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Defense Acquisition Professionals Tout Accomplishments Amid Criticism
By Sandra I. Erwin

Despite popular belief, the Pentagon in recent years has reduced the cost of many weapons programs, it has diversified the supplier base and acquired cutting-edge technology faster than was thought possible, departing Obama administration officials insist.

“We’ve made some serious headway,” said Camron Gorguinpour, who served as Air Force director of transformational innovation. On his last day on the job, he spoke with National Defense about the state of defense procurement and shared concerns about the future as the Trump administration moves to shake up federal procurement.

Gorguinpour spent nearly three years “poking at the bureaucracy” in an effort to lower costs and expedite the military’s notoriously slow procurement system. “We have reduced the time it takes to award contracts by several months. … We introduced an ‘open systems’ acquisition policy and our IT [information technology] programs have saved nearly $100 million so far,” he said. At least 500 Air Force contracting officers have been trained to negotiate nontraditional contract vehicles that should motivate commercial companies to do business with the Pentagon. These are “notable” achievements, said Gorguinpour, considering how difficult it has been over the years to improve the procurement process in meaningful ways.

The House and Senate Armed Services Committees have pounced on the Defense Department for its recalcitrance and bureaucratic inertia regarding weapon acquisitions. Congressional frustration culminated in legislation passed last year that dismantles the office of the undersecretary of defense for acquisition, technology and logistics.

“It’s valuable that Congress is paying close interest to the acquisition process,” said Gorguinpour. “But I don’t actually believe that in most cases, major statutory changes are really necessary.” Most problems could be resolved with just “tweaks,” he added. “We have a lot of authorities and a lot of flexibilities within the statute and the regulations to get things done differently.” Broad, sweeping reforms are Congress’ prerogative, “but regardless of how you reorganize the bureaucracy, we’re still a bureaucracy.” More laws can backfire, he said. “Folks need to be motivated and incentivized to do things differently.”

As Pentagon procurement officers face the wrath of Congress, they are also bracing for what could be rough treatment by the incoming Trump administration. Since he was elected, President Donald Trump has publicly bashed on social media big-ticket Pentagon programs like the F-35 and the future Air Force One aircraft for being too expensive and possibly targets for termination. Trump officials at the same time have hinted they will downsize the federal workforce, possibly reducing the ranks of procurement professionals. Trump’s preferred style appears to be to negotiate privately with industry CEOs, without much regard for the role of government buyers.

“At the end of the day, it’s the frontline people who have to negotiate these deals, who are going to have to process the requirements, and put that into contract language, and ensure competition is fair and reasonable,” said Gorguinpour. “The GS-10s and below get the stuff done. Understanding the responsibility they bear is really important,” he said. “Their willingness to go out on a limb and try to do things differently is very directly affected by things like social media and what Congress says.”

Gorguinpour would not comment specifically on the F-35 or Air Force One, but noted that in any large, complex projects there are “obvious opportunities to reduce cost and get capabilities faster. … But it’s the people on the frontlines that are working these programs that are going to get that done,” he said. “To come in thinking you’re just going to bully your way into long lasting reform? I’m skeptical of that approach for any organization. Once you take the time to understand the nuances, you can find a lot of things to improve.”

The Pentagon still has a long way to go in reforming outdated procurement practices, though, he cautioned. The push started during the Obama administration to attract high-tech commercial companies into the defense market has yet to bear fruit. “If tech firms are going to come into the mix, it will require a fundamental change in the rules and processes that we use to execute acquisitions,” said Gorguinpour. “We have onerous export-control restrictions. We have onerous intellectual property restrictions. The time it takes to award contracts is way beyond what most American companies will deal with,” he said. “It will take real work and real risk to get some of that done.”

Also on his last day on the job, Pentagon procurement chief Frank Kendall defended his record in remarks at the Center for Strategic and International Studies. “What scares me … is that we're bringing in outsiders who have no idea how this place, how the Pentagon works, they will have no idea how the defense industry works,” said Kendall. “And I'm a little nervous that that may happen in this administration,” he said. “Bringing somebody in who does not have the experience of working in that environment I think is a disservice. They will spend their first year just learning what the environment is like and how it works before they can be effective.”

In the defense industry, CEOs are scrambling to figure out how to adapt to the “management by tweet” public shaming tactics, noted aerospace analyst Richard Aboulafia, vice president of the Teal Group Corp. “What I’m most worried about is that he’s asserting the power of the state to interfere with the economy and micromanage decisions that are best left to professionals,” said Aboulafia of Trump. “If this is the case, we are in for a very rough ride.”

A major concern for contractors is that the “people who are doing the really hard work, the procurement professionals in DoD, these are the people whose swamp is being drained.” On the private deals that Trump has worked out with the chief executives of Lockheed Martin and Boeing, “How does that get implemented? I don’t think anyone knows,” said Aboulafia. “If they start getting rid of procurement professionals, that’s very bad for them.”

Trump reportedly has asked Lockheed Martin to reduce F-35 costs by at least 10 percent. The reality is that contractors don’t hold all the bargaining chips, other than their fees and profit margins, said Aboulafia. “It’s the nature of aerospace products, a lot of it is pass-through cost,” he said. “I’m not so sure he appreciates there’s an incredibly complicated supply chain with multiple players, with multiple expectations.”

Federal contracting attorneys Sandy Hoe and John Sorrenti, of Covington & Burling, noted that the president holds a powerful bully pulpit to “pressure high-profile government contractors to ‘voluntarily’ take actions to their detriment and in favor of the government,” but the legal tools and contractual remedies are another matter. “The legal obligations of the United States to its contractors, with some exceptions, is a little different from the obligations of a buyer in a private contract,” the attorneys wrote in a blog post.

