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Kendall: Pentagon Struggles to Determine ‘Fair’ Prices for Commercial Items
By Sandra I. Erwin

Defense procurement chief Frank Kendall is caught between a rock and a hard place. He faces pressures to ease contracting rules that discourage commercial tech firms from doing business with the Pentagon. At the same time, he must placate lawmakers’ and regulators’ concerns about contractor price gouging.

“We try to strike the right balance,” Kendall said.

The challenge for Kendall is to ensure the government is being charged fair market prices for commercial products without necessarily subjecting vendors to intrusive audits and costly red tape. “Commercial practices and purchasing are a continuing subject of discussion,” Kendall said Sept. 2 during a lunch meeting hosted by the Professional Services Council.

The issue of how to balance the Pentagon’s desire to attract innovative commercial suppliers against the need to exert proper oversight of contractors is a tough one for Kendall, he recognized. “The DoD inspector general expects me to ensure fair pricing,” he said. Defense contractors, meanwhile, for years have complained to Pentagon officials and members of Congress that they are being asked to provide sensitive internal company data to the government to substantiate prices they charge for products that are sold commercially and for which price data already exists. Among the most disputed items have been aircraft spare parts.

“I get pulled by the Hill in both directions,” said Kendall. “I get pulled internally in both directions.”

For standard commercial items that are widely sold in the open market, determining a fair price is easy, he said. For defense-unique technologies and weapons whose development is entirely funded by the government, the Pentagon requires “certified cost or pricing data.”

The problem is the gray area between those extremes, such as products developed with private funds that a vendor considers to be commercial, although there may be no competition for setting the price. Some companies contend the Pentagon consistently demands certified cost and pricing data for commercial items.

Establishing the “commerciality” of a product will continue to be a source of friction between defense buyers and contractors, Kendall said. He has directed the Defense Contract Management Agency to study better ways to make “determinations of commerciality, to make the system more predictable and more expeditious,” Kendall said.

“Fair and reasonable price is what this is all about,” he added. “It’s always going to be contentious. We’re always going to have difficulties. We will occasionally make a mistake. … But we don’t want commercial suppliers driven away from the defense market.”

Kendall addressed the issue in the latest edition of the Defense Acquisition University Journal. “I’m afraid that we will never be perfect at this, given the vast number of items the DoD procures and our limited resources.”

In most defense acquisitions, he noted, “We need to proactively look for ways to embed or insert the most current commercial technologies. … It is clear that in many areas of technology the commercial market place is moving faster than the normal acquisition timeline for complex weapon systems.”

The Pentagon last month published a proposed rule to amend the Defense Federal Acquisition Regulation Supplement to provide guidance for evaluating the reasonableness of prices using data other than certified cost or pricing data. The proposed rule seeks to clarify the data an agency can use to establish reasonable prices in situations when there is no market competition.

Contracting experts and analysts have raised eyebrows following the publication of the rule Aug. 3 because it seems to add complexity to an already complicated discussion.

“The proposed rule falls short of its goal, instead increasing confusion in the determination of price reasonableness for commercial goods that have been ‘offered for sale’ but not sold,'" wrote Covington & Burling government contracting attorneys Jason N. Workmaster and Kevin T. Barnett. The rule has “open-ended data provisions that arguably permit the agency to request almost unlimited information to substantiate the reasonableness of prices,” they noted in a Law360 article. It is the “latest example of the government considering increasing the burdens and compliance obligations on its commercial contractors while expecting the results to be lower prices.”

Contractors have been invited to comment on the proposed rule by Oct. 2.

Workmaster observed that the Pentagon appears to take the position that market based pricing may not be an appropriate means of determining price reasonableness. “And it passes the buck to the contracting officer, empowering him or her to collect what the proposed rule refers to as ‘relevant sales data.’”

Industry analyst Byron Callan, managing director of Capital Alpha Partners, criticized the rule as a “step that runs counter to greater commercial outreach. That could be a disincentive for broader commercial enterprise engagement with DoD but also may bear on avionics and military engine spare parts pricing.” The regulation would “more rigorously and quantitatively define when DoD could rely on ‘market based’ pricing of commercial items," Callan wrote in a research note. Market based pricing typically is presumed to exist when non-government buyers in a commercial marketplace account for a preponderance — 50 percent or more — of sales of a particular item.

Photo Credit: Army
Northrop Grumman Beats BAE in Army Antimissile System Competition
By Sandra I. Erwin

The Army has selected a new antimissile system for its combat helicopters after a tightly contested matchup between two of the nation’s top defense contractors.

The Army on Friday awarded Northrop Grumman a $35.3 million contract to produce a laser antimissile system, called common infrared countermeasure, or CIRCM, to protect aircraft from shoulder-fired, heat-seeking missiles and other guided weapons. 

