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January 9, 2012

January 9, 2012




Cyber spies try probing U.S. drone plans

By Aliya Sternstein 01/03/12

China-based hackers for months have been targeting federal agencies and contractors through infected emails apparently to spy on the Pentagon’s drone strategy and other intelligence matters, according to Internet security researchers.

The reported espionage employed a tactic known as spear-phishing where infiltrators, operating under the guise of a legitimate sender, email specific victims a virus-laden file or link. In this case, the hackers used email addresses from military and other government organizations, Jaime Blasco, manager of AlienVault Labs, said Tuesday.

Some emails went to employees at U.S. military contractors, he said, but declined to discuss any information related to specific victims.

The lab traced samples of the malicious software to network addresses in China, AlienVault disclosed last month.

Blasco has since discovered from the same spies separate malware that is capable of overriding Pentagon smart card credentials, known as the Common Access Card, to get into protected resources, he said Tuesday. In addition, the intruders have been pursuing other government organizations with information of interest to Chinese intelligence operations — including the General Services Administration, the U.S. government’s buying arm, and the Central Tibetan Administration.

“After studying all these attacks and all the methods used, we can conclude that they are likely the same group behind all these attacks,” Blasco said.

The Chinese government is believed to sponsor cyber strikes on U.S. assets regularly, with the Office of the Director of National Intelligence reporting in November 2011 that “Chinese actors are the world’s most active and persistent perpetrators of economic espionage.”

The thinking is that the authors of the virus are snooping on the U.S. government’s plans for remotely piloted aircraft by infiltrating the computers of the aircrafts’ designers. “In most of the campaigns the malware dropped displays some document or media attractive to the victim,” Blasco reported last month. One server consistently sent viruses showing drone images labeled as Defense Department media; computer-generated drone renderings; and Boeing Co. drone prototypes. The campaign appears to have been running since at least September.

This particular malware, called Sykipot, works by injecting itself into a victim’s browser or email account and then following orders from the hacker’s command-and-control server, Blasco said. The intruder is capable of ordering the virus to extract documents or insert phony materials, for example. As of December 2011, only a couple of thousand server programs were running these files online and nearly 80 percent of them were located in China, he said.

The outsiders apparently tried to hide their footsteps by redirecting commands through hacked U.S. servers. “If someone is seeing that traffic, for instance the security team of the victim organization, it will look less suspicious,” he said.

“We shouldn’t jump to assumptions but whoever is behind Sykipot is massively collecting information from targeted victims that covers dozens of industries,” Blasco wrote in December. There are several clues pointing to China. At least six Chinese network locations, or IP addresses, were hosting the command-and-control servers, he found. In addition, one of the tools the authors used to package the email campaigns contained message errors in Chinese. Also, all the documentation to set up the framework for running the server software is written in Mandarin. And most of the Web addresses displaying the images were registered on Xinnet, a Chinese domain name seller.

This is not the first time cybersecurity researchers have uncovered evidence of a single operative undertaking aggressive surveillance of military contractors. In 2011, McAfee investigators reported that during a targeted five-year operation, one specific entity penetrated the computers of 72 global organizations, including six federal agencies, 13 defense contractors and two computer security companies.

Pentagon officials were not immediately able to comment.

A GSA spokesman said in a statement, “like every federal agency, we’re constantly on the lookout for new attacks against our systems. We’ve successfully used best-in-class techniques and safeguards to prevent inappropriate access to our systems and continually educate our employees to be on the watch for phishing scams.”


New Pentagon defense strategy puts more focus on Asia

By David Alexander and Phil Stewart

Reuters – 5 Jan 2012


WASHINGTON (Reuters) – President Barack Obama unveiled a defense strategy on Thursday that calls for greater U.S. military presence in Asia and envisions cutting troops in Europe as the Pentagon seeks to reduce spending by nearly half a trillion dollars after a decade of war.

Obama, in a Pentagon news conference alongside Defense Secretary Leon Panetta, released a strategy document that calls for the United States to maintain a force that can win one war while still having the capability to deter the objectives of an adversary in a second conflict.