Contracting officers are not immune to pressure from high-ranking government officials, including the president, but they are “bound to apply the law when awarding and administering contracts.” If a program is terminated “for convenience,” contractors are entitled to recover their cost incurred to the date of the termination, profit or fee on that cost, and termination settlement expenses. For practical reasons, Hoe and Sorrenti argue, the government is “unlikely to take this path because it would be costly and delay ultimate delivery of the system. Thus a contractor willing to endure the public approbation of being identified with ‘fraud, waste and abuse’ likely can survive simply because the consequences of terminating a contract are so drastic.” Given the tightly worded contracting legislation in the U.S. code, “we shall see how the Trump administration proceeds.”

PHOTO: Camron Gorguinpour, Air Force director of transformational innovation, speaks at Robins Air Force Base
Goldfein: Search for New Light Attack Aircraft May Begin by Spring

By: Vivienne Machi

Textron's Scorpion jet

The Air Force may begin eyeing potential commercial-off-the-shelf light attack aircraft to add to its fleets as early as this spring, the service's chief of staff said Jan. 18.


If approved, the service could begin an experiment, called OA-X, to work directly with the defense industry to find a suitable light-attack and/or low-end fighter aircraft within a few months, said Gen. David Goldfein in a speech at the American Enterprise Institute, a Washington, D.C.-based think tank.


"We're actually right now looking at an experiment where we go out to industry and ask, 'What do you have, commercial-off-the-shelf low-cost, that can perform this mission?''' he said. "We're going to do this experiment and just sort of see what's out there, and I expect many of the companies to come forward."


The service is looking to begin the experiment" probably around the springtime" but he emphasized that this would not be a competition.


"This is an experiment … there are very appropriate acquisition laws that ensure we have a fair and open competition; this is not a competition," he said.


Brig. Gen. Ed Thomas, director of Air Force public affairs, said the experiment remains in discussions, has not officially been approved, and no money is attached "at this point."


"The chief believes it does make sense to look at opportunities to provide as he described a … less expensive attack-type aircraft that can do the close-air support mission, that can do the support mission, that other countries and allies can fly also … cheaper to maintain, and do this in a way that doesn't require the F-22 [tactical fighter] or an F-35 [joint strike fighter] over a permissive environment," he said.


Sen. John McCain, R-Ariz., called for the Air Force to develop and field new counter-air and electronic attack capabilities to maintain U.S. air dominance beyond the 2020sin a defense white paper released Jan. 16.


He also called for the service to embrace a "high/low mix" of fighter aircraft, noting that expensive fifth-generation technology is not needed in every scenario. He recommended the Air Force procure 300 low-cost, light-attack fighters that would require minimal work to develop.


"These aircraft could conduct counterterrorism operations, perform close-air support and other missions in permissive environments, and help to season pilots to mitigate the Air Force's fighter pilot shortfall," the report said.


Goldfein said he thought McCain's recommendation was a "great idea," especially as it pertains to service readiness levels while conducting a sustained air power campaign against violent extremism in the Middle East and elsewhere in the world, while maintaining readiness levels at home.


"If you're looking at sustaining this campaign… if that's all we're doing, I can take all of the forces that I currently put towards the fight — the F-22s, the high-end capability — I can continue to sustain that, as long as I am willing to accept the risk that I have back home," he said. "I don't think that's acceptable risk, given the global challenges we face."


"If getting into a low-end capability, that can actually help me with building and sustaining the coalition, lowers costs and improves capability, I'm all for it," he continued.


Textron's AirLand Scorpion jet is "one of the ones we're going to look at," Goldfein said. Experts have previously mentioned Embraer's A-29 Super Tucano and Beechcraft Defense's AT-6 Wolverine as viable options.


Air Force service acquisition officials noted at the 2016 Air Force Association's Air, Space and Cyber Conference that the OA-X program is not about replacing the aging A-10 Thunderbolt II, but could supplement the Warthog and other existing warplanes. McCain in his report called for sustaining the A-10 fighter fleet for close-air support.

