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U.S. Military Lacks Clear Rules of Engagement in Space
By Jon Harper

The United States military lacks clear rules of engagement as it seeks to defend the nation’s space assets, the deputy commander of Strategic Command said March 22.
Potential adversaries such as China and Russia are developing an “arsenal” of lasers, railguns and microwave weapons to neutralize U.S. satellites, said Navy Vice Adm. Charles Richard. These offensive capabilities could take out critical systems that the Pentagon relies on for command-and-control, communications, navigation, intelligence gathering and other purposes.
“We’ve created a domain that must be secured,” he said at a space security conference in Washington, D.C., hosted by the Center for Strategic and International Studies and the Prague Security Studies Institute.
“The best way to prevent war is to be prepared for war. And we’re going to make sure that everyone knows we’re going to be prepared to fight and win wars in all domains to include space,” he added.
Nevertheless, multiple exercises have revealed that the U.S. military isn’t as prepared as it needs to be, he warned.
“One of the things these exercises have highlighted is we have difficulty determining the appropriate response at times due to a lack of rules of engagement in space,” Richard said. Policymakers are “still sorting out answers to the questions like, what constitutes an attack in space? What is the undisputable evidence required within the international community to assert violation of sovereign territory in space? What constitutes provocation in space?”
“If we’re going to act decisively in real time we have to address these issues both legally and operationally,” he added.
There’s also room for improvement when it comes to situational awareness, Richard said. Although the U.S. military is equipped with radars and other sensors, it still can’t see everything that is going on outside the atmosphere.
“Trying to figure out what’s happening on orbit is sort of like watching a tennis match in a darkened room with a strobe light flashing and you’re trying to figure out what’s going on,” he said.
The situation could be rapidly improved through greater information sharing with partners and allies that have space assets, he said.
As potential adversaries enhance their capabilities to attack other countries’ systems, the U.S. national security community should move toward more distributed and resilient space architectures, Richard argued. Allies and partners could help in this regard by sharing on-orbit and ground-based components of their systems in the event of conflict, he said.
If the space domain is uncontested “I can have a very small number of Death Stars up on orbit … that have all these capabilities,” he said using an analogy from Star Wars. But “I don’t think that’s the right way to go in a contested environment.”
That view is not universally shared among policymakers, he noted.
The military’s space components are looking to partner with the commercial sector as they pursue new capabilities. But red tape sometimes gets in the way, Richard said.
“There is a bit of bureaucracy that you have to dynamite through in order to go do this,” he said. “Sometimes that’s a bit of an uphill push.”
Investments in defense-related space capabilities could see a boost under President Donald Trump as other countries improve their anti-satellite technology.
Richard said it would be “premature” to assess whether more funding would be coming STRATCOM’s way in this regard, but he noted that the Trump administration is pursuing a broad military buildup.
“We know that in early meetings with senior military leadership our new president has shown a keen interest in space issues as we work towards a strategy of preparation without provocation in space,” he said.
Rep. Jim Bridenstine, R-Okla., a member of the House Armed Services Committee and a leading voice on space issues on Capitol Hill, said there is “without question” widespread support in Congress and at the White House for spending more in this area.
“If you look at the defense budget even during the Obama administration, they were very aggressive in plussing up the national security space budget,” he said. “Congress of course concurred. And now we’re going to, I think, see that continue.”  

Image: Rendering of a defense satellite communication system satellite (Air Force)
Army Gets 'Sticker Shock' With Price of Robotic Squad Support Vehicles
By Stew Magnuson

The Army is eager to move ahead with robotic systems that can serve as mules for overloaded troops and with driverless trucks that can follow one another in convoys, but the prices companies are proposing are coming in too high, a service official said March 22.

Brig. Gen. John George, director of the capabilities development directorate and the Army Capabilities Integration Center, said "one of the things that kind of hinders us is frankly the sticker shock of some of these systems that we expect to come in at a lower price."

A request for information from industry for the squad mission equipment transport vehicle came in at $80,000 to $240,000, he said at the National Defense Industrial Association's Ground Robotics Capabilities conference in Springfield, Virginia. The SMET is envisioned as an autonomous off-road vehicle capable of carrying soldier equipment in order to lighten troop loads.

"We are frankly unhappy with the cost and the timeline" of SMET and autonomous trucks, he said.

"How much is a Tesla?" He asked. The high SMET price means either the Army produced "gold-plated requirements" or industry is giving it premium prices, he said. "And we're living on a peanut butter salary right now."

If the Army is asking for a capability that is too expensive, it wants to know, he said. If one percent of the requirements being taken away results in 10 percent savings, "that would be very interesting to us. We have got to understand what the cost drivers are."

That is also true of the appliqué kits that convert tactical wheeled vehicles to autonomous trucks capable of doing leader-follower convoys.

