The Insider

IT Export License System
By John Liang
September 17, 2012 at 5:53 PM

A single information technology system allowing officials from the Defense, Commerce and State departments to process export licenses using the same platform will go online in a matter of weeks, Inside U.S. Trade reports this morning.

Assistant Commerce Secretary for Export Administration Kevin Wolf told a Sept. 11 meeting of the Regulations and Procedures Technical Advisory Committee (RPTAC) that the system will go into effect in its "initial operating capability" in the next month or so.

Commerce's Bureau of Industry and Security (BIS) and the State Department will all be using DOD's USXPorts system, which has been modified to allow all agencies to access it, Wolf said.

He said the State Department agencies that will participate will be the Directorate of Defense Trade (DDTC), which administers the United States Munitions List (USML) and the Bureau of International Security and Nonproliferation (ISN), which has authority over dual-use items. For example, ISN includes the Office of Conventional Arms Threat Reduction that guards against proliferation of advanced conventional weapons and related dual-use items, according to the ISN website.

Wolf said he expected "some growing pains" as agencies begin to use the system, but argued that it will create new efficiencies because it will greatly facilitate the electronic sharing of data that was not possible under the previous arrangement when DOD, State and Commerce used three different systems. He said the system will have a more robust, modern server and allows the addition of modules as export control licensing processes evolve.

Wolf said officials in DDTC's aircraft group told him the new system will let them shave off a week from their license reviews. He said any efficiencies may not be apparent in individual licensing decisions, but represent a small victory for the export control initiative.

A single IT system for processing export licenses is one of four key elements of the Obama administration's export control reform effort, which also proposes a single enforcement agency, a single export control list and a single agency in charge of export controls.

Wolf said the enforcement coordination agency, known as the Export Enforcement Coordination Center, has greatly expanded efficiency on enforcement issues due to the information sharing it promotes among agencies. The enforcement center was officially opened in March, and officials were spending the past months to work out exactly how to implement the center's mandates for enhancing and coordinating export control enforcement among 18 agencies in eight departments (Inside U.S. Trade, May 18).

He said the single list and the single agency remains the "ultimate objective" of the export control reform initiative, but noted that the creation of the single agency depends on legislation and on the outcome of the presidential election.

Wolf drove home the point that the current review of the export control lists, which involves a revision of USML categories to determine which items can be moved to the less-stringent Commerce Control List (CCL), provides the preparation for these ultimate goals.

The cooperation required by the five export control agencies working together daily in one room in developing reform-relevant regulations and reviewing USML categories has “culturally” led them to see themselves as part of the same administration, Wolf said. This cooperation has let each agency learn more about the other agencies' export control rules and about the positions of industry, he said.

Wolf said he sees this increased cooperation as one of the reasons that there have not been many disputed commodity jurisdiction (CJ) cases or license disputes that have to be elevated to the assistant secretary level for resolution.

Questionable Threat
By Thomas Duffy
September 17, 2012 at 5:17 PM

Ever since North Korea tested the two-stage Taepo Dong 2 ballistic missile in 1996, the country has been held up by the Bush and Obama administrations as a significant potential threat to the United States. The missile is often cited by ballistic missile defense proponents as one of the reasons the United States needs to invest in a robust BMD program

But a recent study committee formed by the National Academy of Sciences isn't buying the threat. "While some view the Taepo Dong 2 as a potential threat to the United States, the committee thinks this is unlikely," the committee's report states. The report, issued last Tuesday, examines the investment the United States is making in missile defense programs.

When the Obama administration issued its 2010 Ballistic Missile Defense Review, it pointed to the TD-2 as a serious threat to the U.S. mainland. "Although the test launches of the TD-2 in 2006 and 2009 were deemed unsuccessful, we must assume that sooner or later North Korea will have a successful test of its TD-2 and, if there are no major changes in its national security strategy in the next decade, it will be able to mate a nuclear warhead to a proven delivery system," the review stated.

The Heritage Foundation, which is a big proponent of missile defense, notes in a recent policy briefing for 2012 election candidates that the TD-2 "has the capability to deliver a nuclear warhead to Hawaii. A third stage could boost the weapon's range to include the continental United States. The best way to contain the threat from North Korea is through missile defense."