Photo: Textron

Pentagon Acquisition Chief Worried About Trump Appointees
By Jon Harper

The Pentagon’s top weapons buyer is worried that President-elect Donald Trump will appoint someone ill-suited to succeed him.
Frank Kendall, the undersecretary of defense for acquisition, technology and logistics, is expected to leave office when the new administration takes over.
“What scares me … is that we’ll bring in outsiders who have no idea how this place — how the Pentagon works. They will have no idea how the defense industry works,” he said Jan. 17 at the Center for Strategic and International Studies, in what may be his final public remarks as the Defense Department’s procurement chief.
Kendall, who began working at the Pentagon in the 1980s and has spent more than 40 years in the national security field in the public and private sector, has been serving in his current post since 2012.
He noted previous examples of outsiders being brought in to lead defense acquisitions, only to fail.
“The first few undersecretaries for acquisition … were people from non-defense industry,” he said. “The idea was we’re going to bring professional mangers in and they’re going to bring commercial industry expertise in, and I’m a little nervous that that may happen in this [Trump] administration.”
It took time for those individuals to learn how the Pentagon works, and their tenures were often short-lived, he said.
“They weren’t bad people. They were good people. They were good managers ... doing what they had done before. But it wasn’t what we do … it didn’t work,” he said.
Trump has signaled that he will tap successful businesspeople to help lead his administration. But prior experience working with the military and the Washington establishment is critical for knowing how to get things done, Kendall argued.
“DoD brings with it some very interesting cultural things and so does this town. So bringing somebody in who does not have the experience working in that environment I think is a disservice. They will spend their first year just learning what the environment is like and how it works before they can be effective,” he said.
Kendall warned about another trend that he finds troubling: the push for rapid acquisition.
High-tech military advances by potential adversaries have been contributing to the desire among many senior Pentagon officials to shorten acquisition timelines and deliver new technologies to warfighters more quickly. The Defense Department and the military services have established offices to fast-track the development and procurement of critical capabilities.
“I’m a little nervous about … the trend towards something called rapid acquisition,” Kendall said. “Rapid acquisition means high-risk /low quality acquisition… The cost of speed is quality.”
In certain cases, such efforts might be warranted, he noted, citing the rush to deploy mine-resistant/ambushed protected vehicles to Iraq and Afghanistan as U.S. casualties mounted from enemy improvised explosive device attacks.
But the MRAP story also illustrates the drawbacks of such an approach, he said. The systems deployed to Iraq were not well-suited for the terrain in Afghanistan, he noted. The Pentagon had to buy MRAP ATVs that weighed less and had more dynamic suspensions to operate in that environment.
Cybersecurity, reliability, maintainability, manufacturability, versatility and other “cost-driving features” are examples of qualities that could end up being sacrificed when procurement officials are in a hurry, he said.
“Those are things that our operators want but they take more time and they take more detailed designs and they take more testing,” Kendall said. “That’s sort of the normal acquisition process that gets you that quality vehicle. The rapid acquisition process tends to get you something that is not very reliable.” 
Fast acquisition is “not a panacea” for the Defense Department’s challenges, he said.
“You’re not going to get the same quality product if you go down that route and you can expect bad things to happen, risks to materialize and [cost] overruns and schedule slips to occur,” he added.
Kendall also took issue with the perception that the Pentagon isn’t being innovative enough as it seeks to acquire new capabilities to fight high-end wars.
“There has been a great deal of talk obviously about innovation,” he noted. “In the last few years we’ve emphasized it very heavily in the department. The problem that I see with that is that we have, I’m afraid, conveyed the impression unintentionally that a lack of innovation is our problem and that more innovation is the solution to our problems. I don’t believe that.”
The real problem is a lack of sufficient funding, he argued.
“We have quite a bit of innovation but what we haven’t had is the money to take that innovation and translate it into products… to develop it and then to start the manufacturing process,” he said.
Trump has promised a military buildup after he takes office, and he has outlined plans to grow the force while investing in a variety of capabilities. Kendall is optimistic that the budget picture will improve in the coming years. He expressed hope that Trump’s team would use increased funding wisely.
“Looking towards the next administration, there may be more money flowing into the Defense Department,” he said. “I hope that a lot of it goes to research and development and modernization because that’s where we really need the money.”
Pentagon leadership under President Barack Obama has been pushing the so-called third offset strategy, an effort to develop and integrate new technologies and operating concepts to counter advanced foes.
In recent years, the Defense Department has been making investments toward that end. But more funding will be needed, Kendall argued.
“What we’ve been able to fund in the last few budgets is a number of demonstration projects which are early stages, risk reduction, proof-of-principle projects,” he said. “What we don’t have in our budget right now, in our budget request, is the money to take those demonstrations and …  go on to building products, which is a whole different matter and much more expensive. So that’s the challenge I think for the next administration.”

Photo: Frank Kendall (Defense Dept.)
Surge in Military Aircraft Sales Projected Amid Commercial Slump
by Sandra I. Erwin

The aerospace industry is facing a bleak commercial aviation market for the first time since 2003. The saving grace for manufacturers will be a surging demand for military aircraft.

The industry's reality can be described as one of “trading places,” said Richard Aboulafia, vice president of analysis at the Teal Group Corp. The commercial boom is over, and the industry is going to have to pivot to military aviation to stay afloat, Aboulafia said in an “Aviation State of the Union” speech to the National Aeronautic Association, in Arlington, Virginia.

Global defense spending grew last year for the first time since 2011, and much of the new funding will go to military aircraft, said Aboulafia. The world is becoming more volatile and more uncertain, he said, which will fuel military sales.

For the aerospace sector, defense will be its only growth engine. The bad news for commercial aerospace powerhouses like Boeing and Airbus is that defense is a dramatically smaller market. Worldwide deliveries of commercial aircraft in 2016 were valued at $138 billion, compared to $41.7 billion worth of military aircraft — $17.8 billion in fighters, $6.6 billion in transports and $13.6 billion in rotorcraft.

The Teal Group projects a 0.6 percent drop in sales in the commercial sector in 2017, whereas defense deals should soar by 10.6 percent. Fighters and so-called “special mission” aircraft — militarized commercial airframes — will drive that growth, said Aboulafia.

The changes in the market are the result of geopolitical shifts. “Geopolitical tension, uncertainty are good for military, bad for civil,” said Aboulafia. The antitrade mood in the United States that propelled Donald Trump to the presidency also is a major factor. “Trade is more important than ever for civil, and global trade is under the greatest threat since World War II.”

A wild card in the defense forecast is whether Trump will deliver on his pledge to build up the military while he is also promising tax cuts, a massive infrastructure program and an expansion of healthcare benefits. “This is as fiscally loose as it gets,” said Aboulafia.

Until the budgetary outlook settles in the defense market, companies will face pressure to cut cost and will put pressure on their supply chains, he said. In the absence of new programs, aircraft makers will resort to “vertical squabbling,” said Aboulafia. “The great boom is over. We won’t see its kind again for some time.”

PHOTO: Israel’s first F-35 joint strike fighter (Lockheed Martin)
Pentagon Playing Key Role in Reshaping U.S. Industrial Future
By Sandra I. Erwin

The revival of U.S. manufacturing was a dominant theme of the 2016 presidential election. As the jobs rhetoric has grown louder, federal agencies led by the Defense Department have been quietly laying the foundation for a high-tech manufacturing surge. 

The Pentagon, notably, has been assembling a large network of government, private-sector and academic players in a bid to secure access to critical technologies the military needs, while also trying to motivate corporations to invest in advanced manufacturing research.

The Defense Department last week announced it awarded a contract to American Robotics Inc., based in Pittsburgh, Pennsylvania, to manage the “Advanced Robotics Manufacturing,” or ARM Institute, the eighth DoD-led hub that becomes the 14th member of the “Manufacturing USA” network.

Defense officials and industry analysts have hailed this business model because it spreads the financial burdens across many players and puts both the government and the private sector in a position to win big, if projects end up developing successful products that can be commercialized. 

