The Insider

By John Liang
January 28, 2009 at 5:00 AM

Despite a slumping economy, Boeing's Integrated Defense Systems business unit expects 2009 revenues to grow to between $33 billion and $34 billion, compared with $32 billion in 2008.

That said, Boeing is "expecting pressure on defense budgets in light of the economic recovery and financial rescue packages put forth by various governments,” CEO Jim McNerney told Wall Street analysts and journalists during a conference call this morning.

While it's hard for us to know the final impact of all of this, we can and must prepare for the continued market uncertainty while ensuring our ability to fund our growth initiatives. In that regard, we have stepped up our drive to get more competitive and productive. We are being evermore aggressive in managing both costs and investments. Specific actions we are taking include streamlining organizational structures, reducing discretionary and capital spending, eliminating unnecessary work and reviewing staffing levels, all to drive higher levels of productivity.

Boeing IDS reported fourth-quarter 2008 revenues of $8 billion and operating margins of $11 percent, "reflecting strong program performance across IDS's balanced portfolio of programs," a company statement reads. Boeing's overall fourth-quarter 2008 revenues declined by 27 percent to $12.7 billion due to a machinists' strike that ended in November.

By John Liang
January 28, 2009 at 5:00 AM

Retired Adm. Dennis Blair's nomination to be the next director of national intelligence has leaped its first hurdle now that the Senate Intelligence Committee has unanimously approved President Obama's pick.

“Adm. Blair is exceptionally well-qualified to lead America’s intelligence community, and I believe he will be an outstanding Director of National Intelligence,” committee Chairwoman Dianne Feinstein (D-CA) said in a statement today. “He has pledged to work closely with the committee, and with Congress, to build a relationship of trust and candor. I am convinced that he will ensure that we are true to our ideals as we gather the intelligence necessary to provide for our national security.”

On Jan. 22, the committee held a hearing on Blair’s nomination. At that hearing, Blair proposed legislation to partially eliminate legal barriers between military and intelligence matters. As reported:

Blair told panel members he would support the creation of so-called “Title 60” legislation, which would provide the legal basis for oversight and execution of programs that overlap between military and intelligence matters. . . .

Title 10 of the U.S. Code provides the legal guidance for all U.S. military activities. Title 50 is the governing statute that sets legal parameters for the intelligence community. But the legal mandates Title 10 and Title 50 construct have been outpaced by the unique national security needs posed by the ongoing global war on terrorism, Blair said.

The creation of Title 60 legislation would help meet those unique challenges and eliminate many of the bureaucratic hurdles the current titles pose, he added.

“I really think we need a Title ((60)). I think we need to get rid of this artificial division in this global campaign against terrorists when the tools that are available in the Department of Defense and the intelligence agency are both applicable and both need to be put together to get the job done,” Blair said.

Blair’s confirmation before the full Senate is expected soon, according to the statement.

By Jason Sherman
January 28, 2009 at 5:00 AM

President Obama just wrapped up a nearly two hour meeting at the Pentagon with the Joint Chiefs. Here is an initial read on the events from a press pool report filed by Jon Ward of the Washington Times:

Potus promises "difficult decisions" ahead on Iraq and Afghanistan and says he will improve support for the military.

"We're going to have some difficult decisions that we're going to have to make.," he said.

Most of his remarks were about support for the military and easing the strain...

"We have for a long time put enormous pressure on our military to carry out a whole set of missions sometimes not with the kind of strategic support and use of all aspects of American power to make sure they're not carrying the full load. And that's something I talked to the joint chiefs about and something I intend to change," said Potus.

At 5:01, one hour and 52 minutes after his arrival, POTUS emerged from the Tank and walked down the Joint Chief's corridor, where the offices for the mil commanders are housed on the Pentagon's north side. Roughly 60 military personnel who work at the Pentagon, wearing uniforms from all branches, had lined up on both sides of the hall to greet him.

Potus and Vpotus shook hands with the mil folks for about four minutes, walking toward the pool, which was at the far end of the hall, giving photogs a nice picture to make.

Potus could be heard asking people where they were from (Indiana?), and talking with one woman about her pregnancy.

Potus also remained fascinated with the DC region's inability to handle the winter weather.

"Aren't you a little surprised that they canceled school for my kids?" he asked someone.

Other banter.

"Very nice to see you sir. Thank you for your service," he said to another.

"I know south carolina, I did a lot of campaigning there," he said, eliciting some laughter from the otherwise quiet hall, where the mil personnel stood loosely but at attention.

