17, 2019 at 10:17 AM

In a new deal with Boeing, the Air Force has tripled the potential value of a multibillion-dollar contract for munition guidance tail kits.

A June 14 Defense Department announcement states the indefinite-delivery/indefinite-quantity contract for Joint Direct Attack Munition tail kits, spares, repairs and technical services was extended by five years and its ceiling raised by $6.5 billion. This modification brings the total potential value of the agreement to $10 billion.

Work will be performed in St. Louis, MO, and is expected to be completed by February 2025, according to the notice. At the time of award, $905 million are being obligated for the Lot 23 delivery order, using fiscal year 2017, FY-18 and FY-19 ammunition, FY-19 operations and maintenance and foreign military sales funds.

JDAM tail kits provide a guidance capability to existing bombs that can attack targets in adverse weather conditions. They are equipped with Global Positioning System Aided Inertial Navigation Systems.

By Marjorie Censer
June 17, 2019 at 8:00 AM

Peraton said today it has agreed to acquire Solers, which provides software development and systems integration for space situational awareness, satellite ground systems and operations, cybersecurity engineering and enterprise cloud-based technology.

“The Solers acquisition will accelerate both near- and long-range growth opportunities,” Peraton said, adding that it would help it provide differentiated space protection and resiliency offerings.

By Tony Bertuca
June 17, 2019 at 5:05 AM

The Senate is scheduled to begin floor debate on its version of the fiscal year 2020 defense authorization bill this week. Meanwhile, the House is slated to continue voting on a minibus appropriations measure that includes the FY-20 defense spending bill.

Tuesday

The Center for Strategic and International Studies hosts a discussion on the Army’s intellectual property strategy.

Wednesday

Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford is scheduled to speak in the evening at the Council on Foreign Relations in Washington.

Thursday

The House Homeland Security Committee holds a hearing on DOD’s deployment to the U.S.-Mexico border.

Friday

Washington Technology hosts a breakfast featuring contracting executives.

By John Liang
June 14, 2019 at 1:41 PM

This Friday INSIDER Daily Digest has an analysis of the congressional debate over the military budget, plus cybersecurity news and more coverage of the Senate Armed Services Committee's FY-20 defense policy bill.

We start things off with a deep dive into the ongoing debate over the fiscal year 2020 defense budget:

A tale of two -- or three -- toplines emerges as budget battle consumes defense bill

Just eight months ago, the Pentagon was planning for two defense budgets -- and both were lower than the $750 billion now being advocated by congressional Republicans.

Followed by some cybersecurity news:

Senate bill increases CYBERCOM's budget, adds new conditions to end 'dual-hat' relationship

New Senate legislation would add to the conditions that must be met before the Pentagon can split U.S. Cyber Command from the National Security Agency, while also increasing CYBERCOM's fiscal year 2020 budget and directing a Defense Science Board assessment of future cyber warfighting capabilities.

DOD says 'security is an allowable cost' in shift toward new cyber certification

Defense Department officials now say contractors can bill the government for the cost of implementing required cybersecurity measures, as DOD prepares to roll out a new cyber certification for defense suppliers.

The Navy may be moving too fast when it comes to developing its future large warship, according to Senate authorizers:

Senate authorizers seek to pump brakes on Navy's future large surface combatant

The Senate Armed Services Committee is suggesting the Navy is moving too quickly in its pursuit of the future large surface combatant.

Here is more news from the Senate Armed Services Committee's FY-20 defense policy bill and report, which was released this week:

Senate authorizers would elevate Space Force acquisition official to four-star level, expand authorities

Senate authorizers are looking to elevate the civilian lead official overseeing space acquisition to a four-star level equivalent and expand the position’s authorities for the coming Space Force.

Senate authorizers raise concerns over Columbia-class program schedule

The Senate Armed Services Committee is calling on the Navy to produce a report addressing the Columbia-class submarine program's schedule.

By Mallory Shelbourne
June 13, 2019 at 3:39 PM

The Navy yesterday issued Huntington Ingalls Industries a contract award worth up to $687 million for "early service life period work" for the lead ship in the Ford class of aircraft carriers.

"The purpose of this contract is to support ship repair and modernization during continuous incremental availabilities, planned incremental availabilities, full-ship shock trials and continuous maintenance and emergent maintenance during the ship's early service life period," the announcement reads.

"This contract includes five ordering periods totaling 60 months, with a maximum order value of $687,090,000," it continues.

According to the announcement, HII is slated to finish work on the five orders by June 2024. The Gerald Ford (CVN-78) is the lead ship in its class.