That is a shift away from the military’s often repeated goal of being able to fight and prevail in two wars in different theaters simultaneously.


The strategy also calls for the U.S. military to “rebalance toward the Asia-Pacific region” even as it continues to actively counter the threat of violent extremism.

“Even as our troops continue to fight in Afghanistan, the tide of war is receding,” Obama said at the news conference. “Even as our forces prevail in today’s missions, we have the opportunity – and the responsibility – to look ahead to the force we need for the future.

“Our nation is at a moment of transition,” Obama wrote in the introduction to the strategy, which also calls for increased investment in cyber capabilities and suggests the United States may be able to shrink its nuclear arsenal further without jeopardizing security.

The shift in focus to Asia comes amid increasing concern at the Pentagon over China’s strategic goals as it begins to field a new generation of weapons that could prevent U.S. naval and air forces from projecting power into the Far East.

Obama initiated the strategic review last summer after asking the Pentagon to begin planning for major cuts to the U.S. defense budget after a decade of growth. The strategy is meant to identify U.S. strategic priorities and guide defense spending as the military begins to cut back.

Obama and Congress agreed in August to reduce projected national security spending by more than $450 billion in the next decade. They also agreed on automatic spending cuts that could slash another $600 billion from the Pentagon budget unless Congress agrees on an alternative.

The strategy document released on Thursday addressed U.S. interests in broad brush-strokes but did not get into specifics about how many troops would be reduced or deal with specific budgetary issues.

But administration officials speaking before the roll-out of the strategy on Thursday said Army and Marine Corps personnel numbers would be cut by 10 percent to 15 percent in the next decade, a figure that translates into tens of thousands of troops.

The strategy underscores the United States’ “enduring interests” in Europe and the importance of the North Atlantic Treaty Organization but says the force posture in Europe must “evolve” with the changing times.

Administration officials have said the United States is likely to further reduce the number of ground forces in Europe by another combat brigade, a unit of 3,000 to 4,000 people depending on its composition.

The strategy document underscores a U.S. interest in maintaining stability in the Middle East while responding to the aspirations of the people as expressed in the Arab Awakening last year. It also says the United States will continue working to halt nuclear programs in Iran and North Korea.

“U.S. policy will emphasize Gulf security, in collaboration with the Gulf Cooperation Council countries when appropriate, to prevent Iran’s development of a nuclear weapon capability and counter its destabilizing policies,” the strategy document says.

The document expresses concern about new weapons being developed by China and Iran that could make it difficult for the United States Navy and Air Force to project power abroad.


“The United States must maintain its ability to project power in areas where our access and freedom to operate are challenged,” it says.



Smart Grid Security Inadequate, Threats Abound


– Mark Rowh, CIO

January 04, 2012

Near chaos. That’s the current state of security for smart grids, according to Pike Research. A recent report by the research firm finds that a lack of security standards, a hodgepodge of products and increasingly aggressive malicious hackers will make 2012 a challenging year for securing smart grids. (A smart grid uses IT and smart meters in an effort to make electric utilities more efficient, reliable and sustainable.)

“After years of vendors selling point solutions, utilities investing in compliance minimums rather than full security, and attackers having nearly free rein, the attackers clearly have the upper hand. Many attacks simply cannot be defended,” says Bob Lockhart, an analyst at Pike Research.

But he adds: “There is hope.” Lockhart says there’s a “dawning awareness by utilities during the past 18 months of the importance of securing smart grids with architecturally sound solutions.”

Smart-grid pioneer Andres Carvallo, a former CIO at Austin Energy and co-author of The Advanced Smart Grid: Edge Power Driving Sustainability (Artech House, 2011), says security is a complex situation. He notes that a fully secure smart grid requires secure edge devices, secure networks, secure data centers and secure applications.

Looking at the current state of affairs, Carvallo says “security from the application data center to the utility sub-station is pretty good.” However, he says “security from edge devices back to the sub-station and/or data center needs a lot of work.”

The hackers aren’t waiting. “Development of cybersecurity solutions and standards has somewhat stalled, while the attackers are steaming ahead at full speed,” Lockhart says. “While we do have lots of good point solutions available,” he says, “they are just that: point solutions.” The problem is that hackers find the gaps between those products.

