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23 Jan 20. In nuclear spending fight, it’s Trump allies vs. White House budget office. A new fight over America’s nuclear budget has erupted from behind the scenes, as key Republicans in Congress are appealing to President Donald Trump for a significant boost to the agency in charge of the nation’s nuclear warheads. Though there are often disagreements as presidents vet their budgets on Capitol Hill before finalizing them, it’s rare that those fights become public. This time, some of the president’s allies in Congress are battling the White House’s Office of Management and Budget on behalf of the National Nuclear Security Administration, a semiautonomous agency inside the Department of Energy.
According to a report from The Dispatch, NNSA sought nearly $20 billion in the Trump administration’s upcoming fiscal 2021 budget request, but OMB cut that figure first to $18.6 billion, and then later to $17.5 billion. That lower figure still represents an increase of $500 million over the agency’s budget authorized for FY20.
NNSA Administrator Lisa Gordon-Hagerty reportedly pushed back in a Dec. 16 memo, arguing that losing the requested funding, along with projected funds over the next five years amounts to “unilateral disarmament” and would result in cutting “NNSA’s modernization program in half.”
The cut reportedly came from OMB director Russ Vought and acting White House chief of staff Mick Mulvaney, who has previously butted heads with pro-defense members. They reportedly argue the lower number is meant to help comply with 2021 budget caps.
Senate Armed Services Committee Chairman Jim Inhofe, R-Okla., has spearheaded a letter to Trump, with a dozen Republican senators, to support the NNSA’s request. Inhofe told reporters Wednesday the money was needed now to remedy underinvestment by the Obama administration.
“In order to get on a route to make it sustainable, on a program, it has to be $20 billion,” he said of the NNSA budget. “Right now they’re talking about somewhere around $17bn.”
Another Trump ally, Senate Foreign Relations Committee Chairman Jim Risch, R-Idaho, co-signed the Senate letter.
“I think people are acting in good faith on this, that we don’t have unlimited money here, and you have to obviously prioritize,” Risch said Wednesday. “But when it comes to nuclear deterrence, it’s about as high a priority as it gets. You’re talking about existential threats to the country.”
Risch said that because the Obama administration in 2010 pledged to robustly fund nuclear weapons programs in a “horse trade” to win Republican votes to ratify the arms reduction treaty New START, the Trump administration should honor that “longstanding commitment by the second branch of government to the first branch of government.”
“To be fair, that commitment has been met partially, but we need to do more,” Risch said.
According to the Congressional Research Service, the Obama administration projected weapons stockpile and infrastructure costs for FY11-FY20 at roughly $85 billion, but the funds appropriated for these programs fell below the projected levels early in the decade. Under the Trump administration, the budget requests and projections for subsequent years exceed the amount predicted.
Department of Energy spokeswoman Shaylyn Hynes said DOE and NNSA will not comment on budget requests that “are not yet final.” The White House plans to roll out its FY21 budget request on Feb. 10.
“Both Secretary Brouillette and Administrator Gordon-Hagerty are deeply committed to our national security mission, including the modernization of the nuclear weapons program as called for under the Nuclear Posture Review,” Hynes said. “As always, DOE will work with OMB to deliver to Congress a budget that keeps America safe and secure.”
It’s unclear how NNSA would seek to use a boost in funding from FY20, but it could potentially try to plug future costs related to the W87-1 warhead program. In December, a top NNSA official told reporters that the W87-1 program may go through design changes, including dropping planned features to defray costs for the B61-12 and W88 Alteration 370 warheads, which have been forced over budget by problems with commercially built parts.
Adding more money in now could perhaps be used to keep those other projects on track.
Speaking to reporters Wednesday while traveling to Florida, Defense Secretary Mark Esper identified the strategic deterrent as the “No. 1 priority” for him going forward, indicating that some of the $5 billion in savings found through a Pentagon-wide review could go toward that mission in the FY21 budget.
To raise NNSA’s budget, the Department of Defense, which in FY20 received a budget exceeded $700 billion, could easily absorb a $2 billion cut, and it should, said Tim Morrison, a former deputy assistant to the president for national security under the Trump administration.
“The president has made clear in various fora his prioritization of nuclear modernization, to do better than his predecessor,” said Morrison, now a Hudson Institute senior fellow. “These kinds of disputes happen, and I think the president will have a decision to make: Does he want to close this 10 percent hole in the DOE budget at the expense of 0.5 percent of the DoD budget?”
