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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.”
Marine Corps Eyeing Additional Amphibious Ships
By Jon Harper

The Navy hopes to boost the size of its fleet in the coming years after President-elect Donald Trump takes office. Adding amphibious ships to the force would be the top priority for the Marine Corps if more money is injected into the shipbuilding account, the service’s commandant said Jan. 12.
For years, the Marines have complained of a shortage of such vessels. There are currently 32 in the inventory.
“We’ve got a stated requirement of 38,” Gen. Robert Neller said at the Surface Navy Association symposium in Arlington, Virginia. “Those special purpose [Marine air-ground task forces] probably wouldn’t have to be land-based if we had more amphibious ships.” And commanders such as U.S. Southern Command leader Adm. Kurt Tidd “wouldn’t have to come up here with his tin cup in hand” and ask for more assets, he added.
Amphibious ships are expected to bring even more capability to the force in the coming years as they are equipped with F-35B joint strike fighters and MV-22 Osprey troop transport aircraft, he noted.
The Navy and Marine Corps have also been studying adding vertical launch systems to San Antonio-class amphibious transport docks to enable them to carry more potent offensive missiles.
“If that LPD hull form … has VLS, and you’ve got a big deck amphib with F-35s and MV-22 Ospreys, I can go pretty much everywhere I want to go and do pretty much whatever I want to do,” Neller said. “It’s going to change the game.”
The Navy recently released a new force structure assessment that calls for a 355-ship fleet. During last year’s presidential campaign, Trump proposed a ramp-up to 350 ships. Both targets are well above the 308-ship goal that the service had been working toward.
Neller said he would defer to Chief of Naval Operations Adm. John Richardson with regard to precisely how a larger fleet should be composed. But he made his procurement desires known.
“We would … clearly like to see a number of amphibs,” he said. “That would be our first priority.”
However, any growth in the force needs to be balanced, he argued. Other assets are needed to take on high-end adversaries and carry out amphibious operations, he noted.
“The answer isn’t … 100 amphibs,” he said. “Amphibs have to be protected … the conditions for them to land have to be shaped. So you need every model/type/series of ship out there.”

Photo: The amphibious transport dock ship USS Somerset (Marines)

Mattis Breaks With Trump on Russia Threat, Praises F-35
By Stew Magnuson

Retired Marine Corps Gen. James Mattis in his Senate confirmation hearing to be secretary of defense on Jan. 12 singled out Russia as a key threat to the United Sates, a departure from President-elect Donald Trump’s assessment.
During his nearly three hours of testimony before the Senate Armed Services Committee, Mattis found himself answering  statements made by Trump on the campaign trail as well as a series of tweets after the November election that addressed Russia, North Korea, the U.S. intelligence community, and the cost of the F-35 joint strike fighter.
Senators from both parties grilled Mattis on his beliefs about Russia and whether the departed from the president-elect. Chairman John McCain, R-Ariz., included in his prepared remarks a list of Russian aggressions, including the allegation of interference in the past election. Trump, meanwhile, has signaled a détente with Russia, and a desire for better relations.
Mattis, when asked to list the greatest threats facing the nation, named Russia first.
“Russia, to quote the chairman’s opening statement, has chosen to be a strategic competitor. They are an adversary in key areas, and while we should always engage and look for areas of cooperation … we also have to recognize reality and what Russia is up to. And there is a decreasing number of areas where we can engage cooperatively and an increasing number of areas where we are going to have to confront Russia,” Mattis said.
Sen. Lindsay Graham, R-S.C., wanted to know exactly what Trump meant when he tweeted “not gonna happen” about North Korea’s ambitions to launch an intercontinental ballistic missile. Was that a red line? he asked. Mattis said he didn’t want to characterize the president-elect’s statement, but added: “It’s a serious threat and I believe we have to do something about it.” Graham asked if force should be an option if North Korea continues with its ambitions. “I don’t think we should take anything off the table, sir,” Mattis testified.
As for the Iran nuclear deal framework, the joint comprehensive plan of action, which Trump has disparaged and threatened to pull out of, Mattis said the United States should uphold its end of the deal. “It’s an imperfect arms control agreement. It’s not a friendship treaty. But when American gives her word, we have to live up to it and work with our allies,” he said.
Later, under questioning from Graham, he said he personally would not have signed the deal.
Making public Iran’s involvement in terrorism through proxies, its ICBM ambitions and threats in the cyber and maritime domains, “all helps to constrain Iran,” he said.
As for the ongoing dispute between Trump and the intelligence community, Mattis said had full confidence in the intelligence agencies.
“I can tell you that in my many years of involvement in the military I had a close relationship with the intelligence community. I could evaluate their effectiveness at times on a daily basis and I have a very, very high degree of confidence in our intelligence community,” he said.
Mattis on several occasions during his testimony defended the F-35 in light of Trump tweets that called into question the program costs.
Mattis said it was a superior aircraft with stealth and electronics beyond the current generation of fighters. Allies that are purchasing the aircraft are also depending on the program, he noted. Trump only wants to make sure the program getting “the most bang for the buck,” he said.
As far as other weapons systems, Mattis confirmed his support for modernizing all three legs of the nuclear triad with the B-21 long range bomber, the Columbia-class nuclear armed submarine and the ground-based strategic deterrent, the next-generation of intercontinental ballistic missile. He however stopped short of endorsing the controversial idea to arm a long-range cruise missiles with nuclear warheads.