During a Sept. 11 telephone conference call with reporters, David Montague, one of the NAS committee's two co-chairs, succinctly summed up the committee's opinion of the TD-2: "It's ugly."

Montague added that the TD-2 is incapable of carrying a large enough payload to be a significant threat.

"It's a baby satellite launcher and not a very good one at that. If you look at the way it has to be erected prior to launch, it is a sitting duck for 'first intelligence' and what I call pre-launch defense," he said.

The TD-2 is a liquid-fueled missile and has to be fueled as it sits on the launch pad prior to liftoff.

The NAS committee thinks another North Korean missile program should draw greater scrutiny than the TD-2.

"A more immediate threat is a new 3,200[-kilometer intermediate ballistic missile] North Korea is developing that can threaten Japan, Guam, Okinawa -- all staging areas for a U.S. response to aggressive behavior by North Korea," the report states.

NDIA Letter
By John Liang
September 17, 2012 at 3:29 PM

The National Defense Industrial Association last week sent a letter to Deputy Defense Secretary Ashton Carter asking new questions about the effects of sequestration on the defense industry:

We have welcomed the open and productive dialogue we have had with you and Secretary Panetta on these issues and in that spirit would appreciate your guidance and clarification on a further matter. An important question, that directly impacts individual company decisions on how and when to move forward with possible sequestration-related layoffs or site closures, involves whether the costs incurred as result of WARN Act compliance will be determined allowable by the Department of Defense. For instance, if a particular company decides to wait for the January 2 sequestration implementation date specified in law to begin the required WARN Act notice process, will the Department determine that the costs resulting from retaining the affected work force through the applicable WARN Act period to be allowable and be willing to use advance agreements or a similar device to effect this policy position? This matter has been consistently raised by a number of our member companies and identified as s critical to their planning efforts.

We understand the question of sequestration WARN Act applicability is complex and reaches beyond the purview of the Department of Defense. However, further clarity and assurances on how the Department will handle associated cost allowability issues would be of significant help as our industry further reviews and begins to establish options for managing the significant impacts of budget sequestration.

And to view a slew of defense contractors' letters sent to Congress in the past month regarding sequestration, click here.

Hypoxia Hearing
By John Liang
September 14, 2012 at 3:42 PM

Inside the Air Force reports this morning that NASA officials who conducted an independent analysis of the F-22 Raptor's life support systems this summer have concluded that the Air Force's proposed corrective actions to a series of hypoxia-like incidents are positive and worthwhile improvements to the aircraft, but have warned the service against continuing to accept a "normalization of deviance" in the F-22's performance. Further:

NASA's Engineering Safety Center (NESC) performed an independent assessment of the F-22 beginning in late April, and that group's final report was submitted to Air Combat Command (ACC) on Aug. 31, according to Clinton Cragg, the center's principal engineer and the lead on the study group. The NESC final report agreed with the Air Force on the likely causes of breathing problems in the Raptor cockpit -- namely a flaw with the F-22's upper pressure garment and several contributors related to high concentrations of oxygen at low altitudes -- but urged the Air Force to consider a number of more wide-ranging, systemic issues with the F-22 program.

Cragg, along with ACC Director of Operations Maj. Gen. Charlie Lyon and Gregory Martin, a retired Air Force general and the chair of the Air Force Scientific Advisory Board's aircraft oxygen generation study, testified before the House Armed Services tactical air and land subcommittee on Sept. 13.

In his prepared testimony, Cragg wrote that the Air Force, like many organizations before it, has come to accept a handful of mild irritants associated with the F-22 as "normal," when in fact they should have been addressed early on. He cited an issue with a particular part on the space shuttle as an example of NASA going through the same process, and the NESC expressed satisfaction that as part of its oxygen generation study, the Air Force is now paying more attention to these issues.

"The F-22 pilot community has come to expect a number of physiological phenomena as a 'normal' part of flying the Raptor," Cragg wrote. "These include the difficulty in breathing, the 'Raptor cough,' excessive fatigue, headaches, and delayed ear block. Differences in pilot breathing in the F-22 from other platforms was widely known and accepted as a normal part of flying the advanced aircraft. The acceptance of these phenomena as 'normal' could be seen as 'normalization of deviance.'"

