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28 Apr 22. Trump officials gave improper national security loans to trucking firm, lawmakers allege. Democratic lawmakers on Wednesday accused President Donald Trump’s administration of improperly awarding $700m in pandemic relief loans to a trucking company under the guise of national security, over the objection of Department of Defense officials.
In an investigation released by the House Select Subcommittee on the Coronavirus Crisis, officials said the money provided to YRC Worldwide Inc. (now known as Yellow Corp.) in summer 2020 had more to do with potential political advantages for Trump than any real military or national security needs.
“Political appointees fast-tracked approval of a substantial national security loan to Yellow despite the assessments of [defense] career officials that the company was not ‘critical’ to national security and provided Yellow with terms that violated CARES Act risk and interest rate requirements,” the investigation report states.
“The loan to Yellow — which totaled 95% of the funds disbursed under the national security loan program — was approved months faster than smaller, less risky national security loans made to other applicants.”
The report alleges that former Defense Secretary Mark Esper intervened after lower-ranking officials rejected the proposal, signing a letter certifying that the company’s services were “critical to maintaining national security.”
Last month, officials at Yellow reached an unrelated settlement with the DoD over allegations of overcharging the government for delivery services. That required the company to pay penalties amounting to nearly $7m.
But the latest allegations suggest the company received nearly 100 times that amount in undeserved money through the pandemic loan program.
Trump officials had no public comment on the report.
The company has denied any wrongdoing. In a statement to the Washington Post, Yellow lawyers accused the committee of conducting a partisan investigation and said the financial aid received “broad support from numerous members of Congress on both sides of the aisle.”
Several Democratic lawmakers and officials from the International Brotherhood of Teamsters publicly supported the financial aid when it was awarded nearly two years ago.
The Kansas-based trucking firm handles about one-third of all Defense Department shipments that do not require a full truck and trailer. In their application for pandemic loans, company officials said the money was needed to offset losses and maintain critical services for the military.
But the committee report said department officials assessed that the workload could be handled by other companies, and Yellow’s work did not constitute a critical national security service.
After rejecting the proposal, Department of Treasury officials (including former department Secretary Steve Mnuchin) pressed Esper to reconsider.
In emails obtained by the committee, lobbyists for the company said that political strategists in the administration were “almost giddy” at the prospect of the loans helping secure more blue-collar votes for Trump’s re-election campaign.
After Esper’s letter, the company received $700m in low-interest loans, much of which was used for non-pandemic purposes and costs, the report states.
The committee has asked the Department of Treasury for a full investigation into its findings.
“Political appointees risked hundreds of ms of dollars in public funds against the recommendations of career Department of Defense officials and in clear disregard of provisions of [legislation] intended to protect national security and American taxpayers,” committee Chairman Jim Clyburn, D-S.C., said in a statement. (Source: Defense News)
28 Apr 22. A-10 official issues warning over US Air Force’s ‘devastated’ Warthog fleet. A U.S. Air Force official managing the A-10 Thunderbolt aircraft says the service is “hollowing” its Warthog fleet by starving it of resources amid a push to retire the aging attack plane — but still continuing to heavily fly it. In a March 31 briefing, Pamela Lee, the A-10 systems manager at Hill Air Force Base in Utah, said the Air Force has “resourced the A-10 to divest yet flew it like an enduring fleet, rapidly accelerating [the] decline toward today’s hollowing fleet.” The watchdog group Project on Government Oversight posted the slides Tuesday. The Air Force confirmed the slides are authentic, but said they were prepared for internal discussion and that Lee declined to comment. The A-10, designed during the Cold War to be a tank-killing aircraft, was flown heavily in the Middle East and Afghanistan over the last 20 years to provide close-air support. But the Air Force has long warned the A-10 would not survive a high-end fight in contested airspace and has since 2015 repeatedly attempted to retire the fleet, either in full or in part, to free up funding.
