September 24 Weekly Defense Industry Roundup

Posted by Fred Wellman

Defense Industry is Reshaping Itself in Multitude of Ways

Marjorie Censor, Washington Post Capital Business. The fact is that those in the defense industry have been approaching the changing budget environment in a multitude of ways for the last year or so. Last week’s announcement of merger talks between BAE Systems and EADS is just one approach as other firms have split into multiple companies like ITT or SAIC and others have simply spun off underperforming units like General Dynamics. The Post’s @CommonCensor has a good summary of the many approaches and what may be ahead.

Army Orders Intelligence Servers Shut Down, Threatens Palantir, Continues 3rd ID Probe

Paul McLeary, Defense News. In what could prove to be a very damaging development for much talked about Palantir it was discovered last week that the company provided cost-free software and servers to the 3rd Infantry Division prior to their deployment to Afghanistan. The division had put in a request to purchase the software but was short of funds so Palantir offered to provide a package for free in violation of a host of federal procurement regulations. This is not a small thing. The contracting rules are very explicit on what a contractor can provide to the government and the idea that actual servers and software were added to a military network without going through proper procurement processes could be illegal and land both the contractor and the military leadership that approved it in hot water. This entire episode goes to what many people complain about Palantir and their reputation as freewheeling dealmakers.

Pentagon Does Not See Big Cancellation Fees from Cuts

Andrea Shelal-Esa, Reuters. Department of Defense Comptroller Robert Hale told a Congressional committee this week that they must act to stop the sequestration plan from taking effect but he does not see likelihood that the Pentagon will face huge contract cancellation fees as some have predicted. Other DoD officials outlined a plan where those contracts with the ability to simply order less of a product will be tapped to cut them by 10% or as needed. This may cause the individual items to cost more over the lifetime of a contract but would meet the short-term cuts detailed by the sequestration law. Everyone seems to be looking for a way to get out of the cuts and still claim victory but none of it will occur before the election now that Congress has gone home.

DepSecDef Keeps Pressing on Lockheeds F-35

Colin Clark, AOL Defense. The Association of the Air Force annual conference last week produced a rare bit of news when the incoming chief of the F-35 program unleashed a barrage of criticism on the both the builder Lockheed-Martin and his own future team. Major General Christopher Bogdan called the relationship with Lockheed “the worst I’ve ever seen” when describing the partnership. Later in the week Deputy Secretary of Defense backed Bogdan’s comments stating he backed him “100 percent” and also offered a bit of news that F-35’s would be based overseas in the Pacific. It will be interesting to see what leadership changes Bogdan intends to implement to fix this broken relationship and program challenges.

The week ahead:

Tradeshows and Conferences: 

Modern Day Marine, MCB Quantico (Tues-Thurs, 25-27 Sep) Modern Day Marine is co-sponsored by MCB Quantico along with the Marine Corps League and others and serves as the premier expo for Marine equipment, services and technology. Quantico is home to both Marine Combat Development Command and Marine Systems Command so the show offers the opportunity to interact with the leaders in Marine acquisition and future force development. It occurs right on the parade field at base headquarters in tents and is well attended.  We also recommend wearing shoes that can take some water and mud as it seems every year ends up being a rainy time and the ground becomes a bit of a mud pit.

Next big event:  Association of the U.S. Army Annual Conference, Washington D.C., 22-24 October.

Congress: The full Congress is not session this week as they leave town for the election.

Think tanks and other news events: 

Center for Strategic and International Studies: U.S. Forward Presence in the Asia-Pacific Region, Washington, DC (8:30 AM, Mon 24 Sept) Description: With planners at the Pentagon working on the so-called “Asia pivot”, the Center for Strategic and International Studies (CSIS) recently submitted an independent assessment of force posture options for the U.S. Pacific Command area of responsibility to the Department of Defense, pursuant to the Fiscal Year 2012 National Defense Authorization Act. This conference will discuss the findings and recommendations in the report. RSVP online. Participants: Ambassador Richard Armitage, President, Armitage International, Admiral Timothy Keating, USN (ret.), Mr. Walter Slocombe, former Under Secretary of Defense for Policy, Ernest Bower, Senior Adviser and Director, Southeast Asia Program, CSIS, Victor Cha, Professor, Georgetown University, Lieutenant General (Ret.) Noboru Yamaguchi, professor of military history and strategy, National Defense Academy of Japan, Dr. Kathleen Hicks, Principal Under Secretary of Defense for Policy Location: 1800 K Street, NW, Washington, D.C. 20006 B1 Conference Center, CSIS

Government Executive: Financing Defense: Strategies for Leaner Times, Arlington, VA (7:15 AM, Tues 25 Sept) Description: With the upcoming budget sequester seeming all but unavoidable, and with pressures mounting to reduce military spending, Defense Department financial managers and planners have their hands full these days. The Pentagon’s top budget and financial management leader will discuss how the department is preparing for the challenges ahead, what the probable allocation of spending reductions in the longer term are, and what’s likely to happen in Defense personnel accounts. Participants: Robert Hale, Under Secretary of Defense and Chief Financial Officer, Department of Defense Location: Crystal Gateway Marriott 1700 Jefferson Davis Highway Salon H Arlington, Virginia 22202

Carnegie Endowment for International Peace: Ambassador Cameron Munter on Pakistan, Washington, DC (9:00 AM, Tues 25 Sept) Description: In one of his first public event since returning from Islamabad, Ambassador Cameron Munter will deliver an address on the challenges and opportunities ahead in Pakistan. RSVP online. Participants: Ambassador Cameron Munter, former Ambassador to Pakistan Location: 1779 Massachusetts Ave. NW, Washington, D.C. 20036

Heritage Foundation: In Business and Battle: Strategic Leadership in the Military and Civilian Spheres, Washington, DC (8:00 AM, Thu 27 Sept) Description: A book launch for In Business and Battle. The book compares and contrasts top strategic leadership in complex military and business environments of today. It draws on business and military leaders from a dozen countries with responsibilities spanning six continents. RSVP online. Participants: Lord George Robertson, Former UK Secretary of State for Defence and NATO Secretary General, David Ellery, Editor-in-Chief of In Business and Battle, His Excellency Sebastian Wood, Ambassador from the United Kingdom to the People’s Republic of China Location: Lehrman Auditorium 214 Massachusetts Ave NE, Washington, D.C. 20002

Government Executive: Cybersecurity Summit, Washington, DC (8:00 AM, Fri 28 Sept) Description: America’s technological infrastructure supports all segments of the economy and ensures the smooth operation of every public and private institution. Efforts to prevent concerted attacks on this vital infrastructure have risen to the top of the legislative agenda. Cybersecurity confronts the dark side of technological innovation. This summit will scan the current landscape and offer reconnaissance on exactly what is being done, and what additional initiatives are required to ensure the integrity of America’s technological frontier. RSVP online. Participants: Janet Napolitano, Secretary, Department of Homeland Security, Shawn Henry, President, CrowdStrike Services, Inc., Sean McGurk, Director of Industrial Control System Security, Verizon, Paul Nguyen, Vice president of Cyber Solutions, Knowledge Consulting Group (KCG), Dr. Catherine Lotrionte, Associate Director, Georgetown’s Institute for Law, Science, and Global Security, Andy Greenberg, Author, This Machine Kills Secrets Location: Newseum 555 Pennsylvania Ave., N.W. Washington, District of Columbia 20001

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 Monday, September 24, 2012 11:50 am

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