The question with SMET and leader-follower  is: "What is the right balance between requirements and cost and acquisition timeline?" He asked. Those questions are being posed at the Army Requirements Oversight Council, or AROC, he said.

Army Chief of Staff Gen. Mark A. Milley is reinvigorating the council, George said. It once only approved requirements, but it is now being used to synchronize the requirements with resources and the acquisition regime, George said. "Our chief is very engaged in driving the synchronization of those three critical processes and making decisions personally about our requirements."

The AROC held a meeting on whether to proceed with autonomous truck appliqué technology in February, but did not come to a decision on whether to proceed and make it a program of record, George said.

Meanwhile, Milley is demanding that requirements documents be completed in four weeks. "I don't know what it used to be ... But we are moving in an expedited manner to get requirements documents." The council needs to see the capabilities and the costs lined up before they approve a particular technology, George said.

The AROC sees robotic and autonomous systems as a technology that can make Army formations more effective, he said. They must make units more lethal and more protected before gaining approval. "Some people want to develop technology for technology's sake. We have to keep it pointed on what it does to our formations and how it enables them."

George said the double whammy of sequestration and continuing resolutions is causing the Army to protect readiness but at the expense of its modernization accounts. It is trying to maintain its science and technology programs "so when we do have an increase in resources we have the underpinnings of these technologies we can roll out into new systems."

"We are going slow to keep our options open ... We are keeping things warm so as we have opportunities to find resources [we can] either increase capability or increase production."

Despite the austere budget environment, the Army boosted its robotic research and development accounts 500 percent from the 2015 to the 2016 budget, he said, although he didn't want to reveal the exact dollar figures. It is a technology that touches on many of the service's top R&D priorities, which include increased lethality, force protection and assured communications. "I expect over the next 10 years as we see procurement and the actually fielding of capabilities we will see probably a 20 percent increase in investments in that portfolio," he added.

Photo: Lockheed Martin
Defense Hawks Admit Reality: Double-Digit Budget Growth Unlikely (UPDATED)
By Sandra Erwin

Congress’ biggest proponents of massive increases to the defense budget concede that President Donald Trump's blueprint is unrealistic. Nonetheless they are determined to keep beating the drum about what they as deep financial holes in the U.S. military.

Sen. John McCain, R-Ariz., chairman of the Senate Armed Services Committee, has recommended a $640 billion defense budget for fiscal year 2018 and steady increases over the next five years — a funding boost much larger than what the Trump administration has floated. McCain continues to support that goal, but acknowledges that the administration and Congress remain at sharp odds over fiscal priorities. And he believes that Trump's plan to increase defense at the expense of domestic agencies is doomed.

“It doesn’t matter what I think. It’s not going to happen,” McCain said March 22 during a joint media roundtable with Rep. Mac Thornberry, R-Texas, chairman of the House Armed Services Committee.

McCain’s counterpart in the House, also an ardent defense hawk, shares that view, and has endorsed McCain's $640 billion target.

The numbers and the politics are stacked high against big defense spending increases, however. “Fiscal responsibility is of the utmost importance,” said McCain, “but I still believe national security ranks above that.”

Both McCain and Thornberry argue that Congress at large and the public remain unaware of the scope of the military’s fiscal troubles and their implications. “Combat readiness is at an all time low that I haven’t seen since the post Vietnam War era,” said McCain. He cited a classified Rand Corp. study on military readiness woes that was briefed to lawmakers. “I hope that study will be declassified, it will be an eye opener.”

Thornberry elaborated: “The closer you look, the deeper you see the damage done to our military over the past eight years." Traveling around U.S. and overseas military bases, “you see real evidence,” he said. “Some comes out in public hearings, although the military leadership is somewhat reluctant to talk about our vulnerabilities. The damage is deeper than most of us realize.”

The Pentagon has asked Congress to approve a $30 billion add-on for fiscal year 2017 to plug holes in military budgets across the board. The supplemental request includes $24.9 billion for the base budget and $5.1 billion for overseas operations. This would boost the 2017 base request from $524 billion to $549 billion. And OCO funding would grow from $65 billion to $70 billion.

This last minute addition technically would require Congress to break an existing bipartisan budget deal, an unrealistic prospect by most accounts. Thornberry suggested that he would support shifting the $30 billion entirely under the OCO account which is not subject to spending caps.

“Expect it to be in OCO so we can get it done quickly,” he said. “The supplemental is needed to begin the healing. I don’t care what label is on the money, I just want to get the money done.” The military cannot wait, he said. “Aircraft can’t fly. Brigades can’t train. The label on the money is not that relevant. The easiest way to get the supplemental done is through OCO.”

It is paramount that the Pentagon not be funded under a continuing resolution, Thornberry insisted. The current CR expires April 28 and defense officials have pleaded for a full-year appropriations bill.

