The Insider

By Tony Bertuca
October 24, 2018 at 1:00 PM

Robert Karem, currently the assistant secretary of defense for international security affairs, will be leaving his Senate-confirmed Pentagon post to serve as a staffer for Senate Majority Leader Mitch McConnell (R-KY), according to an announcement from McConnell's office.

Karem, who will be advising McConnell on national security matters, was confirmed to his current job by the Senate in May 2017. He previously served as acting under secretary of defense for policy from June 2017 to November 2017, and has prior experience working for McConnell as a legislative assistant.

By Jason Sherman
October 24, 2018 at 12:30 PM

Boeing today announced additional cost growth on the KC-46A tanker program when the company took a $179 million charge for the project, compounding previous losses on the tanker contract.

On Oct. 24, the company reported its third quarter results, including a $112 million charge to its commercial business for the KC-46A "due to higher-than-expected effort to meet customer requirements to support delivery of the initial aircraft, as well as due to incremental delays in certification and testing."

In addition, the $64 million charge to Boeing's defense business was ascribed to "cost growth on the KC-46 Tanker program." The company's Global Services business unit also took a $3 million tanker charge.

By Marjorie Censer
October 24, 2018 at 9:08 AM

Science Applications International Corp. said yesterday the waiting period under antitrust legislation has expired, allowing its planned acquisition of Engility to move forward.

"The expiration of the Act's waiting period satisfies one of the conditions to closing of the proposed merger, which remains subject to other closing conditions in the Agreement and Plan of Merger," the contractor said.

By Marjorie Censer
October 23, 2018 at 2:46 PM

Blue Delta Capital Partners, an investment firm focused on the government services market, is growing its team and seeking additional opportunities as the market reshapes.

The firm was formed in 2009 by Mark Frantz, who previously worked at In-Q-Tel, Carlyle Venture Partners and in the White House, and Kevin Robbins, who had worked at SRA International. Both said they saw an opportunity for a firm willing to make investments and provide advice to smaller government services firms. They also envisioned a firm that wouldn't seek control of the company.

At the time, with the recession underway, Robbins said he saw small companies disproportionately damaged and unable to access capital. They quietly got the group up and running, raising money for individual investments from former chief executives and other individuals.

By 2014, the firm had established a formal fund and had several key investments under its belt. For instance, Blue Delta in 2010 invested in classified space and satellite company KTSi, which was acquired by Scitor in 2013. Scitor was later purchased by Science Applications International Corp.

Additionally, Blue Delta began in 2011 to back 42Six, a big data analytics company, which was acquired in 2012 by Computer Sciences Corp.

This month, Blue Delta announced it has added two general partners: Dave Keffer, the former chief financial officer of CSRA, which was acquired by General Dynamics earlier this year, and Phil Nolan, the former CEO of Stanley and Camber who had previously been an advisory board member and venture partner at Blue Delta.

Frantz told Inside Defense the firm is now taking on larger investments, but still seeking excellent management teams focused on technology.

"Long term, I'd love for us to build a company that you could actually take public," he said.

Even as the defense budget likely flattens, "we like our opportunity to work with the best teams and take market share in the next three years," Frantz added.

By John Liang
October 23, 2018 at 2:12 PM

This Tuesday INSIDER Daily Digest has news on the National Space Council, missile defense, Lockheed Martin's quarterly earnings and more.

The National Space Council is meeting today to discuss Defense Department space reorganization:

Space council to make six national security space recommendations to Trump at today's meeting

The National Space Council plans to make six recommendations regarding Defense Department space reorganization during today's meeting, a source told Inside Defense today.

(Stay tuned for possible updates.)

A problematic component that contributed to a failed missile defense test won't affect other missile systems:

SM-3 Block IIA failure carries no 'fleet-wide' implications, MDA sticking with vendor team

The January flight test failure of a Standard Missile-3 Block IIA guided missile interceptor does not have “fleet-wide” implications affecting other SM-3 variants or other missile systems in the U.S. inventory, according to the office of the Pentagon's top weapons developer, which raised the specter of such ramifications this spring.

Senior Lockheed Martin executives spoke on their company's quarterly earnings this morning:

Lockheed Martin says winning prices in three major programs would have generated $5 billion loss

Had Lockheed Martin matched the winning prices in three major programs it lost in recent months, it would have incurred losses of more than $5 billion, according to the contractor's chief executive.

