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In Proposal to Congress, Pentagon Seeks Simplification of Acquisition Process
By Sandra I. Erwin 

The goal is plain and simple: "Ease the burdens on program managers." That about sums up the gist of the acquisition reforms that the Defense Department hopes Congress will pass in 2016.

"Our legislative proposal is not a radical rewrite," said Andrew Hunter, director of the joint rapid acquisition cell. His office is at the center of ongoing exchanges with House and Senate leaders who criticize the Pentagon's weapons acquisition process as grossly inefficient.

Hunter is leaving the Pentagon next week to join the Center for Strategic and International Studies, but he expects the reform initiative he started with the House and Senate Armed Services Committees will stay on track.

"We've come up with some proposals that we hope will be favorably received," Hunter said Oct. 23 during a meeting with reporters.

His boss, Undersecretary of Defense for Acquisition, Technology and Logistics Frank Kendall, wants the next round of reforms to attack questionable regulations and laws that keep weapons programs bogged down in red tape.

"We think we can reduce the burdens on program managers," said Hunter. That means possibly eliminating portions of legal statutes and Defense Department policies that create busywork without adding substantive value to a program. The mandate from Kendall is to scrub laws and regulations and identify items that, program managers claim, consume too much of their time and distract them from more important priorities.

Hunter has been trying to persuade congressional staffers involved in the reform effort that one of the keys to success in weapon acquisitions is "flexibility," he said. "Program managers should be geared on what they want to buy and not geared on the checklist" and bureaucratic drills.

The Pentagon will not be asking for major rewrites of landmark legislation such as the Weapon Systems Acquisition Reform Act of 2009 or the Competition in Contracting Act of 1984, Hunter said. "Our recommendations build off foundational statutes, and keep the 'goodness' of the statutes." The changes sought would apply to individual provisions that procurement officials consider redundant or duplicative.

Whether and how this will be accomplished is still uncertain. Hunter said there are still "trust" issues between the Defense Department and Congress and it remains to be seen whether lawmakers are willing to take a leap of faith in rewriting rules that might increase the authority of the department to make decisions.

In a separate procurement reform effort, the Defense Department's rulebook, the DoD 5000, is being updated with new instructions on how to do "rapid" acquisitions. The new draft policy, called "enclosure 13," gives acquisition officials more detailed guidance on how to manage fast-track programs. "We talk a lot about rapid acquisition, there is a lot of enthusiasm and need," Hunter said. But many of the rules have been fuzzy on issues such as how exactly rapid acquisition should be done, compared to the traditional procurement process. "We have put those rules in place," he said.

The revised policy captures emergency procedures the Pentagon put in place for wartime procurements, such as drones and mine-resistant armored trucks.   

Most recently, the Pentagon used fast-track measures to equip the U.S. ship MV Cape Ray to destroy Syrian chemical weapons components. A land-based hydrolysis system was deployed on the ship in just five months. Hunter said the Cape Ray project is seen as the new poster child for how to move programs quickly.

Since the Pentagon created the joint rapid acquisition cell eight years ago, more than 500 urgent equipment requests have been handled. Thirty are still active.

Despite the success of wartime rapid acquisitions, Hunter recognized there is no easy way to shake up the lumbering non-emergency weapon acquisitions process. The current system cannot respond as quickly as the Pentagon would like, especially as new threats pop up, he said. "That's just life. It's not an indictment of the system.”

The defense industry is closely watching Defense Department and congressional reform initiatives, and has actively supported actions that would speed up the procurement process.

But the industry wants reforms to go further, to include specific measures that incentivize contractors to save the Pentagon money. It is widely accepted that change is needed, said Tom Captain, vice chairman and principal of Deloitte's aerospace and defense sector. “The problem is not what to do, but how to do it," he said. “We need cooperation and leadership amongst the three parties: Congress, the Defense Department and industry," he said.

Defense contractors would like to see reforms reach into areas where Congress has resisted, such as allowing the Pentagon to sign multiyear contracts with vendors and letting the private sector take on more depot maintenance work, Captain said. Reforms in the past have been "well intentioned, much of which has been said before, but hard to execute," he said. "Like many previous initiatives, it is not clear we are moving the needle of progress. We are still $300 billion over budget on the 99 major defense acquisition programs. Only 30 percent of programs are on schedule and budget," Captain noted. "Unfortunately, the commercial sector is negatively conditioned, and relations with industry are strained."

Rep. Mac Thornberry, R-TX (left), Undersecretary of Defense Frank Kendall (center), Sen. John McCain, R-Ariz. (Thinkstock/Wikimedia Commons)

Gilmore: Major Weapon Acquisitions Can't Be Fixed Overnight
By Sandra I. Erwin

J. Michael Gilmore (left) flies on a C-5M at Dover Air Force Base

At a time when two-thirds of the Pentagon's major weapon programs are behind schedule and over budget, the release of J. Michael Gilmore's annual report to Congress can be as welcome as a skunk at a lawn party.

Gilmore's response: Don't shoot the messenger.

As the Defense Department's director of operational test and evaluation, Gilmore is required by law to provide an independent assessment of the performance of major weapon systems. His findings might be bad news for some programs, but as he points out, the first step in correcting a problem is to identify the causes of the problem.