Defense Secretary James Mattis, in a March 22 statement to the Senate Appropriations defense subcommittee put it bluntly: “Only an FY 2017 appropriations bill can permit us to spend the American taxpayers’ money judiciously and start us on the long road back to military readiness to ensure we can fight effectively. The last six years of sequester’s effects, budget cuts, and repeated continuing resolutions have damaged our readiness to a degree that will take time to recover.”

Congress has acquired the habit of “playing games with the defense budget,” Thornberry lamented. “This is not something to negotiate; this is lives and deaths. Defense dollars should not be used as “leverage to get our favorite projects,” he said.

How to pay for defense growth is one among several issues that has kept congressional factions and the White House at loggerheads. Thornberry does not support President Trump’s proposed cuts to nondefense agencies such as the State Department, but he believes other cuts should be considered to pay for defense. “We need to grapple with mandatory spending, and curtail growth,” he said. “We cannot wait to fix airplanes and ships until we get the budget balanced. That would be wrong,” he added. “We have to get the budget in better shape. But to defend the country we have to repair the damage that’s been done to our military in the past eight years.”

Thornberry acknowledged that defense committees and military leaders could do better at explaining why more funding is needed. It can be difficult for most people to understand why the Pentagon can’t get by on $570 billion or $600 billion.

“I think the military, and we as well, need to do a better job of explaining readiness,” he said. “We have looked at readiness from too narrow a perspective, in red-yellow-green colored charts. What we have not done as we should is explaining that our pilots are not getting as many flying hours as the Chinese or Russian pilots or that low readiness causes aviation crashes,” he said. “We need to do a better job making readiness problems real. I’m not sure we’ve done that well enough in the armed services committees, much less with the public at large.”

Rep. Adam Smith, D-Wash., the ranking Democrat on the House Armed Services Committee, suggested that proponents of higher defense spending should consider options to increase taxes to pay for it.

"If you feel this strongly about increasing the Navy, the Army, nuclear weapons and readiness, then raise freaking taxes and pay for it," Smith said March 22 at the McAleese Credit Suisse defense industry conference in Washington, D.C.

"You have to bring in more money," he said. "If you’re not going to do that I suppose you could go the entitlement reform route." Smith also argued that if the nation decides it cannot afford to increase defense, the national defense strategy should be revised so the military is less strained. It is "completely unacceptable" to assign the military missions "we do not fund sufficiently. It's better to shrink those missions and make sure that forces are trained and equipped."

EDITOR'S NOTE: This post was updated clarifying Sen. McCain's views on the administration's budget. And comments were added by HASC Ranking Democrat Rep. Adam Smith.

Photo: Sen. John McCain, R-Ariz. (left) and Rep. Mac Thornberry, R-Texas (Sandra Erwin, Staff)
Lockheed Considering Offering T-50A for Air Force Light Attack Aircraft Experiment
By Vivienne Machi

As the competition for the U.S. Air Force’s new advanced pilot trainer system progresses, Lockheed Martin executives are confident that their T-50A jet trainer will be ready ahead of schedule and with cost savings that its competitors will be unable to beat.

But in the event it doesn’t win the T-X contract — or even if it does — the company is examining whether the aircraft would be a suitable fit for the service’s experiment to acquire a commercial-off-the-shelf aircraft to provide light attack and close-air support on a budget, also known as OA-X, Lockheed Martin's executive vice president of aeronautics said March 21.

“We are evaluating right now” whether to participate in the invitation, Rob Weiss told reporters at the company’s media day in Arlington, Virginia. “We’re having some initial conversations about that right now … if the T-50 or some other option might make sense.”

The Air Force March 17 released an invitation to industry to participate in the OA-X competition. The service will be looking for mission profiles, carriage requirements, mission duration, supportability, supply chains and manufacturing readiness, as well as the ability to operate off a 6,000-foot runway or shorter, service officials previously said.

Weiss said the company is looking into whether the T-50A could fit those requirements. “The way it currently is described, it looks like there are lower cost and much lower capability airplanes than the trainers” that could fit the bill, Weiss said.

But as it stands, the aircraft is “ready now” to win the end-to-end jet trainer system competition, Weiss said.

The company has “not really spent much time thinking about what happens” if it does not win the T-X competition, he noted. Lockheed partnered with Korea Aerospace Industries to modify its T-50 aircraft for T-X. The Air Force aims to buy up to 350 aircraft and associated ground-based systems to replace its aging T-38 fleet, It needs updated aircraft to train its pilots to fly fifth-generation aircraft including the F-22 fighter and the F-35 joint strike fighter.

“T-50A meets all of the requirements. .... We feel very positive about it,” Weiss said, noting that the two completed T-50A aircraft have been performing regular flight operations and testing in Greenville, South Carolina. Last week, the aircraft completed all of the pre-engineering and manufacturing development test points that the Air Force has required. That flight test data is due by June 28, and Lockheed plans to continue performing tests and analyzing the results before submitting the data on that date, Weiss said.

