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22 Feb 18. Let Pentagon carry over FY18 budget boost so money isn’t wasted, key lawmaker says. A top defense appropriator wants to waive Congress’ use-it-or-lose-it rules to let the Pentagon use its fiscal 2018 funding boost in next year’s budget, too, arguing there isn’t enough time to efficiently spend the money.
Rep. Kay Granger, chairwoman of the House Appropriations Defense Subcommittee, told Defense News on Wednesday that Congress must act to fix an “artificial deadline,” or the military risks losing funds afforded by a new budget deal.
“I couldn’t be more proud of what the Congress approved for defense, but we certainly don’t want to waste that and we don’t want to lose it,” said Granger, R-Texas.
Still, the path for such a measure is unclear, as Democrats are signaling they will drive a hard bargain in ongoing negotiations on how to spend the added $80bn provided to defense by the recent budget deal.
Because Congress has yet to reach a final budget agreement for FY18, which began Oct. 1, 2017, the military has been operating at 2017 spending levels. Appropriators are expected to propose an omnibus spending bill before the latest funding patch expires March 23.
Without congressional action, the military would have five months or less to spend the big bump afforded by the deal on budget top lines, which gives the Department of Defense nearly $700bn for FY18 and $716 bn for FY19
Under current rules, money not spent by government agencies before the end of the fiscal year goes back to the Treasury Department.
Defense Secretary Jim Mattis has railed against Congress’ reliance on stopgap measures, or continuing resolutions, to fund the government, saying in June congressional testimony that funding instability has “blocked new programs, prevented service growth, stalled industry initiative and placed troops at greater risk.”
To soften the impact, lawmakers have since approached Pentagon leaders with the idea of stretching 2018 funds and more recently requested a DoD outline of what it would like extra authority to do. The lawmakers were awaiting a reply, as of Wednesday.
Granger wants the DoD to make the case for flexibility in other categories, but she anticipates the authority ultimately will be narrow, with increased oversight.
Still, the Senate’s No. 2 Democrat and ranking member on the Senate Appropriations Defense Subcommittee, Sen. Dick Durbin, expressed skepticism Wednesday.
“If there is a good case to be made for some flexibility around the margins to better support the women and men of the armed forces and their families, that’s a reasonable discussion to have,” said Durbin, of Illinois.
But Durbin pushed back on another proposal of Granger’s — a $28.6bn fund for the Pentagon that could be used at Mattis’ discretion to give the military the ability to rebuild forces — as “slush funds, a proposal that will not fly.” Durbin also pointed to a Defense Logistics Agency audit that found $800m in spending that could not be justified.
“I’m willing to hear Secretary Mattis out on any proposals he has for the spending increases, but I will want to know how we appropriators make sure that every dollar will be well-accounted for,” Durbin said.
According to Granger, the priority for funding flexibility is with operations and maintenance funding, which must be obligated within one year. O&M also covers military readiness, the center of pro-defense lawmakers’ successful argument for the added funding.
It’s an open question, what the legislative vehicle will be, though it’s likely be the omnibus or a standalone bill. Either way, Granger wants to vet the idea with colleagues of both parties and act quickly.
Both House Armed Services Committee Chairman Mac Thornberry, R-Texas, and the Senate Armed Services Committee’s No. 2 Republican, Sen. Jim Inhofe, R-Okla., have publicly signaled support, as have military leaders.
Stretching funds from one year to the next is not unprecedented, but appropriators are typically reluctant to do so. Bob Hale, a DoD comptroller under President Barack Obama, said he pressed, to no avail, for 5 percent carryover authority to avoid inefficient, year-end spending sprees that plague the department.
“They paint the conference room or buy new furniture because they think if they don’t spend it, they wont get it the following year,” said Hale, now a senior adviser to Booz Allen Hamilton. “If you gave them 5 to 10 percent carryover, they might wait and decide to spend that on training.”
The Heritage Foundation, an influential conservative think tank, has come out in favor of limited carryover authority of up to 5 percent for the DoD’s operating budget.
“The time crunch created by continuing resolutions and the use-it-or-lose-it system can force the DoD into suboptimal decision-making, like focusing on what it can buy ‘right now’ instead of making the acquisitions the military actually needs,” Fred Bartels, of the Heritage Foundation, said Wednesday. “Congress should try giving DoD substantial carryover authority and focus its oversight on what the department actually does with that increased discretion.”
For her part, Granger is banking that Capitol Hill’s general goodwill toward defense will carry the day.
“It needs to be explained, but I think it will have support because the defense bill had so much support,” Granger said of her forthcoming proposal. “If we go back around and say, ‘[For] all this support we gave them, some of that would be lost if don’t do this,’ I think people will be very supportive.”