One member of Congress who has a good understanding of science is committee member Roscoe Bartlett (R-MD), who chairs the tactical air and land forces subcommittee. In his prepared statement yesterday, he said:

I know from personal experience as a scientist working these issues before I came to Congress that the Air Force faced a difficult problem in determining the root cause of these F-22 pilot hypoxia-like events because in either the case of insufficient oxygen quantity or poor oxygen quality, the symptoms to the pilot are largely the same. Hypoxia, or lack of oxygen, produces the same symptoms in humans that would result from toxic exposure, or hypocapnia, also known as hyperventilation.

Click here to read the full ITAF story, and here to view the testimony from the hearing.

Nuclear Nexus
By John Liang
September 13, 2012 at 6:59 PM

House Armed Services strategic forces subcommittee Chairman Mike Turner (R-OH) didn't mince words during his opening statement at today's hearing on the failure of the nuclear weapons complex in Oak Ridge, TN, to prevent an 82-year-old nun and two other antiwar activists from infiltrating the facility:

Let me be clear: I rank this failure alongside the Air Force's unauthorized shipments of nuclear weapons to Barksdale Air Force Base in 2007 and nuclear weapons components to Taiwan, which was reported in 2008.

From our oversight of those incidents, this subcommittee is intimately familiar with how systemic failures -- coupled with a lack of leadership attention -- can lead to massive failures in a business with room for none.

The 2007 Air Force incident revealed deep and systemic flaws throughout the Air Force enterprise that allowed that incident to occur. It also revealed that both on-the-ground personnel and senior leaders in the Air Force had taken their eyes off the ball when it came to nuclear weapons. Tellingly, we saw Secretary of Defense Gates take strong action to hold these people accountable and fix the system.

PAC-3 Performs
By Jen Judson
September 13, 2012 at 5:15 PM

A Patriot Advanced Capability-3 missile intercepted and destroyed an aerodynamic tactical ballistic missile target at White Sands Missile Range, NM, today, according to a Lockheed Martin statement.

Lockheed Martin's test involved a ripple fire engagement using two PAC-3 Cost-Reduction Initiative missiles against a "Juno target" -- a long-range missile -- that was fired from Ft. Wingate, NM, Richard McDaniel, vice president of PAC-3 missile programs within Lockheed Martin's Missiles and Fire Control business, said in a statement sent through a spokesman today. Ft. Wingate is about 300 miles from White Sands.

"The first interceptor destroyed the target and the second PAC-3 missile self-destructed as planned," the statement reads.

PAC-3 is designed to defeat tactical ballistic missiles, cruise missiles and fixed- and rotary-wing aircraft, according to the statement. PAC-3 increases the Patriot system's firepower as 16 PAC-3 missiles can be loaded in place of four legacy Patriot PAC-2 missiles on a single launcher, the statement notes.

This test follows an Aug. 29 Army Test and Evaluation Command operational test of both Raytheon's Patriot and Lockheed's PAC-3 interceptors against ballistic missile targets. The August limited user test was performed at White Sands; the goal was to "validate the Patriot System Post-Development Build to meet design requirements," Army spokesman Dan O'Boyle said in an Aug. 30 statement.

Lockheed Martin expects three more flight tests involving PAC-3 by the end of the year, McDaniel said in his statement. The first is the large, integrated Missile Defense Agency test that will also include the Terminal High Altitude Area Defense weapon system and Aegis. The second involves the Medium Extended Air Defense system; that test will employ use the PAC-3 Missile Segment Enhanced  system. The third is another PAC-3 MSE flight test, he added.

UAVs In The NAS
By John Liang
September 13, 2012 at 4:11 PM

The Congressional Research Service recently issued a report on using unmanned aerial vehicles in the National Airspace System.

