Esper’s broad Pentagon review; Prices fall on two weapons; Counter-drone lasers and more.

It’s that time of year when I lament the busyness of August, the month everyone in Washington calls slow just because Congress is (mostly) out of town.

Let’s begin: Defense Secretary Mark Esper has ordered a “comprehensive zero-based review of all defensewide functions and activities,” according to an Aug. 2 memo to Pentagon officials from Deputy Defense Secretary David Norquist, who is conducting the review. “The immediate goal of this review is to identify time, money, and manpower resources that can be reallocated to our highest priorities in support of the National Defense Strategy through the FY 2021-2025 Program and Budget Review, as well as adjustments to FY 2020 where feasible.” (Our friends at InsideDefense first reported on the memo on Monday.)

The memo continues: “The review will also support a longer-term focus on structural reform, ensuring all [defensewide] activities are aligned to the [National Defense Strategy] while evaluating the division of functions between [defensewide] organizations and the Military Departments. This longer-term focus will produce additional savings in support of future budget cycles.”

Such reviews are not unusual for new defense secretaries. A decade ago, new-on-the-job Robert Gates killed several major projects, including further production of the F-22 fighter jet.

Next up: The Pentagon’s research-and-engineering shop is only a year and a half old, but it already has a new top priority: 5G networking. The high-speed wireless protocol appears to be displacing hypersonics, which R&E Undersecretary Mike Griffin last year called his “highest technical priority.” Griffin announced the elevation of 5G — hotly pursued by China — this week at the annual Space and Missile Defense Symposium in Huntsville, Alabama, our friends at Breaking Defense report

Thirdly, acting Air Force Secretary Matt Donovan and acquisition head Will Roper have penned an oped extolling the advantages of Section 804, the legislation that allows the Pentagon to fast-track acquisition projects. A few months, Roper spoke of the advantages of these authorities here. The latest oped comes as Congress is looking to slow the Air Force’s use of these fast-track authorities to buy new engines for the B-52 bomber.

And finally, on Aug. 2, Congress passed and President Trump signed the Bipartisan Budget Act of 2019, which substantially raises the Budget Control Act spending caps. That clears total defense spending to be $738 billion in fiscal 2021 and $740 billion in fiscal 2021. Seamus Daniels and Todd Harrison at the Center for Strategic and International Studies have a great breakdown of everything you need to know about the budget deal.

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From Defense One

Former Defense Secretary Mattis Is Returning to General Dynamics Board // Marcus Weisgerber

The retired general had been a member of the defense contractor’s board until he became defense secretary in January 2017.

With China, Russia in Mind, Pentagon Adding Stealthy Cruise Missiles // Marcus Weisgerber

Lockheed Martin is building a new factory to accommodate the military’s demand.

DARPA Is Taking On the Deepfake Problem // Jack Corrigan

The agency wants to teach computers to detect errors in manipulated media using logic and common sense.


The State of the Pentagon’s Acquisition Programs

One way the Pentagon and Congress judge whether weapon programs are on or off track are the annual assessments known as the Selected Acquisition Reports. Called SARs (no relation to the disease that spread globally in 2003), they chart how a project’s cost estimate has changed over the past year. That’s important information. The latest estimates were released late last week. Here are a few highlights:

Big picture: Last year, the Pentagon had a total of 83 major programs on the books, whose estimate cost was $1.9 trillion. This year there are 87, with a total estimated cost of just over $2 trillion. This doesn’t necessarily implicate, say, poor contractor performance; for one example, the Pentagon is buying more missiles and bombs than anticipated last year.

The F-35 is the most expensive program on the list. Although the U.S. Defense Department and Lockheed Martin like to say that the cost of buying a new F-35 Joint Strike Fighter is declining, the program’s total estimated cost over decades is up more than $22 billion. The total cost of developing and buying 2,470 jets for the U.S. military is now estimated at $428 billion. (Bloomberg first reported the F-35 projections in April.)

The increase is largely due to the projected cost of upgrading and modernizing hundreds of F-35s already built and flying combat and training missions around the world. The rise is also in part to cost estimates related to ALIS, the computerized logistics system needed to operate the plane, and the cost of installing equipment that would allow the stealthy jet to carry nuclear weapons.

Here’s the F-35 program office’s response to the SAR, provided in an emailed statement:

“The F-35 program remains within all cost, schedule and performance thresholds and continues to make steady progress.…[T]he JPO is implementing innovative acquisition strategies and incentive structures to accelerate the cost-effective and timely delivery and support of warfighting capabilities, as well as embracing the rapid adoption of new technology. This provides a striking balance between aligning technology and business elements.”

