May 29 Weekly Defense Industry Roundup

Posted by Fred Wellman

Investigators Want Explanation of Alleged Overbilling in Afghanistan

Karen DeYoung, Washington Post. Congressional investigators are demanding answers to reports that Swiss-based Supreme Foodservice overcharged the Defense Logistics Agency well over $750 million in double-billings and excessive charges for food provided to U.S. troops in Afghanistan. What is interesting is that these overcharges were initially discovered over a year ago and have been the subject of an ongoing dispute between Supreme and DLA that has resulted in DLA now deducting almost $21.7 million from some $150 million in monthly payments to the company. Yet even with the discoveries of overcharges and financial mismanagement, the contract has gotten all of its one-year extensions and Supreme is on the short list to win the new contract pending award from DLA for another five years of food service.

DoD’s Next Crisis: Excess Inventory

Zachary Fryer-Biggs, Defense News. After over ten years of war the military faces a daunting challenge as parts and equipment bought hurriedly to support the warfighter now exist as excess inventory that is overwhelming an already stressed management system and work force trying to keep up. The returns of equipment from Iraq and Afghanistan will only complicate things further as the DoD has few choices but to sell off the excess at pennies on the dollar, attempt to sell it as foreign military sales, or simply destroy it, as the U.S. simply lacks the storage capacity to keep it all. The problem is being attacked in several approaches, but the mountains of material keep getting taller each day.

Army Seeks to Replace Combat Vehicles, but It Won’t Be Easy

Tom Vanden Brook, USA Today. The Army has a lot of doubters questioning whether they can truly come up with new vehicles to meet the demands for safety and cost being asked of the Joint Light Tactical Vehicle and Ground Combat Vehicle programs. The problem remains that enemies with relatively few resources have been successful in destroying our combat vehicles with regularity. With a $300,000 price tag against a $75 fertilizer bomb the exchange ratio seems less sustainable than ever. So, dealing with the need to protect soldiers lives while also building affordable vehicles in a time of austerity means the Army and Marine Corps are scrambling to get a fleet that can meet all of the competing demands. Vanden Brook has an all-star cast to discuss the issues in this piece.

NIE Saves Army $6 billion

Michael Hoffman, DoD Buzz. Some in Congress have questioned how the Army can continue to run it’s $600 million Network Integration Exercise program testing new information technology solutions for the service in light of ongoing budget cuts. The service has responded that the return on investment has been nearly ten-fold thanks to the cutting of many programs that had been procured and failed to pass effectively through the field tests, like the Unattended Ground Sensors and the unwieldy 12-pound wearable computer monstrosity called Nett Warrior that is now basically housed in smart phones. Those savings have added up to nearly $6 billion according to Army acquisitions officials, and they continue to seek efficiencies. There is common sense merit to rigorous field-testing of new technologies that can’t be argued, so NIE will continue its bi-annual run.

SASC NDAA Freezes Air Guard Cuts, Pakistan Aid; Rejects Tricare Fee Boost

Sydney Freedberg, Jr., AOL Defense. The Senate ended their mostly closed door NDAA mark-up last week with unanimous passage of their version of the bill that included rejection of any cuts to the Air National Guard, reductions in the civilian and contractor workforce at DoD by 5% over the next five years, restrictions on aid to Pakistan and a killing of the Administrations’ attempts to raise Tricare fees on military retirees. The bill has a host of other interesting things and in the end is far from the House bill and some $4 billion over their own topline. The conference committee will probably be high adventure to resolve the two bills in coming months.

Captains of Industry

Ray Fisman, A recent study from Harvard and Boston University researchers looked at the commonalities in corporations run by military veterans. They looked at company’s leaders from 1980 to 2006 and found some fascinating results on the differences between a military veteran CEO and others. Most notably a company lead by someone with military experience was 60% less likely to commit fraud and doctor earnings numbers. They also performed much better during hard times although they produced fewer earnings during boom times than their peers.  All-in-all the study found what many have said are exactly the reasons to hire veterans for any job—high moral standards, calm under fire and steady leadership no matter the conditions.

The week ahead:

Themes:  The Senate is out of town for the short week and the House has an abbreviated schedule so it might be a quiet week in D.C. The parsing of the Senate’s NDAA bill will be in full swing with a wide gap between the House version and theirs amplified by the gulf between both bills and what the Administration is asking for before sequestration issues kick in. The authorization games are just beginning.