BAE Systems is the current supplier of antimissile systems for Army helicopters, so the Army’s decision is seen as a big blow to the company.

The Aug. 28 award, however, far from guarantees Northrop will become the Army’s only CIRCM supplier. The contract gives the Army ample opportunities to test the equipment before it commits to buying large quantities of the systems.

Northrop officials hailed the award as recognition that the company’s CIRCM offering gives the Army better technology than what it current has.

“We believe there is only one company that has been selected,” said Jeff Palombo, sector vice president and general manager of Northrop Grumman's land and self-protection systems, in Rolling Meadows, Illinois.

The contract awarded Friday funds 21 CIRCM “B kits” that will be tested in different Army helicopters, Palombo told National Defense Aug. 31. “The initial award provides incremental funding for the nonrecurring engineering portion of the job.”

Full production would begin in 2019. The Army has budgeted about $1 billion over the next five years for the program, including contractor and government costs.

Both Northrop and BAE had successfully tested prototypes over a three-year development program that ended in March. The Army on June 4 asked both firms to submit their best and final offers.

Palombo said between now and October 2017, the Army will be able to exercise options for further development and low-rate initial production of the systems.

“Like many engineering and manufacturing development contracts, there are time-phased options,” he said. “The customer always has the opportunity to put options on their contracts at their discretion.”

All options were priced in the bidders’ proposals, such as low-rate production orders to equip Army Chinook, Blackhawk and Apache helicopters. There are also options for the A-kits for those airplanes, which are the electronics and mechanical parts that are necessary to install the CIRCM system in the aircraft.

The Army structured the contract so it can first test the systems and ask for changes before it buys larger quantities. “EMD options are becoming more common” in military contracts, Palombo said. “During EMD you’re going to build units upfront, then you do environmental, integration, qualification and reliability testing,” he said. The company would make design or engineering modifications based on test results. “It’s very typical of the government to not order all the options at once but rather wait until the system is sufficiently tested and matured before they put those other options on contract.”

That flexibility would allow the Army, for instance, to choose options to equip different helicopter models based on needs and available funding.

The new CIRCM would replace an existing infrared countermeasure system made by BAE Systems that the Army bought six years ago for emergency combat deployments but now considers too heavy and too expensive.

Northrop and BAE are the nation’s only manufacturers of directional infrared countermeasures. Northrop Grumman currently supplies infrared countermeasures to the Air Force and Navy for both helicopters and fixed-wing aircraft. BAE officials had argued that choosing Northrop for the Army work would further consolidate the market and possibly eliminate a competitor.

Paul Roberts, spokesman for BAE Systems Electronic Systems, said the company was “disappointed by this decision.” In a statement to National Defense, he said the company has not yet decided whether it will protest the award. “We are currently considering all of our options as we prepare to be briefed by the Army about the decision."

Palombo said Northrop’s “open systems architecture” likely gave it the edge, as it would make it easier to update the system over time, if enemies deploy more advanced missiles. Older aircraft missile-warning systems use flare dispensers to confuse the sensors of incoming missiles. Newer missile designs have more complex seekers that are able to defeat flares.

The Army wants to eventually procure CIRCM in large quantities so it can provide aircraft with 360-degree coverage.

“Infrared missile threats are constantly changing,” said Palombo. “So we make sure our systems are kept relevant as technology changes to make sure we can address any new threats,” he added. “An open architecture lends itself to rapid changes.”

Northrop’s CIRCM supplier team includes Daylight Solutions of San Diego, and Selex ES, of Edinburgh, Scotland.

Photo: AH-64 Apache attack helicopter (Army)
Pentagon Initiatives Expose Complex Relationship With Private Sector
By Sandra I. Erwin

Defense business initiatives unveiled over the past week laid bare the difficulties the Pentagon faces as it seeks closer ties with innovators in the private sector.

In the latest effort to raise the Pentagon’s profile as a technology investor and a desirable customer to cutting-edge companies, Defense Secretary Ashton Carter traveled again to Silicon Valley to announce a $75 million five-year investment in a new manufacturing technology consortium that produces next-generation electronics for commercial and military use.

This is part of a larger plan Carter launched shortly after he became secretary of defense “to make sure that we continue to build bridges and strengthen the link between Silicon Valley and the Pentagon,” he said Aug. 28 during a visit to the National Full-Scale Aerodynamics Complex, in Mountain View, California.

With only 16 months left in the Obama administration, Carter said he is determined to establish meaningful collaborations with the private sector that will help rev up the defense innovation engine. A large “wall” exists currently between the Pentagon and the tech industry’s leading innovators, he said. “I know something about how to reduce the height of that wall, but I'm also in a hurry, so I'm going to dig some tunnels in that wall.”