(Want defense business news delivered straight to your inbox?

Inside Defense's free weekly feature, the Defense Business Briefing, offers the latest in defense industry news.

Read and sign up today →)

Some cyber defense news from our colleagues at Inside Cybersecurity:

Senior DOD official questions cybersecurity 'pillar' for acquisitions as laid out in MITRE report

A leading Pentagon official on information security questioned whether cybersecurity should be established as a core purchasing principle for the military, as described in a recent MITRE Corp. report.

Army Maj. Gen. Pete Gallagher, director of the service's network cross-functional team, spoke with Inside Defense this week:

Army network CFT narrowing down S&T investments for FY-21 POM

Following a science and technology review in September, the Army's network cross-functional team over the next few months will build recommendations for senior leaders regarding the service's five-year budget plan starting with fiscal year 2021, according to a service official.

By Maximilian Kwiatkowski
October 23, 2018 at 12:17 PM

The Army will host an industry event next month to discuss the service's Next Generation Squad Weapons program.

The Army will provide an overview of the program to interested vendors Nov. 14 at Picatinny Arsenal, NJ, followed by one-on-one sessions Nov. 15 and 16, according to a notice posted this month on Federal Business Opportunities.

The Army this month issued a draft prototype solicitation to develop the NGSW-Rifle and the NGSW-Automatic Rifle, which would replace the M4 Carbine and the M249 Squad Automatic Weapon, respectively. The service seeks to develop these concurrently in order to use a common 6.8 mm cartridge for both.

By Marjorie Censer
October 23, 2018 at 9:30 AM

Hitachi Vantara today closed on its acquisition of REAN Cloud, whose federal work will add six contracts to Hitachi Vantara Federal, according to the company's chief executive.

Dave Turner, who heads HVF, told Inside Defense his company is seeking to become an end-to-end data services provider for its federal customers. The company has long specialized in data storage, but will add the public cloud piece with REAN.

REAN's six contracts "are across both the civilian and defense communities," he said. That "marries nicely with our footprint, which is civilian, defense and intelligence communities."

REAN Cloud attracted attention when, earlier this year, the Defense Department awarded it a follow-on production agreement for cloud services worth nearly $1 billion. The deal was facilitated by the Defense Innovation Unit and followed prototype work REAN Cloud did for U.S. Transportation Command.

However, Oracle America filed a bid protest, which was upheld by the Government Accountability Office.

Turner said the original award indicated "the government saw something special in their capabilities and their technology platform to be able to make that step," he said. "That is still there, and that is really the reason that we were attracted to them."

By Marjorie Censer
October 23, 2018 at 9:14 AM

Science Applications International Corp. said today it is opening a virtual lab environment -- dubbed an "Innovation Factory" -- to help it "move at a pace similar to startups."

"SAIC Innovation Factory is managed by SAIC and uses technologies developed and refined by SAIC as well as Red Hat, the leading provider of open-source solutions," the company said. "The new Innovation Factory will enable customers to make rapid progress toward IT and Application transformation projects by providing DevSecOps teams who are expert at using Agile/DevOps practices combined with cloud-native architectures built on Red Hat OpenShift, the industry's most comprehensive enterprise Kubernetes platform."

The initial lab is being launched out of SAIC's Reston, VA, headquarters, according to SAIC.

By Justin Doubleday
October 22, 2018 at 4:59 PM

The White House announced today it has officially sent Congress the new national cyber strategy, including a classified annex addressing the increased flexibility the U.S. military now has to launch cyber attacks.

In a missive to relevant congressional committees, including the armed services panels, President Trump attached the national cyber strategy and a classified annex, according to a White House statement. The Fiscal Year 2019 National Defense Authorization Act requires the president to send Congress a report outlining U.S. policy on cyberspace, cybersecurity, cyber warfare and cyber deterrence. Lawmakers had long pressed successive administrations for an updated cyber deterrence strategy.

In September, national security adviser John Bolton announced the first updated national cybersecurity strategy in 15 years. He said Trump signed the new strategy based on "four pillars" of ensuring the security of federal networks and critical infrastructure, improving incident reporting, "peace through strength" commitments for deterring and responding to cyber aggression, and preserving a "vibrant digital economy."