“The A-10 is a great platform for a [permissive] environment,” Air Force Chief of Staff Gen. CQ Brown told the House Armed Services Committee in a Wednesday hearing. “I don’t see very many [permissive] environments that we’re going to roll into in the future.”
Although Congress rejected all the service’s efforts, Lee said the Air Force’s decisions have “devastated” the fleet and left it “dealing with perpetual challenges.”
The “A-10 lives in the shadow of [fiscal 2015] divestiture decisions,” Lee said in the briefing’s summary.
Lee’s briefing slides said the service deferred the A-10′s “hogback” fuselage structural repair work from 2013 to 2019, which she said left 120 jets at risk of being grounded. The number of A-10s heading to depots for major maintenance was also cut by more than half, she added.
Lee said the A-10′s aging engine nacelles are quickly becoming a significant problem, representing a bigger threat to the aircraft’s readiness than its wings.
And she said the A-10′s re-winging efforts are falling short, with new wings purchased for only 173 of the service’s 281 Warthogs. Lee said this means 145 A-10s wouldn’t be able to fly a six-month deployment.
According to the slides, the Air Force has until the second quarter of FY23 to buy more wings before it risks a “stalled recovery.” Fixing the wing, depot issue and other shortcomings would take at least a decade, she said.
If Congress doesn’t grant the service’s request to start retiring the A-10, Lee said, it will have to quickly act to mitigate the worst of the problems that have come from these decisions.
In the committee hearing, Brown said the service plans to buy replacement wing kits for about 218 A-10s. The service called for retiring 21 A-10s as part of its FY23 budget request, leaving the service with 260 Warthogs; Brown said those will not be re-winged.
Rep. Lisa McClain, R-Mich., expressed confusion about the Air Force’s apparent intention to not buy enough wing kits for all remaining A-10s and asked if only 218 planes needed new wings.
“Depends on how many A-10s we keep,” Brown said. “What we don’t want to do is buy more wing kits than we’re going to need if we’re going to start retiring A-10s.”
Air Force Secretary Frank Kendall added that even if those remaining 42 A-10s wouldn’t get replacement wings, they would still be able to fly.
Kendall also said the Air Force, if free to do so, would retire the A-10 fleet by the end of the next five-year plan. (Source: Defense News)
25 Apr 22. One-third of F-35s could be delivered before operational testing is complete. The costs of major upgrades to the F-35 fighter are continuing to rise, and repeated delays on critical simulation tests and on a full-rate production decision are increasing the risk the Defense Department buys faulty jets that need to be fixed, a new Government Accountability Office report said. In Monday’s report, GAO found that the cost of the F-35′s Block 4 modernization effort grew to $15.1bn in 2021, $741m more than the estimated cost in 2020. Much of that increase was due to a $330m increase in the estimated cost of the Technology Refresh 3 effort, an upgrade to the F-35′s hardware and software that seeks to improve its processing capability, display units and increased memory, GAO said. The development of Tech Refresh 3 has proven to be more complicated than expected, program officials told GAO, and has driven up the price tag. Another $312m in cost increases came from modernizing aging test aircraft supporting weapons development, as well as other testing and lab upgrades, the report found. Operational test and evaluation officials told GAO more flight test capacity is needed to ensure several Block 4 capabilities, including weapons integration, work properly.
Multiple problems with software, funding issues that halted software development for eight months in 2021, and the addition of new capabilities has also delayed the delivery of final Block 4 capabilities to 2029, three years later than originally expected.
Lockheed Martin, which builds the F-35, and program officials took several steps to improve its software development, including increased lab testing of software, improved and more consistent monitoring of software development, and lengthening the schedule for developing Block 4 software “drops” from six to 12 months, beginning in 2022.
This longer software development timetable would make it easier to fix bugs, manage upcoming work schedules and ease the testing backlog that developed under the six-month schedule, program officials told GAO.
