Defense Roundup: NSA Whistleblower Fallout, Military Personnel Spared Cuts, F-35 Finds Some Loose Change Between the Couch Cushions

Posted by Fred Wellman

The Outsourcing of U.S. Intelligence Raises Risks Among the Benefits 

Robert O’Harrow, Jr., Washington Post. It was a rough week for the National Security Agency with a first leak in the Guardian that the agency has been collecting all of the meta-data on calls over its system then in the Washington Post on tapping into internet service providers called PRISM.  Sunday it was revealed that both document releases were the work of a single Booz Allen Hamilton contract employee of NSA named Edward Snowden, a 29 year-old IT specialist who claims access to scores of Top Secret documents and hints of more revelations to come as he hides in Hong Kong. The Post looks at how contractors have become an integral part of the massive intelligence complex. By some estimates one in four intelligence workers are contracted employees and estimates say that 70% of the secret intelligence budget goes to contractors making these kinds of leaks all the more likely in the future as vetting of these employees is often up to companies eager to land business and fill slots as much as anything. Many companies have seen the intelligence sector as a growth area in spite of defense budget cuts so it will be important to watch for an inevitable backlash on the outsourcing of government work and how this incident may provide an impetuous that will choke off this lucrative sector. Without question this incident is going to have a huge impact in a host of areas from Constitutional questions of press freedom to security of our nation’s secrets.

U.S. Publishes Details of Missile Base Israel Wanted Kept Secret 

Sheera Frenkel, McClatchy News Foreign Staff. In a bit of irony this week while the U.S. is dealing with the purposeful leaking of classified documents our friends in Israel were fuming over the deliberate leaking of their classified information by the U.S. Department of Defense. As part of a support agreement the U.S. has agreed to build a $25 million base for new Arrow 3 ballistic-missile defense systems in Israel. Unfortunately, the U.S. Army Corps of Engineers-Europe District decided to post the Request for Proposals in an unclassified form and included the 1000-page specifications of the project complete with exact location, heating systems and even the thickness of the walls. Anonymous Israeli officials called it a blue print for an enemy of the country to destroy the base once it’s complete. Later in the week spokesmen from both the Corps of Engineers and Pentagon denied they had done anything wrong saying the Israelis had said it was an unclassified project. The Israeli’s seem to disagree and this saga will likely be chalked up in the bureaucratic confusion category. It does show the key weakness in all of these efforts to protect military secrets: people. No matter how many systems you put in place security still comes down to human decisions either purposeful or through incompetence secrets are often hard to keep.

As Arms Sales Fade, Aerospace Contractors Chase Commercial Customers 

Christopher Drew, New York Times. The headline here is a little bit off as we know that Boeing and Airbus have been turning their attention to commercial jet production and profit margins for a few years now as the coming military cuts seemed more likely. What is interesting in this piece is the analysis that in the past subcontractors that make components like engines have actually had larger profit margins than the prime builders who take the risks and build the final aircraft. With that in mind both Boeing and Airbus are pressuring component manufacturers to be more cost efficient and help them make their various products more cost competitive. What has been a busy time in commercial jet production is likely to continue with a 45% expansion in the next four years and parts suppliers are struggling to keep up. The battle for contracts to maintain those aircraft is another area that will be driven by pricing even more than manufacturing has been so ways to be more efficient will be ever more of a focus even in the commercial space.

Pentagon Says Cost to Retrofit F-35s Drops 

Tony Capaccio (@ACapaccio), Bloomberg. The Pentagon and Lockheed Martin were happy to announce last week that the cost to retrofit existing F-35’s has dropped by some $500 million in a new analysis.  The issue surrounds the way the JSF is being fielded even as its being tested and developed, called “concurrency”. The major flaw in this approach is that as problems are found or new systems developed all of the existing aircraft have to be retrofitted with those new systems and repairs as was estimated to cost around $1.7 billion. This follows a 1.1% drop in the total program cost estimates last month but before everyone starts popping corks it’s important to remember we are shaving off percentage points from the actual project costs that have gone up a staggering 68% from the initial contract was signed back in 2001. These lower estimates are based on real world experience instead of computer models and have the F-35 program office issuing statements of satisfaction instead of the loud criticism we have seen in recent months. All of this wonderful news but the defense budget is still under enormous pressure so it’s far from clear sailing for the most expensive weapon system in history and folks like long time DoD critic Winslow Wheeler aren’t letting off the gas on their push to reduce or even kill the entire program.

House Committee Refuses to Put Squeeze on Personnel 

Tom Philpott, Stars and Stripes. Last week, we highlighted SecDef Hagel’s fiscally sound proposals to trim personnel costs in these times of budget austerity. This week, Congress weighed in on just how politically untenable cuts to benefits really are by blocking any language in the FY2014 defense authorization bill that would raise Tricare fees, lower troops’ pay raises, or shift retirees onto different levels of Tricare. This outcome was fairly easy to see coming, but a few Members of Congress are standing firm that while other parts of the defense budget are trimmed, personnel costs have to come down, too. Without reform, this bipartisan group says the overall national security budget suffers. It’s not only a handful of Members of Congress who think compensation needs reform, 25 think tanks also signed onto a letter making similar calls. It’s veterans and military organizations who are holding the line on cuts.