21 Feb 18. Army looking to funnel potential budget boost into modernization. After two decades of ups and downs, the Army is preparing for its biggest base budget in history. The service is staring down the end of Congress’s latest continuing resolution, but if a budget deal becomes law at the end of March, the Army is preparing to use the extra $6.5 bn it would get in this year’s latest proposed budget.
Those extra funds would likely go straight into the Army’s modernization plans, Lt. Gen. Thomas Horlander, the military deputy to Army’s comptroller, said Wednesday.
“We’re posturing ourselves to take an increase in our top line,” Horlander said. “If we get what we would like in the increase in ‘18, much of it is in our modernization account.”
Waiting half of a fiscal year to find out whether a funding boost is coming isn’t the preference, he said.
“Obviously, it’s not ideal, when you get a funding decision — and funding deal — late in the year.” he said. “But I’ll tell you, when it’s an increase, it’s greatly appreciated.”
President Trump’s fiscal 2019 budget proposal looks to build on that increase, kicking the Army’s budget up from $175bn this year, if the proposed 2018 budget passes, to $182bn next year.
While the budget is trending downward from the height of the Global War on Terror, when the Army was working with more than $250 bn a year, its base budget is higher than it’s ever been at $148bn, when you factor out overseas contingency funds.
Just over 60 percent of that is allotted for military personnel programs, including a 2.6 percent pay raise, and a gradual uptick in Army end strength. The service is slated to add 7,500 to the active component and 500 to the Reserve in 2018, followed by another 4,000 active in 2019.
A request for $2.6bn more in the military personnel account will cover not only recruiting and retention of more soldiers, but their training and sustainment.
“It’s not just about recruiting bonuses and retention bonuses — it also has a lot to do with our institutional Army, our training base,” Horlander said. “It’s between two and three billion more over the next two years. Some of that, not all of that, contributes to end strength growth.”
Despite operation on a fifth continuing resolution in a row, and two short government shutdowns since the year began, Horlander said he’s optimistic about where Army funding is heading.
“I would tell you now, I think we’re in a much better place financially than we have been in a while,” he said. (Source: Defense News)
21 Feb 18. How will General Dynamics’ acquisition of CSRA impact government services? General Dynamics’ $9.6bn acquisition of government information technology solutions powerhouse CSRA on Monday demonstrates a trend of consolidation in the government services market.
In a conference call announcing the acquisition, General Dynamic’s Chairman and CEO Phebe Novakovic pointed to the power of sheer mass in targeting government services opportunities.
“In a consolidating market it makes an awful lot of sense to combine to better address the larger packaging opportunities from a contracting point of view,” she said. “Stasis is death.”
This focus on consolidation begs the question: How will General Dynamics’ acquisition of CSRA affect competition in the government services market?
Leidos’ merger with Lockheed Martin’s Information Systems and Global Solutions in 2016 cemented the company one of the largest firms in the IT market.
Since the merger, Leidos won a contract with the National Geospatial-Intelligence Agency worth nearly $1bn, and has taken steps to compete for the Navy’s multibillion-dollar NGEN-R contracts (CSRA has also expressed its suitability for the NGEN-R contracts).
If the merger plays out like General Dynamics expects, the company will likely be able to compete with Leidos for the larger, more lucrative government services contracts.
Dan Johnson, General Dynamics’ executive vice president of information systems and technology, is particularly optimistic about emerging opportunities in this market space.
“We feel that with recent events such as the newly approved increasing budget, the realization that awarding to the lowest bidder has not worked and that quality matters all align at this point to make the combination of General Dynamics and CSRA a market-changing event, and we are very excited about it,” Johnson said.
Yet, the transition may not move as quickly as GDIT-CSRA hopes.
“The integration will be very complicated and will not be quick, given the massive size of both companies,” said Chris Helmrath, managing director of SC&H Group. “But the bigger issues will be a cultural assimilation. Since GD is known in the market as more conservative while CSRA was seen as an innovator … it will be telling which culture comes out on top as integration progresses.”
But once up and running, GDIT-CSRA could be expected to compete for federal IT service contracts. “This is a double-down play, and I think to compete effectively with Leidos, a player needs scale, which this deal definitely brings,” Helmrath added.
General Dynamics’ decision to double-down bucks the trend of other prime contractors. Aerospace and defense analyst Rob Stallard of Vertical Research Partners said in a report that “doubling down on Fed IT seems to move GD in the opposite direction of where the Prime contractor peers are heading.”
Helmrath and his firm expect further consolidation in all areas of the market, from the largest players like the DXC-Vencore-KeyPoint merger, down to emerging midtier competitors like Polaris Alpha and By Light Professional IT Services.