By the time Potus had made his way down the left side, Gates and the chiefs were in the hall. Gates shook a few hands but kind of just followed Potus.

Potus then walked to sticks and spoke for a few minutes, with VPotus and chiefs behind him. Transcript should be coming soon.

He apologized for being late -- "we kind of lost track of time" -- and thanked the military for their service.

He said in addition to iraq and afghanistan, he and the chiefs talked about "broader global risks that may arise" and how military and civilian assets should cooperate in response.

And fyi, Potus' national security advisor, Gen. James Jones, was in the meeting.

Potus then talked about the "health of the force" and giving more support for vets and their families and promised his "full support."

He then turned and walked down the right side to greet the soldiers he had not yet shaken hands with.

Motorcade rolled at 5:27 and arrived at the White House at 5:36. Potus went into the Oval.

By Jason Sherman
January 28, 2009 at 5:00 AM

.... and here's Obama's statement from the Pentagon after meeting with the Defense Department's top brass:

Sorry we're running a little bit late. I want to, first of all, thank all the men and women in uniform who are represented here. They are the best that this country has to offer. And the first thing I said to the Joint Chiefs in this meeting was how grateful we are for their service. The sacrifices that they and their families make are what are responsible for our freedoms, that sometimes we take for granted.

And as Commander-in-Chief on of my principal goals during my presidency is going to be to make sure that they have the resources and the support that they need to carry out the critical missions that keep our nation safe each and every day.

I had a wonderful discussion with the Joint Chiefs -- we kind of lost track of time -- about a range of issues facing our military, as well as the threats that face this nation, both short-term and long-term. We had discussions about Iraq, as well as Afghanistan. We talked about some of the broader global risks that may arise and the kind of planning and coordination that's going to be required between our military and our civilian forces in order to accomplish our long-term national security objectives.

We also talked about making sure that the health of our force is always in our sights. And I know that all the Chiefs that are represented here, as well as Secretary Gates, are constantly thinking about what we need to do to make sure that people who are in uniform for the United States are getting the kinds of support that they need and that their families are getting the support that they need. And that's something that I'm absolutely committed to, and I know that Vice President Biden is, as well.

We're going to have some difficult decisions that we're going to have to make surrounding Iraq and Afghanistan, most immediately. Obviously, our efforts to continue to go after extremist organizations that would do harm to the homeland is uppermost on our minds. I have every confidence that our military is going to do their job, and I intend to make sure that the civilian side of the ledger does its job to support what they are doing.

We had for a long time put enormous pressure on our military to carry out a whole set of missions, sometimes not with the sort of strategic support and the use of all aspects of American power to make sure that they're not carrying the full load. And that's something that I spoke with the Chiefs about and that I intend to change as President of the United States.

So, again, my first message was to say thank you. And in addition, it's to say that you -- all of you who are serving in the United States Armed Forces are going to have my full support, and one of my duties as President is going to be to make sure that you have what you need to accomplish your missions, and we are grateful to you.

So, all right. Thank you, guys; I'm going to shake some more hands.

By Dan Dupont
January 27, 2009 at 5:00 AM

Defense Secretary Robert Gates is testifying right now before the Senate Armed Services Committee.

We'll have more on this as the day progresses, but for now, you can listen live here.

And we have Gates' prepared testimony posted. We'll have the Q&A later.

By Jason Sherman
January 27, 2009 at 5:00 AM

President Barack Obama plans to visit the Pentagon tomorrow to meet with the Joint Chiefs and discuss the U.S. operation in Afghanistan, Defense Secretary Robert Gates told the Senate Armed Services Committee, pinpointing the timing of the POTUS trip to the Defense Department which was widely expected sometime this week.

By Jason Sherman
January 27, 2009 at 5:00 AM

Defense Secretary Robert Gates just provided new details on the timing of two key spending requests the Pentagon owes Congress.

The second FY-09 war cost request to fund operations in Iraq and Afghanistan through September will be sent to Congress "within two or three weeks," he told the House Armed Services Committee.

Also: The Obama administration's FY-10 budget request will be complete by the end of March, Gates said.

By Sebastian Sprenger
January 27, 2009 at 5:00 AM

Those hoping the Pentagon would get involved in boosting the Afghan economy, as is the case in Iraq, could be disappointed.

Defense Secretary Robert Gates said today he has little appetite for such an undertaking, as he sought to tamper down expectations of what the Afghanistan war can achieve.

Speaking before the Senate Armed Services Committee, Gates reminded lawmakers of Afghanistan's status as one of the world's poorest countries, indicating Washington's dollars would be better spent in areas other than sophisticated economic development help.