“I need to look at one, sir. My going in position would be that it makes sense. But I need to look it in terms of its deterrent capability,” Mattis said.

He also took care to note he endorsed a “manned” version of the B-21, implying that he was lukewarm on the idea, or had not decided on an unmanned version of the bomber.
Mattis also said he would support the Pentagon’s current efforts to decrease its reliance on fossil fuels. “We will take advantage of every advance in terms of extending our legs, extending our energy efforts,” he said.
Mattis on two occasions mentioned the need to boost operations and maintenance accounts in order to refurbish equipment that has been at war.
“We have a reset problem in several of our armed forces coming out of many years of hard use. That reset has not been achieved. We also have a current maintenance problem where ships are at sea longer because the ships that are supposed to relieve them are not prepared,” he said.

Trump Policies Could Drive Away Foreign Military Sales — Or Not, Experts Say
By Stew Magnuson

Andrew Shapiro, founder and managing director of Beacon Global Strategies
and former assistant secretary of state for political-military affairs

Foreign military sales under defense security cooperation agreements are robust, coming in at some $36 billion in 2016. Whether that trend continues under the Trump administration is anyone’s guess, a panel of experts said Jan. 11.
President-elect Donald Trump during his candidacy focused heavily on the creation of manufacturing jobs. But he also hinted at trade wars, disengagement from alliances and said some foreign partners were not pulling their weight in paying for their own defenses.
These varied positions make predictions on future weapon sales in the coming years extremely difficult, the panelists said in a National Defense Industrial Association discussion “Reforming the Security Cooperation Enterprise,” held at the Covington & Burling law office in Washington, D.C., and sponsored by Orbital ATK.
Vice Adm. Joseph Rixey, director of the Defense Security Cooperation Agency, reminded attendees that foreign military sales is a tool of foreign policy. “There are benefits, of course, for our industrial capacity. We recognize that,” he said.
“Our primary goal is to assist our foreign partners … in building their military capacity so they can defend themselves,” he said.
The office does have a forecast for 2017, the details of which are confidential, he said. He did say sales, according to the document, “would be about the same. That’s about the best answer I can give you.”
“We are also seeing a trend out there that our products are very popular, so I’m optimistic about the future in terms of sales,” he said. However, it remains to be seen what the next administration’s attitude will be on defense security cooperation.
“We will determine what it is, they will give that to us, and we will go off and execute it, whatever it is they determine. But that does have an influence on sales. We need to understand what the next administration’s desires are.”
Peter Lichtenbaum, a partner at Covington & Burling and former assistant secretary of commerce for export administration, said it will take some determined efforts to educate the next administration on how FMS fit into its goals of creating jobs or having allies share more of their defense burdens.
Often times, large purchases of U.S. defense equipment come with offset stipulations, which can require that parts of production, and therefore the jobs, be moved to the purchaser’s country. “That might be seen as inconsistent with an administration that is trying to promote American manufacturing,” he said.
“It would be easy for a tweet to come out ... that is harmful,” he said, referring to the “policy by tweet” communications tactic that Trump has taken since the election.
Andrew Shapiro, founder and managing director of Beacon Global Strategies and former assistant secretary of state for political-military affairs, noted that none of the sub-cabinet positions and assistant secretaries have been designated yet, which makes prognostications hard. But he and the other panelists agreed that Secretary of Defense nominee retired Marine Corps Gen. James Mattis knows defense security cooperation well. Shapiro recalled times during Mattis’ tenure at Central Command when he become personally involved in making sure Gulf allies received the U.S.-made materiel they needed.
The Department of State approves the sales, and it’s not clear whether the department’s nominee, businessman Rex Tillerson has much knowledge of the program, he noted. It remains to be seen whether the next administration will reduce State’s funding and approval processes for FMS, Shapiro said.
“The question under a Trump administration is: ‘Are our customers still going to be there?’” Foreign policy changes may cause customers to look elsewhere. “That’s an open question.” On the other hand, Trump’s disposition to celebrate job creation may prompt an ally to tout a program as a boon to U.S. manufacturing in order to get in the president’s good graces, he added.