American Robotics — a consortium of state and local governments, industry, universities, community colleges and non-profit organizations from across the country — contributed $173 million to the ARM Institute. That will be combined with $80 million in federal funding.

The Pentagon is showing growing interest in these public-private partnerships at a time when it fears the U.S. military is seeing its technological edge slipping, and worries that private-sector innovations are moving far too rapidly for the government procurement bureaucracy to keep pace.

The ARM Institute will “organize the current fragmented domestic capabilities in manufacturing robotics technology and better position the United States, relative to global competition,” said a Pentagon news release. 

The goal is to promote a democratization of sorts in the industry so manufacturing robots becomes less expensive and more accessible even to small businesses. “The use of robotics is already present in manufacturing environments, but today's robots are typically expensive, singularly purposed, challenging to reprogram, and require isolation from humans for safety.” Robotic systems are viewed as essential to “achieve the level of precision required for defense and other industrial manufacturing needs, but the capital cost and complexity of use often limits small to mid-size manufacturers from utilizing the technology.”

The Pentagon for years has made it known that low-cost, multifunctional autonomous systems are at the top of its wish list. The manufacturing hubs are one vehicle to make that vision a reality. 

The ARM consortium is one of the largest, with 123 industry participants, 40 members from academia and 64 government and nonprofit partners. The group will be directed to “create and then deploy robotic technology by integrating the diverse collection of industry practices and institutional knowledge across many disciplines — sensor technologies, software and artificial intelligence, materials science, human and machine behavior modeling and quality assurance.”

The Manufacturing USA network started out three years ago, when Congress authorized it in the Revitalize American Manufacturing and Innovation Act of 2014. The program was previously known as the National Network for Manufacturing Innovation. The legislation was passed with bipartisan cooperation and has drawn praise from politicians for supporting small and mid-sized manufacturers, and for creating venues to train the next generation of manufacturing workers.

Each Manufacturing USA institute focuses on a technology area, such as additive manufacturing, integrated photonics or smart sensors. The federal government has committed over $1 billion, matched by more than $2 billion in non-federal investment. The Pentagon noted that the hub in Youngstown, Ohio, attracted over $90 million in new manufacturing investments and is poised to train 14,000 workers in the fundamentals of 3D printing.

In a move aimed at building awareness and shoring up support for manufacturing consortiums, the Pentagon funded an independent study that looked at the overall performance of Manufacturing USA.

The study, conducted by the consulting firm Deloitte and released last week, reported that the first eight advanced manufacturing institutes were able to bring together 1,200 companies, universities and government agencies. The value of these massive networks is that they can help to “accelerate innovation,” the Deloitte study said. Over time, these centers would be the launch pads for the future technically trained manufacturing workforce and for a “sustainable national manufacturing research infrastructure.”

The first eight Manufacturing USA institutes were established by the Department of Defense or Department of Energy. There are early signs that the organizations are reaching “tipping points” where the benefits for both the government and the private sector are self-evident, the study said. 

The private-sector members include influential U.S. companies such as Boeing, GE, Johnson & Johnson, Lockheed Martin and Ford. The study found that the institutes have created “true public-private partnerships that are successfully uniting academia, industry and government across the country.”

Deloitte analysts noted that Manufacturing USA addresses the so-called “valley of death” between research and commercialization, a problem that has plagued defense technology for decades. “By breaking down market barriers in the right technological areas, the program facilitates the acceleration of U.S. manufacturing R&D.” The institutes also focus on ensuring that there are enough workers with the right skills to meet the needs of advanced manufacturers. 

The study compliments the program too for helping entrepreneurs and small businesses by providing access to expensive equipment, pooling project costs, creating technology roadmaps and promoting knowledge exchange. 

One project at the Digital Manufacturing and Design Innovation Institute, in Chicago, linked researchers from the Rochester Institute of Technology and several businesses that were seeking to commercialize wearable technologies. At the Power America advanced electronics institute in North Carolina, a member company called AgileSwitch applied a newly patented switching technique for use in high-power silicon carbide applications. The technology has applications in solar and wind turbine energy, and electric vehicles.

The Defense Department believes it has a huge stake in the success of these ventures as the Pentagon continues its pursuit of low-cost systems such as drones and surveillance sensors. One plan, for instance, is to deploy swarms of minidrones to overwhelm enemy forces and weapon systems. That will require systems that cost a fraction of current products, so they can be deployed in large numbers and used as disposable gear. Buzzwords like “distributed, persistent sensor networks” have been used to describe that vision.

Deloitte warns that Manufacturing USA should increase collaboration with the Pentagon’s own labs and avoid overlapping efforts. “Manufacturing USA was designed, in part, to complement the national labs and propel their work through the manufacturing innovation process,” the study said. “In practice, however, by focusing institute efforts on technology development, the program risks creating non-strategic overlap with these peer entities.”

PHOTO: 3D manufacturing (U.S. Marine Corps)

Outgoing Army Secretary Cites Modernization as Key Budget Concern
By Vivienne Machi

As the U.S. Army's top civilian leader 
Eric Fanning prepares to leave his post, his biggest budget concerns remain how the service will fund equipment modernization and revitalize infrastructure in the years to come, he said Jan. 13.

Fanning, the secretary of the Army, said if he were given one more dollar to spend on the service, he "wouldn't necessarily put it into force structure," he told reporters and industry members during his farewell speech hosted by the National Defense Industrial Association in Washington, D.C.

"There are other areas in the budget that concern me," he said. "Modernization is one. Infrastructure investment is another."

The Army's modernization funds have decreased 33 percent in the last decade, he said, and the strategy previously taken by the service was to "push out modernization for the next generation" by upgrading and maintaining the platforms it already had.

"That's great to get new capabilities into the hands of soldiers faster; that's bad [because] the strategy has the Army holding onto a lot of platforms beyond what the lifespan was anticipated," he said. "So there's a gap in the 2020s that I think we need to get at."

