The Insider

The Defense Department and the defense industry as a whole will soon be facing a shortage of qualified cybersecurity and intelligence workers, according to a report released today by the National Academy of Sciences.

The report notes the long training time needed for science, technology, engineering and mathematics workers and warns that shortages today, combined with the aging of the current STEM workforce and needs in areas like cybersecurity and intelligence, are only going to grow worse.

One way to mitigate those shortages, the report states, would be to offer higher pay to convince students to enter STEM fields in general and the defense sector in particular. The report also calls on DOD to replicate the culture of Lockheed Martin's Skunk Works division, which focuses on interesting and complex problems and endorses out-of-the-box problem solving.

The report is the final version of a study published in interim form in June. The recommendations are largely the same, but the final version discusses more issues in greater depth.

The report's authors discuss the difficulty of predicting exactly which types of STEM workers DOD will need in the future given the rapidly changing nature of technology.

The report also notes that the DOD workforce as a whole is expected to shrink, and the defense industry is reducing its numbers as well. Given these trends, the report says, the STEM worker shortage may be less severe than expected, except in fields like cybersecurity.

Northrop Grumman executives painted a worst-case scenario for their investors today after being asked about what sequestration would mean for the company's 2013 earnings.

During a conference call on Northrop's 2012 third-quarter earnings, investors asked how the company planned to proceed under the shadow of sequestration and what the financial fallout would be from an across-the-board cut of about $500 billion from the Pentagon's budget. Sequestration, which was carved out in the 2011 Budget Control Act, was designed to motivate Congress to work with the White House on trimming the budget. Congress has so far been unable to chisel out a financial plan for how to curb the deficit, which means the policy could be implemented in less than 70 days.

Wes Bush, chairman, president and CEO of Northrop, and Jim Palmer, the company's corporate vice president and chief financial officer, told investors that while Northrop -- and the Defense Department -- would feel the effects of sequestration rather quickly, so would a broad range of government agencies.

"This is a broader set of national issues and national concerns than just the defense community," he said.

Northrop Grumman would be hit hard by sequestration because the contracting base of the military services has a higher turnaround rate, prompting those services to spend their obligated amounts within a set time frame, Bush said.

"Long-term, I don't think I have to speculate in saying the impacts would be profound and very, very negative," he said.

The uncertainty about whether sequestration will happen has made it difficult for Northrop to prepare the way ahead, Bush said. "We all know there is a substantial deficit situation and there are some tough decisions that lie ahead regarding the outcomes for each component of that budget," he said. "So it's a little unclear today from where we are to predict how that's going to go."

Jim McNerney, Boeing's president and CEO, said during his company's third-quarter earnings call this morning  that if sequestration does not hit, Boeing would still not see the same level of defense business in 2013 as in 2012. The company this year has seen large growth in its international defense portfolio, with 38 percent of its current $71 billion backlog representing sales outside of the United States.

"Even without sequestration, it would be hard to beat that next year," McNerney said. "It would be a challenge because of the absolute strength of this year."

The Government Accountability Office released a report this afternoon that finds that "future aerostat and airship investment decisions drive oversight and coordination needs."

GAO identified 15 key aerostat and airship efforts that were underway or had been initiated since 2007, and the Department of Defense (DOD) had or has primary responsibility for all of these efforts. None of the civil agency efforts met GAO's criteria for a key effort. Most of the aerostat and airship efforts have been fielded or completed, and are intended to provide intelligence, surveillance, and reconnaissance (ISR) support. The estimated total funding of these efforts was almost $7 billion from fiscal years 2007 through 2012. However, funding estimates beyond fiscal year 2012 decline precipitously for aerostat and airship efforts under development, although there is an expectation that investment in the area will continue.

Three of the four aerostat and airship efforts under development, plus another airship development effort that was terminated in June 2012, have suffered from high acquisition risks because of significant technical challenges, such as overweight components, and difficulties with integration and software development, which, in turn, have driven up costs and delayed schedules.