Bolton also said the strategy's classified annex addresses Trump's move to repeal the Obama administration's Presidential Policy Directive-20 in order to ease restrictions on the Defense Department's use of offensive cyber capabilities.

Likewise, the Pentagon in September released a summary of DOD's new cyber strategy, which carves out a more active role for the military in protecting the United States from cyber attacks and engaging in "day-to-day" competition in cyberspace with Russia and China.

By John Liang
October 22, 2018 at 4:35 PM

The European Union today called on the United States and Russia to tread carefully over the idea of abandoning the Intermediate-range Nuclear Forces Treaty.

In a statement attributed to a "spokesperson," the EU said the INF Treaty "contributed to the end of the cold-war and constitutes a pillar of European security architecture since it entered into force 30 years ago."

The EU notes that the pact has resulted in nearly 3,000 missiles with nuclear and conventional warheads being removed and verifiably destroyed. "The Treaty is also an important contribution to disarmament obligations under Article VI of the Nuclear Non-Proliferation Treaty," the statement adds.

The EU calls on the United States and Russia "to remain engaged in constructive dialogue to preserve the INF Treaty and ensure its full and verifiable implementation, which is crucial for Europe's and global security."

On Oct. 22, President Trump, talking about the INF Treaty, said Russia had "violated the agreement."

"They've been violating it for many years. And I don't know why President Obama didn't negotiate or pull out," he said. "And we're not going to let them violate a nuclear agreement and go out and do weapons, and we're not allowed to.

"We're the ones that have stayed in the agreement, and we've honored the agreement. But Russia has not, unfortunately, honored the agreement," he continued. "So we're going to terminate the agreement and we're going to pull out."

In its statement today, the EU said it expects Russian to "address serious concerns" regarding its compliance with the INF Treaty, it also expects the United States to "consider the consequences of its possible withdrawal."

"The world doesn't need a new arms race that would benefit no one and on the contrary would bring even more instability," the statement reads.

By Ashley Tressel
October 22, 2018 at 4:13 PM

The Army's cross-functional team focused on modernizing the tactical network is reviewing white papers from two technology exchanges held this year that asked industry to respond to identified gaps in the service's current network.

The first event, focused on potential operations in a contested environment, was held Feb. 6 and 7 at Aberdeen Proving Ground, MD. The second, focused on distributed computing solutions -- including the potential to deliver cloud services to tactical formations -- was held Aug. 1 and 2 in Raleigh, NC.

The Army is reviewing 78 white papers from the second event and plans to respond to industry by the end of next month, according to a notice updated Oct. 17 on Federal Business Opportunities.

Selected vendors will participate in a no-cost demo to be held in December or January.

"At these demonstrations, vendors will show their capability focused on technical maturity, operational relevance and technical ability to integrate into the Army's network design," the notice states.

By John Liang
October 22, 2018 at 2:08 PM

This Monday INSIDER Daily Digest has news on the Army's Bradley replacement vehicle effort as well as cyber defense.

Inside Defense reviewed a recent memo, marked not for public distribution and signed by Next Generation Combat Vehicle cross-functional team Director Brig. Gen. Richard Coffman, that conveyed updated requirements for the Bradley replacement vehicle effort:

Army sets four OMFV capability priorities: growth, gun, FLIR, protection

Army leaders, refining the requirement for the Optionally Manned Fighting Vehicle program, have prioritized four capabilities for a Bradley replacement: growth potential, the main gun, an advanced forward looking infrared sensor and active protection systems.

Some recent related Bradley replacement vehicle news, in case you missed it:

Contractors debut possible Bradley replacement vehicles before Army releases requirements

Industry offerings for the planned Bradley Fighting Vehicle replacement run the gamut as the Army prepares to issue a draft request for proposals and complete a final requirements document that avoids being overly prescriptive.

Appropriators' support for Bradley upgrade cancellation bodes well for NGCV

An $80 million cut to the Army's Bradley upgrade program in the fiscal year 2019 spending bill signals congressional support for the service's decision to forego improvements to a legacy system in favor of investing in a new replacement.

