2020 defense spending outlook: ¯\_(ツ)_/¯; Don't forget the budget caps; F-35 combat tests start; and more...

The talk of the town is the Pentagon’s fiscal 2020 budget request, due to the Hill in just two months. To review: Just a few weeks back, everything seemed to be pointing toward the planned $733 billion request. Then the White House instructed the Pentagon to cut that request to $700 billion as part of a larger federal spending cut of 5 percent. And last week, after meeting Pentagon and congressional leaders, President Trump has reportedly told the Pentagon to up the ask to $750 billion.

Here’s the problem: defense spending is capped at $576 billion in 2020. We’ll add $73 billion in Overseas Contingency Operations funding (OCO is exempt from the caps), bringing the rough total to $650 billion — about $100 billion less than Trump’s new number.

“While floating the $750b is clearly a positive since it indicates that the defense hawks are once again winning over the deficit hawks, all of these numbers are part of a negotiation,” writes Citi’s Jon Raviv.

“We urge caution,” writes Cowen’s Roman Schweizer. “While the higher number is a positive indicator, it is only an opening bid. Defense spending won't be final until Republicans and Democrats strike a spending deal next year.”

And here’s an odd thing about the topline negotiations, two months out from pencils down: the public usually doesn’t hear about them. Not this far out. It’s the first time in my memory that negotiations are playing out in public between the White House and Pentagon.

Gordon Adams, who ran defense budgeting during the Clinton administration, puts it this way: “At this stage in the process, none of these numbers are real.”

Have no fear, we’ll keep covering the latest twists and turns that play out over the next two months.

Welcome

You’ve reached the Defense One Global Business Brief by Marcus Weisgerber. Have you finished your holiday shopping? Send your tips, feedback or Christmas lists to mweisgerber@defenseone.com or @MarcusReports. Check out the Global Business Brief archive here, and tell your friends to subscribe!


From Defense One

Test Validates New US Interceptor for European, Japanese Missile Shields // Marcus Weisgerber

In a first, an SM-3 shot down an intermediate-range ballistic target.

The F-35 Is About to Get A Lot Smarter // Patrick Tucker

A California company is looking to accelerate the Defense Department's embrace of artificial intelligence, starting with some of its most important aircraft.

'I Am Proud to Shut Down the Government,' Trump Says During Fight with Democrats // Eric Katz

The president made his position clear, saying he will "take the blame" if some federal agencies close.


Talkin’ Budget With Todd Harrison

The defense establishment in This Town listens to Todd Harrison, director of defense budget analysis at the Center for Strategic and International Studies. So I was delighted that he joined me this week for a taping of our Defense One Radio podcast. Here are some excerpts from our discussion:

Q. What's going on here? Is anything real anymore?

A: This is really awkward. Here we are in December. The budget request is going to come out in February. Normally at this point in the game the White House and the Pentagon are pretty tight-lipped about the budget. It is highly unusual to have a public negotiation going on like this within the administration and within the president's own party over the defense top line. And we're looking at a range here between $700 billion and $750 billion. That's about a 7 percent spread, which is pretty significant if you're actually trying to put all the details into the budget to make it add up to that top-line figure. So this is just chaotic. This is really unprecedented. And I think it means that nothing is really decided yet.

Q. I’ve read some articles saying this is a classic Trump negotiating tactic. There’s about $100 billion between that cap level and what Trump will now reportedly ask for, Maybe you split the difference and get the $700 billion he was asking for just a few weeks ago?

A. The only concrete number we have is that $576 [billion] number because that's already enacted into law. OCO funding doesn't count towards that budget cap and the deadline for changing that $576 billion number is actually not until Jan. 15, 2020. That's when sequestration would go into enforcement. So for example, let's just say they couldn't reach any agreement this year...We start Oct. 1, 2019, the new fiscal year, on a continuing resolution at the current level of funding, which is $716 billion, minus OCO funding. If you then project that through to Jan. 15, 2020, let's say we're still on a C.R. at that time, it would trigger about a 10 or 11 percent sequester across all the applicable defense accounts.

Q. What’s the budget level that you think is needed to support the National Defense Strategy that was laid out earlier this year?

