The Insider

The U.S. intelligence community believes with "moderate confidence" that there is likely a "coordinated strategy" to acquire U.S. companies involved with critical technologies by one or multiple foreign companies or governments, according to the latest unclassified annual report of the Committee on Foreign Investment in the United States (CFIUS). As China Trade Extra reports this morning:

This is the first time that CFIUS has made this particular finding, although it has long been required by law to report on whether such a coordinated strategy to acquire critical technologies exists, according to CFIUS sources. CFIUS examines transactions that transfer control of a U.S. company to a foreign person to ensure they do not pose a national security risk.

Among the items considered to be critical technologies under the CFIUS statute are defense goods and services controlled on the U.S. Munitions List, certain items on the Commerce Control List, specially designed nuclear equipment and toxins.

The unclassified version of the report does not provide information on which specific entities are engaged in this coordinated strategy, although such a list is likely included in the classified version, according to a CFIUS lawyer. This lawyer said the finding could affect future transactions from the identified companies or governments, which could conceivably include China.

However, China was only linked to four planned and completed transactions involving critical technologies during 2011 out of a total of 120 such transactions that year, according to statistics published in the unclassified version of the report released Dec. 20. The United Kingdom had the most such transactions at 30.

View CFIUS' annual report to Congress.

Members of the National Governors Association and the Council of Governors are urging President Obama to include state National Guard representation on the National Commission on the Structure of the Air Force.

A provision in the Fiscal Year 2013 National Defense Authorization Act, signed into law by the president last week, mandated that representation.

"As you consider appointments, the nation's governors urge you to include senior National Guard leaders to represent states on the commission," the letter reads.

View the letter.

Former Sen. Chuck Hagel (R-NE) would be the first person of enlisted rank to serve as secretary of defense, one of the few secretaries who've been wounded in war and the first Vietnam veteran to lead the Defense Department, President Obama said today when nominating Hagel to succeed Leon Panetta as defense secretary.

"As a successful businessman, he also knows that even as we make tough fiscal choices, we have to do so wisely, guided by our strategy, and keep our military the strongest fighting force the world has ever known," Obama said. "Most importantly, Chuck knows that war is not an abstraction. He understands that sending young Americans to fight and bleed in the dirt and mud -- that's something we only do when it's absolutely necessary. My frame of reference, he said, is geared towards the guy at the bottom who's doing the fighting and the dying."

Senate Armed Services Committee Chairman Carl Levin (D-MI), who will oversee Hagel's confirmation hearing, praised the nomination. “Senator Hagel is well qualified to serve as secretary of defense with his broad experience in national security affairs," Levin said in a statement. "He was a decorated soldier and an effective member of the Senate, and he is a strong advocate for the men and women of our military. The Armed Services Committee will give prompt and careful consideration to Senator Hagel’s nomination for this critical position.”

Earlier today, committee member Sen. Jack Reed (D-RI) issued a statement praising Hagel: “Chuck Hagel will make an outstanding Secretary of Defense. He is highly qualified and his record of service to this country as a decorated combat veteran, successful CEO, senator, and statesman is extraordinary. Chuck is a man of uncommon independence and integrity. Chuck Hagel’s candor, judgment, and expertise will serve him well as our next Secretary of Defense. I fully support his confirmation.”

In a separate statement, Sen. Jim Inhofe (R-OK), the panel's top Republican, praised Panetta's leadership at the Pentagon but did not endorse Hagel. "In the months and years ahead, the Defense Department will be confronted with significant challenges from budget issues to Afghanistan policy," he said. "I worked with Senator Chuck Hagel in the Senate, and his nomination deserves to be fully vetted. The Armed Services Committee has a time-tested process to consider nominations, and I am committed to upholding that process. I am aware of the serious concerns about some of his policy positions, his record, and some of his comments that have been publically reported. I will be seeking clarification from him about these concerns as his nomination proceeds."

Regarding Obama's nomination of counterterrorism adviser John Brennan to head the CIA, Inhoffe said the administration "has an abysmal record of national security and intelligence leaks when it benefits the President’s agenda. And, the tragedy in Benghazi still pose many questions that have not been adequately answered for those of us in Congress and for the American people. As John Brennan’s nomination goes forward, the American people expect us to get answers on these and other subjects related to his nomination. I will be looking into his record more closely in the weeks ahead."

Sen. John McCain (R-AZ), who recently ended his tenure as the panel's top Republican, released his own statement on Hagel's nomination: “Chuck Hagel served our nation with honor in Vietnam and I congratulate him on this nomination. I have serious concerns about positions Senator Hagel has taken on a range of critical national security issues in recent years, which we will fully consider in the course of his confirmation process before the Senate Armed Services Committee.”

On Brennan’s nomination, McCain said, “I appreciate John Brennan’s long record of service to our nation, but I have many questions and concerns about his nomination to be Director of the Central Intelligence Agency, especially what role he played in the so-called enhanced interrogation programs while serving at the CIA during the last administration, as well as his public defense of those programs. I plan to examine this aspect of Mr. Brennan’s record very closely as I consider his nomination.”

Helicopter builder Sikorsky has decided to bid for the Air Force's Combat Rescue Helicopter program with a version of its H-60 aircraft, the likely favorite to win the competition.