Fanning added that he remains concerned about future readiness levels as he leaves his post, but he thought the Army "had a good solid plan for readiness," notwithstanding ongoing budget instability.

"We can definitely fix some holes that we have with more force structure, but if you're going to grow the Army, you have to do it smartly," he said. "We're certainly a people-based force and so the size of the Army … is an important indicator of our capability. But it's not the only indicator and if you don't do it smartly, you can grow yourself into a less capable Army."

And while he may have one foot out the door, he is one of the few leaders who will be leaving when the incoming administration arrives, he noted.

"It's important to remember, in an Army of 1.4 million people in and out of the uniform, fewer than 20 of them are political appointees," he said. "There is a great continuity in our national security, and Army's definitely up to the task."

Fanning also said he is not worried that the Army's rapid capabilities office — which was stood up last August — would be eliminated by the new administration.

"It's focused on the emerging requirements of commanders in the field, it's not something we're making up, it's not pet projects," he said, adding that the office was especially important for developing capabilities — like electronic warfare, long-range fire, survivability and navigation — to maintain a technological edge against near-peer competitors like Russia.

"There's a pretty strong consensus around us needing to push a little bit more, not because our overmatch is gone, but because it's not what we want it to be," he said. "We don't ever want a fair fight."

The RCO will continue to be important to supply critical technology in a timely manner, he added. "We're not going to build a helicopter in the RCO, but there might be some technology in the next-generation helicopter we need, that we need to push out faster."

Photo: NDIA
Navy’s New Frigate Moves Closer to Next Milestone
By Yasmin Tadjdeh

The Navy is preparing to release a draft request for proposals for a new frigate by spring, a service official said Jan. 12.

“We’ll put a draft RFP on the street … in the next two months,” said Capt. Dan Brintzinghoffer, program manager for frigates at the program executive office for the littoral combat ship. “Then the RFP would be at the end of the year.”

The Navy is planning to purchase 40 littoral combat ships and a variant of the vessel known as a frigate. The total purchase reflects the reduction of 12 ships that outgoing Secretary of Defense Ashton Carter ordered in 2015.

The program office is working to mature the design of the frigates before the RFP is released, said Rear Adm. John Neagley, program executive officer at PEO LCS during a panel discussion at the Surface Navy Association’s annual conference in Arlington, Virginia.

“We’re working through those design turns to make sure that we have a good, mature design before we issue that RFP and before we … go into contract,” he said. The team is “working that very, very closely.”

The Navy plans to down select to a single design by fiscal year 2018, Brintzinghoffer said. It is closely working with the prime contractors of the two littoral combat ships, Lockheed Martin and Austal USA.

“We’re increasing the lethality. We’re increasing the capability. We’re increasing the survivability of the ships,” he said. “We’ve modified the designs that will allow the multi-mission frigate to have the full” anti-submarine warfare and surface warfare mission packages.

The vessel will also be outfitted with a more advanced command, control, communications, computers and intelligence suite than the LCS, Brintzinghoffer said.

“The communication suites are more in line with the DDG [guided missile destroyer] than they are with the LCS,” he said. “LCS has a very, very capable communication suite to execute a focused mission. You need a different communication suite when you’re designed to operate in a multi-warfare environment.”

Because the frigate will be designed to accommodate more missions than the LCS, it will be heavier, he said. That will affect its speed — one of the hallmarks of the littoral combat ship program.

“A heavier ship is not going to go 40 knots,” Brintzinghoffer said. “The Navy has changed the requirement for the ship in terms of speed because the requirement for that is multi-mission and enhancing survivability and lethality of that platform to perform those roles simultaneously and [by] doing that the ship is going to be a few knots slower.” The frigate will be able to reach speeds above 30 knots, he added.

So far industry has delivered nine littoral combat ships, Neagley said. Another seven are currently in construction, he said.

Buying the vessels in blocks has helped keep the program stable and has driven cost down, he said. It has been “an effective strategy for us and it has brought a lot of stability into that shipbuilding program,” he said. “It allowed our shipyard partners to invest in those shipyards, get the infrastructure right and help us deliver ships” two times a year.

Four littoral combat ships will be delivered in fiscal year 2017, he said.

Photo: The littoral combat ship USS Freedom (Navy)
Fanning: Army Must Change How it Works With Private Sector
By Sandra I. Erwin

As he prepares to leave office as the Army’s top civilian leader, Eric K. Fanning is urging his successor to rethink how the service works with the private sector and acquires technology.

The U.S. military is seeing its technological superiority eroding and needs to find better ways to tap innovation from startups and companies across the board, Fanning will tell a gathering of industry executives Jan. 13 in Washington, D.C., hosted by the National Defense Industrial Association.

Fanning was appointed 22nd Secretary of the Army by President Obama on May 18, 2016. Before that, he served as acting secretary of the Army and in several senior level posts at the Department of the Army. He previously was chief of staff to the secretary of defense and served as the 24th undersecretary of the Air Force.

According to a draft of Fanning’s prepared remarks, he will call on the Defense Department to create a more “open and flexible” environment for innovative companies. He notes that while the Defense Department often tells industry that “creative solutions are welcome,” for too many companies it feels like they have to “cross a moat to arrive at the front door — and when they get there they find it locked.”

Fanning, like other defense officials, blames the procurement system for stalling innovation. “Often the formal requirements that drive our acquisition process become inflexible guidelines. Rather than promoting the innovative capacity of our industrial partners, we constrain them,” he wrote in his draft remarks. “It’s no secret that some of today’s most innovative companies prefer not to work with DoD.”

Fanning suggests that there should be a closer partnership between the government and industry as national security challenges become more complex. “By finding new ways to incentivize business to make its own investments in adaptable solutions, DoD will ultimately gain access to even more advanced capabilities, more rapidly, at a reduced cost.”

He cites several areas that are “ripe for the private sector to take the lead and provide creative solutions.”