"My office has to make certain that DoD leadership, Congress and military users understand what major weapon systems can and cannot do, what the problems are, the operational implications of those problems, and prioritize resources to fix those problems," Gilmore tells National Defense in an interview.

The Pentagon has come under renewed political pressure to shake up its acquisition process and lower the cost of weapon systems, which heightens the importance of testing, he says. "Defense Department systems are complex. It should come as no surprise to anyone that it can take a long time to get them to work."

Many successful programs along the way experienced false starts and problems in operational tests. Whereas earlier "developmental tests" are done in labs and controlled environments, operational tests and evaluations are realistic live-fire drills that are mandated by law and must be performed before any weapon systems goes into full-rate production. In his next annual report due in January, there will be a litany of programs that did not perform as expected. "Does that mean programs are failing? No," he says. "History clearly supports that."

Even programs that live in perpetual procurement purgatory like the F-35 joint strike fighter eventually break free. "The F-22 fighter took two decades to field. We are still working on upgrades," Gilmore says. "JSF will be around for 30 to 40 years. We'll continue to work on it, and there will be many problems discovered. It should be no surprise."

Congress created the office of the director of operational test and evaluation in 1983. The director is appointed by the president and confirmed by the Senate. DOT&E currently employs 80 government civilians and 20 military officers.

Testers historically have had a tense relationship with the acquisition bureaucracy. Before DOT&E existed, program offices had more direct control of test reports. Some acquisition offices and contractors view DOT&E as a nemesis whose reports make executives run around with their hair on fire.

Gilmore insists that his job is not to kill programs, but to inform the decisions makers. "The purpose of my office is to highlight problems in a straightforward way," he says. "People can decide how important they are and how to fix them."

There is no evidence that major programs have been canceled because DOT&E declared them ineffective, Gilmore says. "Sometimes that happens." If the problems are too severe, the Pentagon could decide to terminate a program. "I don't make those decisions," he says. "We don't engage in rationalization of the problems. We don't try to rationalize their significance."

Gilmore says his office gets unfairly blamed for things it does not control. As Congress prepares to once again consider proposals to reform the Defense Department's acquisition process, Pentagon officials have suggested that changes might be needed in weapon testing and evaluations.

Undersecretary of Defense for Acquisition, Technology and Logistics Frank Kendall wants tests to be conducted earlier in the development cycle. In his view, operational tests identify problems so late in the process that they become cost prohibitive to fix. Earlier tests, Kendall says, could help the Pentagon catch problems before the military sinks huge amounts of money into a program. This would help avert expensive redesigns and modifications — a costly lesson the Pentagon learned over the past decade from the F-35 fighter and other programs.

Gilmore says he support Kendall's initiative. "It's common sense." But he cautions against taking it too far. Programs go through developmental testing in their early stages. Operational tests require a fully assembled prototype that can function in combat-like conditions.

If the Defense Department wants operational tests to occur earlier in the schedule, it will need to have "production representative" systems before the low-rate production milestone, says Gilmore. Typically that does not happen. He suggests that, in advance of operational tests, program managers conduct unofficial evaluations known as "operational assessments" that can give them an early sense of what might happen in OT. There is no requirement in the law to do operational assessments, he says, but nothing in the law precludes them.

Gilmore warns that moving up tests schedules alone will not accomplish much if earlier developmental tests are not thorough enough. "Developmental testing is one the first places that suffers when programs run into schedule and cost problems," he says. "That shows up when we get to operational testing."

Gilmore's website is full of examples of programs that were technologically immature and as result, many problems were discovered in operational testing for the first time. "That is very late in the process," he says. "The issue is that sometimes there is inadequate developmental testing."

Any discussions about changes in test regimens stir suspicions that the Pentagon will cut test budgets in the name of efficiency. Gilmore has resisted suggestions that the cost of tests causes programs to run over budget. His office in August posted a presentation called "Reasons Behind Program Delays: 2014 Update" that seeks to discredit the accusations.

Infighting between program managers and testers is par for the course at the Defense Department. Kendall's predecessor Ashton Carter commissioned an independent team in 2011 to probe complaints that developmental and operational testing led to cost and schedule slippages in programs. The investigation failed to prove that tests were to blame.

In a speech at a recent industry conference, Gilmore reinforced that point. "How are you going to compress testing in this era of constrained budgets? I think it's a mistake," he tells the conference. "It accepts the premise that testing is driving increased cost. The facts don't support that premise."

Many of the Defense Department's current procurement woes are the result of decisions that were made long before the equipment was tested, Gilmore says during the interview.

One example is the Army's multibillion-dollar mobile communications system called WIN-T, or war fighter information network tactical. The system is about to go through its third operational test and its outcome will determine whether it can transition to full-rate production. WIN-T in earlier tests got bad reviews from the users for being too complex, unreliable and cumbersome for combat operations.

When soldiers tell testers the system is not suitable, that is a deal breaker for any program, Gilmore says. "We don't test systems to exquisite golden standards. It doesn't have to be perfect," he says. "But soldiers are smart. They can work around some problems. But others, like the great complexity of the WIN-T soldier network extension and problems with its reliability, they can't deal with."