The test points are meant to demonstrate that the aircraft can achieve a high sustained G-force acceleration, a high angle of attack, and maneuver within those regimes, Weiss said, adding that the aircraft have received “very positive feedback” from Lockheed test pilots. “It confirms our decision to go with the off-the-shelf” product, he said.

Although the Air Force’s request for proposals — due March 30 — sets a desired initial operating capability date in 2024, the T-50A could be ready to deliver in 2022, years ahead of any clean-sheet design, Weiss said.

“I am convinced that it can be delivered six years earlier than a clean-sheet design,” he said. “Based on all the scheduling we’ve done ... it would be four years after 2024 before a clean sheet will actually be delivered.”

Lockheed had previously considered building a new aircraft before opting to work with KAI to produce the T-50A, but their analysis showed that a commercial-off-the-shelf product would be the best option, Weiss said. “One of the biggest challenges we foresaw … was meeting the 2024 initial operational capability requirement.”

The Air Force has not committed to wanting an earlier IOC date, but “perhaps post-competition, that would be a conversation that would occur,” he said. “If there is a desire for an earlier IOC, we will be ready.”

But there is still a broader international market for trainers and light attack aircraft that the T-50A “will compete in, either way,” he said.

Two teams of airframers are currently offering clean-sheet designs for the trainer competition: The Boeing Co. with Sweden-based Saab, and the Sierra Nevada Corp. with Turkish Aerospace Industries. Leonardo plans to compete with Alenia Aermacchi’s T-100, a variant of its M-346 trainer, after several attempts to partner with other companies.

Northrop Grumman previously planned a clean-sheet design before the company announced in February that it had pulled out of the competition.

Weiss did not claim to know why Northrop chose to withdraw, but noted “ when I think back to where we were two years ago in making that choice [whether to submit a clean-sheet design], I think we all envisioned that’s where we do not want to be in 2017.”

Photo: Lockheed Martin
Lockheed Miniaturizing Technology to Counter Short-Range Enemy Fires
By Jon Harper

Lockheed's miniature hit-to-kill interceptor

Lockheed Martin is moving forward with miniaturized defensive systems designed to counter enemy rockets, artillery and mortars, a company vice president said March 21.
One is an interceptor known as the miniature hit-to-kill system, a 30-inch missile that weighs only five pounds. Hit-to-kill technology thwarts incoming missiles, rockets, artillery, mortars or aircraft by directly colliding with them and destroying them.
Lockheed is well known for its ballistic missile defense systems such as the PAC-3 and terminal high-altitude area defense system, or THAAD. Now the company is developing new equipment to take out other types of incoming enemy fire.
“It is basically taking the capability of PAC-3 in terms of sensors …. to go after rockets, artillery and mortars — short range threats that still remain the bane of infantrymen and women around the world,” said Tim Cahill, Lockheed’s vice president for integrated air and missile defense, missiles and fire control.
The company is also developing a gun-launched variant of the technology that is about 20-inches long, he told reporters at a Lockheed-hosted media day in Arlington, Virginia.
Both are in the prototype and testing stages.
“The technologies are moving along rapidly,” he said. “We’re miniaturizing the systems. We’re figuring out ways to move into areas where hit-to-kill was far more difficult.”
The company is taking advantage of advances in commercial technology to move the projects forward, Cahill noted.
“Getting the cost down and getting the profile down of the systems to go for shorter-range targets is so very important with the emerging threats,” he said. “We’re putting a lot of money and time and focus into those electronics and those capabilities and … getting those ready for fielding as fast as we can.”
Most of the funding for the projects is coming from Lockheed’s internal research-and-development accounts, he said.
While the focus of the current effort is providing the miniaturized capability to land forces, the technology could potentially be used in other domains.
“There are opportunities I think — airborne, seaborne and land-based — for all of these smaller missiles that we’re talking about,” Cahill said.
“If you … can actually start fielding a missile that is 30 inches long and [weighs] 5 pounds, well you can imagine the potential for putting that on platforms where you can’t put 10, 15, 20-foot missiles,” he added.
But a number of technical challenges must be overcome to create effective, fieldable systems of that size, he said.
“Hit-to-kill systems [are] all about a highly capable sensor coupled with a highly capable, robust and agile airframe, and being able to tie that all together with a set of algorithms that can allow you to turn on a dime,” he explained. “It’s how do we miniaturize fundamentally the sensors? How do we build maneuverable airframes that can stand increasing Gs?”
Taking out a small, hardened mortar mid-flight requires a great deal of accuracy, he noted.
“There’s a lot of science to that,” he said. “It’s a combination of technology, it’s knowhow, it’s algorithms, it’s miniaturization, it’s robustness in airframe — all [of that] comes together to make it work”.
The technology will likely be ready for fielding in the early 2020s, Cahill told National Defense.