Cyberspace: The costs of industrial cyber espionage range as high as $500 billion annually and 1.2 million jobs a year. “What is arguably more important and more costly is how states like Russia are incorporating cyber tools to sow disinformation and make it more difficult for democratic systems to make decisions,” Fanning says in his draft speech. “We’re undergoing a real test of that so far and the worst may be yet to come.”

Space: Commercial companies like OneWeb are launching hundreds of small satellites to provide broadband internet service to individual users and to support potential first responders over the next three years. “There should be ways DoD can piggyback on these kinds of investments to push the access of our networks to the tactical edge.”

Autonomous systems: The defense sector is driving many cutting-edge efforts forward but some of the most creative advances come from civilian applications. Right now, most of DoD’s autonomous systems do what humans tell them. But many civilian autonomous systems can also interact with humans. "There are opportunities here to develop machines that can learn and make decisions based on analyzing big data."

Advanced machine learning and artificial intelligence: The leading edge of machine learning is now supported by complex algorithms that enable a computer to learn from prior tasks rather than perform the same task in the same way. Think of Netflix, and the way it will queue up options it thinks you like. "We are working on doing something similar with options and capabilities we provide to our forces on the battlefield. This is one area where the military needs a better way to tap into existing innovation rather than seeking to duplicate it."

Big data applications: "What we need and don’t have is a comprehensive approach for using big data to derive a competitive advantage over capable, near peer adversaries. Today, operational big data military applications lag far behind commercial capabilities."

Materials science: "We could make the equipment our people need smaller, lighter, and easier to move. And in the long term, it’s an area where the military can save enormous amounts of money. Researchers are working to provide batteries that recharge in minutes or less, don't die, are difficult to damage, and orders of magnitude more powerful. This will revolutionize how we store and use power in both civilian applications like cars, phones, and infrastructure, but also for military vehicles, communications systems and facilities."

Photo: Army

Navy and Industry Say Capacity Is There to Boost Fleet Numbers
By Vivienne Machi

The U.S Navy's path to expanding its fleet to over 350 ships will not be easy, but it is possible, service leaders said at the annual Surface Navy Association symposium.

Following the Navy's recent release of its future force structure assessment, the speeches at the symposium in Arlington, Virginia, were replete with arguments for why the service must expand from 274 ships to 355, and how it could hope to make that target in the current challenging fiscal environment.

The Navy has performed its duties at the same level of operational tempo since 9/11 with significantly fewer ships, Vice Chief of Naval Operations Adm. William Moran said Jan. 10. That means the ships it deploys are making longer and more frequent trips, promoting wear and tear and raising maintenance costs.

In 2001, the Navy was operating 316 ships, "and we're still operating in the same tempo, with 274 ships," he said.

The Navy has been unable to fully fund its needs for several years due to budget uncertainty, he added. "We're lucky in any given year to have had 90 percent funding."

If the service's budget allocation continues along this trend, the Navy could be deploying at sea fewer than 90 ships within a few years, he warned. "We haven't deployed less than 90 ships in the last 15 years, on a daily basis."

The service leader for PEO submarine said Jan. 12 that the Navy is working to develop a revised 30-year shipbuilding plan since the force structure assessment raised the requirement from 48 nuclear-powered attack submarines to 66.

"So we went from managing a trough where we were below 48 SSNs later in the 2020s, to immediately being in a trough under 66," Rear Adm. Michael Jabaley said.

It is possible to build that quickly, he noted, saying that the Navy delivered up to six Los Angeles-class submarines in one year in the 1980s, while also building the Ohio-class ballistic missile submarine.

"The question is: At what point do you need to start building more facilities, hiring more people?" he said, adding that shipbuilders are already expanding to handle the increased demand signal wrought by the Columbia-class ballistic missile submarine.

"We're just doing that hard work right now to figure out what the recommended posture is, just to get us to 66," he said.

Service leaders argued that rebuilding the fleet is crucial to the service's ability to meet the plethora of threats that it faces today.

"The world has gotten more complex in the years since 2012, and the demand for naval assets has gone up," outgoing Secretary Ray Mabus said Jan. 11. Aggressive tactics from countries including China and Russia and the threat of non-state actors like ISIL contribute to that complexity, he said.

But Mabus added that he is confident that the nation's shipyards can meet the service's demands. Shipbuilders have recently invested in infrastructure and training that have led to hot production lines and multi-year or block-buy contracts, he said. "I don’t think we could have seven years ago … [but] we now have the basis … [to] get to that much larger fleet," he said.

That is the case for Ingalls Shipbuilding, said the company's president, Brian Cuccias, at a media briefing at the conference. Today, the shipbuilder — a subsidiary of Huntington Ingalls Industries — has 10 ships under construction across four ship classes at its Pascagoula, Mississippi, yard, and it remains under capacity, he said.

Ingalls is "significantly ahead" of schedule on all contracts, with "costs improving across the board on every platform," 
Cuccias said. Among the 10 ships under construction are five guided-missile destroyers, the latest San Antonio-class amphibious transport dock ship and two national security cutters for the Coast Guard.

"Ingalls is a very successful production line right now, but it has the ability to actually produce a lot more in the future," he said.

The company's facility is currently only operating at 75 percent capacity, he noted. He could probably produce the ships faster if the funding were available, he said.

Ingalls wasn't always in this position, he acknowledged, but the company has made significant efforts in infrastructure, training and in employee benefits to improve and maintain efficiency.

"Our engine is significant, and our engine is really ready to meet the needs of the Navy and of the country," he said.

Rear Adm. William Gallinis, program manager for PEO ships, said his team is "working closely" with the shipyards to ensure a smooth transition as they boost ship numbers.

"I would tell you, from a shipbuilding perspective, the capacity is there," he said. "But what we need to be mindful of is probably our vendor base that support the shipyards."

Smaller companies that supply power electronics, switchboards or hydraulics could be challenged to deliver at a faster rate, he said.