“We predict continued consolidation for unique capabilities, contracts and customers in government services to continue through 2018,” Helmrath said. (Source: glstrade.com/Defense News)
21 Feb 18. Army Hopes For $6.8bn From FY18 Budget Deal: 70% For Modernization. The figures aren’t final, but the US Army hopes to get about $6.8bn in additional funding for fiscal year 2018 thanks to the recently concluded budget deal, Army Secretary Mark Esper said this morning. The service’s new plan would start delivering a Next Generation Squad Weapon to the infantry by 2023, replacing the M249 SAW light machinegun and ultimately the M4 carbine and M16 rifle. It would begin fielding a Next Generation Ground Vehicleto armored units by 2030, replacing the M2 Bradley.
Overall, the service’s senior uniformed budgeteer, Lt. Gen. Thomas Horlander, said at a separate event, of the expected 2018 increase, “between 70 and 80 percent of it will be in modernization.” That’s about $4.75 to $5.45bn.
The budget deal raised spending on defense about $25bn over the president’s request for 2018, and the Army expects to see more than a quarter of that. But final funding levels won’t be settled until Congress passes an appropriations bill, probably when the current Continuing Resolution expires March 23rd. “I know what we the Army would like to see,” Horlander told the Association of the US Army this morning, “but until we actually see a legislated and enacted bill… I can’t tell you with great certainty.”
Even once Congress passes defense appropriations and the President signs them, the Army still has to get the money from the Treasury and disburse it to some 35 separate commands and agencies, which then have less than half the fiscal year to spend it. “Once Congress passes it, we don’t get that money immediately, it takes a few weeks, a few weeks, so we could be looking at April…. by the time we start seeing dollars,” Esper said.
Modernization Wins Big
That the plus-up will emphasize modernization — everything from basic research to upgrading old systems — is markedly different from the service’s overall budget, more than half of which goes to military and civilian personnel. It’s also different from previous plus-ups, which emphasized readiness. But Defense Secretary Jim Mattisalways planned to shore up short-term readiness in 2017-2018 and then move on tolong-term modernization, and the Army’s emphasis on modernizing for major wars against Russia or China fits well with his new National Defense Strategy.
Army Chief of Staff Mark Milley also shored up readiness first before turning to modernization with a sweeping reorganization of the service’s acquisition, R&D, and future concept bureaucracies. As Courtney McBride of Inside Defense reported, the 2019 budget request allocates $38m of the Army’s rapidly growing RDTE account (Research, Development, Test, & Evaluation) to the Cross Functional Teams working on Milley’s big six modernization priorities.
The one and two-star generals heading the eight Cross Functional Teams need their own money to explore the art of the possible: study promising new technologies, experiment with them, conduct technology demonstrations, and — crucially — to build prototypes.
“The primary focus of the CFTs is really to nail down the requirements,” said Esper — the official wishlists of what a new weapons system must be able to do that drive all military procurement. Today, that typically takes the Army “from three to five years,” said Esper, but the CFTs will reduce it “down to 12 months… by doing a lot of aggressive prototyping…. so you fail early and fail cheaply and learn from it.”
“There is money being applied to these CFTs,” Horlander confirmed to reporters after his public remarks to the Association of the US Army here. “You’re definitely going to see them baked in” to the long-range plan or POM (Program Objective Memorandum) for 2020 and beyond. In the near term, it’s possible but difficult to reprogram additional money from other accounts to the CFTs, but that requires both finding someone in the Army to pay the bill and then getting congressional approval: “Those are never really popular, you guys, I’ll just tell you, reprogrammings are really tough to pull off,” he said.
While their funding’s still in flux, the Cross Functional Teams are already highly active, Horlander said. Bypassing the usual bureaucracy, the Vice Chief of Staff and undersecretary of the Army meet with one CFT or another almost every day, he said: “We had two yesterday, we had one last Friday and we had one last Thursday….standing room only.”
New Tech, Faster
The lowest priority Cross Functional Team, Soldier Lethality, is already accelerating acquisition of new night vision equipment, Esper and other officials have said. That team is looking into everything from better body armor to new computerized training, but “a Next Generation Squad weapon, that would be the big one,” Esper said. “We’re trying to move that forward as well (and) that should happen in the next five years or so.”
There’s a little ambiguity here. The Next Generation Squad Weapon began as the Next Generation Squad Automatic Rifle to replace the M249 Squad Automatic Weapon, a light machinegun issued to two soldiers or Marines in a typical squad. But last year the Army expanded that mission to potentially replacing the Vietnam-vintage M16 rifle and its shorter sibling, the M4 carbine, the standard small arms for the entire Defense Department. My guess is Esper’s “next five years or so” refers to issuing the first replacements for the SAW, with rifle replacements to follow, but I’m still trying to confirm that.