A central component of Carter’s strategy is to prove the Pentagon can be a nimble buyer, willing to play by the rules of the private sector even though it is bound by a stodgy military procurement system.

The key is to “make our department more agile in how it invests in companies,” he said. Another imperative is to get defense executives and tech entrepreneurs to intermingle. “People from the valley can spend a little time working national security problems, and people from the government can spend some time learning how the tech industry works.”

But Carter’s determination to join forces with the tech sector is running up against growing doubts about the federal government’s motives and skepticism that it is willing to ease procurement practices that executives view as heavy handed.

Friday’s announcement of the Pentagon’s investment in a “flexible electronics” manufacturing alliance “comes at a time of deep mistrust between Silicon Valley firms and Washington over revelations the government had secretly obtained data about their users,” declared the San Francisco Chronicle.

In an interview with Bloomberg Television in Silicon Valley, Carter recognized the trust gap and called for a broader debate on the balance between privacy rights and national security. “That balance I don't think we can strike in Washington; I think we can only strike it by talking to the greatest leaders and minds in this field,” he said. “So we need to be a technology leader to protect our country, and we can be a technology leader only if we partner with folks out here.”

The relationship between the technology community and the government has had its ups and downs over the years, said Carter. “So this bridge is important to resolving that issue.”

It has been nearly a year since the Pentagon — under former Defense Secretary Chuck Hagel — launched a major innovation initiative amid rising concerns that the U.S. military has become technologically complacent and potential adversaries are catching up.

One of the implications is that traditional defense contractors are behind the curve in areas like autonomous vehicles, cybersecurity, advanced manufacturing and miniaturized electronics when compared to the larger commercial industry.

The Pentagon’s plodding procurement system is partly to blame, Carter acknowledged. “A lot of the really new, really cutting edge, brand new stuff, we do get but I find that the Defense Department, over the years, has gotten a little too bureaucratic, a little too slow for the pace of people out here,” he said. “And in the technology area, we have so much to learn from the cutting edge out here.”

During the same week when Carter courted the tech industry on the West Coast, the Pentagon’s top weapons buyer Frank Kendall addressed military contractors in Newport, Rhode Island, a stronghold of defense industry. In a speech there Aug. 26, he sought to placate CEO concerns about a Pentagon initiative to increase oversight of corporate R&D expenditures that are billed to the government.

In a reversal from an earlier proposal that would have required companies to enlist a “technical sponsor” from the Defense Department before they start any R&D project, Kendall decided to soften that requirement in response to strong industry blowback. Notably, Kendall seemed to agree with critics that such rules, although justified to protect taxpayer dollars, would give companies less “freedom” to innovate. With the Pentagon in an innovation mood, Kendall suggested, such measures might send the wrong message.

“Innovation has become a very popular word lately,” he told the Southeastern New England Defense Industry Alliance.

Both the government R&D community and contractors need “freedom to have a new idea and to take action in pursuit of that idea … the freedom to fail and start again. I also mean freedom from bureaucratic constraints,” Kendall said according to a transcript of his remarks.

The Pentagon allows contractors to pursue independent research and development as an allowable overhead cost with “very little constraint,” he said. In recent months, though, “I’ve made industry a little nervous by proposing in Better Buying Power 3.0 to increase the department’s oversight of this work.” The backlash from the industry was about the “loss of freedom to make their own IR&D investment decisions,” Kendall added. “That was never my intent.”

Instead, the Pentagon will only require industry to “brief an appropriate DoD official prior to and after concluding an IR&D project, and to record that meeting as part of the accounting for the project. … This should not constrain industry’s freedom in any way that current regulations and statute don’t already require.”

Carter’s Silicon Valley push and Kendall’s R&D initiative expose seemingly conflicting pressures the Pentagon faces to step up its technology game but also to stay out of political trouble for taking risks with taxpayer funds that may not pan out.

“The politicization of these decisions does not generally lead to better results,” he said. “I have no solution to offer for this, other than to continue the work of the last several years to ensure we don’t start unaffordable programs, and to manage risk professionally and proactively in our development programs. The department spends taxpayer provided money; we will always be under close public scrutiny.”

Photo Credit: Defense Dept.