Lockhart says that, outside of defense agencies, it’s rare to find a utility with a well-planned smart grid security program that integrates those products into a working whole.

There’s also a danger of overlooking the insider threat. “Most people believe smart grid security is for only viruses and worms from hostile governments and terrorist groups,” says Joshua Flood, an analyst at ABI Research. “However, one of the main reasons for increased spending on smart grid security software and management systems is simply to make sure the correct people have access to the equipment and systems they should have access to.” Among other things, this means protecting systems from disgruntled employees or others who might commit internal sabotage, Flood says.

Security Standards Need Teeth

The Pike Research report suggests that the lack of enforceable security standards or regulations for power distribution grids “leads to a scene of mass chaos in utility cybersecurity” and will cause utilities to take a wait-and-see approach to significant security investments.

So far, most utilities are focusing on the North American Electric Reliability Corp.’s critical infrastructure protection program (NERC CIP), which applies only to generation and transmission and is the only current standard that has “the teeth to result in fines for noncompliance,” the report says.

But utilities should look beyond regulatory compliance and take a more holistic, risk assessment approach, analysts say. Utilities need to establish (and continually refine) an “organization-wide risk management program, policies and processes to prepare for, react to, and recover from adverse cybersecurity events,” says Marianne Swanson, senior advisor for information system security at the National Institute of Standards and Technology (NIST).

NIST and other government agencies have written useful documents about power grid security and risk management, but the Pike Research report notes that they are merely recommendations.

To complicate matters further, there are differences between the security standards in the U.S. and the rest of the world, Flood says.

“We need similar standards worldwide, and although organizations such as the European Union’s Smart Grid Coordination Group are working with NIST closely, we still need greater progress in Europe on smart grid security,” he says. “However, with current economic problems in the euro zone, less effort and time will be spent on the smart grid than needed.”

Securing industrial control systems such as SCADA (supervisory control and data acquisition) also remains a challenge for utilities, according to Lockhart, but there is little agreement about what to do about it.

A major factor, Lockhart explains, is that many SCADA systems were deployed without any security whatsoever in the mistaken belief that SCADA would always be isolated from the Internet.

“Even when it is, attacks such as Stuxnet can circumvent the isolation by using USB memory sticks to spread,” he says. He adds that SCADA networks can have many old serial protocol devices that have no hope of running any security software, let alone producing event logs for forensics.

Technical Fix for Security Risks?

“There are lots of good technologies available now but none is a silver bullet,” Lockhart says. “As with any environment, security requires risk assessment, policies, and an architecture before you start specifying products.”

That said, Lockhart lists five promising technologies for utility cybersecurity over the next few years:

  1. Multi-factor authentication: This will help ensure that a stolen password is not enough to allow an attack against a grid or a control console from the other side of the world.
  2. Control network isolation: A firewall can make sure that enterprise IT traffic does not end up on the utility’s control network.
  3. Application white-listing: White-listing prevents the execution of malware by identifying “a list of permitted actions on a host and allows nothing else,” says the Pike Research report.
  4. Data encryption at rest and in transit: This approach not only protects data confidentiality, it also helps ensure the integrity of data from devices such as smart meters, temperature sensors and flow meters.
  5. Event correlation: This can be especially useful for identifying the source of attacks and in some cases preventing them.

People Biggest Security Problem

Perhaps the biggest security hurdle facing utilities is the cultural divide between IT teams and utility operations teams, says Lockhart.

“One side understands how enterprise IT networks operate,” he says. “The other side understands how distribution and transmission grids function. There is not that much overlap between the two, but each has the opportunity to make the other’s life truly miserable.”

Lockhart observes that the most progressive utilities have realized that cybersecurity discussions must include both IT experts and operations experts, but other utilities are lagging in this regard.

“From my research, there are still some utilities where those two teams are not on speaking terms,” he says. “Many security vendors tell me that when they visit utilities, they are only seeing the CIO or chief security officer.”

Mark Rowh is a freelance writer based in Virginia.