Photo Credit: Lockheed Martin
Lockheed Official: White House Looking to ‘Rightsize’ Defense Industry Regulations
By Sandra I. Erwin

President Donald Trump’s promises of deregulation could extend to the defense industry, although the specifics are still unknown. The White House already has kicked off a deregulatory agenda in other sectors, and the CEOs of top Pentagon contractors expect the president to take action in the defense sector as well.

“I think there’s a healthy discussion going on between the industry and the administration around the issue of regulations, and what’s appropriate,” said Leo Mackay, senior vice president for internal audit, ethics and sustainability at Lockheed Martin Corp.

Lockheed CEO Marillyn Hewson has participated in several meetings with other industry executives and administration officials. Trump has asked defense CEOs to find ways to ramp up manufacturing operations in the United States and create jobs. “A big aid to that would be rightsizing regulations,” Mackay told National Defense in an interview.

He cautioned that companies are not asking for widespread deregulation but for a thorough review of regulations that add costs and that do not demonstrably serve a useful purpose. The industry does not want to be left to its own devices, he noted. “There’s a place for regulations. But it’s this administration’s view that industry may be overregulated,” Mackay said. “We’re engaging with the administration and other companies on how that could be changed to be more constructive.”

It has been widely documented that red tape makes up about 20 percent of the cost of Pentagon weapon systems, he said. So the idea is not only to help the industry create jobs but also to lower the cost of what the government buys. The administration has reached out to industry for suggestions on how to do this, although reforms will not happen overnight. “This is on their timing,” Mackay said.

Large government contractors like Lockheed have created huge organizations internally just to keep tabs on their own compliance with increasingly complex regulations.

Mackay, for instance, is responsible for what Lockheed calls “integrated assurance.” Companies are “backing into a realization that although they have a CFO who deals with the SEC, a general counsel who deals with legal issues, there is an internal governance and compliance area” that needed to be beefed up, he said. It’s one of Mackay’s jobs to “assure the CEO and the board that we are actively compliant with the laws and regulations that apply to our industry,” as well as internal audits, ethics, enterprise risk management and corporate social responsibility efforts. “If you don’t plan to meet all these obligations in a coordinated fashion, there’s a very good chance that you may not,” he said. “I think you’re going to see more firms starting to do something like this.”

Prime contractors such as Lockheed are especially challenged because they oversee a massive network of sub-tier suppliers and have to assure the government that everyone follows regulatory mandates such as screening systems for counterfeit parts, cracking down on human trafficking and preventing materials extracted from war-torn countries known as “conflict minerals” from getting into U.S. weapon systems.

“It’s a team sport,” said Mackay. Lockheed provides subcontractors with “supplier tool kits” and webinars that explain codes of conduct. The company participates in the Defense Industry Initiative, a consortium of 77 defense contractors focused on ethics and integrity in business dealings with the Defense Department.

The regulatory picture in Pentagon procurements will remain cloudy for several months, or until the administration completes a reorganization of the acquisitions office and fills high-level jobs. Mackay, like others in the defense industry, is hopeful that future reforms will not be a repeat of past efforts.

“There’s an unfortunate tendency when we get waves of acquisition reforms: We don’t do a very good job clearing out existing reviews and we generally add on, so the process gets lengthened,” he said. “We need to clear out existing underbrush before you put in a new structure.”

Mackay was especially critical of recent efforts to impose “fixed-price” contracting on new technology developments. Firm fixed-price deals make sense for production contracts, but “at other points in development other contracts like ‘cost plus’ are more advisable. It has a bad name, but is more appropriate for new technology.”

Proposals to use fixed-price contracting as the default option is an example of “bad ideas that have a long track record of not working and are advanced as innovative thinking,” he said. “If you’re developing new technology, fixed pricing is not a good idea. There’s a lot of evidence that says that’s the case.”

Critics who claim these rules are put forth to prevent contractors from overcharging the government should be reminded that the Defense Department closely scrutinizes companies’ internal cost data and audits every program. “They know our cost structure. We negotiate incentive fees, award fees, return on sales. None of it is hidden. They have all the data,” he said.

Mackay said the system works better when there is “healthy respect for both government and industry program managers’ discretion, and giving people the authority and responsibility and letting them do their jobs, and hold them accountable for the results.”
Lockheed Martin Looks to 'Trump Effect' as it Targets International Sales
By Yasmin Tadjdeh

Marillyn Hewson

Lockheed Martin is planning to grow its international sales as countries around the globe make investments in defense platforms, and President Donald Trump pressures European allies to spend more on security, said the company’s CEO.

International sales made up nearly 27 percent of Lockheed’s sales last year, Marillyn Hewson said March 21. She wants to raise that figure to 30 percent in the coming years.

