Defense Roundup: Sequester Spares Stock Prices but Not Military Readiness or Civilians’ Wallets; Entrepreneurs Might Save the Economy, No Surprise Many Are Veterans

Posted by Rob Riggins

Best Case for Sequester is Still Disaster, Top Experts Say 

Sydney Freedberg Jr. (@SydneyFreedberg), Breaking Defense. In an unusual intellectual meeting of the minds, four of Washington’s major defense think tanks came together to model the effects of the sequester budget cuts on the future defense department’s situation. Under the lead of the Center for Strategic and Budgetary Assessments, teams from the Center for a New American Security, American Enterprise Institute, and Center for Strategic and International Studies’ looked at several possible budget scenarios and what DoD would have to do to make the cuts. The consensus from all four is that sequester in an unmitigated disaster as a tool for cutting budgets due to its broad cuts. Each scenario leaves the U.S. unprepared for future conflicts by cutting the F-35 program, retiring two aircraft carriers, and delaying construction of new ones along with massive manpower reductions to the Army. At the same time, Army Chief of Staff Odierno is already sounding the alarm that most Army ground combat brigades will be essentially unable to conduct their combat missions due to training cuts by this Fall. Our own special correspondent, John Grady, will be attending a CSBA session today and will have a full report tomorrow on our site. Of course, almost none of this is being talked about anywhere outside of Washington thanks to little to no impact on the average American. All the more likely to be ignored as defense stocks are doing great.


Amid Sequester, US Defense Stocks Still Surge 

Zachary Fryer-Biggs, Defense News. With the effects of the sequester just settling in, defense stocks continue to stay strong with many at or near all time highs in the month of May. Most analysts see it as recognition that the moves defense companies have been making to solidify their positions knowing that shrinking budgets were inevitable after the conclusion of over a decade of war have been successful. In addition, the early parts of sequester have proven relatively minor to industry as most of the big cuts are coming to internal programs and buckets of money, like the furloughs for DoD employees issued just last week. Those furloughs will likely only affect a few of the most defense heavy states but not the whole nation. At the same time, analysts recognize that Wall Street doesn’t really care about two years from now—they care about today and next quarter so the impacts of the cuts are yet to be seen. In the mean time, the dichotomy of solid stocks and warnings of impending doom continue to confuse most Americans and ensure that the sequester cuts aren’t going to be fixed by Congress in the near future, if ever.


The Army’s Multibillion Dollar ‘Money Pit’ 

Austin Wright (@abwrig), Politico. The ongoing battle over the military’s Distributed Common Ground System intelligence network took an interesting twist this week that adds to the continuing onslaught from the lobbyists for Palantir and Congressman Duncan Hunter. In this week’s new angle, three anonymous recent combat veteran Reserve soldiers “have been making the rounds in Washington to air their grievances” with the system. They talked with Politico but asked to remain nameless to protect their careers. It’s a very unusual move that leaves you wondering who exactly is paying for junior soldiers to make their way to the nation’s capital and stay for a few days. At the same time, the Army has been running demonstrations of the system for reporters to show them how it is more than just an analysis tool like Palantir’s software and more Congressmen start to sniff around with the issue. It’s an oddly public battle over a multi-billion dollar, multi-decade program. There is little doubt it won’t continue to get more interesting going forward.


Pentagon Defends Weapons After Report of Hacker Attacks 

Tony Capaccio (@ACapaccio) and Gopal Ratnam (@g_ratnam), Bloomberg. Last week’s Scout Report included the report from the Washington Post that the plans for dozens of top U.S. weapons programs and technologies had been stolen by Chinese government cyberspies. Department of Defense spokesman George Little issued an official statement last week saying the U.S. has “full confidence in our weapons platforms” and that “suggestions that cyber intrusions have somehow led to the erosion of our capabilities or technological edge are incorrect.” Other spokesmen said that the issues identified in the original report are being addressed. They cite that the report was developed over two years and outside experts note that counterintelligence activities are also being conducted that often involve feeding misleading or inaccurate data to the hackers. The cyber cold war being waged is becoming increasingly hot. In pointed remarks during the Shangri-La Dialogue meeting in Singapore last week SecDef Hagel called out China for its cyber espionage and drew a sharp response from Chinese officials who deny they are stealing our secrets. Clearly the battle to protect electronic data and cyber systems will be an ongoing effort regardless of the hot wars coming to an end.


