Anyone else thrilled January is behind us? Now that the never-ending month is over, let’s look ahead. For the second consecutive year, we are not expecting the Trump administration to send next year’s budget proposal to Congress on time, in this case because lawmakers still haven’t passed this year’s budget. Sigh.
Yet we know a little bit about that upcoming proposal, thanks to our friends at the Washington Post and Bloomberg, who are reporting that the Pentagon will seek $716 billion in fiscal 2019. That’s a base budget request of $597 billion, plus more than $90 billion for Overseas Contingency Operations, and the rest for nuclear weapons work in the Energy Department.
Seems like a lot right? It is, but when you look at the Pentagon budgets from a decade ago, when hundreds of thousands of troops were deployed in Iraq and Afghanistan, the numbers were actually higher when you adjust for inflation. In real terms, the 2007 through 2011 budgets all topped $716 billion. The peak year was the first of those: 2007, a $666 billion budget that would be about $785 billion in today’s dollars.
So what does the 2019 proposal mean? It appears the administration aims to stuff money into the OCO fund — ostensibly reserved for unexpected war costs — so it can present a base budget within shouting distance of the roughly $561 billion cap imposed by the Budget Control Act. The Pentagon has made no secret in recent years that OCO no longer funds only the wars in Iraq and Afghanistan. If the White House does indeed request $90 billion for OCO in 2019, it would mark the third straight year of increase — and a 38 percent raise over 2018’s $65 billion OCO request.
The latest continuing resolution funds the government through Feb. 8. If, Congress passes a budget, we could see the 2019 proposal the week of Feb. 12. But if there’s another CR, then things get dicey, meaning we might be in for a long February too.
You’ve reached the Defense One Global Business Brief by Marcus Weisgerber. Send your tips and feedback to email@example.com or @MarcusReports. Check out the Global Business Brief archive here, and tell your friends to subscribe!
From Defense One
Qatar Wants to Host US Ships, Expand Air Base For American Families // Marcus Weisgerber
Amid the Saudi-led blockade, the Qatari defense minister came to Washington seeking deeper ties with U.S.
Hint: it’s all about “resilience.”
The Marines Have ‘Too Many Hornets’ // Caroline Houck
The commandant wants to retire beaten-up F/A-18s more quickly as F-35s join the Corps.
Boeing Loses Trade Dispute With Bombardier
Mark this down in the “no one saw this one coming” column. The U.S. International Trade Commission ruled unanimously that the sale of a new Bombardier passenger jetliner to Delta Airlines did not harm Boeing. Asked about the decision on a quarterly earnings call this week, CEO Dennis Muilenburg said the firm was disappointed with the decision, but would hold additional comment until it received details from the ITC.
Muilenburg: “I will say that we remain firm in our stance on the need for fair global trade, it’s really important for the future that we all play by the same rules. We may consistent on that team for years, we will continue to be consistent on that team. And when we see practices that are not consistent with everybody playing by same rules, we’re going to raise the issue. And you can count on that in the case going forward as well.”
So where does Boeing go from here? Remember: Canada also killed a $5 billion-plus Super Hornet deal and has threatened to bar the Chicago-based company from future defense work.
- Boeing has invested in Cuberg, which has been developing batteries that could be used in aircraft and industrial applications. That follows last year’s investment in Zunum Aero, which is developing hybrid-electric aircraft engines.
- Dennis Muilenburg, the firm’s chairman, president, and CEO, is now on Twitter at @BoeingCEO. Expect “company news and industry insight,” says communications VP Phil Musser, who became the firm’s top spokesman last year. Musser has made improving the firm’s social-media presence one of his top priorities.
Watch for Nuke Report
The Pentagon is expected to formally roll out its Nuclear Posture Review on Friday. Even though we’ve seen a leaked draft already, we’ll keep an eye out for any fine-tuning that might have occured in recent weeks. Something not likely to change: a focus on upgrading the nuclear command-and-control network, which we told you about last month.