Trump’s push for increased defense spending is sending a signal to NATO allies, she said during remarks at Lockheed’s annual media day in Arlington, Virginia.

There is “a ‘President Trump effect,’” she said. “NATO members are considering the shifts of U.S. priorities and many see a greater need to shoulder more of their own defense burdens. This is significant. In fact, if NATO members fulfilled their already stated pledges to spend 2 percent of their GDP on defense, it could result in a $100 billion increase in spending across the alliance.”

The company has seen a new willingness and resolve from governments around the globe to increase their investments, she said. In 2016, the company's international sales came to more than $12.7 billion — nearly 27 percent of its total sales, she said. “In fact, more than 40 percent of our new business came from international customers.”

That includes a $1.2 billion contract with the Republic of Korea’s air force to upgrade 134 of its F-16 aircraft, she said. Lockheed also last year inked a deal to serve as the combat system integrator for the Royal Australian Navy’s future submarine program, the country’s largest defense program in its history.

“These achievements are just the beginning,” she said.

Global security challenges are one of the leading reasons foreign nations are looking to boost their defense spending, Hewson said.

“Our customers are grappling with security threats that are increasing intercontinental, asymmetric and unpredictable,” she said. “We have seen deliberate and repeated aggressive action and provocations from near-peer nations. We have seen volatile leaders and regimes stoke instability in their quest for regional dominance.”

The financial crisis of 2008 and weak economic growth caused many European nations to cut their defense spending, which exasperated a post-Cold War trend, she noted. Even now debt crises and the impending exit of the United Kingdom from the European Union will cause uncertainty, she added. However, Lockheed is optimistic about its future in the international market.

“At Lockheed Martin we recognize that our customers need innovative solutions in this period of defense cuts and budget constraints. They’re looking to us to maximize the value of every dollar, euro, pound, yen, riyal or dirham that they spend,” she said. “Despite these long and ongoing trends, we have proven that Lockheed Martin can meet these challenges and succeed in a constrained environment.”

One of the biggest drivers of Lockheed’s international growth is the company’s F-35 joint strike fighter program, Hewson said. Last year, the program established new agreements with Denmark, Israel, Turkey and the Netherlands.

“Approximately 50 percent of all F-35 orders over the next five years are expected to come form international customers,” she said.

Trump has previously criticized the program — which has suffered cost overruns and schedule delays — as being too expensive. When Lockheed recently announced a contract for its newest lot of aircraft, known as LRIP 10, Trump took much of the credit and said his involvement had shaved hundreds of millions of dollars off the cost of the planes. Defense experts noted that the price of the aircraft, by the very nature of the military purchasing it in lots, was already planned to go down.

Hewson said, however, that Trump’s intervention into negotiations between the company and the F-35 joint program office made a demonstrable difference.

“We were in discussions on the Lot 10 … [and] he helped accelerate that along,” she told reporters. “He put a stronger focus on price and how we could drive the price down.

“I will admit that as we are ramping up the program we are going to continue to see cost reductions just through volume, but his emphasis and his engagement did absolutely make a difference,” she said.

Hewson said she was confident Lockheed could sign an LRIP 11 contract this year, but noted that Trump has not been involved in those negotiations.

Meanwhile, Lockheed is making larger investments in its internal research and development, she said. For the fourth consecutive year, the company has increased its funding for IRAD. In 2016, it spent $988 million on such endeavors. The company is pursuing technologies such as directed energy weapons, hypersonics, autonomy and advanced manufacturing, she said.

Photo Credit: Lockheed Martin
Federal Contractors Seek Edge in Specialized Services
By Sandra I. Erwin

In the cutthroat world of government services contracting, the lowest bid generally wins the project. That trend has driven a cadre of technically specialized firms to reposition themselves in the market so they can compete less on price and more on the value of particular skills and knowledge. 

This shift is especially apparent in sectors like defense, space and intelligence that depend on contractors for highly complex missions. Companies that have the technical expertise are carving out niches where they can dominate and be less vulnerable to price wars. 

Lynn Dugle, CEO of government services contractor Engility Inc., said the company has been moving in that direction for the past couple of years, and the plan going forward is to focus more acutely on projects that are awarded based on “best value.”

“We are positioning our defense business to be more like our space and intelligence businesses, where we can differentiate the work we do in higher end services and engineering,” Dugle told National Defense. 

Dugle is finishing up her first year as CEO of $2.1 billion Engility. The company was spun off nearly five years ago from top defense contractor L-3. In 2015 it acquired the services contractor TASC and doubled its size.

Engility initially sought to compete in broader categories of federal support services that are awarded to the lowest bidder in so called “lowest price technically acceptable” contracting. Over the past eight months, only 5 percent of Engility’s bids have been for LPTA contracts, Dugle said. Now almost all the company’s proposals are “best value.”