Fourth Navy MUOS Communications Satellite to Complete Global Coverage
By Stew Magnuson

Barring foul weather caused by Hurricane Erika in the Caribbean, the fourth Mobile User Objective System satellite is scheduled to launch Aug. 31 from Cape Canaveral Air Force Station in Florida, providing full global coverage for what it is being touted as a “cell phone tower in the sky” for U.S. forces.
U.S. armed forces, civilian agencies and allies will have access to smartphone like features on the secure narrowband system, with higher data rates and beyond-line-of-sight connectivity as long as they can link to the system, although rollouts of terminals and the software waveforms that are needed to connect to the spacecraft have been plagued by delays.
“This greatly extends the coverage for our warfighters on the ground,” Col. James Ross, Army tactical radios program manager, said on a conference call with reporters Aug. 28. The system is referred to as “cell towers in space” for its ability to deliver the kinds of communications consumers expect on Earth. Officials said the voice clarity is actually better than a typical cell phone.
The Navy’s MUOS-4 spacecraft, if successfully placed in orbit, will provide global coverage, although the system will not be considered fully operational until a fifth on-orbit spare is launched, all ground station work is complete and the wideband code division multiple access is working properly.
The Navy is having difficulties delivering the waveform also known as WCDMA, which is intended to work with MUOS. The MUOS spacecraft have a payload that allows them to communicate with radios compatible with the legacy UHF-Follow-On satellites, which accounts for the 10 percent of capacity being used.
Of more immediate concern is Hurricane Erika, which is on course to make landfall in Florida the day prior to launch. Officials are keeping an eye on the storm and preparing for any delays.
Navy Capt. Joe Kan, MUOS program manager, said while it is true the spacecraft are not using their full capacity because of a lack of terminals, they needed to be launched so there was no degradation in service as the legacy UFO satellites age. Early users of the system include the Coast Guard, which has sent communications from its icebreaker, Healy, as far as 83 degrees north, and Special Operations Command.
The system is designed to be used by everyone from troops on the ground with backpackable radio systems to ships, submarines and jet fighters. It has been successfully tested on C-17 aircraft, noted Iris Bombelyn, vice president of narrowband communications at the spacecraft’s manufacturer Lockheed Martin. The company is in the early stages of testing the on-orbit spare, she added.
A third hiccup in the system’s rollout has been a court case centering around an environmental lawsuit opposing the placement of the ground control station in Italy. Kan said the other ground stations can take up the slack while the Navy awaits the decision by an Italian court.
Kan said there are already ongoing high-level discussions with the joint staff, U.S. Strategic Command and others about the follow-on narrowband system. “No final decision has been made yet, but we certainly are proceeding and are on track to start the pre-acquisition activities as early as 2017, once those decisions are made.”
“There is a lot of interest in getting the pre-acquisition activities going," he added. Expanding MUOS to a sixth satellite to increase capacity is also on the table, he said. It is engaging with a “number of different countries” to look at the possibility of funding partnerships, he said. Canada, Australia, the Netherlands and the United Kingdom have all been part of the talks, he said.

Photo: MUOS-4 satellite being encapsulated near Cape Canaveral (United Launch Alliance)
TARDEC Leader: Army Needs Innovative Truck Technology
By Yasmin Tadjdeh

The Army needs future tactical wheeled vehicles to be modular, flexible, adaptable and smart as the service faces a future of unknown missions and threats, said the director of the Army Tank Automotive Research, Development and Engineering Center Aug. 26.

“The future is unknown. We don’t know who we’re going to fight. We don’t know where we’re going to fight. We don’t know under what conditions,” said Paul D. Rogers during a speech at the National Defense Industrial Association’s annual tactical wheeled vehicle conference. “What we have to realize is [it’s] probably unknowable.”

“If we want our vehicle systems to be more than just things, they have to … be able to change as rapidly as that commander on the ground needs it to change. We need to give them the adaptability so that they can adjust to the threats and the environments that they find themselves in,” Rogers said.

What is certain is that Army forces will fight in all five domains — air, sea, land, space and cyber, he said. The ground domain will present a number of challenges for the service, he added. It is one of the most complicated because it is affected by natural disasters, humanitarian crises and riots. Those all have an impact on military forces, he said.

“Our soldiers and our systems have to be able to operate in that complex environment,” he said. “That’s where we’re challenged. The ground domain is very, very complex and it offers many, many different dilemmas.”

The Army is now researching how it can be flexible, resilient and responsive “so that we can give that commander on the ground the ability to innovate as [his] opponent is innovating,” he said.

One program TARDEC is working on is the “tactical truck of the future,” he said. The joint tactical truck system is being developed alongside the Office of Naval Research, he noted.

“The goal is to take a look at our current fleet of … medium and heavy tactical systems and really look at the 40 or 50 variants and ask ourselves and challenge ourselves, ‘Can we simplify that class of vehicles to a much smaller class, a smaller set of different solutions. Can we make it modular? Can we give it the attributes that we need in order to give that differential advantage, that flexibility to our warfighters?’” he asked.

The Army wants JTTS to be fuel-efficient so the force can be deployed with a shorter logistical tail, Rogers said.