The Sept. 10 report -- originally obtained by Secrecy News -- states:

Growing interest in the use of unmanned aerial vehicles (UAVs), particularly for homeland security and law enforcement applications, has spurred considerable debate over how to accommodate these unmanned aircraft and keep them safely separated from other air traffic. Additionally, the use of these pilotless aircraft, popularly referred to as drones, for aerial surveillance and law enforcement purposes has raised specific concerns regarding privacy and Fourth Amendment rights and potential intrusiveness. These issues have come to the forefront in policy debate in response to provisions in the FAA Modernization and Reform Act of 2012 (P.L. 112-95) that require the Federal Aviation Administration (FAA) to begin integrating unmanned aircraft into the national airspace system by the end of FY2015.

While drones have been used extensively by the military and small radio-controlled model aircraft have been around for more than 50 years, advances in more complex vehicle controls and imaging sensor capabilities are spurring public sector and commercial interest in unmanned aircraft for a variety of purposes, including law enforcement, homeland security, aerial imaging, and scientific research. FAA currently approves public entities (such as federal agencies, public universities, and local police departments) to operate UAVs on a case-by-case basis, but growing interest is making this approach increasingly untenable. Moreover, commercial users are seeking authorization to fly drones, but so far FAA has only allowed test and demonstration flights by manufacturers. FAA faces a number of challenges to address anticipated growth in demand for civilian UAV operations and develop regulations governing the certification and operation of unmanned aircraft systems in domestic airspace.

View the report.

And check out InsideDefense.com's recent coverage of the UAVs-in-the-NAS issue:

Navy Awaits FAA Approval To Fly Drones Without Visual Observers
Inside the Pentagon - 08/23/2012

Successful Demo Could Enable More Drone Flights In U.S. Airspace
Inside the Pentagon - 06/28/2012

Forbes: Process Used To Fly Drones In U.S. Airspace Too Burdensome
Inside the Pentagon - 06/21/2012

Kendall: Air Force Needs Greater Airspace Access For Unmanned Aircraft
Inside the Pentagon - 06/14/2012

DOD To Demo New Airborne Sense-And-Avoid Requirements For Drones
Inside the Pentagon - 06/14/2012

Senate Panel Wants Annual Reports On UAS Airspace Integration Efforts
Inside the Pentagon - 06/07/2012

Report Details Integration Of UAS Into the National Airspace System
Inside the Air Force - 06/01/2012

UAV Export Controls
By John Liang
September 12, 2012 at 7:09 PM

Rep. John Tierney (D-MA) is worried the federal government isn't doing enough to ensure U.S. unmanned systems technology doesn't fall into the wrong hands.

Tierney, the ranking member of the House Oversight and Government Reform national security, homeland defense and foreign operations subcommittee, says in a statement issued today that a July Government Accountability Office report "has found that a lack of information sharing among federal agencies has hindered our ability to keep drone technology out of the hands of our enemies." Further:

"The fact that the U.S. Government has allowed drone technology to fall into the hands of our enemies is extremely troubling for our country and our military. The Administration must take immediate steps to increase efforts to curb the spread of drones and reduce this threat to our national security," Congressman Tierney said. "I call on the Departments of Defense and State to take swift action on the recommendations in this report."

Most notably, the GAO report released today finds that countries with drones or Unmanned Aerial Vehicles (UAVs) nearly doubled in seven years and many of the countries that have acquired UAVs could put U.S. military assets at risk. Due to inadequate information sharing, U.S. drone technology has made its way into the hands of so-called "countries of concern" and terrorist organizations.

According to the GAO report itself:

GAO recommends that [the] State [Department] improve its export licensing database to better identify authorized UAV exports, that relevant agencies improve mechanisms for sharing information relevant to the export licensing process, and that State and DOD harmonize their UAV end-use monitoring approaches. The agencies generally agreed with the recommendations.

View the GAO report.

Boeing on Merger Talk
By Gabe Starosta
September 12, 2012 at 6:46 PM

European defense giants BAE Systems and EADS appear close to completing a corporate merger, and Boeing Chief Executive Officer Jim McNerney -- speaking at the Council on Foreign Relations today -- was asked for his view on how that joint company would impact Boeing. His response:

I just caught those rumors this morning myself. I think from my perspective, and I'm thinking about it quickly here, I have a pretty deep and abiding faith in our company's faith, OK, so I don't see this as something that is going to threaten us fundamentally. It does reflect a global consolidation that is beginning to happen. I think this may be a matter of, from an EADS standpoint, maybe some increased U.S. market access because of BAE's entity here, and the entity, when it is put together, does look a little bit more like us. That's been a steady them in EADS' development over the years.