Soldiers Turn Entrepreneurs as One Million Exit Military

Shobhana Chandra, Bloomberg. More and more, veterans are turning to entrepreneurship and they’re hiring other veterans to work for them leading to a lower veteran unemployment rate over time. Franchises, in particular, are popular with veterans who have an entrepreneurial spirit but at the same time are used to operating within a larger system. Interestingly, two authors linked Israel’s economic boom with the universal conscription and subsequent battlefield experience that young people then applied to their post-military careers through entrepreneurship. For American reservists and guardsmen who came home to lost jobs in a poor economy, entrepreneurship is the best option available. They’ll also be the first ones to hire when the economy improves as small businesses are the quickest adapters. It’s one more way veterans are major contributors to the economy.


The week ahead:


Tradeshows and Conferences:


NSA SIGINT Development Conference 2013 (Tue-Wed, 4-5, June); OPS1 North Cafeteria Party Room Ft. Meade, MD The classified conference will focus on intelligence issues facing those who are tasked with SIGINT as part of their mission. Over 1500 participants from the US intelligence community and around the world will attend this conference. The exhibit hall will be unclassified.


 40th IFPA-Fletcher Conference (Wed-Thu, 5-6 June), Ronald Reagan Building and International Trade Center, Atrium Hall, 1300 Pennsylvania Ave. Washington, D.C. The Institute for Foreign Policy Analysis and the International Security Studies Program of The Fletcher School of Tufts University will convene a high-level conference in Washington, D.C., in cooperation with U.S. Special Operations Command.  “Positioning Special Operations Forces for Global Challenges” will include top U.S. and allied/partner country officials, senior military commanders, Congressional leaders, academic-policy specialists and other non-governmental experts for a two-day exchange on the growing importance of special operations forces for twenty-first-century security.


Congress: Both chambers are in session this week.




Homeland Security Subcommittee on Emergency Preparedness, Response, and Communications: Emergency MGMT 2.0; How Social Media and New Tech are Transforming Preparedness, Response, and Recovery Disasters Part I; Private Sector When: 10:00 AM, Tuesday, June 4, 2013 Where: 311 Cannon House Office Building


Veterans’ Affairs Subcommittee on Oversight and Investigation: How Secure is Veterans’ Private Information? When: 2:30 PM, Tuesday, June 4, 2013 Where: 334 Cannon House Office Building


Foreign Affairs Subcommittee on the Middle East and North Africa: A Crisis Mismanaged: Obama’s Failed Syria Policy Who: Mr. Tony Badran, Research Fellow, Foundation for Defense of Democracies, Ms. Danielle Pletka, Vice President, Foreign and Defense Policy Studies, American Enterprise Institute, Jon Alterman, Ph.D., Director, Middle East Program, Center for Strategic and International Studies When: 10:00 AM, Wednesday, June 5, 2013 Where: 2172 Rayburn House Office Building