Tradeshows and Conferences: 

IDGA 3rd Annual Irregular Warfare Summit (Weds-Fri, 30 May – 1 June) Washington Marriott Wardman Park, Washington, D.C. IDGA follows up last week’s NDIA SOFIC show with their own conference focused on irregular warfare and special operations forces. This event will have attendees from a number of the special warfare branches and an entire day dedicated to psychological operations.

National Coalition for Homeless Veterans Annual Conference (Weds-Fri, 30 May – 1 June) Grand Hyatt Washington, Washington, D.C. This is the annual conference for the oldest and leading non-profit fighting to end veteran homelessness. ScoutComms will be supporting this year’s conference on behalf of our client The Home Depot Foundation who is sponsoring the conference as part of their three year; $30 million effort to ensure every veteran has a safe place to call home. There are over 500 attendees representing hundreds of organizations coming to D.C. for this collaborative event. Follow #NCHV12 on Twitter and media are welcome though the conference itself is sold out.

Congress:   The Senate is not in session this week. The House of Representatives has a short three-day workweek planned.

House of Representatives: 

House Veterans’ Affairs Committee – Hearing (4:00 PM, Wed, 30 May)

Oversight and Investigation Subcommittee hearing on “Purchasing Perspective: VA’s Prosthetics Paradox.” Witnesses: TBD Location:  334 Cannon House Office Building

House Veterans’ Affairs Committee – Hearing (10:15 AM, Thurs, 31 May)

Full committee hearing on “Reviewing the Implementation of Major Provisions of the VOW (Veterans Opportunity to Work) to Hire Heroes Act of 2011.” Witnesses: TBD

Location:  334 Cannon House Office Building

Think tanks and other news events: 

American Enterprise Institute: Budget Priorities for 21st Century Defense: A Conversation with Deputy Secretary of Defense Ashton Carter, Washington, D.C. (10:45 AM, Wed, 30 May) Description: The discussion of U.S. defense spending has taken on a new dimension because of the prospect of sequestration as well as the number of recent budgetary reductions in the U.S. Department of Defense — most notably evidenced in the 2011 Budget Control Act. The Obama administration’s strategic “pivot” to Asia poses questions about how and where resources are to be allocated and about what type of military might be required for this process to take place. AEI’s Marilyn Ware Center for Security Studies will host Deputy Secretary of Defense Ashton B. Carter for a timely discussion of U.S. defense budgets, of the changing strategic landscape in the U.S. and the force that this landscape demands. Participants: Thomas Donnelly, AEI; Dr. Ashton B. Carter, Deputy Secretary of Defense Location: AEI, 12th Floor, 1150 17th Street, NW, Washington, D.C. 20036

Heritage Foundation: Understanding the Smith-Mundt Modernization Act, Washington, D.C. (3:00 PM, Thurs 31 May) Description: Controversy has swirled around the Smith-Mundt Modernization Act since it passed mark-up as an amendment to the House version of the National Defense Authorization Act on May 18. The bill is now before the Senate. The Smith-Mundt Act, which established public diplomacy and international broadcasting as activities of the U.S. government, has been in force since 1948. One of its provisions prohibits U.S. citizens from accessing the public diplomacy products of the U.S. government, whether in print or on the airwaves. The purpose of this provision was to prevent domestic government propagandizing. Yet, in an age when global news and information flows are available 24/7 in print, on the airwaves, and online, this prohibition has become an anachronism. Critics on the left and right alike have charged that modernizing the Smith-Mundt Act will lift the floodgates for U.S. government propaganda aimed at U.S. citizens. Not so. Rather, the amended act will force greater government transparency and accountability and it will allow Americans insights into what Washington is communicating to audiences around the world. Participants: Juliana Geran Pilan, Director, Center for Culture and Security and professor, Politics and Culture, Institute of World Politics; The Honorable Joseph Duffey, former director, United States Information Service; Helle Dale, Moderator, Senior Fellow for Public Diplomacy, Heritage Foundation. Location: Lehrman Auditorium, 214 Massachusetts Ave NE, Washington DC 20002-4999

Changes in the Defense Media

Politico has the scoops this week on a couple of changes: Former Vice Chairman of the Joint Chiefs General James Cartwright (USMC ret.) and former Vice Chief of Staff of the Army General Peter Chiarelli (USA ret.) are signing with ABC News as consultants. Doug Frantz, a former Los Angeles Times managing editor and recent chief investigator for the Senate Foreign Relations Committee, is joining The Washington Post as national security editor.

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.

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This entry was posted on Tuesday, May 29, 2012 10:27 am

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