BAE issued a statement to the London Stock Exchange this morning confirming rumors about the merger, and EADS has posted a similar statement on its own website which notes that EADS would own 60 percent of the proposed new company. The BAE statement reads:

BAE Systems and EADS have a long history of collaboration, and are currently partners in a number of important projects, including the Eurofighter and MBDA joint ventures. The two companies confirm that they are now in discussions about a possible combination of the businesses. The potential combination would create a world leading international aerospace, defence and security group with substantial centres of manufacturing and technology excellence in the UK, USA, France, Germany and Spain as well as in Australia, India and Saudi Arabia.

BAE Systems and EADS believe that the potential combination of the two businesses offers significant benefits for all stakeholders, over and above their individual business strategies, which both businesses continue to execute strongly. In particular, they believe that the combination of the two complementary businesses offers the opportunity of greater innovation, long term financial stability, and an extended market presence, which will enable them to compete even more effectively on the world stage.

Any agreement on the terms of a potential combination will require approval by the Boards of both BAE Systems and EADS, and would be subject to, amongst other things, a number of governmental, regulatory and shareholder approvals. There is no certainty at this stage that the discussions will ultimately lead to a transaction.

BAE Systems is a strong, well-run company, successfully implementing our strategy. During the process of the discussions with EADS, BAE Systems will continue to focus in meeting all of their current commitments.

EADS-BAE Merger
By John Liang
September 12, 2012 at 4:57 PM

EADS today released a statement confirming speculation that talks about a possible merger with BAE Systems are under way:

This potential combination would be implemented through the creation of a dual listed company structure, under which both companies would operate as one group by means of equalisation and other agreements but would be separately listed on their existing exchanges.

The discussions between the parties envisage that BAE Systems shareholders would own 40% and EADS shareholders 60% respectively of the enlarged group. It is contemplated that there would be a unified board and management structure with identical boards and executive committees at each of BAE Systems and EADS.

BAE Systems and EADS have a long history of collaboration and are currently partners in a number of important projects, including the Eurofighter and MBDA joint ventures. The potential combination would create a world class international aerospace, defence and security group with substantial centres of manufacturing and technology excellence in France, Germany, Spain, the UK and the USA.

View the full statement.

Open Skies
By John Liang
September 12, 2012 at 4:07 PM

During a speech earlier this month at the Stockholm International Peace Research Institute, acting Under Secretary of State for Arms Control and International Security Rose Gottemoeller touched on the success of the Open Skies Treaty, which allows certain countries the ability to conduct short-notice intelligence, surveillance and reconnaissance flights over foreign territories and collect data on military activities:

This year, we are celebrating the twentieth anniversary of the signing of the Treaty and the tenth anniversary of the Treaty's entry into force. The Treaty itself remains a solid regime. The observation flights -- more than 800 to date -- serve to enhance military transparency. They also provide an opportunity for our governments -- in most cases, military personnel -- to regularly and effectively work together.

The biggest single challenge we face for the continued success of the Treaty is the future availability of resources. The Treaty will only be as good as the States Parties make it, and we cannot make it as effective with old aircraft and sensors. For its part, the United States has recently completed an internal review of future implementation plans. The key development involves a U.S. commitment to transition from the film-based cameras we use today to digital sensors. We urge all parties to also redouble their efforts to modernize the Treaty to allow for the use of these sensors and ensure sufficient assets for future operations.

The United States has proposed a number of ways to improve Treaty implementation, while bearing in mind the budgetary constraints that are a reality in the U.S. and across Europe. One thing we believe has been underutilized is the possibility of sharing Open Skies assets among States Parties. This is the type of creative thinking we need to do to continue to advance European security in the current fiscal environment.

Inside the Air Force reported in June that Lockheed Martin has been looking to grow the number of roll-on capabilities its international customers carry as militaries around the world re-examine their purchasing power and size of their force structure:

Jim Grant, vice president of air mobility business development, told Inside the Air Force during a June 19 interview that countries looking to cut back on their defense spending might be able to save money by investing in roll-on capabilities for their C-130 cargo aircraft.