Reduced nuclear spending would reduce the president’s leverage in future treaty negotiations with Russia and China, Morrison argued. A cut for warheads, he said, would induce Capitol Hill defense appropriators to seek cuts to related missile systems in DoD’s budget.
“DoD will wind up getting gutted,” he added.
But the Arms Control Association’s director for disarmament and threat reduction policy, Kingston Reif, argued that Gordon-Hagerty’s “bonkers” FY21 budget proposal is further evidence that the Trump administration’s upgrade plans for America’s nuclear arsenal is fiscally unsustainable ― “a ticking budget time bomb even at historically high levels of defense spending.”
“Faced with the reality of unsustainable overcommitment, the agency is unfortunately resorting to hyperbolic fear mongering,” Reif said. “But it doesn’t have to be this way. Scaling back the plans for new warheads and infrastructure would make the modernization effort easier to execute and reduce the threat to other defense programs while still leaving a devastating deterrent.” (Source: Defense News)
22 Jan 20. Army chief says to expect fewer program cuts in 2021 budget. Following two rounds of zero-based budgeting that went after underperforming and legacy programs, the Army’s 2021 budget request is likely to contain fewer deep cuts to existing budget lines, Army Secretary Ryan McCarthy told reporters.
The Army’s zero-based budgeting process — called “night court” — for fiscal years 2019 and 2020 was “far more aggressive because you had to reshape the portfolio,” McCarthy said at a Jan. 15 Defense Writers Group event. The 2021 budget will be more focused on “refinements,” he said, now that the Army has completed a push to move more than half of its research, development, and acquisition accounts to focus on new capabilities.
“And there’s a lot of risk associated with that. This budget is the refinements of those decisions, and you’ve got be successful, in the form of demonstrations and prototypes, before you would want to expand,” McCarthy said, mentioning that hard choices were still made but declined to name specific programs.
But those research and development initiatives often hinge on other transaction authorities, a fast-tracked acquisition pathway that allows the Defense Department to more quickly prototype new tech capabilities.
With OTA acquisition, Army leadership is trying to be “judicious but watching it very closely,” McCarthy said.
The Defense Department has accelerated its use of OTAs in recent years. According to a Government Accountability Office report published in November, DOD had 618 new OTA awards in 2018 compared to 384 the prior year. The Army issued the majority of OTA awards, some of which were conducted on behalf of other DOD components.
Ellen Lord, undersecretary of defense for acquisition and sustainment, told reporters last month that OTA spending increased from $1.7 billion in 2016 to $3.7bn in 2018. Additionally, 88% of those awards went to contractors who were new to the government market.
However, such fast growth has created concern for Congress, which has pushed for more OTA scrutiny.
“Congress has been very good to us on this, allowing us to have this authority,” McCarthy said. Members have said they want us to use OTAs, but “if something happens and something goes wrong, we’ve got to be there to manage any fallout,” he said.
But it looks like the night court process introduced by Defense Secretary Mark Esper when he was Army secretary will remain a mainstay, McCarthy said.
“We’re going to have to do night court whether I’m in this job or not,” he said. “If the prototypes start landing over the next 18 months and they work — I mean it’s a good problem to have, but then — now you have to make choices. Do you start scaling long-range fires before helicopters, before armored vehicles?”
McCarthy said the 2021 budget request should be public by mid-February. (Source: Defense Systems)
17 Jan 20. Speed Must Be Put Back Into DOD, Hyten Says. As long as he is vice chairman of the Joint Chiefs of Staff, Air Force Gen. John E. Hyten said he will make sure speed is put back into every element of the Pentagon. Inserting speed into everything the Defense Department does is a priority, the vice chairman told the Center for Strategic and International Studies today in a discussion on “the growing security challenges posed by U.S. strategic competitors.”
“When you look at our competitors, large and small, one of the things you find they have in common is they’re moving very, very fast. And we are not,” Hyten said.
DOD has built processes over the years that by design are not built for speed, he noted. “By design, they’re built to remove risk, and if you have a process designed to remove risk, you have something that is very … bureaucratic.” Strategic competitors such as China and North Korea are examples of what consistent, coherent strategies and the ability to go fast means, Hyten said.
Unlike 40 years ago, China has a powerful economy today. “China was a friend until a few years ago. China was not a great power competitor. Their military strategy was focused on countering the United States and our allies in the 1990s,” the general said. “Their economic strategy is tied very tightly to their military, because every technology that’s in China is available for military use.”
