The Insider

Hearing Problems
By Dan Dupont
March 24, 2010 at 5:00 AM

Sen. Carl Levin (D-MI), the chairman of the Senate Armed Services Committee, ran smack-dab into the train that is the Republican effort to defeat health-care reform efforts today. It seems the Republicans have invoked an obscure Senate rule that basically shuts down Senate business in the afternoon -- which today meant Levin’s hearing on U.S. Pacific Command, U.S. Strategic Command and U.S. Forces Korea had to be scrapped.

And his office wants the press to know he’s not happy about it, judging by this statement sent to reporters:

It is astounding to me that Republicans have taken a step of such pointless, blind obstructionism. It cannot achieve their goal of obstructing health care reform. Instead, they are obstructing a hearing that has nothing to do with the health care debate and everything to do with the defense of our nation. And they have disrupted the schedules of senior commanders who in two cases have traveled thousands of miles from their troops, and who would be providing the Senate with information on pressing national security topics such as North Korea’s nuclear program, Chinese military capability and the threat of cyber-warfare. Our national security should not be held hostage to Republican pique over health care.

In an addendum to the press release, Levin’s office later pointed out that ranking member John McCain (R-AZ) wanted to hold the hearing, too.

Fluid Deadline?
By Sebastian Sprenger
March 24, 2010 at 5:00 AM

Senate Armed Services Committee Ranking Member John McCain (R-AZ) yesterday queried a senior defense official about the prospects of Pentagon leaders meeting their target of achieving a clean financial audit for the entire Defense Department by 2017.

"Do you think they'll make that?" he asked Elizabeth McGrath at her nomination hearing to become DOD's deputy chief chief management officer. McGrath currently serves as the assistant deputy CMO and DOD's performance improvement officer.

McGrath apparently was in no mood to give a yes-or-no answer: "I think that each year they'll make progress against that goal," she replied, noting renewed leadership attention to the issue would result in a "higher probability" of meeting the deadline.

McCain tried to draw her out again. "So you think we'll make the goal?" he asked.

"I think that they will make progress against the goal," McGrath responded. "I think time will tell as to whether or not they are able to hit the 2017 goal." Later, she described the target deadline as an "aggressive goal."

Clean audit opinions essentially are proof that an organization's financial books are balanced and that all money flows are traceable. DOD currently achieves clean audits for roughly half of its $3.8 trillion in combined assets and liabilities, according to Pentagon data.

Gates: No Modifications To KC-X RFP (Updated)
By Jason Sherman
March 24, 2010 at 5:00 AM

UPDATED 2:25 PM: Pentagon officials said that DOD has not yet changed the May 10 deadline for KC-X bids. Defense Secretary Robert Gates told the House Appropriations defense subcommittee this morning that DOD will not modify the request for proposals for the KC-X competition, which EADS executives and their former U.S. partner Northrop Grumman believe favor a small aircraft, tilting the competition to rival Boeing. Pentagon officials have previously said DOD would consider extending the deadline in order to encourage European defense giant EADS to participate in the potential $35 billion competition.

Taking Fire
By Sebastian Sprenger
March 23, 2010 at 5:00 AM

It was a tense hearing this morning for Solomon Watson, the administration's nominee to be general counsel for the Army. A trifecta of Republicans on the Senate Armed Services Committee tore into him repeatedly for his role as then-general counsel for The New York Times when the paper ran a story revealing a controversial, warrantless surveillance program run by the National Security Agency and authorized by former President George W. Bush.

Watson stressed the decision to run the story in late 2005 was made by the newspaper's publisher, not himself. Watson said his deputy worked on a legal evaluation of the article before publication, which found that running the story would not be illegal. Watson became aware of the story after its publication, he said.

Sen. Jeff Sessions (R-AL) argued Watson should have worked actively to prevent the story's publication because it contained classified national security information. At the time, White House officials vigorously denounced the article, saying it had brought to light a counterterrorism program that needed to remain secret.

Having Watson oversee all Army legal issues would be like "putting the fox in charge of guarding the hen house," Sessions opined. Watson, in turn, vowed to aggressively pursue leakers of classified information throughout the service if senators confirmed him.

Despite his concerns, Sessions does not have a hold on Watson's nomination "at this time," a spokesman for the senator told us this afternoon. We're still awaiting word from Republican critics Sens. John McCain (AZ) and Saxby Chambliss (GA) concerning a potential hold.

Trade-Off
By John Liang
March 23, 2010 at 5:00 AM

In a move that could have implications for the Air Force's KC-X tanker replacement program, a World Trade Organization panel today issued a final ruling stating that some repayable launch aid given by European Union member states to Airbus violated the WTO Agreement on Subsidies and Countervailing Measures (ASCM), according to World Trade Online.