But GAO said it remains to be seen whether these changes will improve how Block 4 is rolled out.
The report noted the year-long software development period is a step away from the “agile” software development process of upgrades being delivered in chunks, rather than large quantities of changes dropping all at once, after a lengthy development period.
And test officials with the government told GAO that shifting to a 12-month software drop schedule won’t fix the problem of late deliveries if the program office keeps adding surprise changes. A longer time between software upgrades also means patches for bugs found in the field might take longer to deliver, GAO said.
Major test delay
GAO also raised concerns about the continued delay of the Joint Simulation Environment test, without which the Pentagon can’t wrap up the F-35′s initial operational test and evaluation process and make a decision on full-rate production.
The military is acquiring up to 152 F-35s each year for the Air Force, Navy and Marine Corps — which GAO noted is nearly the full production rate — and is on track to have 1,115 fighters delivered in 2023. If the full-rate production decision occurs that year, GAO said, that will mean about one-third of the total number of F-35s expected to be bought will have been delivered before it finishes operational testing.
This puts the program at risk of more cost overruns, GAO said, if additional performance issues are identified after large numbers of fighters are in the field.
The COVID-19 pandemic has also worsened ongoing supply chain issues and caused labor disruptions, which led to delays in the delivery of F-35s, the report said. The program office and contractors decided in September 2021 to adjust delivery schedules of aircraft through 2023 to absorb the blow from COVID-19. This meant 35 fighters of 120 delivered in 2020 were no longer considered to be late.
But the report also dinged engine contractor Pratt & Whitney for delivering “nearly all” F-35 engines late in 2021. Only six of the 152 engines delivered by Pratt & Whitney were on time, the report said, its lowest number in at least five years.
This was due to quality issues — such as some raw materials being manufactured incorrectly — and not due to COVID-related problems, at least since February 2021. (Source: Defense News)
26 Apr 22. As Raytheon struggles to replenish Stinger missiles, lawmaker pushes Defense Production Act. The U.S. may not be able to make more of the shoulder-fired Stinger anti-aircraft missiles it has been sending to Ukraine until at least 2023 due to parts and materials shortages, the head of manufacturer Raytheon Technologies said Tuesday.
The revelation, during Raytheon’s quarterly earnings call, underscores the challenge facing the Pentagon and defense industry as they seek to boost arms production in response to the ongoing Russia-Ukraine conflict. The bottleneck is fueling recommendations from Capitol Hill that President Joe Biden invoke the Defense Production Act to prioritize supplies of components for weapons like the Stinger.
Greg Hayes, Raytheon’s chief executive, said the company is working to find some of the materials for the missile. Because some components are no longer commercially available, the company will have to redesign electronics in the missile’s seeker head.
“That’s going to take us a little bit of time,” Hayes said. “We’re going to ramp up production this year, but I expect this is going to be ‘23-’24 where we actually see orders come in for the larger replenishments, both on Stinger as well as on Javelin, which has also been very successful in theater.”
The remarks follow a meeting earlier this meeting between top DoD officials and industry leaders at the Pentagon to discuss weapons supplies for Ukraine, the U.S. and allies.
While Hayes noted Raytheon has been working closely with DoD in recent weeks, he said the U.S. hasn’t been a sustaining customer.
“We are actively trying to source some of the material, but unfortunately DoD hasn’t bought a Stinger in 18 years,” Hayes said. “As far as the Stingers, we should keep in mind we are currently producing Stingers for an international customer, but we have a very limited stock of material for Stinger production.”
Last month, Washington finalized the fiscal year 2022 $1.5trn spending bill, which provides $13.6bn in new aid for the Ukraine crisis. The money was in large part to restore military stocks of equipment already transferred to Ukrainian military units through the president’s drawdown authority.
As of last week, aid from U.S. military stockpiles for Ukraine included more than 1,400 Stinger anti-aircraft systems and 5,500 Javelin anti-tank weapons. However, neither Stingers nor Javelins were included in the administration’s latest $800m drawdown package.