A roll-on capability is a self-contained capability that is transferable from C-130 to C-130. The capability makes it possible for a cargo aircraft to perform a mission other than refueling or lifting heavy cargo. The more roll-on capabilities a C-130 has, the more missions it is capable of, Grant said. . . .

International customers who own and fly C-130s and are looking to cut back on defense spending could do something similar if they are privy to the Open Skies Treaty, which allows certain countries the ability to conduct short-notice ISR flights over foreign territories and collect data on military activities, Grant said.

PTSS Delay
By John Liang
September 11, 2012 at 6:56 PM

The "advisory and assistance services" contracts for the Precision Tracking Space System have been extended by three months, the Missile Defense Agency announced in a Federal Business Opportunities notice issued today.

The notice states:

This provides notification of the Missile Defense Agency's intent to extend contracts HQ0006-10-C-0004 and HQ0006-10-C-0005, Advisory and Assistance services for the Precision Tracking Space System (PTSS) for a period of three (3) months. These contracts were previously extended under J&As No. 12-0016 and 12-0017. Due to unanticipated delays in the re-procurement process, the new Task Order under the Missile Defense Agency Engineering and Support Services (MiDAESS) program will not be awarded in time. The three-month contract extensions will bridge the gap and allow completion of the procurement process under the MiDAESS contract. Additionally, the contract extensions will incorporate an option period of three (3) months. Dependent upon the timing of the award of the new MiDAESS Task Order, the Government may or may not exercise the three-month option.

The extensions will be performed by the incumbent contractors, Vanguard Research, Inc., 1235 S Clark St STE 501, Arlington, VA 22202 and Winter, Donald C., Sole Proprietor, McLean, VA 22102, respectively. The period of performance extensions on these contracts are needed to avoid a break in service until the follow-on procurement efforts for these services are completed.

PTSS was one of five MDA programs cited by the Government Accountability Office in a July report that run the risk of incurring delays and inefficiencies because their schedules do not meet best practices. As InsideDefense.com reported:

"These results are significant because a reliable schedule is one key factor that indicates a program is likely to achieve its planned outcomes," the GAO report, addressed to MDA Director Lt. Gen. Patrick O'Reilly, stated. "Our analysis suggests that estimated time frames and costs of these programs are either not reliable or the program is missing information that could make it more efficient. The MDA schedule results are similar to those of other agencies that GAO has analyzed. We are recommending actions that would better ensure compliance with schedule best practices for the five programs reviewed as well as for the long-term MDA program."

In addition to the PTSS effort, GAO looked at the Standard Missile Block IIA, Aegis Ashore, Ground-based Midcourse Defense and the Extended Medium-Range Ballistic Missile Target programs, according to the July 19 report.

"Overall, none of the five programs had an integrated master schedule for the entire length of acquisition as called for by the first best practice, meaning the programs are at risk for unreliable completion estimates and delays," the report states.

FAB-T Fight
By Gabe Starosta
September 11, 2012 at 1:42 PM

Raytheon will have about 10 months and $70 million to compete with Boeing for the future of the Family of Advanced Beyond-Line-of-Sight Terminals program, the Defense Department said in a contract announcement yesterday afternoon. In an effort to drive down cost and risk on the long-delayed communications terminal program, the Air Force decided late last year to bring on a competitor to prime contractor Boeing. Raytheon was the only company to bid, as Inside the Air Force reported this summer, and the company received a formal contract for that work this week.

The complete contract announcement from DOD is below:

The Raytheon Co., Network Centric Systems, Marlborough, Mass. (FA8307-12-C-0013), is being awarded a $70,000,000 firm fixed price contract for development, testing and production of engineering development models of air (E-4, E-6), ground fixed and transportable Command Post Terminals with Presidential and National Voice Conferencing (PNVC) for the Family of Advanced Beyond Line-of-Sight Terminals. The location of the performance is Marlborough, Mass. Work is to be completed by July 2013. The contracting activity is AFLCMC/HSNK, Hanscom Air Force Base, Mass.