DOD has provided limited oversight to ensure coordination of its aerostat and airship development and acquisition efforts. Consequently, these efforts have not been effectively integrated into strategic frameworks, such as investment plans and roadmaps. At the time of GAO's review, DOD did not have comprehensive information on all its efforts nor its entire investment in aerostats and airships. Additionally, DOD's coordination efforts have been limited to specific technical activities, as opposed to having a higher-level authority to ensure coordination is effective. DOD has recently taken steps to bolster oversight, including the appointment of a senior official responsible for the oversight and coordination of airship-related programs. However, as of August 2012, DOD has not defined the details relating to the authority, scope, and responsibilities of this new position. Whether these steps are sufficient largely depends on the direction DOD intends to take with aerostat and airship programs. If it decides to continue investing in efforts, more steps may be needed to shape these investments.

Inside the Pentagon reported last Thursday that DOD is poised to demonstrate a rigid-hull, variable-buoyancy hybrid air vehicle next month amid efforts to develop a concept of operations for the technology:

The Defense Department plans to hold the Project Pelican demonstration nearly a year earlier than anticipated, said DOD spokeswoman Lt. Col. Melinda Morgan. The Pelican is designed to vertically land and takeoff at maximum gross weight. Unlike existing airships and other hybrid airships in development, it will be a heavier-than-air vehicle during ground operations, according to the Pentagon's fiscal year 2013 budget request.

Project Pelican, a non-deployable airship technology demonstrator designed by Aeros, aims to integrate and demonstrate a technology suite that could reduce operational constraints on future heavy-lift, buoyant-aircraft development programs, budget justification documents state.

The event in November will demonstrate the control of static heaviness, or COSH, system that allows direct management of the vehicle's buoyancy, Morgan said. When the airship is on the ground, this system will pump helium into helium pressurization envelopes.

"Ambient air will fill portions of the internal structure of the airship and the vehicle will become heavier than air," Morgan said in an email. "This will allow the offload of cargo without having to onload ballast (weight) to keep the airship on the ground."

The COSH system will release the helium from the pressurization envelopes in preparation for flight, allowing the vehicle to become lighter than air and enabling vertical takeoff, Morgan said.

Read today's GAO report.

Read last Thursday's ITP story.

InsideDefense.com reported earlier this month that the Pentagon in November will begin publicly exploring ways to open up select portions of the Joint Strike Fighter program to competition, which could create opportunities for other defense contractors to grab a small slice of the estimated $1.1 trillion cost to sustain the new fighter fleet:

On Nov. 14th and 15th, the F-35 joint program office will host an industry event "to identify potential business sources, capabilities, and experience to successfully deliver a wide range of hardware and infrastructure services in support for F-35 JPO sustainment," the Pentagon announced in a Sept. 28 notice published in Federal Business Opportunities.

The Pentagon is eying four areas for potential competition: supply chain management, the Autonomic Logistics Information System, training systems, and support equipment, according to the notice. Lockheed Martin is the F-35 program's prime contractor.

"The results of this industry day will be used to assess tradeoffs and alternatives available for determining how to proceed in the acquisition process," it adds.

The Defense Department is concerned about the F-35's sustainment costs, which are projected to be significantly higher than those of the legacy aircraft they will replace. For nearly two years, the F-35 program office has looked for ways to pare back the projected operations and sustainment bill, which earlier this year the Pentagon projected in an acquisition report will be $1.1 trillion through the 2060s.

Also, the move to consider opening some of the F-35 program to competition is part of the Defense Department's efforts to bring the Joint Strike Fighter program in compliance with provisions of the 2009 Weapon Systems Acquisition Reform Act that calls on the Pentagon to find ways to ensure competition throughout a weapon's life-cycle.

View the presentation slides that will be used during the industry day.

View the full Oct. 1 story.

The Defense Department is more effective at commercializing clean energy technology breakthroughs it funds through its research and development program than the Energy Department because DOD can procure and deploy research breakthroughs, creating a market for its technologies, according to a new study. As InsideEPA.com reports:

"Although investments at DOE exceed those at DOD, until DOE is more strongly linked to deployment and procurement mechanisms, DOD’s investments could potentially have a much greater impact," says the Oct. 16 report from the Information Technology and Innovation Foundation (ITIF), a group whose board members include representatives of major high-tech companies and environmental groups.

The report, which is a follow up to a study released last year that first recognized the potential of DOD use as a way to advance new energy technologies, says DOD has the potential to supplant DOE's importance as the lead agency for advancing clean energy and making innovative, low-carbon energy technologies competitive with fossil energy.