Defense Think Tanks Break Tradition and Agree to Some Stuff: Cut Places, People, and Pay to Modernize the Military

John Grady, Special Correspondent. Last week four think tanks in Washington D.C. provided an analysis for DoD on where cuts should come from on a host of scenarios facing the budgets. This week 25 of them sent a letter to Secretary of Defense Hagel and Congress laying out exactly where they think cuts should occur today. Without a lot of surprise they urged cuts to personnel benefits programs like TRICARE, another round of base closings and slowing of pay raises for military personnel. Also not surprising was the near immediate dismissal of the suggestions by Congressional leaders. Our John Grady attended a forum last Monday on Capitol Hill and got the brief on their ideas, which all come with political baggage for both DoD and elected leaders.

The week ahead:

Tradeshows and Conferences:

Mission Command (Mon-Wed, 10-12, June), Waterview Conference Center, 1919 North Lynn Street, Arlington, VA ‘Mission Command’, previously ‘Command and Control’, is now in its 10th year and while the nomenclature has changed, so have the technology requirements. Mission Command will focus on improving network integration and accessibility through exchanging strategies and methods from various test and evaluation commands, acquisition executives, tactical IT technology experts, and international communications experts.

Next Generation ISR (Tue-Wed, 11-12 June), Holiday Inn Rosslyn at Key Bridge, 1900 North Fort Myer Drive, Arlington, VA The two-day general session will assemble top leaders from the Pentagon and private sector to discuss increasingly ubiquitous ISR technology. Especially in an era of expanding international interests and shrinking budgets, more decision makers are turning to fast-changing ISR capabilities as cost-effective and practical.

National Logistics Forum(Thur-Fri, 13-14 June), Hyatt Regency Crystal City, 2799 Jefferson Davis Hwy, Arlington, VA The National Logistics Forum is ore robust this year with uniforms from the Pentagon joining DoD logistics leaders to discuss the effects of current fiscal constraints on the sustaining the force and how that will affect the force 10 years down the line. A technology exhibition will spotlight industry’s developing logistics capabilities.

Congress: Both chambers are in session this week.


Homeland Security Subcommittee on Counterterrorism and Intelligence: Protecting the Homeland Against Mumbai-Style Attacks and the Threat from Lashkar-e-Taiba When: 10:00 AM, Wednesday, June 12, 2013 Where: 311 Cannon House Office Building

Committee on the Budget: The Department of Defense and the Fiscal Year 2014 Budget Who: The Honorable Charles T. Hagel, Secretary, Department of Defense, General Martin E. Dempsey, Chairman, Joint Chiefs of Staff When: 1:00 PM, Wednesday, June 12, 2013 Where: 210 Cannon House Office Building

Foreign Affairs Subcommittee on the Middle East and North Africa: American NGOs Under Attack in Morsi’s Egypt Who: The Honorable Lorne W. Craner, President, International Republican Institute, Mr. Charles W. Dunne, Director, Middle East and North Africa, Freedom House, Ms. Joyce Barnathan, President, International Center for Journalists, Mr. Kenneth Wollack, President, National Democratic Institute When: 1:00 PM, Wednesday, June 12, 2013 Where: 2172 Rayburn House Office Building

Homeland Security Subcommittee on Oversight and Management Efficiency: Why Can’t DHS Better Communicate with the American People? When: 9:00 AM, Friday, June 14, 2013 Where: 311 Cannon House Office Building


Appropriations Subcommittee on the Department of Defense: Hearing to Examine Department Leadership Who: The Honorable Charles T. Hagel, Secretary, Department of Defense, General Martin Dempsey, Chairman, Joint Chiefs of Staff When: 10:00 AM, Tuesday, June 11, 2013 Where: SD-192 Dirksen Senate Office Building

Homeland Security and Governmental Affairs: Reducing Duplication and Improving Outcomes in Federal Information Technology Who: Steven L. VanRoekel, U.S. Chief Information Officer, Office of Management and Budget, Simon Szykman, Chief Information Officer, U.S. Department of Commerce, Frank Baitman, Chief Information Officer, U.S. Department of Health and Human Services, David A. Powner, Director of Information Technology Management Issues, U.S. Government Accountability Office When: 10:30 AM, Tuesday, June 11, 2013 Where: SD-342 Dirksen Senate Office Building

Appropriations Subcommittee on the Department of Defense: Hearing on Voluntary Military Education Programs Who: The Honorable Frederick Vollrath, Assistant Secretary of Defense, Readiness and Force Management, Mr. Terry W. Hartle, Senior Vice President, American Council on Education, Mr. Steve Gunderson, President and CEO, Association of Private Sector Colleges and Universities, Mr. James Selbe, Senior Vice President for Partnerships, Marketing, and Enrollment Management, University of Maryland University College When: 10:00 AM, Wednesday, June 12, 2013 Where: SD-192 Dirksen Senate Office Building