Q&A: Qatar’s Defense Minister
Like its Middle East neighbors, Qatar is a major buyer of U.S. weapons. Its made-in-America arsenal includes C-17 and C-130 cargo planes, Apache attack helicopters, Patriot missile interceptors, and, more recently, F-15 fighter jets. This week, Qatar’s Defense Minister Khalid Bin Mohammad Al-Attiyah visited Washington for the first U.S.-Qatar strategic dialogue with U.S. Defense Secretary James Mattis and Secretary of State Rex Tillerson. I chatted with him on Tuesday evening.
Q. What were you hoping to accomplish in talking with Secretaries Tillerson and Mattis?
A. We touched on all the relations between us and the United States. I would like to speak more about our military-to-military relation and how we can enhance this relation. In Qatar, we decided to have a 2040 Vision for our militaryto-military cooperation with the United States. It has so many programs which we would like to achieve by then. Starting from Al Udeid Air Base, — make Al Udeid Air Base a family-oriented place for the men and women who work there from the American Air Force — to the defense purchases which we have between us and the United States, going to training and exercises, going to the navy cooperation and how we can improve our military navy ports so we can accomodate the American Navy if needed in Qatar. How are we going to manage all of the systems and integrate them as well.
Q. Did you come here with an acquisition wishlist?
A. Our cooperation does not stop here. We have a lot of things going on. We have a lot of investment in defense technology with some of our American companies here. In the land force we are having the Javelin also. It’s an ongoing military-to-military relationship in all of its aspects; purchasing defense equipment and training, exercise together, deployment.
Q. Has the recent blockaide affected Qatar’s relationship with the U.S. military?
A. It does not impact the relation between us and the military, but it’s definitely disturbed the operations against terrorism in the region. No doubt it is affecting this operation directly.
Q. What kind of solution are you looking for? What kind of role would you like to see the U.S. play?
A. Encourage the dialogue. Encourage everyone to and sit around the table and support … Kuwait as the honest mediator.
Q. Are plans for the missile defense early warning radar still progressing?
A. Of course. We will be receiving it shortly. The [early warning radar] and our Patriot, they will be shortly received in Doha.
Annual Pentagon Testing Report Arrives
At 394 pages, it’s essentially the state of each major weapons program. It issues warnings of deficiencies and other types of issues that have cropped up in testing (or might crop up in testing). This is the first report issued from the new Director of Operational Test and Evaluation Robert Behler. “As I begin to shape my initiatives as the director, my past experience, the emergence of new technologies, and the rapid evolution of threats suggest several key focus areas for the future,”” he writes in the report’s introduction. “These areas include testing of software intensive systems and cybersecurity implications, integrated testing, test infrastructure, and modeling and simulation.”
Norway’s Nammo Buys U.S. Firm
The ammunition-and-missile-engine company has purchased MAC LLC, a Bay St Louis, Mississippi-based producer of polymer bullet cartridge cases. The U.S. government approved the sale, the firm said in a statement. We’ve been reporting on Nammo’s U.S. expansion here and here and here.
Kratos Eyes Oklahoma for Drone Production
At the Paris Air Show last year, we found Oklahoma officials hungrily luring defense firms to open up shop in the state. The effort bore fruit in the form of San Diego-based Kratos Defense, which has announced plans tobuild jet-powered tactical unmanned aircraft and target drones in the Sooner State. It will initially open an engineering facility in Oklahoma City and is planning a 75,000-square-foot factory. It plans to employ more than 350 workers.
The Senate Armed Services Committee has approved John Gibson to be the Defense Department’s chief management officer.
Tom Bell, who led Boeing’s defense and space sales team, has left the company for Rolls-Royce, where he has been named president of its defense sector. (It’s the third time he’s moved between those two companies: Bell spent 20-plus years at Boeing, then 2012 to 2015 at Rolls-Royce before returning.)
Jeff Shockey will step into Bell’s shoes as vice president of Global Sales and Marketing for Boeing Defense, Space & Security. Shockey has been with Boeing since 2016 and was previously a staff director for the House Permanent Select Committee on Intelligence, managing partner at government relations firm Shockey Scofield Solutions (S3 Group), and minority staff director for the Appropriations Committee of the House of Representatives.
MITRE has named Julie Gravallese the new vice president of programs and technology integration.She will “lead strategies and operations for the company’s technical workforce and programs, including MITRE sites and laboratories.”