After last year's tests, the Army was wise to make modifications to WIN-T and schedule a new round of operational tests, he says. Sometimes the military services rush programs to failure, he says. "You should not be schedule driven, you should be event driven, and think hard if you're actually ready for the test," he says. "Program managers are always under a horrible schedule pressure, because schedule delays means additional costs. The longer it takes to fix a problem the longer the engineering pool has to be funded." There is also political pressure from contractors and their congressional backers to move systems into full-rate production in districts where hundreds of jobs might be at stake.

Gilmore also has recommended that the Pentagon revisit how system requirement are defined. That alone can set up a program for success or failure, he says. Usually requirements are written as technical specifications, but that is insufficient to ensure a system is militarily useful. Gilmore has repeatedly held up the Navy's P-8 maritime surveillance antisubmarine airplane as an example of how to not define requirements.

Under the Pentagon's procurement regulations, officials from the Joint Staff's joint requirements oversight council, or JROC, must sign off on a system's most important requirements, dubbed "key performance parameters." In the case of the P-8, none of the KPPs specified that the aircraft needed to detect and destroy submarines, he says. In operational tests last year, the aircraft showed it could fly, but it was not able to perform wide-area antisubmarine surveillance. In an test that is supposed to replicate combat conditions, says Gilmore, the aircraft needs to do much more than just fly.

"I'm an advisor to the JROC," says Gilmore. "I do make them aware of my concerns. But it's up to the JROC to set requirements."

Perhaps the most dramatic illustration of what happens when a major weapon system's requirements, procurement strategy and test plans are out of kilter is the F-35. The aircraft's mission systems have yet to be tested in the F-35, even though the program is already in production. Gilmore expects the program will move forward, albeit at a slower pace than many had hoped.

Almost every setback in the F-35 can be pinned on decisions that were made more than a decade ago, long before the current program leaders took over.

In the early days of the George W. Bush administration, the Pentagon agreed to proceed to low-rate production at the beginning of engineering development, with little to no testing. Normally, low-rate production starts after development is completed.

"The assumption was that models and simulations were so good that very limited testing would be needed either in flight sciences or mission systems in order for the plane to mature," Gilmore says. "Those were bad assumptions. It took the department a number of years to realize that." A program restructuring in 2010 added more time and money for developmental testing.

F-35 program executive officer Lt. Gen. Christopher Bogdan has put pressure on the contractors to improve the reliability of the aircraft. Poor reliability, says Gilmore, is a direct consequence of the decision to rush the program. "It is not a surprise that the aircraft availability rates are between 30 to 40 percent in the squadrons that have production aircraft," he says. "I expect that to improve over time." These are issues that should have been worked on before the aircraft went into production, with more component-level testing. It should not shock anyone, he adds, that as a consequence of the decision to start building airplanes before key components were fully tested, the aircraft remained immature.

The F-35 program office now has to play catch-up, and live with the consequences of those early decisions, he says. "You can't test reliability at the end of the program."

Gilmore is working closely with F-35 managers in preparation for operational tests in 2018. His office had recommended the aircraft undergo an "operational utility evaluation" in 2015 after software development is completed. But Gilmore later concluded that the mission systems would not be ready. "We continue to work on plans to do formal operational testing which probably won't occur until 2018," he adds. "We're beginning preliminary work laying out some of the details of the operational test but we're still several years away."

Photo Credit: Air Force

U.S. Defense Industry Needs Export Reform to Beat Global Competition
By Jon Barney and August Cole

Special Contributors

Global commercial aerospace and defense markets are far more competitive than is currently appreciated in Washington.

The sales of manned and unmanned military aircraft, satellites and advanced sensor systems are no longer shoe-ins for American firms selling to U.S. allies. Being underbid by state-backed companies from China is not the only competitive threat. There is broad-based competition from multiple countries, including Brazil, India and Israel, among others. These global players are also making faster-than-expected commercial and technological advances.

Rising defense spending overseas is a big driver of this latest wave of new competitors. Spending outside the U.S. should rise to more than $500 billion in 2016, up from $300 billion in 2008.

Concurrently, American aerospace and defense firms are looking to offset decreased spending by the Defense Department and allied European governments by pursuing new markets and opportunities. Yet current roadblocks in the form of export rules and policies endure despite the ongoing export control reform initiative led by the Obama administration.

Regulations and rules are a necessity in the aerospace and defense sector to ensure business is done in a legal, ethical and effective manner. The market is moving faster than these rules are being changed.

According to a recent Avascent and FleishmanHillard survey, 80 percent of aerospace and defense executives believe their competitive landscape will increase next year, led by disruptive competitors with low cost offerings in China, closely followed by those in other Asian countries, the Middle East and North Africa region, and Latin America. Nearly all of the surveyed executives, some 93 percent, believe international sales will be increasingly important in the coming years.

They are clearly not alone in this ambition. The survey revealed executives are starting to see competitive threats in key segments where U.S. firms are largely accustomed to being the uncontested leaders. These areas include unmanned aerial vehicles, intelligence, surveillance and reconnaissance systems, and missile technology.

This illustrates a larger trend where there is increasing competition. A proliferation of rivals is a true sea change for the defense industry, one that has until now dodged the most difficult aspects of globalization.

Just as the industry is going to have to catch up to this new reality, so too must the regulatory environment. The competitiveness of America’s aerospace and defense sector depends on reforming current laws that are holding up the sales of technologies and systems, effectively forcing U.S. firms to cede ground to rivals in strategic and commercially vital markets.