North Korea is also going fast and is the 115th most powerful economy in world out of more than 190 nations, he said, adding that their ballistic missiles and nuclear missiles have seen more success than before.
“If you want to go fast in the missile business, you need to test fast, fly fast, learn fast,” Hyten said. “North Korea learned from their failures, they changed systems and subsystems, and … North Korea has been building new missiles, new capabilities, new weapons as fast as anybody on the planet.”
Speed itself is efficiency, and speed builds capability and puts savings into programs, he said.
“But you have to be able to accept failure. And if the dictator of North Korea has learned how to accept failure, why can’t the United States learn how to accept failure?” Hyten said.
The United States needs to understand what failures are and learn from them by moving quickly from those mistakes, he said.
“I look back at hypersonics, and we’re now in a significant competition with a number of competitors around the world,” he said as an example.
The nation was ahead in hypersonics a decade ago when the two programs failed. We instituted multiyear studies into the failure process, and then cancelled the program, Hyten said, adding, “That’s not how you go fast.”
Every time we have a launch failure, we stop for years at a time to recover, he said.
With a $700bn defense budget, we should be able to create the environment of peace in the world. To do that, we have to compete in the world and that means we have to go fast again.”
Air Force Gen. John E. Hyten, vice chairman of the Joint Chiefs of Staff
If we don’t have human life involved, we have to figure out how to go fast, how to adjust, how to learn quickly, how to move fast. “And we have to do that across our entire enterprise, and we’re not doing that,” the general said, adding that we must learn to take risks.
“The commercial sector is starting to lead the world in many areas. Were starting to embrace that, but not fully yet. We’ve got to embrace the elements of this country that are going fast, where we know how to do things,” he said.
Commercially, we’re the leader in information technology in the world, “but we haven’t learned how to do that in the DOD. … We have to allow people in acquisition to take risks and not delegate the responsibilities to the people who are executing programs,” the general said.
But DOD is making progress in acquisitions and through the military services. “Now we have to align the rest of the department to those initiatives and take advantage of it,” Hyten said.
“We should be able to protect ourselves against any threat. We should be able to deter any adversary from taking action against us,” the vice chairman said.
“With a $700bn defense budget, we should be able to create the environment of peace in the world. To do that, we have to compete in the world and that means we have to go fast again,” Hyten said. (Source: US DoD)
15 Jan 20. Army Secretary Says ‘Night Court’ is Here to Stay. The Army’s top civilian said the service plans to continue cutting programs to find funding for its top modernization priorities.
Last year, following a deep-dive program review by leadership known as the “night court” process, the service announced that it realigned over $30bn in its future years defense program for fiscal years 2020 through 2024 to invest in long-range precision fires, future vertical lift, next-generation combat vehicles, the network, air-and-missile defense, and soldier lethality. It resulted in cutbacks for lower priority efforts.
Secretary of the Army Ryan McCarthy said the night court is here to stay.
“We’re going to have to do night court whether I’m in this job or not,” McCarthy said Jan. 15 at a Defense Writers Group breakfast in Washington, D.C.
McCarthy said upcoming budget decisions will focus on the current modernization programs. The service must ensure that its prototyping and demonstration efforts are successful, he noted.
The Army has been investing in its technology priorities by using other transaction authority agreements, which allow the Defense Department to cut through bureaucratic red tape and do rapid prototyping and follow-on production as long as there is industry competition.
Meanwhile, President Donald Trump’s fiscal year 2021 budget request for the military is slated to be released next month.
“If you go back to the ’19, ’20 [budget realignment] experiences, they were far more aggressive because you had to reshape your portfolio,” McCarthy said. “If you were to look at those decisions that were made then to now, over half of our RDA — research, development and acquisition — account is going towards new capabilities. … This [upcoming 2021] budget is the refinements of those decisions.”
However, this does not mean the service won’t be truncating or cutting programs in the next budget request, he noted. McCarthy declined to identify how many programs will be affected.
“There were some hard choices,” he said. “There were some cuts. You’ll see that here in a couple of weeks.”
If prototype efforts for the Army’s top modernization programs bear fruit, the service may need to realign more money as they move forward in the procurement process.
“If we’re successful … in those 18 months, then harder choices are coming again,” he said.
