May 14, 2019 | International, Aerospace
By: Joe Gould , Aaron Mehta , and Valerie Insinna
Correction: A previous version of this story contained an erroneous amount of reprogrammed money. The story has been updated to show the Pentagon reprogrammed $1.5 billion in FY19 funds.
WASHINGTON — In the wake of the Pentagon reprogramming $1.5 billion in fiscal 2019 funds to support President Donald Trump's border wall with Mexico, only the U.S. Air Force appears to be losing money appropriated for equipment updates.
The funding largely comes from personnel accounts in the Air Force, Navy and Army. But the Air Force is the only service to lose funding for hardware, including nuclear and conventional weapons, surveillance aircraft updates, and space programs.
Overall, the Pentagon reprogrammed $818.465 million from FY19 defense appropriations, as well as $681.535 million from FY19 overseas contingency operations accounts, or OCO, to reach that $1.5 billion total.
Lawmakers expressed concern that the use of military resources and manpower on the southern border will damage military readiness. However, acting Defense Secretary Patrick Shanahan said last week that ongoing deployments to support the Defense Department aren't doing so.
“We've seen no degradation to readiness,” he told Senate appropriators May 8 at a defense budget hearing. “In fact, in some cases, it's enhanced our readiness because the troops get to perform certain functions.”
Congressional Democrats and some Republicans have objected to the administration's use of this mechanism for funding the president's border wall, arguing it bypasses Congress' constitutional power of the purse. For the second time in recent weeks, the Pentagon ignored decades of precedent and carried out the transfer of funds without first consulting with the Senate Appropriations Committee.
Sen. Patrick Leahy, the Senate Appropriations Committee's top Democrat, led a letter to Shanahan on May 10 to object to the latest instance, saying it harms hurricane cleanup at Tyndall Air Force Base, Florida.
“We are dismayed that the Department has chosen to prioritize a political campaign promise over the disaster relief needs of our service members, given the finite reprogramming authority available," the lawmakers wrote.
They noted that Shanahan's decision to notify Congress of the reprogramming came a day after he testified before the subpanel that oversees defense spending, and they wrote that they welcomed his views on “how you intend to repair the damaged relationship between the defense oversight committees and the [Defense] Department.”
The letter was also signed by the Senate Armed Services Committee's top Democrat, Sen. Jack Reed, as well as Democratic Sens. Dick Durbin, Brian Schatz, Tom Udall , Patty Murray, Chris Murphy, Tammy Baldwin, Dianne Feinstein and Jon Tester.
The reprogramming could be a topic at Shanahan's future confirmation hearing for the full job of defense secretary. A date for that hearing has not been set.
Why the Air Force?
About half of the non-OCO $818 million sum the Defense Department wants to redirect to the border comes from Air Force accounts, with space and missile programs taking the biggest hit. In total, the Pentagon expects the service to shear $402 million off its FY19 budget.
About $210 million would be cut from Air Force space programs, specifically the Evolved Expandable Launch Vehicle program, which funds the use of rockets that send satellites and other capabilities into space. According to the reprogramming document, one rocket launch has been canceled due to the “Space Test Program (STP)-4 satellite provider termination of the Robotic Servicing of Geosynchronous Satellites (RSGS) spacecraft,” which is no longer necessary under the National Security Strategy.
The Air Force's program for modernizing its E-3 Sentry early warning aircraft — more commonly called AWACS — also could lose funding that it no longer needs in FY19.
The program, "Diminishing Manufacturing Sources Replacement of Avionics for Global Operations and Navigation,” or DRAGON, updates the E-3's avionics and brings it into compliance with future air traffic control requirements. But it is moving too slowly to use all of the funds it was appropriated in FY19, so the administration aims to have $57 million diverted for border protection.
DRAGON has been delayed for two reasons, according to the reprogramming request. First, “aircraft have been available for programmed depot maintenance” at a slower-than-planned rate, dragging out the modification schedule. Additionally, DRAGON integration can only occur after AWACS are upgraded to the Block 40/45 configuration, and not all aircraft have gone through that process.