LPTA is widely despised by companies in the defense industry and viewed as a race to the bottom. There is now a growing consensus that LPTA contracting works for nontechnical services like maintaining government facilities or staffing mess halls. Dugle has seen the Defense Department walk back from LPTA for engineering support and other “mission support.” Defense agencies frequently found that companies selected based on LPTA were technically unqualified.

“The market has shifted,” Dugle said. “Customers got burned on those higher end contracts with LPTA. Competitors bid really low and then they couldn’t staff the jobs.”

Engility is moving to hire specialized talent to shore up its defense expertise. “We are close to naming a senior VP for defense,” she said. “We need a certain percentage of our leadership to have operated and been successful at pursuing big programs, and at best value proposal writing. That’s a different skill than competing on price for smaller projects.”

The shift to higher end services appears to paying off. Engility reported an $11 million loss in 2016, but that was an improvement over $235 million of red ink in 2015. The numbers are “encouraging,” said Dugle. “Four contracts we won were over $200 million. That requires getting the right people with the right experience.” Engility has submitted at least 10 bids worth over $100 million that are still in source selection.

“We want to be primes in large jobs,” said Dugle. The company’s government work today is 40 percent defense. Dugle predicts that share will increase. “The market itself in DoD continues to get more attractive,” she said. 

Like other industry executives, Dugle is bullish but cautious about the anticipated spending boost to defense and veterans programs projected by the Trump administration. Even if the increase materializes, every agency in the federal government including the Defense Department will be squeezed. A new Trump executive order requires agencies to conduct a “thorough examination” of its operations and to recommend “where money can be saved and services improved,” White House Press Secretary Sean Spicer told reporters. That could result in layoffs of government workers but also in cutbacks in the use of contractors.

The message for contractors is that “we have to be prepared to respond,” said Dugle. “We do a lot of thinking about scenarios and how we can be prepared. Services is always a challenging business. It’s not a technology play, it’s a people business.”

Dugle is especially optimistic about the possible privatization of parts of the Federal Aviation Administration. “We just won the largest contract with the FAA, the largest we’ve ever won, to help them modernize their systems.”

Trump’s budget has been widely rejected on Capitol Hill and many specifics remain unknown so Engility, like other defense firms, has been conservative in its future earnings and sales guidance to Wall Street. “It’s premature until we know the program details of the FY18 budget,” she said. “We believe we are more advantaged than disadvantaged in a Trump administration but we did not want to put that in a plan.”

The industry also will be watching congressional action led by House Armed Services Committee Chairman Rep. Mac Thornberry, R-Texas. The committee is drafting a procurement reform bill to accompany the 2018 national defense authorization act. On the list of Thornberry’s targets are services contracts. 

The 2017 NDAA sets limits to the use of LPTA in defense procurements. Thornberry has pushed Pentagon officials over the years to more precisely articulate the military’s needs for contracted services and how services vendors are selected.

“One of the big challenges is the definition of requirements,” Dugle said. That is partly the reason DoD has had to re-evaluate its use of LPTA contracts, she noted. “If you just write a requirement that you need five people with 10 years of experience with a particular degree, that is when people default to price.” Conversely, the government could make the requirement to accomplish a desired mission, and leave it up to the bidders to decide how to staff the job. “If you are relying on systems engineering, you have to write good requirements.”

Photo: Lynn Dugle, CEO of Engility (center)

NATO Agency Seeking Bids for IT Modernization Program
By Vivienne Machi

NATO's communication and information technology arm is seeking industry partnerships as it takes on a multi-year modernization effort for its information-technology systems, according to the organization's acquisition director.

The NATO Communications and Information Agency — which runs the information technology, communications and command and control for the multinational organization — has opportunities for defense and IT companies in various stages of the modernization program, Peter Scaruppe told National Defense in February.

"The IT modernization program is a very important one because it basically replaces all of the IT in all the NATO locations, and for all the NATO forces," he said.

The program entails: streamlining NATO's IT service offerings to increase efficiency and effectiveness; using a customer-funded delivery system to increase the flexibility and scalability of IT services; delivering services from a centralized set of locations; and implementing increased cyber security measures, according to the agency.

The program will span at least four contracts and be worth up to $537 million, and is expected to be completed by mid-2018, Scaruppe said.

Next on the priorities list is introducing a cloud-based services enterprise design by this summer, which Scaruppe called a major part of the modernization program.

"Storage is an important issue for all current and future IT programs, because with big data and the availability of big data, it is increasingly important," he said. "We are anxious to see what companies will provide."

NCIA Agency also plans to develop new data centers in Mons, Belgium, and Lago Patria, Italy, by early 2018, Scaruppe said. A third site has not yet been publicly revealed, but is being considered as an option "if and when we need it," he said.

"This is for the IT support and operational support for NATO locations and operations," he said.