As Inside the Air Force has reported, the service late last month released its much-anticipated KC-X request for proposals:

The RFP does not take into account an interim World Trade Organization ruling against Airbus for receiving government subsidies. Boeing backers wanted the ruling addressed in the final RFP.

“While we appreciated the open dialogue with the Air Force throughout this process, we are disappointed that the RFP does not address some of our key concerns, including ((EADS)) Airbus’ unfair competitive advantage derived from subsidies from its sponsor European governments -- subsidies that the World Trade Organization has found to be illegal and harmful to U.S. workers and industry -- and how fuel and military-construction costs over the life of the tankers will be factored into consideration of the competing bids,” Jean Chamberlin, vice president and general manager of Boeing’s tanker program, said in a statement. “We will review the RFP in its entirety and in detail before offering further assessment.”

Speaking to reporters following a Feb. 24 House Appropriations defense subcommittee hearing, Boeing supporter Rep. Norm Dicks (D-WA) said he was “unhappy” the finalized RFP did not include language reflecting the WTO ruling. But “besides that they’re trying their best, and we’re trying to give them the benefit of the doubt, we have to get this done, this is a national priority to get these tankers,” he said.

Inside U.S. Trade reports today that according to sources on both sides of the dispute:

They said the final decision, delivered to the parties as a confidential document, differs little from a September confidential interim decision.

The final ruling says that some repayable launch aid to Airbus are actionable subsidies that caused serious prejudice to the sales or exports of U.S.-based Boeing. If the panel ruling were upheld on an expected appeal, the EU would have to remove their effects or remove the subsidy, sources familiar with the case said.

The final panel also found that some launch aid for the Airbus A380 were export-contingent prohibited subsidies that must be withdrawn immediately.

Airbus, however, sees a silver lining in the fact that once again the panel has failed to find that launch aid as a program on its face violates the ASCM. This means that each instance of launch aid given by EU member states for the development of a specific Airbus large civil aircraft has to be challenged individually as a subsidy.

The ruling therefore does not cover any launch aid that the United Kingdom, Germany, France and Spain may provide for the latest Airbus plane, the A350, in the near future, Airbus argues.

The Airbus statement highlighted that fact by saying that “US attempts to include the A350 were specifically rejected.” Therefore, Airbus said, possible future funding for that plane “is not affected in any way” by today's ruling.

A source close to the U.S. case called the Airbus argument absurd. The source said that while launch aid “in theory” could comply with the ASCM, the point of the finding is that when the loans were not on commercial terms, they violated the WTO rules.

The WTO's decision was met with applause by members of both parties in Congress.

Sen. Patty Murray (D-WA) said in a statement that "today's final ruling puts any doubts to rest -- launch aid is an illegal subsidy that has cost American jobs, hurt our ability to compete, and damaged our overall economy."

Rep. Todd Tiahrt (R-KS) said: "We finally have a concrete ruling to justify what we have been saying for years. The illegal subsidies given by European governments have caused great damage to the U.S. aviation industry and cannot continue. If Airbus decides to bid for the KC-X tanker contract, this gives the Obama administration the opportunity to show its commitment to American workers by accounting for the illegal dealings of European governments."

Afterburning
By Marcus Weisgerber
March 22, 2010 at 5:00 AM

The GE Rolls-Royce F136 Fighter Engine Team announced this morning that it hit full afterburner on its third “production-configuration” F-35 Joint Strike Fighter engine.

“All major objectives have been reached during this phase of testing, which included an engine nozzle common to both F-35 engine programs,” an engine team statement reads.

“Six F136 engines are scheduled for testing this year, to measure engine performance and endurance as the competitive engine for the F-35 program continues to demonstrate steady progress and significant milestones,” the statement continues. “F136 performance is meeting all expectations in terms of thrust, temperature margins, and fuel consumption -- confirming the vital role that it will play competing in the Joint Strike Fighter program over several decades.”

The latest test results come as the Pentagon and Congress remain at odds over whether the F136 program should continue. Defense Department officials claim that the primary F135 Pratt & Whitney-built engine will suffice over the life of the JSF program, and that an alternate is a waste of money. Congress sees a second engine vital should a problem arise with the F135 down the road.

The F-35 alternate engine program is sure to be a hot topic when Pentagon acquisition executive Ashton Carter and Director of Cost Assessment and Program Evaluation Christine Fox appear before a joint hearing of the House Armed Services air and land forces and seapower and expeditionary forces subcommittees on Wednesday.

EADS Relooks Tanker
By Christopher J. Castelli
March 19, 2010 at 5:00 AM

EADS released a statement this morning saying it will assess the "new situation" surrounding the request for proposals for the Air Force tanker program.

Yesterday, the Defense Department "indicated it would welcome a proposal from EADS North America as prime contractor for the KC-X tanker competition," the company said. "This is a significant development. EADS is assessing this new situation to determine if the company can feasibly submit a responsive proposal” to RFP.

