2020 spending outlook; Record-setting F-35 deal; More secrecy at the Pentagon; and a bunch more...
Last week we talked about the political fight that will likely occur over the next two years between the Republican-controlled Senate and the Democrat-controlled House. This week we’ll try to predict defense toplines, with a little help from the ever-insightful Jim McAleese.
Pentagon planners had slated defense spending (that is, DOD plus Energy Department nuclear-weapons funds) to reach $733 billion in 2020 — and then President Trump directed a 5 percent cut, bringing it down to about $700 billion. Looking at things conservatively, McAleese says in a recent note to investors that the 2020 and 2021 budgets will be between $700 billion and $716 billion.
Reminder: those numbers would require Congress to raise (or repeal) federal spending caps, which as Capital Alpha Partners’ Byron Callan points out, for the Pentagon are $576 billion in 2020 and $591 billion in 2021.
So, assuming 1) the White House sends a $733 billion budget proposal to Congress with 2) a $73 billion OCO request, which is not subject to the caps, and 3) lawmakers approve it, then about $84 billion would be cut through sequestration, Callan writes. If a $700 billion budget is presented, about $53 billion would have to be cut.
You’ve reached the Defense One Global Business Brief by Marcus Weisgerber. A quick programming note: there will be no Global Business Brief next week. Happy Thanksgiving to everyone in the U.S. We’ll be back on Nov. 29, just in time for a preview of the Reagan National Defense Forum where I’ll be moderating a panel about national security spending. Send your thoughts, tips and feedback to: firstname.lastname@example.org or @MarcusReports. Check out the Global Business Brief archive here, and tell your friends to subscribe!
From Defense One
Incoming HASC Chair: Scale Back Plans for New Nukes // Marcus Weisgerber
Rep. Adam Smith laid out new terms for a debate over the Pentagon's plans to expand the military's nuclear arsenal.
Supersonic Bizjets May Attract Pentagon Interest // Paulina Glass
Three teams are pursuing latter-day SSTs. The U.S. military might have use for them.
State Department Relaxing Rules on Transfer on Drone, Chip Technology // Patrick Tucker
The rules will pave the way for 5G cellphones — and even drones that talk to each other in midair.
The Biggest F-35 Contract Yet
It’s an “undefinitized” contract awarded Nov. 14 for 255 jets that would be purchased over three years, and could be worth as much as $22.7 billion. The purchase — which includes three batches of orders (Lots 12, 13 and 14), would bring the cost of the Air Force’s F-35A variant down to $80 million per jet, according to a Lockheed Martin infographic. Who will get the planes: 64 for the U.S. Air Force, 26 for the U.S. Marine Corps, 16 for the U.S. Navy, and 149 for allies and partners.
Give Me Prototypes, Not PowerPoints!
“We really need to get out of the PowerPoint world and into the prototype world. The best way to do that is through experimentation,” Rear Adm. John Tammen, director of the undersea warfare division of office of the Chief of Naval Operations, said Nov. 8 at the Naval Submarine League symposium.
What Comes After the Columbia-Class Sub
The Pentagon’s Nuclear Posture Review calls for “a minimum of 12” new Columbia-class SSBN submarines to replace the Ohio-class boomers. “What we are going to do is we are going to keep the Columbia [production] line hot after the 12th Columbia is produced and that gives the option” to build more than 12,” Tammen said. “If U.S. Strategic Command doesn’t need more than 12 of the new submarines, then the Navy is “looking at what we call the Large-Volume Host Platform,” he said. “There will be payload volume and there will be ability to host vehicles onboard inside that center section.” Mind you that that decision on building more subs won’t likely come until the 2040s. That’s when the Navy is supposed to get its last Columbia-class submarine, according to a chart that Tammen presented at the conference.
Another Pentagon Leader Pushes for More Secrecy
A Navy admiral argued that DoD’s public budget documents give away too much to potential adversaries. “Russia and China are doing everything in their power to try to take advantage of the undersea domain — to try to reduce the superiority that we’ve spent decades trying to establish,” Rear Adm. John Tammen, director of the undersea warfare division of office of the Chief of Naval Operations, said Nov. 8 at the Naval Submarine League conference.
Tammen continued: “We have to stop telegraphing our budgets. I took a couple of slides out of my brief because I do think they provide a little too much telegraphing. We do need to maintain that edge and one way of doing that is not to tell the adversaries what we’re doing.”
That follows a 2017 memo from CNO (and fellow submariner) Adm. John RIchardson, who wrote that all hands should be warier of what they reveal in public forums. But that drew instant blowback from Capitol Hill, where Congress said it was making it hard to make the case for larger military budgets.
Tammen’s words also fly in the face of what Rep. Adam Smith, D-Wash., the incoming chairman of the House Armed Services Committee, argued in a column in Defense One: that increased Pentagon secrecy is hurting national security.
As well, Kingston Reif, director for disarmament and threat reduction policy at the Arms Control Association, points out that the Government Accountability Office’s latest assessment of nuclear weapons spending is “thin” because the Pentagon classified its estimates. Here’s a previous GAO assessment.
Congressman Concerned About Chinese Solar Panels
Rep. Tom Marino, R-Penn., wrote in an Oct. 24 letter to Energy Secretary Rick Perry that he is alarmed by the introduction of Huawei-made power inverters in the United States. “Given the United States’ history of exercising caution in dealing with Huawei, I am concerned that the company’s entrance into large-scale and residential solar markets may pose a threat to our nation’s energy infrastructure,” Mario writes. The U.S. needs to “remain vigilant in ensuring the control mechanisms of utility-scale and residential solar systems receive the same protections as other parts of the power grid.” The Pentagon has banned the sale of Huawei-made mobile phones on its bases.
Jay Gibson, the Pentagon’s chief management officer, has resigned his post as of Nov. 30 and just nine months on the job. It ends more than two months of speculation about Gibson’s fate after the Wall Street Journal reported he was being fired.
Former Air Force Secretary Deborah Lee James has joined the board of Firefly Aerospace, developer of orbital launch vehicles for the small to medium satellite market. James also serves on the board of Textron among organizations and firms.
Price Floyd, who ran public affairs at the Pentagon early during the Obama administration, has joined the C|T Group as director of campaigns and communications of its Washington, D.C., office C|T|F Global.
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