"Do we need to re-sequence some of the funding to provide some of the facility improvements for some of the vendors that may be challenges? My sense is that the industrial base will size to the demand signal. We just need to be mindful of how we transition to that increased demand signal," he said.

The acquisition workforce may also see an increased amount of stress, Gallinis noted. "It takes a fair amount of experience and training to get a good contracting officer to the point to be [able to] manage contracts or procure contracts."

"But I don't see anything that is insurmountable," he added.

Congressional representatives at the conference told audiences that the hardest part of achieving a 350-ship Navy would be funding.

Rep. Bradley Byrne, R-Ala., said Jan. 12 that Congress has to "break the cycle" of passing continuing resolutions in lieu of a full budget.

"Nothing is worse for the Navy and our entire military than this uncertainty of these continuing resolutions," he said. "I'm worried that we're beginning to accept continuing resolutions as some sort of new normal, and we have got to push back against that as any sort of normal."

"This lack of funding certainly hits the entire shipbuilding industrial base," he added.

Vice Adm. Thomas Rowden, who commands the Naval Surface Forces, said Jan. 10 that the service's 2018 shipbuilding plan would include recommendations to build more ships beyond the 355 already identified.

"For the time being, the ships that we have built — both variants of the littoral combat ship and our guided missile destroyers … provide us opportunity to grow that fleet more rapidly if we choose to do that," he said.

Mabus recommended that the next administration continue to increase the number of ships, as neglecting to do so would mean more costly shipbuilding down the road. 

"If you miss a year building a ship, you never get it back," Mabus said. "You won't be able to get anything else because you won't save any money. You may actually pay more for fewer ships."

But as important as new ships are for the Navy's return to full readiness, Moran emphasized that maintenance, not building, should be the current fiscal priority.

"When the transition team came around, and … asked us what we could do with more money right now, the answer was not to buy more ships," he said. "The answer was to make sure that the 274 we have were maintained and modernized enough to provide 274 ships worth of combat. Then we'll start buying more ships."

"That doesn't mean we don't need more ships," he noted. "It's all connected. We need a bigger Navy."

Moran said the Navy knows "precisely how much money we need in our readiness accounts to be able to execute the full magnitude of what our yards can handle for ship maintenance and modernization for '17 and '18," but he would not disclose the number.

"Any money that comes on top of that, we can start looking at how we would contract out for ships [that] yards and contractors are ready to start building this year or next," he said.

Technologies including unmanned ships could help fill the ship gap at a lower cost, Surface Warfare Division Director Rear Adm. Ronald Boxall said Jan. 10. The Defense Advanced Research Projects Agency's Sea Hunter autonomous unmanned surface ship, which was launched last year as part of its anti-submarine warfare continuous trail unmanned vessel program, is being tested and evaluated for mission suitability by the service, he said.

"Somebody talked about, 'well, are you worried about the cost of all these ships and everything?' Yes, we are," he said. "We want to bring the best bang for buck … [The Sea Hunter is] a lot of bang for a lot less buck for something that size."

The unmanned ship could serve functions, such as providing an escort for a destroyer, he added. "Could that ship do a function that we need it to do at a much lower rate? I would say, "Yeah. We're going to go find that out.'"

Rep. Rob Wittman, R-Va., said Jan. 12 that Congress and the House Armed Services Committee needs to use the Navy's force structure assessment for 2016 as a baseline target.

"I think that this year's force structure assessment is … very accurate," he said. "It takes the demand signal from the co-coms [combatant commanders], it looks at that in context of what's happening around the world and what we can realistically do and achieve, and it says the Navy should be at 355 ships."

Wittman said he was "confident" that the goal could be met by working with the Navy and the industrial base.

To get to 355 ships would require a 60 percent increase in ship construction funding, or almost $25 billion over the long term, he said.

"I believe that Congress needs to make a commitment in the shipbuilding budget of at least $5 billion annually," he said. "I believe $5 billion a year is something that we can integrate into the current shipbuilding programs, integrate into the Navy force structure assessment and realistically and efficiently … apply those numbers to grow the fleet to where it needs to be."

Wittman noted that the reason for a 355-ship Navy is "not to go to war, but it's to prevent war."

"It's the greatest ability for us to project force forward, to deter bad behavior, to deter aggression and to make sure the world is a safer place," he said.

Jon Harper and Yasmin Tadjdeh contributed to this story.

Photo: The future guided missile destroyer USS Zumwalt departs the Bath Iron Works shipyard. (Navy)

Mattis Should Win Confirmation, But Can He Win the Coming Budget Wars?
By Sandra I. Erwin