The Air Force sees AWACS as a key part of its initial version of the Advanced Battle Management System, a family of systems that will provide ground surveillance across the different military services. Instead of retiring seven E-3s in FY18, Gen. Mike Holmes, head of Air Combat Command, said those planes could be upgraded with new sensors and communications gear.
However, DRAGON isn't the only modernization effort for the Sentry that is moving slower than expected. In November, Bloomberg reported that the service terminated a contract with Boeing to upgrade the AWAC's characteristic disc-shaped radar due to repeated delays.
Other Air Force programs that will take a hit include a planned upgrade to the Minuteman III intercontinental ballistic missile and the air-launched cruise missile programs.
A number of top defense officials previously said nuclear modernization is the top priority for the Pentagon, including Ellen Lord, the department's acquisition head, who on May 1 told Congress: “We have weapons that are decades over what was supposed to be their useful life. And we are out of time. We need to continue on the path we're on, or we are going to fall behind and not have the nuclear deterrence that we enjoy today.”
The document reprograms $24.3 million, of the $124.5 million appropriated in FY19, from the Minuteman III Launch Control Block Upgrade program; the document claims funds are available due to a “slip in the production schedule for FY 2020.”
Meanwhile, $29.6 million — more than half of the $47.6 million appropriated for the air-launched cruise missile programs in FY19 — will be reprogrammed. The explanation for that change: “Funds are available due to contract savings from reduced guided missile flight controller modification requirements; and due to lack of executable requirements for Support Equipment and Low Cost Mods in FY 2019.”
The reprogramming of funds for the Hellfire missile is also notable, as the Pentagon has identified a lack of munitions stockpiles as a major issue to address in its budget request. As an example, the FY20 budget called for the maximum rate of production possible on Hellfire: $730.8 million for 9,000 of the weapons.
The document states that funds are “available due to contract savings from all variants that provide precision kill capabilities. Savings are attributed to negotiated lower unit costs per missile system.”
January 20, 2022 | International, Naval
The Navy and Lockheed Martin are still negotiating the cost breakdown for a fix to the Freedom variant Littoral Combat Ship that has restricted the operations of most ships in the class, a service official said last week. Capt. Andy Gold, the program manager for the Navy’s Littoral Combat Ship, told reporters at the annual …
June 17, 2019 | International, Security, Other Defence
By: Mark Pomerleau Contractors, facing an increasing barrage of cyber intrusions by foreign entities, should protect themselves using traditional regulatory approaches but also new techniques such as blockchain and artificial intelligence, according to a new report from Deloitte. As companies in the defense supply chain began following the Defense Federal Acquisition Regulation Supplement (DFARS) cybersecurity regulations and the Department of Defense started to assess how adoption went, “we started to form our own ideas on what we see as emerging issues and solutions that [can] ... improve the cybersecurity posture against our enemies,” Jeff Lucy, managing director in cyber risk services practice at Deloitte, told Fifth Domain. On the regulatory side, the report, titled “Third-party risk management: Cybersecurity in the Defense Industrial Base,” says prime contractors must comply with the defense regulations measuring their companies' compliance with national cybersecurity standards. They should also create awareness among their subcontractors and smaller companies by providing training. Third, primes should create third party assessment programs for performing cybersecurity evaluations of their suppliers. However, the paper also suggests non-regulatory approaches, including automating supply chain functions, integrating blockchain to boost cybersecurity and using artificial intelligence to gain real time visibility into the threat landscape. Lucy noted that the Pentagon is beginning to take these regulations seriously and the problems aren't going away. “In 2019 we've seen that the DoD has started to move forward, start to take action to enforce their expectations around the DFARS requirements,” he said. “It's clear now with the steps that we're seeing with [Undersecretary of Defense for Acquisition and Sustainment] Ellen Lord getting the [Defense Contract Management Agency] on board to start auditing the suppliers