The report comes as many in the sector are working with the department to advance clean energy technologies. The American Council on Renewable Energy (ACORE) is hosting a week-long clean energy conference in Washington, DC, Oct. 15-19 where it will discuss the work it is doing with the military to form a partnership focused on advancing clean energy through DOD's procurement system and its ability to rapidly scale up and commercialize technology.

The new report, "Lean, Mean, and Clean II: Assessing DOD Investments in Clean Energy Innovation," does not favor one agency's programs over another, but recommends increased coordination between the two agencies to more rapidly commercialize transformative technologies. "The linkage between R&D and procurement makes DOD's investments complementary to DOE's investments, and in many ways it is conclusively necessary," says the report. "DOD strongly links its research to potential procurement, while DOE's research is weakly associated with federal deployment subsidies, tax incentives and grants."

Surveying DOD's investments in energy storage, "smart grid" technologies, biofuels, advanced grid electronics, energy efficiency and renewable power technologies, the ITIF report says DOD is focused primarily on "procurement," giving it the unique ability to commercialize technologies more quickly than DOE's historic R&D approach that can leave technologies trapped in the "Commercialization Valley of Death" -- where new innovations are developed but cannot find the investor capital. . . .

The report says DOD fills the "gap" in advanced energy development that DOE cannot close through its programs alone. "This gap -- largely non-existent for DOD -- inhibits clean energy technologies from competing equally with other energy substitutes in the market, and results from a lack of government investment as well as private sector investors' reluctance to support high-risk technologies," says the report.

"DOD's procurement process provides the demand and the capital for the production of emerging technologies, inevitably moving DOD's innovation cycle forward, and potentially providing the technologies presence in commercial markets."

The report says DOD has increased flexibility in its energy programs "to shift funding as technology develops," which is a "major weakness" in non-defense advanced energy programs, and indicative of the type of innovation structure "missing at the DOE."

To view InsideDefense.com's coverage of Pentagon energy issues, check out Defense Energy Alert.

A report released this week by Sen. Tom Coburn (R-OK) finds that Pentagon missile defense efforts and the Navy's Littoral Combat Ship are among the most wasteful of federal programs.

As Inside the Pentagon reports this morning:

Coburn's "Wastebook 2012" identifies more than $18 billion in "egregious" federal spending, highlighting 100 of the year's "countless unnecessary, duplicative and low-priority projects spread throughout the federal government," according to a statement from the senator's office.

The report complains at least $1 billion has been wasted because the Missile Defense Agency began building interceptors before research was complete, causing costs to skyrocket. "Due to the concurrent acquisition strategy, the Ground-based Midcourse Defense's newer interceptors alone have cost the taxpayers well over $1 billion more than originally planned," Coburn's report states. The agency will continue to use the risky development method, accepting the potential for new issues that "may require costly design changes and retrofit programs to resolve," the report adds.

The report also argues the Pentagon is wasting a significant amount of money in the Littoral Combat Ship program by building multiple ships based on two completely different designs. The Navy is now building two ships of each design with plans to build many more. Just for the four now under construction, the additional cost of using two designs is $148 million, the report states. The LCS program "would likely be better off fiscally and strategically with one design," Coburn's report argues.

Other security programs on Coburn's list include State Department and Energy Department endeavors that have come under fire and a Pentagon effort to spend $700,000 researching a new way to make beef jerky.

And from the beef jerky section of the report:

Beef jerky so good it will shock and awe your taste buds.

That is the goal of an ongoing Pentagon project, which is attempting to develop its own brand of jerky treats that are the bomb! Only, the money is coming from a program specially created to equip soldiers with the weapons they need.

The Foreign Comparative Testing (FCT) program has spent more than $1.5 million to develop the savory snacks. This is a highly unusual initiative since the purpose of the FCT is "to improve the U.S. warfighter's capabilities" by testing "items and technologies of our foreign allies that have a high Technology Readiness Level (TRL)" that could satisfy "mission area shortcomings." One of the program’s stated objectives is "eliminating unnecessary duplication." . . .

Now beef jerky will be added to this list.

"I was told this is the first time FCT has funded a project that wasn't related to weaponry or combat systems. Mine was the first one related to food. FCT was happy to fund this novel technology," said Tom Yang, a South Carolina-based senior food scientist on the Food Processing, Engineering and Technology team at the Combat Feeding Directorate.