Our colleagues at Inside Cybersecurity look at the Pentagon's efforts to deter and defend against cyberattacks and their impact on private industry:

DOD has been tasked with securing systems, but industry may determine effort's success

President Trump has tasked the Defense Department with taking a more active and expansive role in protecting the nation's critical infrastructure from cyberattacks by foreign adversaries, with efforts to secure the supply chain having emerged as the front line in this battle.

More cyber defense news, in case you missed it:

DOD officials say NIST cybersecurity guide will prompt government-wide procurement reforms

GAITHERSBURG, MD -- Defense Department officials responsible for implementing data-protection acquisition rules say cybersecurity guidelines from the National Institute of Standards and Technology -- currently being considered for revision -- will lead to a government-wide approach to securing sensitive information through widespread procurement reforms.

NIST official: Revisions coming for data protection guide, will address 'advanced' cyber threats

GAITHERSBURG, MD -- The National Institute of Standards and Technology is planning to issue a draft second revision to its guidelines for controlled unclassified information handled by the Defense Department and government contractors, in order to better address "advanced persistent threats," according to a key NIST official.

By Justin Doubleday
October 22, 2018 at 1:32 PM

The Pentagon has not been directed to send additional troops to the southern border, despite President Trump tweeting that a "caravan" of refugees from Central America poses a national emergency.

"We have not received any guidance on any additional support required, but we certainly remain postured," Pentagon spokesman Col. Rob Manning told reporters today. He confirmed that 2,100 National Guard personnel remain stationed at the southern border, providing support to the Department of Homeland Security.

"Sadly, it looks like Mexico's Police and Military are unable to stop the Caravan heading to the Southern Border of the United States," Trump tweeted earlier this morning. "Criminals and unknown Middle Easterners are mixed in. I have alerted Border Patrol and Military that this is a National Emergy [sic]. Must change laws!"

The Defense Department has been called upon to play an active role in border security by the Trump administration this year. In April, the president ordered National Guard forces to the southern border, and the Pentagon established a border security cell to coordinate the expanded military assistance.

Congress has allowed DOD to shift $120 million in its budget to pay for the National Guard personnel stationed at the border, while the Pentagon is also considering a plan to spend $450 million to enhance fencing and construct more barriers along 31 miles of an Arizona bombing range to help shore up border security.

Meanwhile, Democrats have criticized the Trump administration's use of the military on the border.

By Tony Bertuca
October 22, 2018 at 5:15 AM

The top defense companies will hold a series of earnings calls this week, while senior Pentagon officials are scheduled to appear at events around the Washington area.

Tuesday

The National Defense Industrial Association holds a breakfast with the Navy's acquisition chief.

The Association of the United States Army holds an event on Army readiness.

The National Defense Industrial Association hosts a science and engineering technology forum to discuss Army innovation.

Lockheed Martin and United Technologies executives are slated to discuss quarterly earnings.

Wednesday

Boeing, General Dynamics and Northrop Grumman executives are set to discuss quarterly earnings.

Thursday

Leidos and Raytheon executives are expected to discuss quarterly earnings.

The Atlantic Council hosts a discussion on security in Northern Europe.

Friday

Washington Technology hosts an event on the 2019 outlook, with defense industry organizations slated to attend.

By John Liang
October 22, 2018 at 5:10 AM

Some must-reads from this week's edition of Inside the Army:

1. Industry offerings for the planned Bradley Fighting Vehicle replacement run the gamut as the Army prepares to issue a draft request for proposals and complete a final requirements document that avoids being overly prescriptive.

Full story: Contractors debut possible Bradley replacement vehicles

2. Army leaders, refining the requirement for the Optionally Manned Fighting Vehicle program, have prioritized four capabilities for a Bradley replacement: growth potential, the main gun, an advanced forward looking infrared sensor and active protection systems.

Full story: Army sets four OMFV capability priorities: growth, gun, FLIR, protection

3. The Army is speeding up the Future Attack Reconnaissance Aircraft program thanks to lessons learned from the success of its Joint Multi-Role Technology Demonstrator effort, according to the director of the Future Vertical Lift cross-functional team.

Full story: Army now pursuing two future aircraft replacements concurrently

4. The Army's vice chief of staff and under secretary have spent the past year crafting "business rules" and "metrics" for deciding when to stop upgrading legacy systems and start acquiring new capabilities as the service attempts to modernize its fleets.

Full story: McConville: Army setting up 'decision points' on when to leave behind old systems