Noting that Congress has asked for more specificity on the service’s night court process, McCarthy said: “We owe them that.”
The Senate version of the 2020 defense appropriations bill expressed lawmakers’ concerns that “continued, wide-ranging truncation or elimination of programs without notification to the congressional defense committees in advance of the subsequent budget submission leads to inefficiencies and misappropriation of resources.”
“So much about the budget is about trust,” McCarthy said. “It’s changing the behavior of the Army to be more conscious of every dollar that we get from the taxpayer.”
Each of the services will once again be vying for a large slice of the fiscal pie as the 2021 budgeting process unfolds. The day before McCarthy met with reporters, Chief of Naval Operations Adm. Michael Gilday called for a higher budget topline for the sea service rather than the one-third, one-third, one-third split that has often been dolled out to the departments of the Army, Navy and Air Force, respectively. The Navy needs more money to carry out its responsibilities outlined in the National Defense Strategy, Gilday said.
McCarthy said the Army’s share is now closer to 24 percent.
“I don’t want to get in fights with other services about topline budgets,” he said. “Everybody needs budget increases year over year … but it is not a one-third, one-third, one-third split. Not even close.” (Source: glstrade.com/Breaking Defense.com)
15 Jan 20. Does the Pentagon need a chief management officer? Ms. Lisa Hershman, an accomplished former CEO who has been serving in the Department of Defense for over two years, received Senate confirmation by unanimous consent to become the DoD chief management officer shortly before Christmas. At the same time, however, the 2020 National Defense Authorization Act required two studies from the DoD that openly posit eliminating the CMO function altogether.
What gives? The mixed signals coming out of these discordant events underscore the fact that the theory behind the current CMO function (and similar efforts over the past two decades) does not match the reality of the business structure of the DoD. The solution that will ultimately work best for the DoD is one that truly takes a business-based approach to DoD business operations.
The CMO function is the latest in a long-running series of efforts since the early 2000s to reform the business of defense. The essential idea has been to bring the best commercial business practices into DoD business operations through organizational and legislative changes.
While the rationale for these respective initiatives is unassailable, they have struggled in execution. The CMO and its predecessor organizations, for example, have focused on the acquisition or certification of DoD business systems. These efforts, however, have largely devolved into bureaucratic battles over resources and authorities, pitting the business-focused organization against the formidable military departments and the “fourth estate.”
Whatever the outcome, the business-focused organization ends up being seen as weak and ineffective.
Why is that? Having worked for years in and around these respective efforts in both government and industry roles, I have come to the conclusion that these well-meaning initiatives are just the wrong type of solution. This is largely because their respective organizations, often despite strong leadership and empowered by various degrees of legislative authority, have not had the bureaucratic throw-weight to succeed in Pentagon battles with the services and the fourth estate.
The solution to this challenge, however, is not to further tinker with the CMO’s authority or to create a larger or different CMO organization. Part of the solution is to recognize that while the DoD is not a business, it is in many ways a businesslike organization. There are no profit and loss, or P&L, centers in the DoD, but the military departments frankly function in much the same way as a P&L line of business. The services are directly responsible for training and equipping their soldiers, sailors and airmen just as P&L leaders are responsible for delivering products and solutions on time and profitably.
Likewise, fourth estate entities such as the defense agencies and the Office of the Secretary of Defense have direct responsibility over their respective functions. Harnessing the power and authority of these organizations through the training and enabling of good business practices is a much more natural fit for the DoD.
Devolving responsibility in and of itself is not the answer, however. The other part of the solution is accountability. Commercial businesses do not have a CMO function. Instead, well-run businesses are led by strong executives who are responsible and accountable for delivering results to their employees and shareholders. Those that succeed are rewarded, while those that fail are replaced.
The same goes for the DoD.
DoD leadership should focus on establishing business-reform objectives for each major DoD organization, and then holding leaders of these respective organizations accountable to the achievement of measurable business goals. This should be driven by the secretary and the deputy, and enabled by a much smaller CMO function. Secretary Mark Esper appears to be headed in that direction in his recent memo on 2020 DoD reform efforts, which focuses the CMO’s efforts on the fourth estate and makes the services directly responsible “to establish and execute aggressive reform plans.” That is the right approach.