While this development is "a positive sign that the DOD seeks competition, it does not address EADS’ underlying concerns that the RFP clearly favors a smaller, less capable aircraft, and that the additional combat capability offered by our system may not be fully valued," EADS said.

"An important prerequisite for our consideration of entry into this competition will be a significant extension to the period within which to prepare and submit a proposal," the statement continues. "EADS welcomes the DOD’s recent statement which indicated a willingness to extend the timeframe. Though this is essential, it is only one factor in making a decision for EADS to compete. In the end, the company will only submit a proposal if there is a fair chance to win, after evaluating all relevant factors."

Biofueled
By Pat Host
March 19, 2010 at 5:00 AM

The Defense Energy Support Center and the commercial airline industry trade group Air Transport Association of America have formed a team called the Strategic Alliance for Alternative Aviation Fuels to buy billions of dollars’ worth of biofuels for use in commercial and military airliners.

The alliance, announced at a press conference today in Washington, is “designed to harness the combined market share of the two sectors to advance the development and deployment of alternative aviation fuels, leverage collective market and purchasing powers and encourage fuel suppliers to bring commercial alternative fuel and renewable energy into the marketplace,” according to a statement released today at a press conference in Washington.

According to the Air Transport Association, the commercial airline industry and the U.S. armed forces are the two largest consumers of jet fuel in the world. The military is expected to consume $14.2 billion worth of jet fuel during fiscal year 2010 -- 125.5 million barrels’ worth.

The alliance will be led by Navy Rear Adm. Kurt Kunkel, commander of the Defense Energy Support Center, located at Ft. Belvoir, VA.

Kunkel said the biggest challenge to making the alliance work will involve making sure the biofuels are “drop-in” -- meaning the existing infrastructure will be able to accommodate their use without significant modifications.

“From a DOD perspective, we like to make sure the critical infrastructure we have is utilized and we want to make sure that is not an impediment to execution,” Kunkel said.

According to Defense Logistics Agency briefing slides presented at the press conference, the four biofuels and quantities requested are HRJ-8 (400,000 gallons), which are Camelina- and Tallow-derived; HRJ-5 (190,000), also Camelina-derived; HRJ-5-Algae (1,500), which is derived from algae; and F-76 (20,055), also algae-derived.

'Tidal Wave'
By Debbie Siegelbaum
March 18, 2010 at 5:00 AM

As equipment returns from Iraq, the Army is expecting a significant increase in equipment reset requirements -- particularly for trucks, according to a service official.

James Dwyer of Army Materiel Command said in a March 17 presentation at a conference sponsored by the Institute for Defense and Government Advancement that recent Iraqi elections and increased activity at Iraq ports indicate assets will soon be arriving back in the United States for reset.

“We thought we’d see a whole lot of trucks by now -- a lot of those have come down out of Iraq and gone right over to the surge for ((Operating Enduring Freedom)) -- so we intend to see kind of a tidal wave coming now,” said Dwyer. “I think we’re going to see some assets show up; first it’s going to happen probably in the summertime, but most of that will carry over to next year.”

According to Dwyer, Army depots are operating at about 65 percent capacity. Given this rate, “we’ve got plenty of room to handle the surge,” he said.

EADS: Mission 'Impossible'
By Jason Sherman
March 18, 2010 at 5:00 AM

The Pentagon's current deadline for Air Force tanker bids does not permit enough time for EADS, the European defense contractor, to find a new U.S. partner and prepare a new proposal for an aerial refueling aircraft, Louis Gallois, EADS' chief executive officer, told reporters in New York this morning.

“It is impossible,” Gallois said. “The present time frame -- 60 days -- impossible.”

Asked if any other major U.S. defense contractors have approached EADS to discuss partnering for the tanker competition, which EADS won in 2008 when teamed with Northrop Grumman, he said, “For the time being, no.” The Pentagon overturned the award to the Northrop Grumman-EADS team after congressional auditors determined DOD's evaluation criteria for selecting the winner was flawed.

Gallois said he supported Northrop Grumman's decision last month to not compete again for the potential $35 billion deal to build 179 new tanker aircraft, citing a belief that the new request for proposals would favor a smaller aircraft built by Boeing.

Gallois said the entire process was “a huge frustration,” and that it has resulted in two "victims."

U.S. taxpayers, he said, are the “first victim” of a competition with only one bidder. “It is clear that when there is a competition there is pressure on price. When there is no competition, I think it is different.”

The second victim is the Air Force, he said. "The U.S. Air Force will not have the most modern and capable airplane. And it will be the first time that the British, the Australians will have a better airplane than the Americans.”