NCI Agency has made concerted efforts in recent years to work more closely with industry to beef up its cyber defense capabilities. The agency contracts out about 80 percent of its work to the defense and security industries of NATO's 28 current member-nations, Scaruppe said.

This year, the agency will host its annual industry conference in North America for the first time since it kicked off six years ago, rather than in a European country, "to note the transatlantic alliance," he said.

The theme of the NCIA Agency Industry Conference and AFCEA TechNet International — which will be held in late April in Ottawa, Canada — is "Sharpening NATO's Technological Edge: Adaptive Partnerships and the Innovative Power of Alliance Industry." The conference builds upon last year's theme of why innovation is important to NATO's technological needs, Scaruppe said.

"Especially in the IT and cyber world, we know that there are a lot of innovators out there … not exactly keen on working with an 800-pound gorilla like NATO," he said. "Some are not familiar with the process, [so] we need to catch the right innovators."

One major part of the conference is dedicated to innovation challenges where agency officials and industry will discuss pre-determined areas of study, he said. "We did this last year, very successfully, and we got lots of proposals, many more than we thought we would get."

Conference attendees will learn of upcoming business opportunities with an overall budget of about $3.2 billion over the next two to three years, Scaruppe said.

Businesses also have the change to speak with agency experts ahead of potentially bidding on a project.

"We do this every year, but we're dedicating a lot more time to this part than usual [this year]," he said, adding that the agency hopes to attract more U.S. and Canadian industry members as a result.

Attendance rates at previous conferences have been about 70 percent European-based, Scaruppe said.

The agency is also looking to attract more cyber experts through the conference by running a next-generation skills exercise and innovators program, he said.

"We have a lot more work than we have staff for — and the same is true with the private companies — [and] we want to find innovative ways of how to attract these people, how to retain these people and also keep us current in the cyber exercise."

Photo: NATO officials discuss future cyber initiatives at the NATO Communications and Information Agency. (NATO)
Lockheed Martin to Deliver Powerful Laser to Army
By Yasmin Tadjdeh

A powerful 60-kilowatt laser that could knock out enemy drones or burn a hole through a truck will soon be delivered to the Army.

The high-powered beam combined fiber laser — which is being built by Lockheed Martin — will be delivered to the U.S. Army Space and Missile Defense Command in Huntsville, Alabama, in the coming months, said Robert Afzal, the company's senior fellow for laser and sensor systems.

The company recently demonstrated “that we could take a number of high power fiber lasers and through our technique of spectral beam combination, combine the output of the individual fiber lasers into a single near perfect diffraction-limited beam and generate on the order of 60 kilowatts of output power,” he told reporters during a phone call March 16.

“Diffraction-limited” means that the beam “was close to the physical limits for focusing energy toward a single, small spot,” according to the company.

The weapon will be outfitted on the Army’s heavy expanded mobility tactical truck, Afzal noted. A company spokesman noted that while the laser has the capacity to hit drones, mortars and trucks, he could not say whether the Army would use the system to do so.

Lockheed's laser is powered directly from electricity and has an electrical-to-optical efficiency of 43 percent,
Afzal said.

“That’s a very important number because it means that the power supply you need to operate the laser can be much smaller,” he said. It also means that the amount of waste heat that is produced by the laser is reduced, allowing for minimized cooling requirements.

“This is really a key step forward for high-powered lasers,” he said.

Lockheed has been working with the Army on the project for years, Afzal said. The company will conduct some additional tests on the system in its Bothell, Washington, facility over the next few months until delivery.

So far Lockheed has only tested the laser to 58 kilowatts, but it plans to continue to optimize the system, and it anticipates that it will reach 60 kilowatts by the time of delivery, Afzal said.

The company’s laser technology is scalable depending on customer’s needs. “There is a path to going to higher and higher powers as our service partners need them,” he said. Additionally, it could reduce the size of the laser itself if size, weight and power constraints required it. Afzal declined to say how large the Army’s laser system is.

The Army had already integrated a less powerful laser onto a HEMTT tactical wheeled vehicle, he noted. However, Lockheed’s system, when mounted on the truck, will be five times more powerful, he said.

The system could be deployed today, he added. “The laser that we built is not just a laboratory demonstration,” he said. “In terms of the maturity of the technology to be fieldable on an Army vehicle, this technology is ready for that.”

The laser could be used on a variety of systems including air and sea-based platforms, he said.

“Because of the flexibility and the scalability of the architecture and that it would be combined with an optical system to do the targeting, we’re looking at a whole host of platforms,” he said.

Opportunities are ripe for laser technology across the services, Afzal said. Lockheed is looking at a number of programs across the services including the Air Force’s self-protected high-energy laser demonstration, the Navy’s Sea Saber program and Special Operations Command’s effort to equip an AC-130J Ghostrider gunship with a directed energy weapon, he said.

“Each one of the services is moving forward with exploring this capability,” he said.

Photo Credit: Lockheed Martin

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