Veterans Affairs: Hearing to Examine Pending Benefits Legislation Who: Curtis L. Coy, Deputy Under Secretary for Economic Opportunity, Veterans Benefits Administration, Department of Veterans Affairs, Jeffrey Hall, Assistant National Legislative Director, Disabled American Veterans, Ian de Planque, Deputy Legislative Director, The American Legion, Colonel Robert F. Norton, USA (Ret.), Deputy Director, Government Relations, Military Officers Association of America, Ryan Gallucci, Deputy Director, National Legislative Service, Veterans of Foreign Wars When: 10:00 AM, Wednesday, June 12, 2013 Where: SR-418 Russell Senate Office Building

Budget: The President’s Fiscal Year 2014 Defense Budget Request Who: The Honorable Charles T. Hagel, Secretary, Department of Defense, General Martin E. Dempsey, Chairman, Joint Chiefs of Staff When: 10:30 AM, Wednesday, June 12, 2013 Where: SD-608 Dirksen Senate Office Building

Appropriations: Hearings to Examine Cybersecurity, Focusing on Preparing for and Responding to the Enduring Threat; to be immediately be followed by a closed briefing in SVC-217 Who: The Honorable General Keith B. Alexander, Commander, U.S. Cyber Command Director, National Security Agency Chief, Central Security Service, The Honorable Rand Beers, Acting Deputy Secretary, Department of Homeland Security, The Honorable Patrick Gallagher, Acting Deputy Secretary, Department of Commerce Director, National Institute of Standards and Technology, Richard McFeely, Executive Assistant Director, Criminal, Cyber, Response, and Services Branch, Federal Bureau of Investigation When: 2:00 PM, Wednesday, June 12, 2013 Where: SD-G50 Dirksen Senate Office Building

Think tanks and other news events: 

Bipartisan Policy Center: The Geopolitical Impacts of the U.S. Tight Oil Boom: Implications for OPEC and the U.S. Strategic Posture What: The first in a series of four events on the New Geopolitics of Petroleum and Natural Gas. This first session will explore the realistic implications of what the tight oil boom means for the country in both economic and geopolitical terms. Who: Senator Lisa Murkowski, U.S. Senator from Alaska, Edward Morse, Global Head of Commodities Research, Citibank, Paul Sankey, Managing Director, Deutsche Bank, Katherine Spector, Head of Commodities Strategy, CIBC World Markets, Luis Giusti, Senior Adviser, Center for Strategic and International Studies, Ambassador Carlos Pascual, Special Envoy and Coordinator for International Energy Affairs, U.S. Department of State, Daniel Yergin, Vice Chairman, IHS, Former Senator Pete V. Domenici, BPC Senior Fellow, Adam Sieminski, Administrator, U.S. Energy Information Administration, Former Senator Bennett Johnston, Chairman, Johnston & Associates, Robin West, Chairman, PFC When: 9:00 AM, Wednesday, June 12, 2013 Where: The Hyatt Regency 1225 I Street, NW Suite 1000, Washington, D.C. 20005

Center for Strategic and International Studies: A Congressional Perspective on U.S.- China Relations What: The CSIS Freeman Chair in China Studies is pleased to host the co-chairs of the bipartisan Congressional U.S.-China Working Group, Representatives Rick Larsen (D-WA) and Charles Boustany (R-LA), for a conversation on the view from Congress concerning the forward trajectory of U.S.-China relations in the aftermath of the California meeting between Presidents Obama and Xi. Who: The Honorable Charles W. Boustany, Jr.  (R-LA), The Honorable Richard R. “Rick” Larsen (D-WA), Christopher K. Johnson, CSIS Senior Adviser and Freeman Chair,  Freeman Chair in China Studies When: 10:00 AM, Thursday, June 13, 2013 Where: Center for Strategic and International Studies 1800 K Street, NW, Washington, D.C. 20006

Asia Society: Fueling the Future: The United States, Asia, and Energy Security What: A conversation on the energy sector shifts in Asia and the United States over the next 10 to 30 years. Leading experts will assess how this evolution in the U.S. energy industry will impact trade and regional security between the United States and Asia, and will also discuss how U.S. policies can create a supportive environment for domestic economic growth in the context of the expected changes.Who: Rex Tillerson, Chairman and CEO Exxon Mobil Corporation, Carlos Pascual, Special Envoy and Coordinator, International Energy Affairs, U.S. State Department, Daniel Yergin, Vice Chairman, IHS When: 3:00 PM, Thursday, June 13, 2013 Where: Ronald Reagan Building and International Trade Center 1300 Pennsylvania Ave, NW, Washington, DC

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.


This entry was posted on Monday, June 10, 2013 9:20 am

Leave a Reply

Your email address will not be published. Required fields are marked *

Notify me of updates to this conversation