Some of the biggest challenges with current export controls are out-of-sync lists of prohibited exports, overly complex oversight management, and an overall sluggishness. Attempts to align and simplify Defense Security Cooperation Agency, Commerce Department and State Department processes are well intended but are moving too slowly. While DSCA has announced improvements in the foreign military sales review process, there remains a perception within the defense industry that there is a real competitive disadvantage.

According to former Sen. Jim Talent, R-Mo., partner at Banner Public Affairs, “While export controls serve an important purpose — preserving America’s tactical military advantage — outdated policies can have the same negative effects on competition and innovation as burdensome over-regulation. When America’s defense industry base is disadvantaged, our nation and its allies pay the price measured in economic and military strength.”

Within the next five years, certain segments of the aerospace and defense industry are especially vulnerable if current export control rules persist. Avascent believes the sectors most at risk to rising competition are unmanned systems, intelligence surveillance and reconnaissance, cyber security and air traffic control management. The latter is of growing importance given the soaring market projections for global air travel in the coming decades.

Unlike the highly political fight over the Export-Import Bank, which has become a battleground in the larger struggle over the role of the government in supporting America’s corporations, reforming export-control rules can be a non-partisan priority. Not only would reform improve the competitiveness of one of the nation’s most strategically important industries, it could also be a political win for all involved.

Exports help support America’s defense and aerospace industrial base, which is going through a difficult period as it rebalances to lower levels of government spending. Exports also help sustain current well-paying jobs in technical fields that are crucial to the foundation of tomorrow’s aerospace innovation. Moreover, the next generation of engineers evaluating where they want to work will be hard pressed to choose a field they see as globally uncompetitive.

Defense exports are also a cornerstone of U.S. national security. Supporting allies through the sales of systems and services helps shore up military relationships using up-to-date technology and a fundamental commitment to a position of strength. That is not to say looser export controls should unleash a flood of arms sales worldwide. The Islamic State wresting control of American-made military equipment from the Iraqi army should be seen as a cautionary tale of what can go wrong. The U.S. government should use forward-looking judgment concerning military aid, and export control reform will free up resources used for unnecessary reviews while allowing for a stronger focus on cases needing the most scrutiny.

For its part, the defense industry needs to ensure it is the first choice for America’s allies. U.S. firms looking at overseas markets should conduct a thorough portfolio analysis, evaluate and prioritize markets and develop a strategic approach.
Ultimately, reforming export-control policy is both a commercial and a strategic issue. Doing so will improve the competitiveness of American aerospace and defense firms while also making sure that U.S. partners around the world can continue to count on America when it comes to bolstering their own national security. The best way forward is to enact speedy reform, and show that there will be real benefits for America and its allies.
Jon Barney is a managing director at Avascent, a strategy and management consulting firm. August Cole is a writer-in-residence at Avascent. He is also a nonresident fellow at the Atlantic Council where he serves as the director of the “Art of Future Warfare” project within the Brent Scowcroft Center on International Security.

Photo Credit: Defense Dept.

With Loads of New Electronics Coming Online, Navy Seeks Shipboard Power Management Solution
By Valerie Insinna

The Navy is investing hundreds of millions of dollars in state-of-the art technologies such as lasers, rail guns and assorted radar and sensor suites. What it doesn’t have, however, is a ship that can power all of those systems at once.

That’s why the Office of Naval Research is developing new electrical components and systems to help the service better distribute and manage its power supply, Sharon Beermann-Curtin, ONR’s power and energy technical lead, told National Defense in September.

The idea is to be able to move the power available on the ships today “when you want and where you want, on demand,” she said.

If the Navy can't get a handle on this problem, it risks having to build one ship for a rail gun, one ship for a radar, and so on, she said. “What you want to do is ... [to] allow all of these multiple functions in one ship."

The Navy also wants enough energy to optimize the performance of all of its onboard systems, she said. For example, some radars are energy elastic and can have a longer range if given more power, she said. Other weapon systems can shoot targets at a greater distance when consuming more electricity.

Currently, Navy vessels are limited in the way that they source power and move it among its various components. The DDG-1000, for instance, is electrically propelled but uses auxiliary turbines to power weapons and sensor systems, Beermann-Curtin said.

“What we want to do is be able to use the propulsion power, as well as any other power and then put the power where we want it, when we want it,” she said. "We want to make everything very flexible,” including being able to store energy for later use.

Developing the necessary technologies and putting it onto a ship will be a long process, Beermann-Curtin said. So far, ONR has undertaken basic research on subsystems and components, including energy storage, controls and new, more-efficient silicon carbide power converters. The next step will be designing a system architecture that takes into account safety, stability and maintainability, she said.

ONR has founded a research-and-development consortium comprising nine universities with expertise in electrical engineering. The participants develop and test new technologies and components, she said. Using a physics-based modeling tool, the consortium can simulate how an electrical system would perform with both new and old components and obtain data on potential vulnerabilities.

The consortium’s goal is to create a 100-megawatt system with 20 kilovolts of direct current that can fit it into the DDG-51 hull, she said. Meeting the size and weight requirements is a major challenge for the project.

ONR is also focusing on increasing the autonomy of electronic systems, so that sailors wouldn’t have to manually control how power is distributed, but could make adjustments as needed, she said.