“We’re looking at possibly getting up to about 50 percent efficiency at the vehicle system level and that will cascade up to the formation level,” he said. “I think it’s possible based on the work we’ve seen in the commercial world and work we’ve seen in the Department of Energy.”

TARDEC has an ongoing relationship with the Energy Department and is looking at new ways to inject fuel efficiency into trucks, he said. They are looking at everything from using dissimilar materials to new lubricants.

Photo Credit: Army
Special Operators Interested in ‘Motoped’
By Jon Harper

CINCINNATI, Ohio – U.S. commandos are interested in a new dual-mode bike that that can be propelled by a motor or human peddling, said a member of the defense industry.
The Motoped Survival Bike was delivered to the special operations community for testing on Aug. 8, according to Jeffery Givens, president and CEO of Graystone Defense LLC.
Givens is a consultant who works with the American Performance Technologies Group, which designed the vehicle.
“It’s simply a ruggedized downhill racing mountain bike with a motor on it,” he said Aug. 26 at the National Defense Industrial Association's Joint Service Power Expo in Cincinnati, where the motoped was on display.
The bike is designed for off-road travel and is equipped with six-inch shock absorbers similar to those on professional Motocross motorcycles, Givens said.
The vehicle weighs 132 pounds and can carry a 300 pound load, including the weight of the driver. In testing it has reached speeds of more than 45 miles per hour, he said.
The motoped gets 140 miles per gallon or better, depending on the size of the engine and other variables, Givens noted. The bike carries three one-gallon fuel tanks, giving it a range of up to 480 miles, depending on the terrain and other variables, he added.
Givens said a key selling point for the bike is that it would enable special operators to drive across rugged terrain rather than march over it.
“The soldier is going 20 miles an hour … instead of 2 miles an hour with 80 pounds of gear” on their backs, he said.
U.S. Special Operations Command is already buying ATVs to help commandos go off road and reach their targets more easily. But the motoped offers an additional advantage in that special operators could turn their engines off on the final stretch of their journey to better maintain the element of surprise when attacking the enemy.
“You’ve got an option … [if] you want to come in on the [motor] power for a certain distance [and] then want to peddle for a little bit so you’re quiet,” Givens said.
He noted that the bikes, given their relatively small size, are easily transportable via helicopter. They are also less expensive than most vehicles the military buys, coming in at under $4,000 per unit.
Givens acknowledged that the vehicle does have some limitations in its current form, such as the difficulty of peddling uphill.
“I admit that a 132-pound bike with 300 pounds of rider and gear is a lot to pedal,” he said.
Another potential drawback, from the military’s perspective, is that it runs on gasoline.
“Everybody wants to go to heavy fuel,” Givens said. “[But] nobody has produced a single cylinder, small fractional horsepower motor that is diesel yet that has worked.”
He said some changes need to be made to optimize the bike for potential military customers. “There’s a little bit of developmental work that we’ll have to do,” he noted.
Potential upgrades include installing LED lighting, closing the fuel system and giving the vehicle the ability to recharge military batteries, he said.
Givens was asked if gun mounts could be placed on the bike. “We’ll look into that eventually,” he said. “It all comes down to weight and how much bulkiness you want to have.”
Special operators are not the only ones interested in the motoped. The APT Group is already selling variants of the vehicle on the commercial market. The company has sold more than 500 since February, Givens said.

Photo Credit: Motoped
Defense Department Wants Cargo Drones For the Pacific
By Jon Harper

CINCINNATI, Ohio – Promoting the development of cargo drones will be the focus of next year’s operational energy capability improvement fund, according to a Defense Department official.
“The [fiscal year 2016] theme for OECIF is unmanned aerial vehicles,” said Steve Mapes, deputy director for expeditionary operations in the office of the assistant secretary of defense for energy plans and programs. “What we’re talking about is unmanned aerial vehicles for resupply.”
OECIF provides seed money to programs that could potentially improve the energy usage of deployed forces or deliver long-term cost savings.
By using UAVs to transport cargo “you can take those trucks [that would normally have to be used to transport supplies] off the road or you can navigate or circumvent bodies of water without having to send actual forces or troops or ships” to deliver materiel, Mapes said Aug. 25 at a National Defense Industrial Association power conference in Cincinnati, Ohio.
OECIF investments in 2016 would be “targeted specially toward the Pacific,” which presents unique logistical hurdles because of its vast size, Mapes said.
“Tyranny of distance right now is hands down one of the most challenging things we have to deal with, particularly in the [U.S. Pacific Command area of responsibility],” he said. “We rely heavily on host nation agreements. We rely heavily on our joint partners to move equipment and assets from point A to point B. But one of our major defense challenges is just distance.”
As a solution, he envisioned launching supply drones off ships. “We’re talking cargo aircraft that can navigate from a ship-based platform [and] … allow us to navigate that distance without bringing that ship right up to the coast,” he said.
The planned investment reflects an expansion of the roles of unmanned aircraft, which are known for intelligence gathering and precision strike capabilities.
“They’re not exclusively for … surveillance or reconnaissance,” Mapes said. “We’re developing UAVs specifically for logistics.”
Although the focus right now is on the logistical needs of PACOM, Mapes suggested that cargo drones could be useful in other regions as well.
“We’ve got a lot of analysis on UAVs and the efficiencies to be gained and the application in a variety of" areas of operations including the Middle East and Europe, he said.