During a Senate Armed Services Committee hearing Tuesday on the defense industrial base, multiple senators called on Biden to invoke the Defense Production Act to help address supply chain issues in replenishing Stingers and other munitions.
“We have a significant usage rate for the Stingers that we’re moving over there ― Javelins also ― and we have to not only be able to help the Ukrainians, we have to maintain our stocks,” committee chairman Sen. Jack Reed, D-R.I., told Defense News after the hearing. “It might require that kind of support. And that’s something we’ll look at closely.”
Sen. Richard Blumenthal, D-Conn., on Tuesday repeated his call to invoke the Defense Production Act, after urging Defense Secretary Lloyd Austin to do so at hearing earlier this month.
Echoing a Center for Strategic and International Studies assessment, Blumenthal said the U.S. had likely sent Ukraine one-third of its Javelins and that it would take a year to ramp up Javelin production and 32 months to replenish Javelin supplies.
“The cupboard is empty, or it will be very, very shortly unless the president invokes the Defense Production Act to provide that demand signal on an expedited basis,” Blumenthal said.
At the same hearing, former Undersecretary of Defense for Acquisition and Sustainment Ellen Lord said the bottleneck on Stinger and Javelin systems points to broader defense-industrial base problems, particularly with munitions.
Lord noted the U.S. has already sent about a quarter of its Stinger stocks to Ukraine.
“We cannot over the next couple of years produce more because we have a problem with the government not paying to maintain production capacity,” she said. “When that happens, you have test equipment become bottled and not work. You have supply chains with links broken in them, and especially if we had key elements of that supply chain supplied by now-adversarial countries.”
Lord also endorsed invoking the Defense Production Act to incentivize companies to produce additional munitions such as Stingers. She floated loosening restrictions on sharing technical knowledge to manufacture those munitions with close U.S. allies such as Australia, noting Washington has been “very conservative” so far in its information sharing.
“Even with the Javelin, which we do have a hot production line right now, we are still five years out to probably developing all the munitions we need,” said Lord.
The SASC hearing comes after House Armed Services chairman and ranking member Reps. Adam Smith, D-Wash., and Mike Rogers, R-Ala., pushed Austin and the Joint Chiefs chairman, Gen. Mark Milley, on Stinger replenishment in a letter last month.
They pointed to “the apparent absence of a Department of Defense plan to meet [short range air defense] replenishment requirements for not only our U.S. stocks of Stinger systems, but those of other contributing allies and partners.”
“Therefore, the committee strongly urges that the Department prioritize acceleration of a [short range air defense] modernization or replacement that will deliver a low-cost, exportable evolution of a system, within 36 months,” they wrote. (Source: Defense News)
25 Apr 22. F-35 modernization program’s costs, schedule keeps growing: GAO. “In 2021, the program office added 3 years to its Block 4 schedule and now expects to extend Block 4 development and delivery into fiscal year 2029, in part, due to the addition of new capabilities,” the GAO said in its annual report on the F-35.
The F-35’s Block 4 modernization program added three years to its schedule and $741m to its estimated cost in 2021, according to a new report released today. by the Government Accountability Office.
The Block 4 modernization program is set to upgrade the Lockheed Martin-made F-35 Joint Strike Fighter with more powerful computing systems, software updates and new weapons and equipment, much of which remains classified. However, the cost and schedule of the effort, which started in 2018, continues to snowball.
The Block 4 modernization plan was initially set up to wrap up in 2026. By 2020, the F-35 program office had pushed that date out until 2027, the GAO reported last year. This year’s report extends Block 4 development and delivery “into fiscal year 2029, in part, due to the addition of new capabilities,” the GAO said in its annual report on the F-35.