"If we are looking to build some sort of Central Asian Valhalla, we will lose," he told senators.

The goal in Afghanistan, Gates said, is to prevent that country from becoming a "safe haven" for terrorism where extremists can plot attacks against the West.

His comments came after widespread anticipation in national security circles that President Obama would build a new Afghanistan policy around short-term goals believed to be achievable and realistic.

Gates did say the Afghans could use some "technical help" in farming and minerals extraction.

By Sebastian Sprenger
January 27, 2009 at 5:00 AM

NATO allies' calls for aerial reconnaissance missions or strikes account for a good chunk of the U.S. missions flown in Afghanistan, Defense Secretary Robert Gates disclosed in testimony before Congress today.

"The truth of the matter is, I think 40 percent of the air missions that are called in are called in by our allies because they don't have enough forces there," Gates said in response to a question from Sen. Jack Reed (D-RI). The senator wanted to know whether sending more reconnaissance UAVs to Afghanistan could help minimize civilian casualties during attacks on suspected insurgent hideouts.

NATO shortfalls in Afghanistan played a big role during Gates's testimony before the Senate Armed Services Committee today.

Gates said he believes some European NATO allies are ready to contribute more to the conflict there, now that President Obama is in office.

"My sense is, from some of the information and diplomatic comments -- and public comments -- that some leaders have made in Europe, that they are prepared to be asked and that they are prepared to do something. And, in fact, there are some indications that a few of our allies have been sitting on a capability so that they could give the new president something when he asks," Gates said.

By Sebastian Sprenger
January 26, 2009 at 5:00 AM

Readers parsing China's recently released national defense white paper for certain words might be surprised that one term is notably absent -- "cyber."

How can this be, given that U.S. officials seem to believe the PLA is quite active in snooping around on Western governments' networks?

The answer lies in the different terminology used by the Chinese, we're told by an expert. What readers instead will encounter frequently is the word "informationization." And that term is so central to the text that it can be found all over the document -- 35 times, by the count of our .pdf reader.

"Taking informationization as the goal of modernization of its national defense and armed forces and in light of its national and military conditions, China actively pushes forward the ((revolution in military affairs)) with Chinese characteristics," the document states.

A search for "information warfare" turns up exactly one match. The section goes like this:

The PLA is spreading basic knowledge of electromagnetic-spectrum and battlefield-electromagnetic environments, learning and mastering basic theories of information warfare, particularly electronic warfare. It is enhancing training on how to operate and use informationized weaponry and equipment, and command information systems. It is working on the informationizing of combined tactical training bases, and holding exercises in complex electromagnetic environments.

By Dan Dupont
January 26, 2009 at 5:00 AM

Shay Assad, the director of defense procurement at the Pentagon, has a new title, temporarily; he's now the acting deputy under secretary of defense for acquisition, technology and logistics, according to John Young, the under secretary.

Assad is filling in for James Finley, who, as was expected, left the building before the Obama administration took over.

Young made Assad's acting role official in a Jan. 19 memo.

Before the Obama team can get around to filling the deputy job full-time, of course, it must find someone to succeed Young, who is sticking around until a replacement is confirmed.

While Harvard's Ashton Carter, assistant secretary of defense for international security policy during the Clinton administration's first term, was thought to be a strong candidate for several weeks, his lack of acquisition experience has, according to some observers, made him less likely to get the nod.

The latest name getting the most buzz for frontrunner status is that of David Oliver, retired rear admiral and former principal deputy under secretary for acquisition. Oliver now serves as a higher-up at EADS North America and played a big role for that company in the tanker competition, which is sure to raise some eyebrows on Capitol Hill should he be Obama's pick.

By Jason Simpson
January 23, 2009 at 5:00 AM

You can't always believe what you read on the Internet.

This morning, the Aviation Week blog “Ares” posted an entry titled “JSF Blows Nunn-McCurdy." The post claims a "bombshell" recently was dropped by the Government Accountability Office on a GAO Web page for the presidential transition, which states:

The Joint Strike Fighter (JSF) -- DOD's largest acquisition program procuring aircraft for the Air Force, Navy, Marines, and U.S. allies -- also recently declared a Nunn-McCurdy unit cost breach. This program faces considerable risks stemming from its decision to reduce test assets and the flight-test program to pay for development and manufacturing cost increases.

According to Ares, this is a big deal.

Outgoing program office director Maj Gen Charles Davis chose not to mention the breach in a 90-minute briefing and discussion at the Brookings Institute last week, and although several questions were asked about costs, nobody specifically used the N-word.