processes for assessing their suppliers.” Cyber intrusions into the supply chains of defense contractors have become more prevalent in recent years. In a recent example, the Chinese government was blamed for a series of hacks and while the information they stole was not technically classified, in aggregate, it was considered to be quite damaging to the U.S. This year's Department-wide annual report on Chinese military activity included a new section highlighting that China's exfiltration of sensitive military information from the defense industrial base could allow it to gain a military advantage. Ultimately, Lucy said the solution to the supply chain and cybersecurity for the defense industrial base is manageable. “Most primes, from what I've seen with interactions with our customers, have put some level of the basic elements for a supplier assessment program in place already,” he said. “They've done some level of canvassing their suppliers, critical suppliers, taking a risk based approach to understand whether their suppliers are in adopting” standards. https://www.fifthdomain.com/industry/2019/06/14/how-contractors-can-guard-against-cyber-intrusions/
July 23, 2020 | International, Aerospace
By Anthony Capaccio Lockheed Martin Corp. and Boeing Co. received about half of an initial $2.3 billion in increased, accelerated payments the Pentagon provided contractors to help companies' cash flows after the Covid-19 pandemic erupted in the U.S. The initial infusion was included in $13 billion in regular, periodic progress payments paid to the companies, according to newly released defense figures. Lockheed Martin initially received $685 million while Boeing got $670 million, according to a Pentagon statement to Bloomberg News In a separate statement, Lockheed Martin said that modifications to existing contracts resulted in additional accelerated payments to the company, increasing its total received to $1.1 billion by June 30, “all of which we have flowed down to our supply base.” Lockheed and Boeing are the top two U.S. defense contractors, so they were expected to get the biggest share of the funds. Other companies receiving the accelerated payments include: Raytheon Technologies Corp.: $410 million L3 Harris Technologies Inc.: $74 million The Boeing/Lockheed United Launch Alliance LLC: $70 million Northrop Grumman Corp.: $70 million Another $321 million went to other companies. The companies are benefiting from a policy the Pentagon announced in March, just as the pandemic was building in the U.S., that provided for faster, and bigger, payments to companies. The move was intended to guarantee that critical national security contracts -- including the production of key weapons systems and supplies -- weren't interrupted by companies having problems accessing cash or credit. The extra funding would ensure production lines were able to stay open. The Defense Department's move meant that larger firms could get as much as 90% of their payments for contracts in progress, up from 80% previously. For smaller businesses, which might be more susceptible to virus impacts, the rate rose to 95% from 90%. As the initial funds were identified, the Pentagon “worked with each of the major primes to ensure that they were identifying at risk companies in their supply chain and flowing down payments to those companies, as well as all companies doing work for the prime,” said the statement. The major contractors “have been flowing down payments, in some cases more than the payments received from DOD,” it said. Pentagon officials initially estimated in March about $3 billion would be paid but that number included a potential $700 million payment on a long-standing contract that further analysis deemed was not necessary. In addition to the accelerated progress payments, the Air Force in April released to Boeing $882 million withheld from the company over current deficiencies with its KC-46 military tanker program as part of Covid-19 relief efforts. After the program was announced, Senator Elizabeth Warren, who serves on the Armed Services Committee, expressed concern about its oversight. In particular, the Massachusetts Democrat questioned whether companies might try to divert the increased payments for stock buybacks, dividends or executive pay. Pentagon Undersecretary for Acquisition and Sustainment Ellen Lord in a May 15 letter to Warren said that hasn't been the case. “Companies do not divert payments for incurred costs to share buybacks, dividends or executive salaries because contractors must have already incurred costs before they receive the increased progress payments,” Lord wrote. https://www.bloomberg.com/news/articles/2020-07-22/lockheed-boeing-got-half-of-2-3-billion-in-pentagon-virus-cash