In short, the DoD does not need a management organization to oversee the business of defense; it needs to enable its leaders to utilize business best practices, and then hold these leaders accountable for results. (Source: glstrade.com/Defense News)
17 Jan 20. Signs of Progress on Industrial Base Issues. For decades, defense policymakers have focused attention on the U.S. manufacturing sector as an area of strategic concern for the United States. Issues such as production outsourcing, skilled personnel deficits, insufficient investment in new technologies and equipment and worrisome supply chain resiliency have plagued the manufacturing sector in recent years, encouraging doubts about its ability to meet the military’s need for secure and reliable industrial supply
An interagency task force assessment of the state of the defense industrial base, initiated by President Donald Trump’s Executive Order 13806, identified multiple systemic risks and recommended policy initiatives to address them. Recent actions by the Trump administration have been promising, but strengthening America’s industrial vulnerabilities will be a long process, requiring patience and dedication by policymakers and the contracting community.
Released in September 2018, the interagency task force report titled, “Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States,” established an important benchmark for understanding the risks to the defense industrial base’s performance. The report identified macro focuses and risk archetypes shaping the industrial base — including uncertainty of government spending, sole source manufacturing and diminishing STEM skills — and specified roughly 300 impacts felt across 16 sectors in a classified appendix.
To address the risks and negative trends raised by the report, the agencies involved provided a lengthy list of recommendations including expanding direct investment in the industrial base, growing workforce development efforts and improving research efforts into next generation technologies.
The Trump administration has taken perhaps its most aggressive policy action to enhance domestic sourcing of rare earth materials. Many advanced defense technologies rely on rare earth materials as ingredients in critical high-performance components. In July 2019, Trump signed five presidential determinations designating light rare earth elements, heavy rare earth elements, rare earth metals and alloys — neodymium iron boron rare earth sintered material permanent magnets, and samarium cobalt rare earth permanent magnets — as critical to national defense under Section 303 of the Defense Production Act of 1950. This act gives the president broad economic policy authorities to create, maintain, expand or restore domestic industrial base capabilities for the purpose of national defense.
Trump also signed similar orders this year regarding small unmanned aerial systems, naval sonobuoys and critical chemicals for missiles and munitions. The Section 303 orders target some of the deficiencies identified in E.O. 13806 report caused by sole source or foreign source production.
In another initiative to reduce reliance on foreign made goods, the Pentagon has begun a partnership with domestic textile manufacturers to produce “smart fabrics” for use in military uniforms. Working through the Advanced Functional Fabrics of America nonprofit, the Defense Department has funded a collaborative research venture between the Massachusetts Institute of Technology, Drexel University and Apex Mills. Together this group has created a factory where they can rapidly design and create prototype smart fabrics which can communicate health information from its wearers and test the feasibility of producing durable outfits with these capabilities on a larger scale.
Financing partnerships to help build innovative and economically viable domestic sources for next-generation uniforms will mitigate the current risks presented by the military’s reliance on single source and foreign source textile providers.
The administration also has used public-private partnerships to expand domestic sourcing of cold-rolled aluminum. The E.O. 13806 report identified cold-rolled aluminum — which serves as an essential ingredient in the armor for military ground vehicles, ships and aircraft — as an area of sourcing risk. The Defense Department leveraged the Cornerstone Initiative, a public-private “consortium of consortiums,” to invest $9.5m into Constellium’s West Virginia plant to increase the production quality and amount of cold-rolled aluminum.
The department’s industrial base analysis and sustainment program started the Cornerstone Initiative in early 2018 using an other transaction authority agreement funding vehicle. While Cornerstone formed before the 13806 report was published, it stands as a model to emulate in responding to other risk areas mentioned in the report.
The administration has also acted to address risks to the availability of skilled workers. In June 2019, the Department of Labor announced the creation of a new rule which would expand access to industry-recognized apprenticeship programs. This rule would allow educational institutions and industry groups to be authorized as “standards recognition entities,” making them eligible to develop and approve the apprenticeships. Additionally, Labor has pledged $183.8m dollars in grant money to support universities and industry groups working to build or expand their own apprenticeship programs.
Shortages in skilled domestic laborers is one of the macro-level problems identified by the report, and industrial apprenticeships have a proven record of growing the size and quality of the manufacturing workforce.
In a little over a year since the release of the report, the Trump administration has achieved some early successes in addressing the vulnerabilities it identified. Despite the reasons for cautious optimism, there remains significant work to be done to fully implement the recommendations. Restoring and advancing U.S. manufacturing will require years of effort. (Source: glstrade.com/NDIA)
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