Photo: Stew Magnuson
Navy Secretary Skeptical of F-35 Handshake Deals
By Sandra I. Erwin

Navy Secretary Ray Mabus agrees with President-elect Donald Trump that the F-35 joint strike fighter program is too expensive and its price needs to come down. But he is doubtful that any verbal agreements between Trump and industry CEOs will magically fix the program. 

The per-aircraft cost of the F-35 is too high now, but should be going down as production ramps up, Mabus told reporters Jan. 11, just days before ending his term as the longest serving Navy secretary in the modern era. 

Any assertion that costs would fall miraculously as a result of Trump intervening is not believable, he said. “This may be the easiest promise that anybody has ever made. It was going to happen anyway,” Mabus said of the president-elect’s pledge to bring the price down. “I don’t think that handshake deal has any meaning,” he said in reference to Trump’s overture to the Boeing Co. to “price” a more advanced version of the F/A-18 Super Hornet as a cheaper alternative to the F-35.

Mabus nonetheless said he has been disappointed by the performance of the Lockheed Martin-built F-35 over his eight years in office, and praised his decision to keep buying Super Hornets for the Navy as a bridge until the carrier version of the F-35 completes development in 2019. 

“The F-35 is very late, it’s way over budget,” he said. “We’ve bought F-18s the entire time I’ve been secretary.” 

The Navy always was scheduled to be the last service to receive the F-35, and there has been speculation for years that Navy leaders never intended to stop buying Super Hornets out of fear that the F-35C would not come to fruition. Mabus said the Navy is comfortable it can handle F-35 delays, unlike the Marine Corps and the Air Force, which have no fallback plan. 

“The Marines have no back up. They haven’t bought Super Hornets and the Harriers are very old. They have to have it,” Mabus said of the F-35B, the vertical takeoff version that the Marine Corps is buying to replace the aging Harriers. “They are getting the aircraft that they need.” 

The Navy should “always have different generations of aircraft on the carrier decks,” he said. “For that reason we need to have the F-35 coming in behind the F-18. But they need to drive the cost down, and it’s late.” It will fall on the Trump administration to decide whether the Navy’s F-35C will continue on. “As of right now the F-35C will get its first squadron in fiscal year 2019.”

Mabus said it should not surprise anyone that this program has been so problematic. “It’s been a pet cause of mine,” he said, of the ill-fated decision to make the F-35 a tri-service “joint program that is not joint,” he said. “You have three aircraft. It’s not one aircraft that can do three different jobs.” One consequence of that arrangement is that “there is no one held accountable” when problems arise. “If it was a service program, you’d go up to Congress and say, ‘I’m responsible, look at me, look at the CNO [chief of naval operations].’”

Not knowing what specifically Trump might have negotiated with Boeing for an alternative to the F-35, Mabus said prices should be on a downslope regardless. “What I do know is that at this stage in the game the prices ought to be going down. Once you get into production, the price of each aircraft should be cheaper than the one before. There ought to be a learning curve, economic benefits to having production going at full rate.”

Mabus does not believe that publicly shaming companies as Trump did last month in various tweets — bashing both Boeing and Lockheed Martin — is a viable negotiating strategy. “I’m not sure it works,” he said. During his time in office, Mabus said, he helped reduce the cost of Navy destroyers, carriers and submarines by meticulously negotiating with contractors. “We did that with pretty straightforward stuff, shaming wasn’t part of it.” The key is to have stable designs and mature technologies and be upfront with contractors on “what you are going to build,” said Mabus. The industry also has to do its part by investing in infrastructure, hiring and training people, he said. “I think we’ve driven very hard bargains, and I think they’ve been fair.”

Trump again brought up his plan to reduce the cost of the F-35 during opening comments at a news conference Jan. 11. “The F-35 is way, way behind schedule and many billions of dollars behind budget,” he said. He praised Pentagon officials who discussed the issue with him in meetings in late December. “The admirals and generals have been fantastic. We are going to do some big things with the F-35 and perhaps the F-18 programs. We are going to get the costs down. We’re going to have competition. It’s going to be a beautiful thing.”