A. You could completely fail to implement the National Defense Strategy. The truth is it's not about a top line. It's about how you spend it. It's about what you're putting the money towards. And you know that's going to be the interesting thing, to see in this budget request, is do they actually shift investments? Do they shift force structure to better align with the national defense strategy, because the NDS clearly prioritizes great power competition. China and Russia, the threats that we face from those countries. And if you're going to prioritize those things, that means you have to de-prioritize other parts of your force structure and other types of weapons systems that aren't relevant to great power competition. So that's what we should be looking for in the budget request. Regardless of what top line they actually come in at.

Stuff Pentagon People Say

Here’s a list of more than 100 words, phrases and acronyms used — oftentimes excessively — by people who work in “the building.” This list is comprehensive, yet as we found out on Twitter this morning, far from complete. After all, the whiteboard is only so big. Where did it come from? Joy Shanaberger, an aide to Frank Kendall, former undersecretary for acquisition, technology and logistics, put it together during her time in the Pentagon. It’s a few years old, but some things in the Pentagon never change.

F-35 Begins Operational Testing

The F-35 Joint Strike Fighter is beginning operational testing, even though U.S. jets have already been deployed and the Marine Corps and Israelis have already dropped bombs on enemy forces (the former, in Afghanistan; the latter, in Syria). The planes “will be field tested, under realistic combat conditions, for the purposes of determining the weapons systems’ operational effectiveness and operational suitability for combat,” the F-35 program office said in a statement. The test will “measure the effectiveness, suitability, lethality, survivability and overall mission capability of the F-35.” Data from the tests will be used by Pentagon officials to decide whether the plane is ready to enter full-rate production.

Contracts of Note

Northrop Grumman received a $450 million deal on Dec. 6 for Joint Threat Emitter equipment, training gear that simulates surface-to-air missile batteries and other types of weapons that could be dangerous to planes. The deal is for U.S. and foreign militaries, which were not identified in a contract announcement. Saudi Arabia ordered the system back in February.

Boeing received a $159 million order (also on Dec. 6) from Japan for a second KC-46 aerial refueling tanker, a follow-up order to the initial one in December 2017. Japan is the first foreign country to buy the KC-46, which is based on the commercial Boeing 767. It also has four older Boeing 767-variant tankers that it bought last decade.

Sierra Nevada received a $329 million deal on Nov. 28 for 12 A-29 Super Tucanos for the Nigerian Air Force. The planes will be built in Jacksonville, Florida, where Sierra Nevada and Embraer built Super Tucanos for the Afghan Air Force.  The State Department approved the Nigeria A-29 sale in August 2017.

Reporter-turned-Boeing Exec to Receive Aerospace Award

John Morrocco, journalist with Aviation Week & Space Technology turned Boeing PR man has been posthumously awarded the 2018 Lauren “Deac” Lyman award for outstanding achievement in aerospace communications. Morrocco died unexpectedly in July. He was honored at an AIA event on Wednesday evening.

Making Moves

Lt. Gen. Arnold Bunch, the Air Force’s top uniformed acquisition official at the Pentagon, has been nominated for his fourth star and to lead Air Force Materiel Command, which has been without a leader since Gen. Ellen Pawlikowski retired in September.

Maj. Gen. Duke Richardson has been nominated to become the Air Force’s military deputy for acquisition, Bunch’s current job. That position comes with a third star. Richardson is currently in charge buying new Air Force One aircraft. ICYMI: Here’s the Air Force’s explanation about how plans to save $1.4 billion on the two new planes.

Bruce Tanner, Lockheed Martin CFO, will retire next year. Kenneth Possenriede will replace Tanner on Feb. 11. Possenriede is vice president of finance and program management at Lockheed’s Aeronautics business.

Lisa Hershman, the Pentagon’s deputy chief management officer, is now the Pentagon’s acting chief management officer, following John Gibson’s departure.

Alberto Gutiérrez has been appointed head of military aircraft within Airbus Defence and Space, effective Jan. 1. He will also serve as head of Airbus Spain. He will replace Fernando Alonso who is retiring about 40 years in the aerospace industry.

Michael Mullen, former Chief of Naval Operations, has been named advisory board chairman of TechMet Limited, a private industrial company that is building controlling or significant minority positions in world-class projects across the technology metal supply chain.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.