Meanwhile, “costs continued to rise during 2021 due to crucial hardware development and testing upgrades, among other things,” the GAO stated. In 2021, the F-35 joint program office increased its cost estimate for the Block 4 effort to $15.14bn — $741m more than its 2020 estimate of $14.4bn.
According to the GAO, two main factors drove the cost increase.
First, the estimated cost of the Technology Refresh 3 (TR-3) effort grew by $330m. TR-3 — which comprises a new integrated core processor, memory unit and panoramic cockpit display system — essentially provides the technological backbone for the Block 4 upgrades, which would not be able to run on the F-35’s current computing systems. “According to program officials, much of the increase in TR-3 costs occurred because its development is more complex than originally expected,” the GAO stated.
While the report didn’t get into details, TR-3 is both behind schedule and over budget; for its part, the Pentagon still believes the upgrade will be ready for F-35 Lot 15. If the program doesn’t suffer further delays, TR-3 hardware will be introduced into the production line later this year, Lt. Gen. Eric Fick, the Pentagon’s F-35 program executive, said in March.
The second major factor in the cost spike was the growth in costs for testing and lab upgrades needed to update the aging F-35 test aircraft so that they can be used in future weapons tests. Costing an additional $312 m, this area also covered an “increase in flight test capacity” required to validate that Block 4 capabilities perform as planned.
Schedule Delays Continue
While cost increases and schedule delays often are tied together, the factors driving the three year delay are different from those that drove the extra costs
“We found three contributing factors for the recent Block 4 capability schedule delays: ongoing software quality problems, a pause in Block 4 software development due to funding issues, and the addition of new Block 4 capabilities,” the GAO stated.
For Block 4, the F-35 program office has adopted an approach it calls Continuous Capability and Development Delivery (C2D2), which incorporates agile development processes where new software is regularly created, tested, revamped and rolled out. However, the program office has routinely faced software quality issues, meaning that software coders sometimes have to focus on fixing defects rather than getting new capability out the door.
While software development problems have been a longstanding hurdle for the Block 4 development effort, an eight month pause starting from January to October 2021 added to delays.
According to the GAO, the temporary stoppage in Block 4 software development efforts occurred “when the program office ran out of funds due to the TR-3 cost overrun” and “the contractor paused work on Block 4 development and focused its work on TR-3.”
The program office believed that focusing on TR-3 was critical for keeping Block 4 development on track, as many Block 4 capabilities cannot be fielded without TR-3. However, the endeavor came at an expense — currently, 39 of the original 66 Block 4 capabilities are now behind schedule because of the pause, the GAO said.
Finally, the program office added 25 new capabilities to the Block 4 modernization effort, which further exacerbated schedule delays, the GAO said.
Air Force leaders have repeatedly spoken about the need to field Block 4 F-35s as quickly as possible.
“The Block 4 capabilities are what we really need for the pacing challenge — for China and their advanced systems. So we need to get that done,” Air Force Secretary Frank Kendall said last week. “We’ve been behind schedule for a couple of years with that.”
In the meantime, the service plans to slash F-35A procurement, which officials believe will allow it to avoid expensive costs to retrofit operational jets in the near future. The Air Force requested funds to buy 33 F-35As in FY23 and 29 jets in FY24, before ramping up to 43 in FY25. (In previous years, the Air Force had regularly requested 48 F-35As per year.)
Despite the near-term cuts to the Air Force’s annual F-35 buy, the service is ramping up its investment in the Block 4 effort, requesting $414m for F-35 modernization in FY23, a sharp increase from the $248m it received last year.
The Air Force’s approach to the F-35 program sharply contrasts with the Navy and Marine Corps’ buy plans. The sea services intend to keep F-35 procurement steady over the next five years, purchasing 13 F-35C carrier variants and 15 F-35B short takeoff and landing variants in FY23. Both services are also basically doubling their investment in Block 4 modernization in FY23, requesting $114m for the F-35B and $155m for the F-35C. (Source: Breaking Defense.com)
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