Weekly Defense Industry Roundup

Posted by Kathleen Smith

Fred Wellman with General Petraeus in Iraq

Fred Wellman, President ScoutComms, brings us his weekly review of defense industry news via The Scout Report. Fred served over twenty years as an Army officer in both aviation and public affairs. You can follow Fred on Twitter @ScoutComms.

Special report: DoD’s Budget Quandary

Phil Ewing, DoD Buzz. Phil dispenses with the short blog format to do a deep dive on the defense budget challenges from a host of angles. It’s a nice little roll up of the many competing factors and realities that are getting muddled in the debate in D.C. right now.

Army Spent Over $32 Billion on Canceled Programs Since 1995

Tony Capaccio, Bloomberg. In a scathing internal report issued in January but not released until yesterday it was found that the Army spent at least $32 billion on 22 weapons programs that never produced a single system for the service, representing almost a third of its total budget for new weapons during that time. During a roundtable yesterday with reporters, conducted before handing over the report, leaders tried to put a positive light on the situation and emphasize looking forward with lessons learned. Unfortunately, many of the biggest recommendations in the report were dismissed so the success of the reported changes remains to be seen.

DoD to Scrutinize Non-Weapons Programs: Carter

Marcus Weisgerber, Defense News. Undersecretary of Defense for Acquisition, Technology and Logistics, Dr. Ash Carter spoke at the Brookings Institute last Friday and once again emphasized that service contracts will be getting a hard look and not just weapons programs. While OMB has a 15% goal out for all of the government to reduce their service contractor support, there is a lot of noise coming out of DoD on the growth of service support since 9/11. The drumbeat is getting pretty loud on this topic so it’s likely we will start seeing cut backs in those contracts pretty clearly by FY 2013. As an example we recently saw a CENTCOM contract issued as a one year with additional one year and six month options in what seems to be a nod to unclear future funding.

Pentagon Should Cut Bloated Head Count, Not Weapons Programs

Loren Thompson, Forbes. Ostensibly an opinion piece from Loren Thompson of the Lexington Institute this is a pretty good run down of the personnel issues in the Pentagon and how they have grown since 9/11. It offers another look at how exploding personnel costs are weighing down the defense budget even more than weapons systems and operational costs.

Contractors vs. Feds: What’s Behind Crumbling Relations

Sarah Chacko, Federal Times. Speaking at the National Contract Management Conference last week BAE Systems, Inc. CEO Linda Hudson highlighted frustrations in industry with growing regulations and rulings coming out of DoD that are increasingly making it difficult to do business with the department and seem to be a deliberate effort to shift risk to contractors and cut profits. This is leading to deteriorating relations between the two that few see any improvements to in the near future.

Defense Suppliers Must Be Wary of Arms Control Export Law

Robert McCabe, The Virginian-Pilot. This is a nice little article out of Hampton Roads based on a seminar on the challenges of ITAR regulations for defense suppliers and ensuring they watch the rules.  This is going to be a growing issue as more firms seek out opportunities abroad to make up for losses in a shrinking DoD budget.  Some good tips and anecdotes in this piece. It was featured in the Defense Institute of Security Assistance Management’s (DISAM) Journal.  Hat tip to great Army Foreign Area Officer, Brad Nicholson for this story.

Social Media History Becomes a New Job Hurdle

Jennifer Preston, New York Times. A new company called Social Intelligence is being hired by companies to investigate the social media histories of potential employees looking for inappropriate comments, photos and other signs of unacceptable professional behavior.  The effort is not without controversy and has already gotten a close look by the Federal Trade Commission to see if they are gathering illegal information.  While it questionably appropriate it is clearer each day that your behaviors online can come back to haunt you later.

Chiarelli: ‘Without Energy, Army Stands Still and Silent’

Rob McIlvaine, Army News Service. This past week the Army and Air Force held their first ever joint energy forum to discuss the future of energy production and efficiency in an increasingly energy hunger military. As current Chief of Staff of the Army Marty Dempsey loves to tell audiences, you can follow an Army patrol through the mountains of Afghanistan by the trail of dead batteries. This growth in high technology and fuel hungry power systems is driving a harder look at ways to leverage new systems and techniques for power generation. There is interesting stuff here for innovative companies to address in the future. Hat tip to our friend Joe Yoswa for this story.

Analysis of the FY 2012 Defense Budget

Todd Harrison, Center for Strategic and Budgetary Assessments. This report was all over the news this week. Harrison has done a thorough analysis of next year’s budget for defense and found it the highest in real dollars since World War II, though it’s not as high a percentage of GDP as then, nor as a high a percentage of the federal budget as in previous years. With a number of newsworthy factoids this report was highly dissected in the media and will be for days to come. Harrison found that while the budget has grown substantially in the last ten years in terms of return on investment, DoD is not getting more for its money in terms of new systems or increased readiness.  There is a lot of good info here for the wonk in you. Read the Full Report.

This entry was posted on Friday, July 22, 2011 4:13 pm

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