Eventually, Beermann-Curtin would like to produce a prototype electrical system on land, which would test the systems architecture and evaluate component performance. Her team has not yet secured the funding to do so, but a working prototype could be built and demonstrated as early as 2022, she said.

ONR’s research would likely apply to future ships because “it would be too expensive to backfit an entire electrical system design” on a legacy vessel, she said.

Potential system designs may require radical changes in how vessels are powered, including revisiting Thomas Edison and Nikola Tesla’s debate between direct and alternating current, she explained. Today, most electrical systems — including those on the majority of Navy ships — use alternating current. Only the DDG-1000 incorporates both direct and alternating current. However, with recent advancements in solid-state power converters, it may be more efficient to power vessels with direct current, Beerman-Curtin said.

ONR and its consortium have developed 3-megawatt silicon carbide power converters that perform at higher voltages and frequencies than the legacy equipment, as well as reducing volume by 60 percent and weight by 30 percent, she said.

“With the silicon carbide [converters], we have built and proven the weight and volume reductions, and then the ability to control the power very, very precisely and safely,” she said.

"If you just stayed with the silicon semiconductors that you use today, they get very cumbersome. You would need like, a thousand of them versus 10,” she added.

Photo Credit: Navy

Pentagon Contracting Trends Paint Gloomy Picture for Defense Industry
By Sandra I. Erwin

DoD budget, 2001-2019

There is a growing consensus in Washington that military spending — despite the looming threat of across-the-board federal budget cuts in 2016 — could be ticking back up. Stepped-up combat operations in the Middle East, an escalation of military efforts to contain the Ebola outbreak in West Africa and the possibility of Republicans winning the Senate have created upbeat expectations.

New data on Defense Department contracting trends, however, pours some cold water on these forecasts. Pentagon contracts did plunge as a result of the 2013 sequester, but the squeeze on contractors is likely to persist into the future, analysts from the Center for Strategic and International Studies predict.

Defense Department contract obligations dropped by 16 percent to $314 billion from 2012 to 2013, a decline four times as steep as was seen from 2009 to 2012, a CSIS study estimated. The reduction in Defense Department contract obligations under sequestration was nearly three times as steep as between 2011 and 2012. From 2009 to 2013, contracts plunged by 26 percent.

David J. Berteau, senior vice president of CSIS and director of the study, said the abrupt decline is not likely to be a one-year anomaly.

"I think that when we see the 2014 data, we are going to see the trends all across the board continue," he said.

The report provides overwhelming evidence that the sequester, which was designed to cut government spending across the board, has affected contractors far more dramatically, Berteau said. Non-contract outlays, by comparison, remained mostly flat from 2012 to 2013, an indication that when budgets fall, federal agencies target contract spending as a measure of first resort. The study, conducted annually by CSIS, looks at contracting trends from 2000 to 2013 drawn from the Federal Procurement Data System.

"Contractors are paying the largest share of the impact of the decline," Berteau said. As a percentage of total gross defense outlays, defense funded contract obligations have declined from 53 percent to 49 percent in 2013, the lowest share since 2002.

Berteau said the industry might not want to keep pretending that its defense sales have hit bottom and are going to come back up. World events and new contingencies such as the war on the Islamic State and the Ebola crisis might boost emergency spending, but will not immediately lead to a broad bipartisan agreement to increase the current caps on government discretionary spending, he added.

At the Defense Department, uncertainty and churn will continue to delay weapon modernization programs. "It is only going to get worse from a contractor point of view," Berteau said. "I do no see the votes to change those caps any time soon."

Many defense CEOs believed when sequester hit, that it would be a one-time event, that "Congress would come to its senses, that we'd get our money back in 2014, and the caps would be raised," said Berteau.

A big warning signal for contractors is the precipitous fall in Defense Department research and development spending. R&D contract obligations dropped by 21 percent from 2012 to 2013, and by 39 percent from 2009 to 2013. The Army's R&D contracts went down by 35 percent and the Air Force's by 27 percent, compared to only 10 percent for the Navy.

These numbers show that the Pentagon, contrary to the official rhetoric, is paring back investments in advanced technology and modernization of the force, said CSIS analyst Greg Sanders, one of the authors of the study. After Congress passed the Budget Control Act and military spending took a dive, Defense Secretary Chuck Hagel called for a smaller, but more technologically advanced force. The data contradicts that vision, Sanders said.

As shown by impressive gains in stock prices over the past two year, large primes have pulled through the sequester better than small firms. The study provides compelling proof that the largest contractors are more sheltered from cuts. From 2012 to 2013, contracts for the Pentagon's top six contractors — Lockheed Martin, Boeing, Raytheon, General Dynamics, Northrop Grumman and L-3 Communications — dropped by 9 percent. For everyone else, they fell by 19 percent.

The numbers in the CSIS study should not come as a surprise to industry investors, says analyst Byron Callan, of Capital Alpha Partners. "The data likely conforms to many investor perceptions of what’s happened in recent years," he writes in a research note.

"Investors and analysts need to keep in mind that the data is for contracts — this is not the same as outlays," he warns. Contract awards more closely track company orders while outlays are more closely related to sales. Of particular interest to investors, he says, is that foreign military sales contract obligations fell 20 percent between 2012 and 2013 — from $26 billion to $21 billion. "FMS should not have been impacted by sequestration, but the data is a bit surprising given general optimism surrounding international defense growth opportunities."