The Marine Corps famously first used unmanned cargo aircraft to resupply forward operating bases in Afghanistan. The K-Max rotary wing aircraft, a Lockheed Martin and Kamen Aerospace product, was used on a temporary basis under a joint urgent operational needs statement. However, it did not transition to a program of record.
Mapes said the Defense Department will issue a solicitation in early fiscal year 2016 as part of the process of determining which programs will receive OECIF funds. He did not specify how much money will be dispersed next year. In recent years, OECIF funds have totaled tens of millions of dollars.

Image Credit: Thinkstock
Oshkosh Defense Wins Joint Light Tactical Vehicle Contract
By Yasmin Tadjdeh and Allyson Versprille

A hotly contested contract to replace the U.S. military’s fleets of aging Humvees was awarded to truck builder Oshkosh Corp. of Oshkosh, Wisconsin, the Army announced Aug. 25.

Oshkosh beat out competitors Lockheed Martin and incumbent AM General — maker of the Humvee — to build the joint light tactical vehicle for an initial contract worth some $6.7 billion. Oshkosh expects to deliver approximately 17,000 vehicles and sustainment services over the course of the initial contract. Over the program’s lifetime, the Army is planning to purchase more than 49,000 vehicles and the Marine Corps is slated for 5,500 units. It is estimated the entire program is worth $30 billion.

The JLTV is one of the few remaining new-build vehicle contracts in the U.S. military market, making it an extremely important win and major boon for Oshkosh.

Scott Davis, Army program executive officer for combat support and combat service support in a briefing with reporters said the selection was based on “key performance parameters” and “key system attributes." He declined to give further details on the selection process.

John Bryant, senior vice president of defense programs at Oshkosh Defense, told National Defense: “While we never counted our chickens before they were hatched, we were confident that there was no better vehicle out there. … It’s absolutely the best light vehicle on the planet. It offers unprecedented protection and superb off-road mobility.”

He said the company is ready to deliver vehicles in 10 months. “We have been in execution mode really since we delivered our proposal.”
John M. Urias, executive vice president of Oshkosh Corp. and president of Oshkosh Defense, touted the winning vehicle's attributes. “Our JLTV has been extensively tested and is proven to provide the ballistic protection of a light tank, the underbody protection of an MRAP-class vehicle, and the off-road mobility of a Baja racer. The Oshkosh JLTV allows troops to travel over rugged terrain at speeds 70 percent faster than today’s gold standard, which is our Oshkosh M-ATV.”

Heidi Shyu, assistant secretary of the Army for acquisition, logistics and technology said: “I am tremendously proud of the JLTV program team. Working with industry, they are delivering major improvements in protected mobility for soldiers and have succeeded in executing a program that remains on-budget and on-schedule."

The program is meant to replace a portion of aging Humvees with new vehicles that balance mobility and protection. The Marine Corps and Army will finish fielding the vehicles between fiscal years 2022 and 2040. Each vendor delivered 22 prototype vehicles as part of JLTV development, which were utilized as part of a 14-month competitive test.

Low rate initial production is slated to begin in the first quarter of fiscal year 2016, according an Army statement. The two services will procure approximately 17,000 vehicles under this initial contract, with a decision on full rate production by the department expected in fiscal year 2018. 

Procurement of 5,500 Marine Corps vehicles are front-loaded into the JLTV production plan. Initial operating capability for the Corps is expected in Fiscal Year 2018 with fielding complete by 2022, the statement said.

The Army anticipates having its first unit equipped in 2018. Army procurement will last until approximately 2040 and replace a significant portion of its legacy light tactical vehicle fleet with 49,099 new vehicles, the statement said.

Sean Stackley, assistant secretary of the Navy for research, development and acquisition said: "With America's soldiers and Marines in mind, the program team successfully met both services’ requirements for affordable, achievable capability advancements that will make a true difference. Today's award brings us a step closer to delivering a flexible vehicle that balances the payload, performance, and protection critical in the operating environments of today and tomorrow."

During the National Defense Industrial Association’s annual tactical wheeled vehicle conference in Reston, Virginia — where Army leaders earlier gave briefings on a variety of truck-related topics — members of industry reacted to Oshkosh winning the lucrative award.