Armed Services Committee Oversight: Pending Legislation Regarding Sexual Assaults in the Military Who: General Martin E. Dempsey, USA, Chairman of the Joint Chiefs of Staff, General Raymond T. Odierno, USA, Chief of Staff of the Army, Admiral Jonathan W. Greenert, USN, Chief of Naval Operations, General James F. Amos, USMC, Commandant of the Marine Corps, General Mark A. Welsh III, USAF, Chief of Staff of the Air Force, Admiral Robert J. Papp, Jr., USCG, Commandant of the Coast Guard, Lieutenant General Dana K. Chipman, JAGC, USA, Judge Advocate General of the United States Army, Vice Admiral Nanette M. DeRenzi, JAGC, USN, Judge Advocate General of the United States Navy, Lieutenant General Richard C. Harding, JAGC, USAF, Judge Advocate General of the United States Air Force, Major General Vaughn A. Ary, USMC, Staff Judge Advocate to the Commandant of the Marine Corps, Rear Admiral Frederick J. Kenney, Jr., USCG, Judge Advocate General of the United States Coast Guard, Brigadier General Richard C. Gross, USA, Legal Counsel to the Chairman of the Joint Chiefs of Staff, Colonel Donna W. Martin, USA, Commander, 202nd Military Police Group, Captain Stephen J. Coughlin, USN, Commodore, Destroyer Squadron TWO, Colonel Tracy W. King, USMC, Commander, Combat Logistics Regiment 15, Colonel Jeannie M. Leavitt, USAF, Commander, 4th Fighter Wing, Nancy Parrish, President, Protect Our Defenders, Anu Bhagwati, Executive Director and Co-Founder, Service Women’s Action Network, Major General John D. Altenburg, Jr., USA (Ret.), Chairman, American Bar Association Standing Committee on Armed Forces Law, Colonel Lawrence J. Morris, USA (Ret.), General Counsel, Catholic University When: 9:30 AM, Tuesday, June 4, 2013 Where: SH-216 Hart Senate Office Building


Appropriations Subcommittee on the Department of Defense: Hearing to Examine the Missile Defense Agency Who: Vice Admiral James Syring, Director, Missile Defense Agency When: 10:00 AM, Wednesday, June 5, 2013 Where: SD-192 Dirksen Senate Office Building


Veterans’ Affairs Committee: Hearing Pending Benefits Legislation Who: Curtis L. Coy, Deputy Under Secretary for Economic Opportunity, Veterans Benefits Administration, Department of Veterans Affairs, Thomas Murphy, Director, Compensation Service, Richard Hipolit, Assistant General Counsel, John Brizzi, Deputy Assistant General Counsel, 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 5, 2013 Where: SR-418 Russell Senate Office Building


Joint Economic Committee Hearing: Building Job Opportunities for Veterans When: 10:00 AM, Wednesday, June 5, 2013 Where: SH-216 Hart Senate Office Building


Think tanks and other news events: 


American Enterprise Institute: The Defense Reform Consensus What: A discussion on the think tank reports about how best to reform Pentagon spending. Who: AEI, Brookings Institution,Cato Institute, the Center for American Progress, the Center for a New American Security, the Center for Strategic and Budgetary Assessments, the Center for Strategic and International Studies, the Foreign Policy Initiative, and the Stimson Center When: 12:00 PM, Monday, June 3, 2013 Where: Russell Senate Office Building Room SR-485 Washington, DC 20510


Woodrow Wilson International Center for Scholars: The Energy and Climate Nexus: Challenges and Opportunities for Transatlantic Security What: A discussion of the key findings and recommendations from The Energy and Climate Nexus: Challenges and Opportunities for Transatlantic Security, a policy report jointly written by CNA and the Royal United Services Institute (RUSI).

Who: Christian Burgsmüller, Counselor, Head of Transport, Energy, Environment and Nuclear Affairs Section, European Union Delegation to the United States, Daniel Chiu, Deputy Assistant Secretary of Defense for Strategy, Office of the Secretary of Defense, Ralph Espach, Director, Latin American Affairs, CNA Center for Strategic Studies, Rear Admiral Neil Morisetti, Special Representative for Climate Change, United Kingdom Foreign and Commonwealth Office, Sherri Goodman, Senior Vice President, General Counsel and Board Secretary, CNA; Executive Director, Military Board, CNA, Kaleb Redden, Director, North and West Europe, International Security Affairs European and NATO Policy, Office of the Secretary of Defense When: 9:00 AM, Thursday, June 6, 2013 Where: Woodrow Wilson Center, 1300 Pennsylvania Ave., NW, Washington, D.C. 20004

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 03, 2013 9:54 am

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