Retired Marine Corps Maj. Gen. Arnold Punaro, chairman of the National Defense Industrial Association, said the report should raise red flags about the Defense Department's investment priorities. “The report makes clear that the bill payer for defense cuts and sequestration has been our technological edge. From 2009 to 2013, overall defense spending is down 20 percent, but research and development spending is down 40 percent,” said Punaro. “We should not cut investments in technology if we want to remain the preeminent global military power. Senior defense officials such as Undersecretary of Defense Frank Kendall have underscored this point repeatedly.”

Photo Credit: CSIS

First Squadron of E-2D Advanced Hawkeye Ready to Deploy
By Valerie Insinna

NORFOLK, Va. — The Navy in 2015 will deploy the first squadron of its new airborne early warning aircraft, the E-2D Advanced Hawkeye, a Navy official said Oct. 16.

The Advanced Hawkeye reached initial operating capability Oct. 10, meaning that a squad of five aircraft is manned, trained, equipped and ready to deploy, said Capt. Drew Basden, commodore of the Navy’s airborne command, control and logistics wing. The aircraft will move to the USS Theodore Roosevelt aircraft carrier next year.

The Navy has flown its predecessor, the E-2C Hawkeye, for 50 years, said Capt. John Lemmon, program manager for E-2/C-2. The aircraft can detect and identify what is happening in the air or on the sea’s surface, and then communicate that information to commanders, increasing the carrier strike group's situational awareness.

The E-2C was designed for a blue water environment, said Cmdr. John Hewitt, head of the VAW-120 squadron that trains pilots and maintainers on the E-2D, "and it did that job very, very well.” However, "it had its limitations in a littoral and over-land environment."

With the Advanced Hawkeye, operators have the ability to see very small air and surface targets "over land, over water, it really doesn't matter. The aircraft does not care about its operating environment,” he said.

Although the E-2D is completely new airframe, it looks mostly the same as the older E-2C. That’s because the original was built and designed for the airborne early warning mission, so there was no need for Northrop Grumman to completely redesign it, said Bart LaGrone, the company’s vice president for E-2/C-2 programs.

The newer airplane is about 2,500 pounds heavier in order to accommodate more equipment, he said. “We had to redesign 60 percent of the fuselage to handle the heavier weight of the aircraft.”

The biggest draw is the E-2D’s new APY-9 radar system, designed by Lockheed Martin, Lemmon said. "It can detect smaller targets at greater ranges [and] track them,” and is advanced enough to support naval integrated fire control-counter air missions — the Navy’s concept to better network every aircraft and ship in a carrier air wing and strike group, allowing them to cooperatively engage an adversary. Lemmon declined to state the radar’s range.

The increased size of the radar meant that Northrop had to beef up the E-2D’s engine, choosing the T56-A-427A manufactured by Rolls Royce, LaGrone said.

Another new feature of the aircraft is that one of its pilots can serve as a fourth tactical operator when not taking off or landing the plane, LaGrone said.

It can also play a role in humanitarian operations, he said. Its communication suite allows it to search for survivors of natural disasters, for example, and prioritize rescue missions.

So far, Northrop Grumman has delivered 15 E-2Ds with a 16th scheduled for November, LaGrone said. The company will manufacture about five aircraft per year.

The Navy has contracted for 50 Advanced Hawkeyes, but plans to buy a total of 75 to replace its 52-aircraft legacy fleet. It will begin sunsetting the E-2C in 2017, and the entire Hawkeye fleet is expected to have transitioned to the newer aircraft by 2027.

Program officials plan on incorporating additional capabilities on the aircraft in the coming years. The Navy in August conducted a preliminary design review on aerial refueling, which could be on the E-2D as early as 2020, Lemmon said.

Adding that capability “will play a huge role in extending our persistence and reach,” he said.

The service also wants to begin integrating and testing the Tactical Targeting Network Technologies data link on the aircraft within the next year, Lemmon said. The link will reduce transmission latencies and provide additional bandwidth.

Northrop Grumman is exploring foreign military sales of the Advanced Hawkeye to countries including United Arab Emirates and India, LaGrone said. Current international operators of the E2C include Japan, Taiwan, Egypt and France.

Photo Credit: Northrop Grumman

Four Years After Establishment, Army Cyber Command Touts Progress (UPDATED)
By Sarah Sicard

The relatively new Army Cyber Command is looking to perform more joint operations as it continues to build its capabilities, a pair of its senior leaders said Oct. 15 at the Association of the United States Army annual conference in Washington, D.C.
In order to do that, it will need to collaborate with the government and private industry to develop a capable, sustainable cyber environment, said its commander, Lt. Gen. Edward Cardon.
Army Cyber Command just passed its fourth anniversary. According to its mission statement, it was established in 2010 with the goal of "full spectrum cyberspace operations to ensure freedom of action in cyberspace, and to deny the same to U.S. adversaries."
It activated a cyber protection team in September, Cordon said. The command is integrating National Guard and Reservists into its forces and placing them in these response teams, he said.
On Oct. 7, the command held a ceremony where team members received their new insignia patches, according to an Army Cyber Command article. The teams will be responsible for “conducting defensive cyberspace operations, readiness inspections and vulnerability assessments as well as a variety of other cyber roles and missions,” the article stated. There are plans for 10 more teams.
Cyber Command, though still a relatively new organization, has done a great deal to bring the Army up to speed in cyberspace, Cordon said. But there are still questions moving forward.