Tim Foerster, director of strategic planning and marketing at BCF Solutions, an Arlington, Virginia-based business consultancy, said: “Oshkosh is a proven leader in the development to tactical vehicles and the success of their current product lines indicts that. I think that this is great for the Army, for the Marine Corps and then of course for Oshkosh but also the small businesses that make up their partners and supply chain as well.”

Army Col. John Cavedo, former JLTV project manager, told reporters that the new vehicle will restore the so-called “iron triangle” of payload, protection and performance. "This is going to allow us to operate the way we had envisioned our light tactical vehicles being able to operate with greater flexibility and gaining back an expeditionary capability that we lost when we had to provide additional” armor, he said.

In addition, Cavedo said the per-unit cost of the vehicles was below the reported amount of $399,000 in fiscal year 2012 dollars. That includes the various kits, fielding and other costs. He declined to say how much lower the price tag would be.   

John Kent, senior manager of media relations at Lockheed Martin Missiles and Fire Control, in statement brought up the possibility of a protest. “The Lockheed Martin JLTV Team was disappointed to learn that the U.S. Army and Marine Corps did not select our JLTV. We believe we presented a very strong solution and await the customers’ debrief to hear more detail regarding the reasons behind this selection before making a decision about a potential protest.”

AM General spokesman Jeff Adams said the company was proud of its offering and disappointed in the announcement. “At this time, we are reviewing the government’s decision and are considering all available options,” he said in a statement.

Brad Curran, an aerospace and defense analyst at Frost & Sullivan, said he believed that AM General was the front-runner for the contract. “There are still plenty of hummers in the fleet, and there are still plenty of foreign military sales as well, so between foreign military sales and parts and maintenance from the current fleet, which isn’t going to go away for many, many years [AM General] will still have work to do.”

Oshkosh’s Bryant said: “I would be surprised if there were no protests considering the stakes. ... Usually on a very large program like this when you consider the fact that there are not a large number of big tactical wheeled vehicle programs on the horizon, it wouldn’t surprise me if there were protests.”

Foerster said: “I think Lockheed has a lot going for it right now, with missile systems and air systems and naval systems so probably more than the other three they probably had the least to lose. AM General: this is going to be a tough one, having been the provider of the Humvee. … It will be interesting to see how they rebound from this.” 

Bryant added: “The JLTV contract is one of the most valuable wins in the history of Oshkosh, particularly in Oshkosh Defense. What it really means to us is it offers stability over the long term.”

Photo Credit: Oshkosh Defense
Air Force Leaders: Continuing Resolution Worse Than Sequestration

By Allyson Versprille

Air Force leaders warned Aug. 24 that a continuing resolution in fiscal year 2016 would reduce readiness and funding for the military even more so than a sequestration-level budget.


"A full-year CR would provide for our Air Force — really for our military — even less money than the sequestration-level budget would provide," Secretary of the Air Force Deborah Lee James said during a press briefing at the Pentagon. "All around, that would be a bad deal. … We need to get the full-up appropriation and the full-up authorization passed at roughly the president's budget level." The administration's 2016 request seeks $534 billion for the Defense Department.

Congress has a Sept. 30 deadline to pass a new budget. Some lawmakers have proposed keeping sequestration levels in place, and making up Defense Department budget shortfalls through overseas contingency operations funding. Other members have suggested that a continuing resolution would be more expedient. 


Planned increases in aircraft procurement and personnel levels could be affected by a continuing resolution, the Air Force leaders warned.


"We have quantity increases scheduled in ‘16 in aircraft procurements like the KC-46, the F-35, the C-130 multiyear program and a few other things,” said Gen. Mark Welsh, Air Force chief of staff. “Those would go away under a year-long CR. The quantity increases would not be allowable.”


The service already has trouble today fielding enough functioning aircraft, Welsh said, stressing that modernization is an imperative for the service.


"We have four fleets of airplanes that are over 50 years old," he said. "The idea that we would run Formula One or a NASCAR race with a car built in 1962 is ridiculous, but we're going to war with airplanes built in 1962."


James said personnel increases that have been requested in the Air Force's fiscal year 2016 budget would not be possible under a continuing resolution.


"Under a full-year CR … we would not be able to increase our end strength," she said. While the service would try to avoid reducing personnel numbers, James did not completely rule out this possibility. "We would be significantly down in terms of our dollars of where we need to be, and so everything would have to be looked at."


Additionally, if the Pentagon is forced to operate under a continuing resolution, as many as 50 new-start programs would suffer, James said. "If we don't get a budget, it's going to affect lots and lots of programs. Under a CR there are no new starts."