Business Case
By Sebastian Sprenger
March 17, 2010 at 5:00 AM

Defense officials are figuring out how the military's fielding goals in Afghanistan for the Mine Resistant Ambush Protected class of vehicles could best be met. Speaking before the Senate Armed Services Committee this morning, Army Gen. David Petraeus said officials are building a “business case” to determine which option would be more economical: Building new vehicles and shipping them to Afghanistan or refurbishing vehicles resident in Iraq and transporting them there.

Petraeus, who oversees the Iraq and Afghanistan wars as the chief of U.S. Central Command, said the goal is to eventually have 14,500 MRAPs in Afghanistan. Of those, 6,500 would be of the heavy design originally fielded in Iraq, while “8,000-plus” would be of a lighter, all-terrain variant, he said.

Only “small numbers” of the vehicles, designed to protect troops from improvised explosive devices, would be given to allies, Petraeus said.

The general's comments come as Pentagon officials continue to rush MRAPs to Afghanistan, as roadside bomb deaths there are on the rise. Defense Department acquisition chief Ashton Carter has said he operates under the maxim, “First acquire, then require,” when it comes to the bomb-proof vehicles.

On Board
By John Liang
March 17, 2010 at 5:00 AM

The Senate Armed Services Committee yesterday approved the nominations of three people to serve on the Defense Nuclear Facilities Safety board.

The committee approved the nomination of new member Jessie Hill Roberson to take the place of outgoing member A.J. Eggenberger. The panel also OK'd the renominations of Peter Winokur and Joseph Bader to continue as board members, with Winokur taking Eggenberger's place as chairman, according to a board spokesman.

Board member John Mansfield will continue as vice chairman, the spokesman told InsideDefense.com.

According to the board's Web site, Congress created the panel "in 1988 as an independent oversight organization within the Executive Branch charged with providing advice and recommendations to the Secretary of Energy 'to ensure adequate protection of public health and safety'" at the Energy Department's defense nuclear facilities. Moreover:

Broadly speaking, the Board is responsible for independent oversight of all activities affecting nuclear safety within DOE's nuclear weapons complex. Prior to the end of the nuclear arms race, the nuclear weapons complex concentrated on the design, manufacture, test, and maintenance of the nation's nuclear arsenal. The complex is now engaged in cleanup of contaminated sites and facilities, disassembly of nuclear weapons to achieve arms control objectives, maintenance of the smaller stockpile, and storage and disposition of excess fissionable materials.

Going Vertical
By Dan Taylor
March 17, 2010 at 5:00 AM

The first full vertical landing of the Marine Corps' F-35 Joint Strike Fighter short-take-off, vertical-landing (STOVL) test aircraft, BF-1, is expected to be conducted tomorrow if weather cooperates, according to a source familiar with the program.

A Wednesday flight was canceled due to high crosswinds, but the aircraft successfully completed a hover and short take-off at 90 knots today, according to the source, who added that a full vertical landing was expected at around noon tomorrow.

The highly anticipated event has been delayed for months as glitches turned up during testing and weather did not cooperate with the test schedule.

The STOVL variant is slated to replace the Marines' fleet of AV-8B Harriers on the decks of the service's amphibious ships, and potentially on aircraft carriers as well.

MRAP Move
By Marjorie Censer
March 17, 2010 at 5:00 AM

Marine Corps Brig. Gen. Michael Brogan, commander of Marine Corps Systems Command and joint program executive officer for Mine Resistant Ambush Protected vehicles, said today he will soon be reassigned but does not yet know where or when.

Speaking to reporters after appearing before the House Armed Services air and land forces and seapower and expeditionary forces subcommittees, Brogan said he will likely be reassigned this summer.

“I am not retiring,” he stressed today.

However, he said his assignment still depends on the as yet unapproved and unreleased results of a promotion board.

Portfolio Reviews
By Marjorie Censer
March 16, 2010 at 5:00 AM

The Army's new capability portfolio review effort is intended to help the service take a holistic look at its programs and find potential efficiencies, Army Vice Chief of Staff Gen. Peter Chiarelli told the House Armed Services readiness subcommittee today.

Answering a question about the increasing price of systems, Chiarelli said an assessment of any individual item will typically show the system is needed. But examining "a portfolio of common systems" will probably reveal areas in which the Army has more of a specific capability than it needs or opportunities for improved efficiencies, he said.

He used the example of precision munitions, noting that a portfolio review might find that some munitions are precision that do not need to be -- significantly increasing the cost.

"It's time we think in the Army that we step back," Chiarelli said of the portfolio review approach.

InsideDefense.com in early March reported on a Feb. 22 rule set signed by Joseph Westphal, under secretary of the Army, and Gen. Peter Chiarelli, Army vice chief of staff, that sets the guidelines for conducting the one-year, pilot capability portfolio review effort directed by Army Secretary John McHugh. The purpose is to conduct an “Army-wide, all-components revalidation of requirements.”

More here.