"How do we organize ourselves ... in cyber? And I believe that is a closer partnership with private industry, and how we work requirements capabilities in acquisition," he added.
"Next year, we are going to drive very hard on … operations both at the national support to combatant commanders and the Army level," Cordon said.
He added: "We’re now starting to work very hard on 'What does cyber look like at corps level and below?' Sometimes you'll hear this referred to as tactical cyber."

The command’s Cyber Center for Excellence training institution is working to address those questions and adequately lay out doctrine for dealing with Army cyber strategy, he said. As it continues to make strides, Army Cyber Command is still seeking to answer the broader question of "what is the scope of cyber?"

The Cyber Center of Excellence currently teaches signal, cyber and electronic warfare, and though it doesn’t now, it will also need to include intelligence gathering in the future, said its commanding general Maj. Gen. Stephen Fogarty.

Correction: An earlier version of this story stated that Army Cyber headquarters had moved to Fort Gordon, GA. Its headquarters is in Fort Belvoir, VA.

Photo Credit: Thinkstock
Turkey Postured to Defeat ISIL Without NATO Help

By Sarah Sicard

Despite continued threats to its border with Syria, Turkey is capable of handling pressure from the conflict without major NATO support, an Army official said Oct.16.

"I think that their assessment is they're postured if an actual conventional force from Syria, ISIL, comes into Turkey. They're postured to defeat it," Maj. Gen. Walter Piatt, deputy commanding general of U.S. Army Europe, said at a round table discussion with reporters.

"They have seen an enormous amount of refugees come over their border," he added. "This is not something that's new. They’ve seen this before and they are very good at managing this, understanding the threat, understanding the border."

Though NATO forces are present in Turkey, Piatt confirmed that this does not indicate heightened involvement from the alliance.

He added: "There are many challenges when you deal with an alliance. We’re dealing with sovereign nations here."

As such, with the strengthening of the allies in NATO, the U.S. role of acting as a unilateral force in Europe is coming to a close, he said. This comes as part of the continued U.S. drawdown, wherein the Army in Europe will eventually rely heavily on the alliance as an interoperable, multilateral force.

By 2018 or 2019, the U.S. troop count will be drop from 31,000 to 28,000 — an ideal number, according to Piatt. Having more than that is unnecessary.

"The posture we have now is a result of our success. The commitment we had to the nations during the Cold War, it worked," he said. The Balkans' borders are open, and Eastern Europe's economy is moving in the right direction, he noted. Those are examples of NATO's success.

Though there are still many crises in the region, the force reduction "is what peace looks like," he said. "It's natural. We can downsize force and we can increase the alliance to contribute to that force gap."

Piatt added that the drawdown has been a catalyst, forcing the alliance to reach the heightened capacity needed to maintain security. "We need to be a contributing member to this alliance, and we can create a smart defense, if we do this correctly."

One area where NATO has made the most significant strides is that of technical communications and intelligence. "Each country has different capabilities," he said.

The most important aspect of collecting information has been through human intelligence. The strength of intelligence gathering is best when it comes from people who know the environment. Local governments and law enforcement have played a major role in increasing intel-sharing among allies, he said.

In an era of fiscal austerity, NATO should be considered the primary source of troop strength in the region rather than operations that rely solely on U.S. armed forces, he said.

"If your solution is to command more money and more people, then you probably haven't thought through the problem well enough, because the alliance is right there," he added.

The facilities and training programs that have been built up to provide support to the alliance in the wake of U.S. personnel reduction will allow for budget consolidation and more streamlined future operations, he said.

The greatest concern moving forward is continuing to sustain joint strategies with NATO allies. After ongoing multinational efforts in Afghanistan and Iraq over the last decade, the foundation for cooperation is strong and needs to be maintained, he said.

Photo Credit: Army 
FEMA Preparing for Possible Shortages of Bio-Hazard Gear as Ebola Fears Rise  
By Stew Magnuson

The Obama administration is looking into evoking the Defense Production Act to stem possible shortages of bio-hazard protective gear as fears of an Ebola outbreak grow, a Federal Emergency Management Agency official said Oct. 15.

Jim Kish, deputy assistant administrator for response at FEMA, said that there is currently no shortage of gear that would protect personnel from the deadly Ebola virus, but the administration is looking into the possibility that there could be a run on such items if the contagion spreads.

“As the situation matures inside the United States … private sector organizations, local jurisdictions, federal agencies are all going to recognize the need to procure and field and expend personnel protective equipment,” Kish said at the Association of the United States Army annual conference in Washington, D.C.

“I’m not stating that there is a shortage today, but the notion about how we are going to address any potential [shortage] in that area, in terms of planning activity, we’d be negligent if we weren’t thinking about it right now,” he added.

The Obama administration may evoke the Defense Production Act, Kish said. That authorizes the president to require businesses to give federal contracts priority over previously existing contracts "to promote the national defense," according to the law.

Kish criticized the collective Ebola response so far: “Things are maybe not set quite right in the public health arena,” he said.