However, the service's next-generation long range strike bomber would most likely not be affected under such legislation, she said. It has already been funded to a certain extent, meaning it would not be considered a new-start program, she noted.


James estimated that the bomber contract would be awarded "soon," although she did not provide a specific timeframe. "We will do it when we're ready. The key thing is to make sure that we are doing it correctly."


Welsh said the bomber is intended to replace the aging B-52 and B-1 platforms.


"The B-52 and the B-1 will time out eventually," he said. "We would start to field the new bomber in the mid-20's and it would probably continue for 25 years or so."

Photo Credit: Air Force

Pentagon: More Firepower for Asia-Pacific Region
By Stew Magnuson

A Defense Department Asia-Pacific maritime security roadmap released Aug. 21 calls for more personnel and weapon systems to be forward deployed in the region.
The “Asia-Pacific Maritime Security Strategy” said the Pentagon in the near future will be “bringing its finest capabilities, assets and people to the Asia-Pacific region.”
The region has for decades remained free from major conflicts, the congressionally mandated report noted. “However, the security environment is changing, potentially challenging the continued stability of the region.”
Included in its list of assets being sent to the region would be the first forward-stationed F-35B Marine Corps joint strike fighters, which will be based in Iwakuni, Japan. The new aircraft carrier USS Ronald Reagan will replace the USS George Washington this year. Japan will also host the newest air operations-oriented amphibious assault ship, the USS America, by 2020, two more Aegis-capable destroyers and the latest class of stealth destroyers, the DDG-100.
“The department will also procure 395 F-35 aircraft over the next several years, many of which will be deployed to the Asia-Pacific region,” the report said.
It will base an additional attack submarine and two additional Virginia-class submarines in Guam.
The Defense Department is embarking on a comprehensive weapons modernization program relevant to the maritime domain, the report said. The Joint Air-to-Surface Standoff Missile and a new long-range anti-ship cruise missile that “will improve the ability of U.S. aircraft to engage surface combatants in defended airspace” are part of this program.
“The department is also making substantial investments to develop the MQ-4C Triton unmanned aerial systems, which will provide broad area situational awareness to our operational commanders,” the report said. Other intelligence, surveillance and reconnaissance platforms that will be deployed in the region in increasing numbers are the E-2D Hawkeye carrier-based airborne early warning and control aircraft and the P-8A Poseidon maritime surveillance aircraft.
The Navy will increase the number of ships assigned to the Pacific fleet by about 30 percent, the report said. By 2020, 60 percent of naval and aviation assets will be home-ported in the region.
While Japan will remain the “cornerstone” of U.S. forward deployed assets, Guam is set to be a major strategic hub of operations for the joint forces. The new joint high speed vessel is set to be deployed there by 2018, it said. In addition, new training ranges will be developed in the Northern Mariana Islands to “enhance the readiness of our forward forces to respond to regional crises,” the report said.
The report outlined numerous partnerships in the region. The Defense Department is spearheading, along with Singapore, the establishment of a regional maritime domain awareness network. “No coastal state can provide effective maritime domain awareness on its own,” the report noted.
Many of these partnerships appear to be bulwarks against a rising China. The U.S. military is forming other partnerships with Chinese rivals Vietnam and India. It is expanding maritime engagements with Japan, Malaysia and Indonesia, it added.
“China’s rise as a political, economic and military actor is a defining characteristic of the 21st century; and we have a broad, complex relationship that has both elements of cooperation and competition,” the report noted. “As a result, our defense engagement strategy considers both elements.”
“China is modernizing every aspect of its maritime-related military and law enforcement capabilities, including its naval surface fleet, submarines, aircraft, missiles, radar capabilities and coast guard,” the report said.
Despite a large portion of the report being devoted to China and its perceived transgressions in disputed territories such as the Spratly and Senkaku Islands, the report noted that China participated on a limited basis in the 2014 Rim of the Pacific exercise and will be invited to do so again. The document spelled out the many regional issues, mishaps and territorial claims involving China that have exacerbated tensions in the region.
“China is using a steady progression of small, incremental steps to increase effective control over disputed areas and avoid escalation to military conflict,” the report said.
The Defense Department is undertaking a series of measures that are designed to reduce tensions and mitigate the risk of incidents between the U.S. and Chinese forces as well as China and regional rivals such as Japan, the report said.
Along with the U.S. military shifting more firepower to the region, other nations are upgrading their capabilities. Vietnam is “pursuing an ambitious modernization program,” the report said. The Philippines is also looking to upgrade its aging ship fleets. Japan will be developing an amphibious assault force as well as modernizing its ISR assets. 

Photo Credit: USS Ronald Reagan and other ships during the 2010 Rim of the Pacific exercise (Navy)
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