FAB-T is designed to be fully compatible with the Air Force's new Advanced Extremely High Frequency line of communications satellites, as well as with the legacy Milstar constellation. In addition to the command post terminals portion of FAB-T mentioned in the contract announcement, the program is also meant to include airborne terminals aboard the Air Force's bomber aircraft, but the service has not committed to a schedule for production of those devices.

Sequestration Letters
By Jordana Mishory
September 10, 2012 at 5:58 PM

The defense industry is struggling to determine the impact of sequestration because of a dearth of guidance from the Obama administration, according to recent letters industry leaders sent to lawmakers that deride the potential defense cuts but in many cases are short on requested details.

Senate Armed Services Committee Ranking Member Sen. John McCain (R-AZ) released the letters from industry today. He and six colleagues requested details in June from 15 companies on how sequestration cuts would impact their employees, partners and suppliers; when the firms expected to issue layoff notices; and whether they have experienced a slowdown in new contract awards due to funding uncertainty. Two letters, from ATK and CSC, are still pending.

In several of the letters, defense industry officials note that they expect a reduction in contracts that corresponds with the across-the-board percentage cut expected by the Pentagon.

L-3 for example said that it anticipates the loss of about $1.1 billion in annual sales, based on the approximate 12 percent across the board annual reduction to contracts and subcontracts supporting DOD if sequestration is enacted. But the company doesn't anticipate any full contract terminations as a result of sequestration, although "partial contract terminations are possible and perhaps likely," states the Aug. 21 letter from Chairman, President and CEO Michael Strianese.

The companies were asked what the impact would be of terminating or restructuring contracts as a result of sequestration. EADS North America Chairman and CEO Sean O'Keefe states in his July 18 letter that a 15 percent reduction in revenues may "eliminate the business case for continuing the contract" and lead to termination. In comparison, a 10 percent reduction could require "redefining the business case" so the company could continue to execute the contract. He anticipates that every one of its nearly 20 DOD or Homeland Security contracts could potentially require restructuring.

O'Keefe specifically noted that EADS has made "significant, self-funded investments" to compete for the Armed Aerial Scout program. If sequestration leads to this program's cancellation, the company would have "invested tens of millions of precious research and development dollars in AAS that could have been spent creating jobs in other market sectors," he writes.

Many of the letters noted sequestration would have a detrimental impact on national security, expressing concern about how the cuts would affect the supply chain. Several of the companies noted contract awards are being delayed because of uncertainty and lack of guidance regarding sequestration implementation. Raytheon's Chairman and CEO William Swanson stated that the "consequences of sequestration are already beginning to manifest themselves."

The defense leaders urge Congress to find a solution to prevent sequestration from taking effect

Honeywell Aerospace President and CEO Timothy Mahoney writes in his July 19 letter that the company would like to see a "more thoughtful decision-making process, which prioritizes the must-have systems for the Department of Defense with deeper cuts in less critical programs, informed by the mid- and long-range defense strategy and changing threat landscape."

Lawmakers are waiting on a congressionally mandated report from the White House detailing how it would implement the cuts in fiscal year 2013.

Guard Duty
By Dan Dupont
September 10, 2012 at 1:20 PM

GOP presidential nominee Mitt Romney will "headline" the National Guard Association of the United States' 134th "general conference and exhibition" this week in Reno, NV, NGAUS noted today.

"Romney will address the conference at 11:15 a.m. on Tuesday,"  the organization said in a statement.

The full agenda includes:

• Gen. Raymond T. Odierno, chief of staff of the Army - Monday at 1 p.m.;

• Gen. Carter F. Ham, commander of U.S. Africa Command - Monday at 1:45 p.m.;

• Gen. Mark A. Welsh III, chief of staff of the Air Force - Tuesday at 8:20 a.m.;

• Gen. Frank J. Grass, chief of the National Guard Bureau - Tuesday at 9:15 a.m.

Most speakers will address the conference theme, The National Guard: Hometown Force, Global Reach, or any of a number of military and homeland security issues affecting the Guard. These include overseas operations, domestic missions and the impact of the current fiscal challenges on the defense budget.