Some programs are expected to cost less. Take the Army’s Oshkosh-made Joint Light Tactical Vehicle, which saw its total cost estimate decline from $28 billion to 25.7 billion “due primarily to a revised estimate for vehicle and kit costs based on unit cost data from the current contract.” The estimated price tag for the MQ-25 Stingray refueling drone dropped from $15.2 billion to $13.1 billion “due primarily to a revised estimate to align to the fixed price contract awarded [to Boeing] on August 30, 2018” and revised cost estimates.

Buying two new Air Force One aircraft is expected to cost $5.2 billion, the SAR confirms. As we wrote when this figure emerged in March, “Air Force officials have always privately conceded that the program was going to cost more than the $3.9 billion figure touted by the White House last year, when the Air Force signed a deal with Boeing to convert two 747s it purchased in 2017 into Air Force One configuration. Now the projected costs are out in the open.”

It’s been three years since the last SAR press briefing. The Pentagon used to gather reporters before the SARs’ annual release so defense officials could explain the data and the oft-complicated reasons for cost-estimate changes. That hasn’t happened since 2016. And while we’re asking, the public would benefit from receiving more of the detailed, program-level SAR reports that the Pentagon usually calls “For Official Use Only.” Such documents would shed light on individual programs — and as well, show how their costs are changing as the Office of the Secretary of Defense delegates responsibility to the individual military services.

Another question I’ve pondered: Are there SARs for classified programs, like the B-21 bomber? I asked Pentagon acquisition officials during one of the backgrounders several years ago, but never got a straight answer, if memory serves me correctly. I recall one official saying that Congress is kept apprised of the performance of classified programs, but no one would confirm whether there are classified SARs.

State Clears MH-60R Sale to South Korea

Just in time for U.S. Defense Secretary Mark Esper’s visit to the peninsula on Thursday, State Department officials cleared the export of 12 of the Lockheed Martin-made submarine-hunting “Romeo” helicopters on Wednesday. The deal is valued at $800 million.

Boeing Gets $55M Contract to Fix KC-46 Boom

The deal, announced on Aug. 2, is for “system level hardware and software critical design review of the boom telescope actuator redesign.” Here’s the background on the KC-46 tanker’s boom problems, which are part of the reason the Air Force has been so slow to accept the aircraft from Boeing.

Air Force to Deploy Raytheon Counter-Drone Laser

Two prototypes are heading overseas for “in-field operation against unmanned aerial systems and operator training,” the company said. We first told you about the “high-energy laser weapon system” in 2018 when Raytheon showed it off at the Farnborough Air Show. The company developed the ATV-mounted laser system on its own dime. 

Speaking of counter-drone systems, the U.S. Army has awarded Lockheed a contract for three Q-53 radars, which can, among other flying objects, track drones. Northrop Grumman has been awarded a contract to build a laser weapon prototype for the Army’s Stryker.

The F-35 Can Now Guide Army Missiles

An F-35 successfully tracked “enemy” missiles and fed the data to the Army’s integrated air and missile defense Battle Command System, which guides interceptor missiles. The test, during a recent Orange Flag exercise, follows a similar test in which an F-35 passed missile-tracking data to the Navy’s AEGIS combat system, which guides ship-launched interceptor missiles. 

Boeing Pushing F-15EX in New Video

In a minute-long clip, the company’s chief test pilot talks about new digital fly-by-wire controls for the latest version of the decades-old jet. (The Air Force’s current F-15Es have mechanical controls). We’ll learn the fate of the F-15EX when Congress finishes its conference on the 2020 defense budget.

Companies Invest in CapEx

Lockheed Martin has opened a 30,000-square-foot missile supply facility that employees 125 people in Lufkin, Texas, according to an Aug. 7 statement. People there build circuit cards and wire harnesses for the Guided Multiple Launch Rocket System, Patriot Advanced Capability-3 missiles, Terminal High Altitude Area Defense, and Tactical Missile System.

Boeing opened a $115 million, 350,000-square-foot facility near Philadelphia to build fuselages for and upgrade V-22 Ospreys, the company said. Boeing jointly builds the V-22 with Bell.

On Wall Street

Morgan Stanley analyst Rajeev Lalwani upgraded Northrop Grumman shares to overweight (buy) from equal weight (hold) with a $418 price target. NOC was trading at $369 on Thursday morning. He also listed the new L3Harris Technologies at overweight with a $259 price target. LHX was trading at $212 on Thursday morning.

Making Moves

James Mattis is returning to the board of defense contractor General Dynamics, a position he held until becoming the defense secretary in January 2017.

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