The Army is also leading an all-service effort to replace existing helicopters with something faster and longer-ranged, called Future Vertical Lift, which is Milley’s No. 3 priority. And, after several cancelled programs since 2000, the Army is also exploring a new armored fighting vehicle, the Next Generation Combat Vehicle, which is Milley’s No. 2. (No. 1 is long-range precision-guided cannon shells and rockets). The first FVL variant, replacing the UH-60 Black Hawk utility helicopter, is expected to enter service in the 2030s, but the NGCV timeline has long been fuzzier, with a plan for tech demonstrations in 2022 and first fielding around 2035. Esper wants to change that.
“We’e looking at moving this up now, NGCV prototyping etc.,” Esper said. “I want to see stuff being fielded by 2030.”
“This notion of somehow we do it in the mid-2030s, I think it’s too late, we need to be more aggressive,” Esper continued. “I think the technology is out there either in our own industry or with other allies (that) we could get to that Next Generation Combat Vehicle — specifically a fighting vehicle, not a tank — sooner than what’s been predicted in the past.”
When he says 2030, Esper is talking about a replacement for the M2 Bradley Infantry Fighting Vehicle. The 35-ton M2 looks like a tank, complete with tracks and gun turret, but its primary mission is transporting and supporting infantry. “Tank” in military jargon refers specifically to much more heavily armed and armored Main Battle Tank like the 70-ton M1 Abrams. Both vehicles have been extensively upgraded since their introduction in the early 1980s, but the Bradley in particular is running out of electrical power for modern electronics and Active Protection Systems to shoot down incoming missiles.
“Certainly with the Bradley, we are reaching the end of what’s possible with regard to increments (i.e. incremental upgrades), and at some point a little bit later, it will be the same with the tank, so we are being forced to look at what’s after those two,” Esper said.
How big an improvement does Esper want? Is he willing to take risks on cost and schedule in order to get the “10x” (tenfold) improvements in capability sought by Gen. Milley?
“The Chief’s message — and I agree with it — is to think big, think bold, but then you have to balance that with, okay, what’s achievable,” Esper said.
While the Army may aspire to revolutionary new technology as a long-term “endstate,” he explained, it must budget for step-by-step improvements along the way there, designing each iteration with room for growth and a plug-and-lay open architecture that can incorporate new technologies as they are ready.
“I’m not going to wait for a big bang,” Esper said. “We need to continue to modernize and do so incrementally….long strides instead of big leaps.”
“I’m not looking for perfect, but I’m looking for better,” he said, specifically compared to “our strategic competitors of Russia and China… better than them.” (Source: Defense News)
20 Feb 18. State clears Dutch Apache upgrades, Kuwait boats, Finnish weapons. The State Department on Tuesday cleared the potential sale of Apache helicopter upgrades to the Netherlands, fast patrol boats to Kuwait, and ship-based missile launchers for Finland, which if completed could be worth a combined $1.37bn in foreign military sales.
They were announced by the Defense Security Cooperation Agency. All DSCA notifications must be cleared by Congress before final negotiations can occur, and so the dollar total and detail of the packages can change in the future.
The Dutch sale represents the largest portion of that potential figure, at an estimated cost of almost $1.2bn to upgrade and remanufacture 28 AH-64D Block II Apache Attack Helicopters to the AH-64E configuration.
Included in that package are upgrades for 51 T700-GE-701C engines to T700-GE-701D, 17 new AN/APG-78 Fire Control Radar and subcomponents, 28 AN/ASQ-170 Modernized Target Acquisition and Designation Sights, twenty-eight AN/APR-48B Modernized Radar Frequency 70 Embedded Global Positioning System/Inertial Navigation Systems, plus associated training support and equipment.
Work for the upgrade package will be led by Boeing and Lockheed Martin. No offsets are laid out, but the DSCA notes the Netherlands usually requests some form of commercial offset in such deals.
Kuwait requested 15 fast patrol boats at an estimated cost of $100m. The boats would come equipped with two .50 caliber machine guns per boat, along with six spares, to be used for “patrol, interdiction, and maritime protection,” according to the DSCA. Work will be done by Kvichak at its Kent, Washington, location.
“This proposed sale will contribute to the foreign and national security of the United States by improving the security of a friendly country,” the DSCA notification reads. “Kuwait plays a key role in U.S. efforts to advance stability in the Middle East, providing basing, access, and transit of U.S. forces in the region.”
Finally, Finland has been cleared to spend $70m on four Mk 41 Baseline VII Strike-Length Vertical Launching Systems, used to launch missiles off its upcoming fleet of new-build corvettes. Finland is in the midst of an ambitious modernization program for its fleet, and was recently cleared to purchase $730m worth of naval weapons, although the country is technically still in a selection process for that equipment. Lockheed will be the primary contractor, and some form of commercial offsets are expected with the final deal. (Source: Defense News Early Bird/Defense News)
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