Industry watchers remain dumbfounded about the idea of replacing the F-35 with an F/A-18 Super Hornet. The Navy and Marine Corps operate F/A-18s, but the Air Force does not. And the program has many international partners who would be affected by any disruptions in the program. 

Aerospace industry analysts are scratching their heads. “Unless the rules of physics have changed, you cannot make a non-stealthy two-engine carrier based aircraft from the 1980s into a single engine, multi-role stealthy fighter from the 2000s,” noted Robert Stallard, of Vertical Research Partners. 

Air Force Lt. Gen. Chris Bogdan, head of the F-35 joint program office, has said repeatedly that the F-35 has been on budget and on schedule since the Pentagon restructured the program in 2011. He told reporters last month that the low-rate production lot 9 contract marks a 5.5 percent drop in prices for the F-35A Air Force variant, a 1.8 percent decline for F-35Bs and a 2.5 percent rise for F-35Cs, compared to the previous lot. His goal is to reduce the cost from $102 million apiece to less than $85 million per aircraft by 2018.

Lockheed Martin has called on the Defense Department to commit to a long-term agreement, or “block buy” so the company can negotiate better prices with subcontractors. But the Pentagon’s top weapons tester, J. Michael Gilmore, recently cautioned against such agreement. 

“The Department should carefully consider whether committing to a ‘block buy’ is prudent given the state of maturity of the program, as well as whether the block buy is consistent with a ‘fly before you buy’ approach to defense acquisition," wrote Gilmore, director of the Defense Department’s operational test and evaluation. He also has recommended Congress conduct a comprehensive review of the F-35 program, Bloomberg News reported. He asked lawmakers to ensure that program officials “adequately fix and verify hundreds of deficiencies” identified in the DOT&E fiscal year 2016 annual report.

Photo: F-35C
Mabus: U.S. Shipyards Can Meet Demand for Larger Navy
By Yasmin Tadjdeh

In its latest force structure assessment, the Navy said it needs 355 ships to meet its needs, a significant increase over an earlier requirement of just 308. The Navy is confident that U.S. shipbuilders will be able to meet that demand, outgoing Secretary Ray Mabus said Jan. 11.

They have the capacity to “get there because of the ships we are building today,” said Mabus during a speech at the Surface Navy Association’s annual conference in Arlington, Virginia. “I don’t think we could have seven years ago.”

Shipbuilders around the United States have "hot" production lines and are manufacturing vessels on multi-year or block buy contracts, he added. The yards have made investments in infrastructure and in the training of their workers.

“We now have the basis ... [to] get to that much larger fleet,” he said during what may be one of his last speeches as the Secretary of the Navy.

Since Mabus began his tenure in 2009, the Navy has put 86 ships under contract. The Navy will have 300 ships in its fleet by 2019, and 308 by 2021, he said.

The need for the 355-ship Navy is based on an increased demand signal from combatant commanders around the world, he noted.

“The world has gotten more complex in the years since 2012 and the demand for naval assets has gone up,” he said. “The reason for the difference is in 2012 we didn’t have a resurgent Russia. In 2012 we didn’t have an increasingly aggressive China. In 2012 ISIS or Daesh or whatever you want to call them didn’t exist. In 2012 North Korea was not doing the range of things it’s doing.”

It will be critical for the next administration to continue to increase the Navy’s fleet, he said.

“There are consequences to not having enough ships. There are consequences to a shrinking fleet,” he said. “If you miss a year building a ship, you never get it back. If you miss a year, that neglect will reverberate for decades.”

Cutting ships will not save the government money, he said. The cost of each vessel will go up.

“You won’t be able to get anything else because you won’t save any money. You may actually pay more for fewer ships,” he said.

Meanwhile, Mabus praised his administration’s push to develop alternative fuels for Navy and Marine Corps platforms. He said he hopes these efforts will not be pared back by the Trump administration.

“The new normal at sea is alternatives mixed with traditional fuels,” he said. “If you do [roll it back] you will make us a less effective fighting force. If you do, you will make us weaker. If you do, you will put sailor’s and Marine’s lives at risk.”

He noted that when the Great Green Fleet deployed last year, the Navy paid $1.99 per gallon for a biofuel blend. Not only is it cost effective, it allows ship to be at sea longer. He noted that vessels are most vulnerable when they are refueling.

“It gives us an edge, it makes us better,” he said.

Oil usage over the last seven years in the Navy has decreased by 15 percent. In the Marine Corps, it has decreased by 60 percent, he added.

Photo: Navy
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