Over the weekend, Department of Homeland Security Secretary Jeh Johnson tasked FEMA to be the integrator of information and operational coordination for DHS’ response to the Ebola cases.

The lead federal agency remains Health and Human Services, through its agency the Centers for Disease Control, Kish said. But DHS has a widening role.  

“As of this morning, we found out that there might be a growing need for that kind of thing as well,” he said, referring to the case of the Dallas-area nurse who flew on a commercial flight after treating an Ebola victim.

In light of that case, the Transportation Security Administration may be called in to carry out some kind of measures, he said. Customs and Border Protection, which screens inbound passengers, already has a role in the response, he said.

Along with the nurse who was allowed to fly, another who treated the patient has come down with the virus. The patient, Thomas Eric Duncan, had flown from Liberia, and had a high fever, but was sent home from the Dallas-area Texas Health Presbyterian Hospital. He has since succumbed to the disease.

In terms of integrating DHS’ Ebola information, Kish said, “We have a fairly good template and a good battle rhythm going.”

“We feel like we are probably looking at something we haven’t seen the edge of yet because we are learning as a nation, and seeing more every day,” he added.

HHS’ office of refuge resettlement would be responsible for screening any large number of immigrants coming over from Ebola-stricken countries, he noted.

Meanwhile, Republican leaders on the House Homeland Security Committee Oct. 15 called on DHS’ Johnson and Secretary of State John Kerry to suspend visas from Ebola-stricken countries such as Liberia, Guinea and Sierra Leone.

“While we remain confident in CBP’s ability to adequately screen individuals with overt signs of disease, given the virus’ long incubation period of up to 21 days, individuals carrying the virus may not show symptoms when they leave West Africa or upon entry in the United States,” the letter said.

“Taking such action to temporarily suspend some of the 13,500 visas would improve the American public’s confidence of public health officials to limit the spread of Ebola to the United States, while simultaneously permitting a robust effort by the U.S. government and global health agencies to combat this vicious disease in West Africa,” read the letter signed by the chairman of the committee Rep. Michael McCaul, Texas, and the chairs of the five subcommittees.  

Photo Credit: Defense Dept.
Army Studying Path Forward For Future Fighting Vehicle
By Valerie Insinna

The shadow of the cancelled ground combat vehicle hung over the Association of the U.S. Army annual meeting and exposition, but the service is already looking at options for a Bradley infantry fighting vehicle replacement that could be developed in the future.

“Both because of affordability challenges and because we want to have an opportunity to explore those design concepts, our future fighting vehicle approach at this stage is about building knowledge [and] allowing technology to mature before we commit to a specific future design,” Brig. Gen. David Bassett, head of the ground combat systems program executive office, said Oct. 14.

The Army will decide by fiscal year 2016 whether to move forward with a new clean sheet design for the future fighting vehicle or an upgraded Bradley, he said.

A future fighting vehicle program could start as early as 2019, said Col. James Schirmer, program manager for armored fighting vehicles. Until then, the Army is studying budding ground vehicle technologies and potential designs.

For instance, the Army Tank Automotive Research, Development and Engineering Center is working on various science and technology projects that may be mature enough to be integrated into the new vehicle.

Additionally, “we have General Dynamics and BAE both under contract to do some concept exploration work starting with the work they've already done before [for GCV] and then working the designs to see what would happen if we reduce the number of troops to be carried,” he said. “What are the range of possibilities? What are the different advantages and disadvantages and price points we're looking at to help the Army determine which direction it wants to go in the future?

“When that comes back together toward the end of that time period, we will have a better idea of what the Army wants and we'll have some additional technologies ready for insertion,” he added.

Although the Army is interested in groundbreaking vehicle technologies, Bassett stressed that a future fighting vehicle design must be economically feasible.

“We’ve spent a lot of time in the Army chasing those kinds of requirements that proved neither designable nor affordable,” he said. A huge technological breakthrough “may be what we want we would like to see, but it has got to be what we can actually build and afford.”

The Army was forced to kill the ground combat vehicle because of budget cuts, not because the program was mismanaged or wasn’t developing a quality product, Bassett said.

"Even when it was eventually ended, the ground combat vehicle was executing on budget and on schedule, and the prototypes that were developed — the automotive test rigs and other test rigs that were developed — were doing exactly what the requirement had asked them to do,” he said.

The problem was that the vehicle was conceived in a different fiscal environment. When budgets became more constrained, the Army chose to sacrifice the GCV in order to keep the armored brigade combat team relevant, Bassett said.

The service’s near term investment strategy is to incrementally modernize its Bradleys, Abrams tanks and M109 Paladin self-propelled howitzers, he said. Upgrades will provide the fleet with new ammunitions, better optics and a more integrated network.

The Army's only current new-start design program is an armored multi-purpose vehicle to replace the aging M113 armored personnel carrier.

Under the Army’s first engineering change proposal for the Bradley, the vehicle will be outfitted with a new suspension and lighter track to restore ground clearance, making it less susceptible to underbelly blasts. Those upgrades will also restore space, weight and power in the vehicle, Schirmer said. Loc Performance this summer won a contract to perform that work.

The second engineering change proposal will increase automotive power with a new engine and transmission. A new power management system will allow the Bradley to more efficiently distribute electricity through the vehicle and share more data between the turret and vehicle.

Photo: Bradley fighting vehicles (Army)
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