And the post ends thusly: "Welcome to the Pentagon, Mr President!"

There's just one problem: The Web site links to a GAO report dated almost a year ago, citing a Nunn-McCurdy breach from 2005.

Contacted by Inside the Air Force today, GAO said the wording of its statement may be a little misleading. Mike Sullivan, the director of GAO's aqcuisition and sourcing management team, told ITAF that “the Nunn-McCurdy breach . . . actually was in the December 2005 (selected acquisition reports). It's three years old. We were just trying to list programs that had Nunn-McCurdy breaches since they changed the Nunn-McCurdy criteria, and it was a unit-cost breach. It probably should have been explained better, but when we say 'recent,' it didn't happen now, it's three years old.”

By Christopher J. Castelli
January 22, 2009 at 5:00 AM

The Senate Armed Services Committee will be a bit larger than before, and there will be a few new faces.

Among the new members, we've learned, will be Sen. Roland Burris (D-IL), who was recently appointed by Illinois Gov. Rod Blagojevich (D).

Three other Democrats are joining the panel: Sens. Mark Udall (CO), Kay Hagan (NC) and Mark Begich (AK).

Hillary Clinton, who yesterday became secretary of state, has left the committee; so has Sen. Mark Pryor (D-AR).

Texas Republican Sen. John Cornyn is also off the panel.

Republican Sens. Richard Burr (NC) and David Vitter (LA) are new additions to the committee.

By Carlo Muñoz
January 22, 2009 at 5:00 AM

Retired Adm. Dennis Blair, President Obama's pick for director of national intelligence, today told lawmakers he supports the administration's newly minted executive orders governing interrogations of suspected terrorists by the CIA and other intel agencies, but cautioned that some of those actions could put future intelligence-gathering efforts at risk.

According to the White House directive, all government officials will now have to adhere to the rules, regulations and practices outlined in the Army's field manual for interrogation tactics, techniques and procedures. During today's confirmation hearing before the Senate Select Intelligence Committee, Blair said that if he is confirmed he will take the administration's edict a step further by renaming the Army document the "Manual for Government Interrogations."

However, Blair expressed concerns over the possibility that the manual, in the wrong hands, could "become the training manual for resistance training" for suspected terrorists detained by U.S. forces. "I agree they should be uniform . . . (but) we need to be very careful about how we do this," Blair said. "We need to get it right."

To maintain operational security while implementing a uniform code of interrogation procedures, Blair said, he would use his position as the vice chairman on the "Special Task Force on Interrogation and Transfer Policies" -- also established under the administration's executive order -- to ensure that information in the manual cannot be used against U.S forces. Further, Blair floated the notion of issuing a version of the manual that is "widely available in an unclassified form" but would not include "the specific techniques that can provide training value" to adversaries.

But ranking member Kit Bond (R-MO) pointed out that Blair's idea for two versions of the manual was the same approach applied by the Bush White House. When Blair attempted to respond, Bond cut Blair off, telling the DNI nominee he did not need a response.

By Sebastian Sprenger
January 22, 2009 at 5:00 AM

Senators on the Armed Services Committee could use the occasion of a hearing with Defense Secretary Robert Gates next week to consider the nominations for some key Pentagon posts, according to panel spokeswoman Tara Andringa.

On Inauguration Day, the committee received the nominations of Jeh Johnson to be the general counsel of the Defense Department, Robert Hale to be the Pentagon comptroller, Michele Flournoy to be the under secretary of defense for policy and William Lynn to be the deputy defense secretary.

While the committee has not scheduled it, a vote "could possibly happen" when the panel convenes Tuesday morning to hear from Gates, Andringa told us today.

Whether senators will vote on the Lynn nomination then is unclear. Committee Chairman Sen. Carl Levin (D-MI) announced today that members are awaiting an Obama administration assessment to see whether lobbying-related rules, outlined by the new president this week, would preclude Lynn from the No. 2 Pentagon job. (See our story on this issue here.)

Meanwhile, DOD officials saw the departure of acting Comptroller Douglas Brook over the weekend. According to a mid-January memo from Navy Secretary Donald Winter, Brook was scheduled to leave his Navy comptroller job, which he kept after becoming acting DOD comptroller last fall, on Jan. 17. Sources today confirmed this meant Brook was leaving the Pentagon altogether.

A DOD spokesman did not return an e-mail seeking comment on whether the administration would bother to name a new acting comptroller before the Senate confirms someone, probably Hale, for the job.