Defense Secretary nominee James N. Mattis said one of the first orders of business, if he is confirmed, will be to figure out how much money the Pentagon needs to accomplish its mission. His motto: Solvency and security.
Mattis was adamant in testimony to the Senate Armed Services Committee that the Pentagon needs more funding, although he was vague about what specific increases he would recommend. He repeatedly told senators during his confirmation hearing that current limits on federal spending set by the Budget Control Act are damaging to the military and must be repealed. But he also showed empathy for congressional fiscal hawks and assured them that he would aggressively pursue business reforms to reduce bureaucratic bloat and eliminate wasteful programs.
The retired Marine Corps general, who is widely respected and was lobbed mostly friendly questions from the committee Jan. 12, is expected to be confirmed as the Trump administration’s next Pentagon chief. Congress will first have to approve an exception to a law that bans the appointment of retired officers as secretary of defense within seven years of retirement from active duty. Mattis retired in 2013 after a 41-year career in the Marine Corps.
Known as a thoughtful strategist with a keen understanding of the global security threats the nation confronts, Mattis laid out to the committee a compelling case for a larger Pentagon budget, and offered many of the same rationales that Obama defense secretaries Robert Gates, Leon Panetta, Chuck Hagel and Ashton Carter had articulated in years past before Congress in mostly fruitless efforts to get relief from the Budget Control Act.
Unlike his predecessors, however, Mattis would be taking over the Defense Department in a more favorable political climate, with Republicans in charge — although the GOP on Capitol Hill remains internally divided on spending priorities. Mattis said he sees as one of his major challenges to “determine, request, and allocate the resources necessary to strengthen our military, while earning the confidence of the Congress and the American people that the Department of Defense is a good steward of taxpayer money.”
He listed as his priorities to improve the readiness of the force and bring “business-minded reforms to the Department of Defense.” This effort would include a “review of what, why, and how we are buying things.”
The discretionary caps imposed by the Budget Control Act are in effect through fiscal year 2021, unless there is agreement to change budget levels. Mattis insisted that the caps are weakening the military and, if they stayed in place, the military would have to retrench from global responsibilities. 
“We have a strategic mismatch between the political ends we espouse and the military means we have available to confront and deter threats,” he said in prepared testimony. “While our military remains the best fighting force in the world, these cuts have created damage that will take time to repair. Unless the Department of Defense receives funds above the caps imposed by the Budget Control Act, it will not be able to achieve the readiness, modernization, and force structure required to meet emerging threats.”
Rolling back the spending caps will provoke a heated political fight, as congressional Democrats will demand equal relief for nondefense agencies. Mattis, like President-elect Trump, does not believe in the “dollar-for-dollar” rule that was used by the Obama administration to negotiate budget deals in 2013 and 2015.
Mattis argued that legitimate requirements should drive budgets. “While the solvency and security of the U.S. go hand-in-hand, I believe budgets should match resources to national priorities. Each department and agency must define and justify its requirements.”
One nondefense agency that Mattis wants to see better resourced is the State Department. He is long-time champion of investing in civilian tools of development and diplomacy. As the combatant commander who oversaw the entire Middle East and Central Asia, he told the Senate Armed Services Committee in 2013: “If you don’t fund the State Department fully, then I need to buy more ammunition.”
Mattis sees soft power as an essential weapon that ultimately helps prevent shooting wars. “All elements of national power must work in tandem to support national priorities — in particular, our diplomatic efforts must be sufficiently funded if we wish the military to be employed generally as a last resort,” he said in SASC testimony. “A process that imposes budget rules first, and matches resources to national priorities second, is inherently limiting and inflexible.”
The adequacy of Pentagon funding, he said, would be measured by “our ability to execute our chosen strategy, maintain the nation’s technological edge, preserve the health of the joint force, and provide options to the president.”
The political environment today in theory would favor bigger defense budgets, but the reality is more complicated.
Jack Deschauer, a defense industry lobbyist at Squire Patton Boggs, noted that Congress has not yet passed an appropriations bill for 2017, even knowing that funding by continuing resolution is damaging to the Defense Department and the defense industry because new programs can’t be started. “I don’t know where it’s going to go,” he told National Defense. “There are competing power sectors.”
Trump’s budget director is a deficit hawk who may resist defense spending increases. The incoming president also has ambitious tax reduction and infrastructure investment plans that could derail efforts to increase defense. “It’s impossible to do everything,” Deschauer said. “In the short run, DoD will go up. Through reconciliation they will remove sequester. But I expect Republicans will move to cut domestic spending to fund defense. But I don’t think it will go up as much as some people thought it would increase.”
The current five-year defense budget is $107 billion above the BCA limits. Unless Trump can negotiate a deal with Congress, the Pentagon will have to cut spending by $21 billion a year starting in 2018. The modernization of the U.S. nuclear arsenal — which Trump has indicated he will support — will require an additional $17 billion a year from 2022 until 2043.
Lou Crenshaw, a retired Navy vice admiral and defense industry consultant, noted that the same budget pressures that dogged Obama will continue. Trump will have to tackle mandatory entitlement programs that account for the bulk of government spending, and figure out how to pay for planned tax cuts. Even if every Pentagon procurement program were wiped out, that still would not begin to make a dent in the problem.
Mattis said he would push for aggressive internal reforms that could ease pressures on runaway costs at the Defense Department. One area of concern is health care. DoD requested $47 billion for the military health system in 2016. The Congressional Budget Office has calculated that those costs will reach $64 billion by 2030.
“When internal costs rise faster than the topline growth, the Department will be forced to shortchange war fighting,” Mattis wrote in prepared testimony. “In the nation at large, the rising cost of health care continues to outpace inflation by double digits. The same math applies to the Department of Defense,” he noted. “This is a complex issue.”
A similar conundrum exists regarding personnel costs. Military personnel costs, as a percentage of the overall DoD budget, have remained consistent for the last two decades at 30 percent while the size of the force continues to decrease. “We must support our force and structure our pay and benefits in a way that continues to benefit recruiting and retention,” said Mattis. “But the best support we can give service members is to equip and train them properly.  If the defense budget flattens or declines in real terms while this percentage remains constant, the Department of Defense will face major challenges in defending the nation’s vital interests.”
Mattis said that regardless of the topline, the Pentagon should invest in research and innovation. “Those areas identified in the development of the Third Offset strategy are worthy of investment,” he said. “If confirmed, I will seek new options for simplifying and improving the success rate of putting new technologies into production. … I will review the current portfolio of technologies under development and ensure that those provide the nation with long-term technological superiority.”
And like his predecessors, Mattis will push for acquisition reforms. “Poor acquisition outcomes are forfeiting U.S. technology advantages and depriving the nation of strategic capabilities,” he wrote. “The fundamental challenge for the defense acquisition system is to deliver integrated hardware and software platforms that change on a routine basis. I will seek to establish a culture of innovation across the department.”
Mattis defended Trump’s criticisms of the F-35 as being too expensive. He called the F-35 a “critical capability” for the armed forces and for many U.S. allies. Trump supports the program, he said, but wants “bigger bang for the buck.”
During an exchange at his confirmation hearing, Mattis couched the looming fiscal dilemma in blunt terms: “We have to adapt the military to fiscal realities. But we can't fix our national debt problem on the back of our military.”
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