Bids for the long-delayed CRH acquisition effort were due yesterday, and Sikorsky spokesman Frans Jurgens told InsideDefense.com today that the company has indeed responded to the solicitation. "I can confirm that Sikorsky submitted a bid for CRH. We are offering a fully compliant H-60 variant," he said in an email.

The Air Force plans to buy 112 CRH helicopters as a replacement for the aging, Sikorsky-made HH-60G Pave Hawk.

The company is very likely to be the only prime contractor to turn in a bid for CRH, as its top rivals announced last month that they would sit out the competition. Boeing, EADS-North America and a Northrop Grumman-AgustaWestland team all announced on the same day their decisions not to bid on the program, which is worth a maximum of $6.8 billion.

An "oversight issue" for House and Senate lawmakers -- the new ones of which were sworn in today -- "is the extent to which the Weapon System Acquisition Reform Act and the Better Buying Power initiative are having a positive effect" on Defense Department acquisitions, according to a Congressional Research Service report issued yesterday.

View the report -- originally obtained by Secrecy News -- which contains a good primer on the Pentagon acquisition process.

And check out some other just-issued CRS reports, also courtesy of Secrecy News:

CRS Report On The Army's GCV Program

CRS Report On The Army's JLTV Program

CRS Report On The Marine Corps' ACV And MPC Programs

CRS Report On The CTBT

Defense Secretary Leon Panetta today issued a statement on the two-month delay of sequestration included in this week's fiscal-cliff deal. He praised lawmakers for temporarily averting the automatic cuts but called on Congress to do more in the near term to entirely eliminate the threat of sequestration.

His complete statement:

On behalf of the Department of Defense, I want to express our thanks to the Democratic and Republican Members of Congress who voted to temporarily avert sequestration. Hopefully, this will allow additional time to develop a balanced deficit reduction plan that would permanently prevent these arbitrary cuts.

Had Congress not acted, the Department of Defense -- along with other federal agencies -- would have been forced to begin taking dramatic steps that would have severely impacted our civilian personnel and disrupted our mission. For more than a year, I have made clear that sequestration would have a devastating impact on the Department. Over the past few weeks, as we were forced to begin preparing to implement this law, my concerns about its damaging effects have only grown. As an example, had Congress failed to act, I would have been required to send out a notice to our 800,000 civilian employees that they could be subject to furlough.

Congress has prevented the worst possible outcome by delaying sequestration for two months. Unfortunately, the cloud of sequestration remains. The responsibility now is to eliminate it as a threat by enacting balanced deficit reduction. Congress cannot continue to just kick the can down the road.

This Department is doing its part to help the country address its deficit problem by working to implement $487 billion in spending reductions in accordance with our new defense strategy. The specter of sequestration has cast a shadow over our efforts. We need to have stability in our future budgets. We need to have the resources to effectively execute our strategy, defend the nation, and meet our commitments to troops and their families after more than a decade of war.

Every day, the men and women of this Department put their lives on the line to protect us all here at home. Those of us in Washington have no greater responsibility than to give them what they need to succeed and to come home safely. My hope is that in the next two months, all of us in the leadership of the nation and the Congress can work together to provide that stability and to prevent sequestration once and for all. Our national security demands no less.

The fiscal year 2013 intelligence authorization bill has been approved by both chambers of Congress and forwarded to the president for his signature, according to a joint statement released yesterday by the leaders of the House and Senate intelligence committees.

The bill "is significantly below last year's enacted budget, but also up slightly from the President's budget request," the statement reads, adding:

The House Intelligence Committee unanimously voted to report the FY13 bill to the full House on May 17, 2012 and it originally passed the House on May 31 with overwhelming bipartisan support.  The Senate passed its version of the authorization bill on December 28, 2012, after extensive negotiation between the House and Senate committees.  With today's vote, the House approved the version approved by the Senate and has sent the legislation to the President for signature.

Senate Intelligence Committee Chairman Feinstein said, "This bill marks four straight years of Congress passing an intelligence authorization bill.  This bill provides important oversight provisions while authorizing funding for critical national security programs.  The bill has been carefully negotiated between the two committees, our House and Senate colleagues, and the executive branch, and I look forward to the president signing it into law."

Senate Intelligence Committee Vice Chairman Saxby Chambliss said, "I am pleased that Congress has passed this annual intelligence authorization bill, which allows the Senate Select Committee on Intelligence to provide comprehensive oversight of the nation's intelligence community. It is imperative that Congress provide oversight to hold the intelligence community accountable for its fiscal and legal responsibilities."

House Intelligence Committee Chairman Rogers said, “The current challenging fiscal environment demands the accountability and financial oversight of our classified intelligence programs that can only come with an annual intelligence authorization bill.  This important bill reaffirms to the hard-working men and women in the intelligence community that Congress is united in ensuring they have the tools they need in order to do the very difficult and dangerous work of keeping America safe."

House Intelligence Committee Ranking Member C.A. Dutch Ruppersberger said, "It is our responsibility on the Intelligence Committee to give our intelligence professionals the resources, capabilities and authorities they need to keep our country safe.  This bill does this while keeping costs in check. It invests in personnel and programs that are working and cuts things that aren't.  I look forward to the President signing this bill to make it law."

Read the Senate committee's manager's report.