Ohio earthquake was not a natural event, expert says

Tue, Jan 3 2012

By Kim Palmer

CLEVELAND (Reuters) – A 4.0 magnitude earthquake in Ohio on New Year’s Eve did not occur naturally and may have been caused by high-pressure liquid injection related to oil and gas exploration and production, an expert hired by the state of Ohio said on Tuesday.

Ohio’s Department of Natural Resources on Sunday suspended operations at five deep well sites in Youngstown, Ohio, where the injection of water was taking place, while they evaluate seismological data from a rare quake in the area.

The wells are about 9,000 feet deep and are used to dispose of water from oil and gas wells. The process is related to fracking, the controversial injection of chemical-laced water and sand into rock to release oil and gas. Critics say that the high pressure injection of the liquid causes seismic activity.

Won-Young Kim, a research professor of Seismology Geology and Tectonophysics at the Lamont-Doherty Earth Observatory at Columbia University, told Reuters in an interview on Tuesday that circumstantial evidence suggests a link between the earthquake and the high-pressure well activity.

“We know the depth (of the quake on Saturday) is two miles and that is different from a natural earthquake,” said Kim, who is advising the state of Ohio.

Data collected from four seismographs set up in November in the area confirm a connection between the quakes and water pressure at the well, Kim said.

“There is circumstantial evidence to connect the two — in the past we didn’t have earthquakes in the area and the proximity in the time and space of the earthquakes matches operations at the well,” he said.

A spokesman for Ohio Republican Gov. John Kasich, a strong supporter of oil and gas exploration in the state, said Ohio could announce a preliminary decision whether to continue the suspension of the wells as early as Wednesday.

The state was already looking into the cause of earlier seismic activity from 10 previous earthquakes, beginning in March, 2011.

According to Kim, this is not the first time Ohio tremors have been linked to human activities. “We have several examples of earthquakes from deep well disposal in the past,” Kim said.

A quake of 4.2 magnitude in Ashtabula, Ohio, on January 26, 2001, was believed to be due to deep-well injection, he said. And in 1987 there was an incident with a correlation to high pressure deep well injection, he said.

There are 177 so-called “class two” deep wells in Ohio, according to Tom Stewart, executive vice president of Ohio Oil and Gas Association. They all operate under federal guidelines spelled out by the Clean Water Act.

There is no evidence that the wells in Youngstown were operating at higher pressures than allowed, Stewart said.

“We haven’t seen anything from anyone at (the state agency) that would lead us to believe that the well was not operating properly,” he said.

Kim said that even though the wells have stopped pumping water into the rock, the area might not have experienced its last earthquake. “It could take a couple of years for the earthquakes to go away. The migration of the fluid injected into the rock takes a long time to leave,” Kim said.

Ohio’s Democratic Senator, Sherrod Brown, said the quick response by the state shows it is a serious issue.

“There are things we need to know about drilling and earthquakes,” Brown told Reuters on Tuesday.

Brown said he supports new energy exploration that brings jobs to the state but has questions about how companies will handle fracking and wastewater disposal. “They have got to answer the question of what they are going to do with the waste just like nuclear power,” Brown said.


Defense Android users will be able to browse Web and send messages securely

By Bob Brewin


Defense Department employees will be able to send and receive encrypted emails, browse the Web safely, and access security applications on their Android devices.

Good Technology has announced that its mobile management software is the first to be certified by the Defense Information Systems Agency for use with tablet computers and smartphones that employ the Android operating system.

The software was initially approved for use with the Dell Streak 5 tablet computer; Good has started partnering with other hardware companies to help them win DISA certification.

Good’s software complies with a Defense Department policy setting a messaging standard known as secure, multipurpose Internet mail extensions. This standard requires use of cryptologic keys in conjunction with the Common Access Cards needed to enter military computers and networks, according to Good.

A DISA spokeswoman said the Good certification fits with the agency’s overall strategy to support mobile computing in a secure, enterprise environment.

Secure Android will wirelessly pass and manage sensitive data from Microsoft Exchange servers located in Defense Department data centers via Good’s email application to end-point Android devices using a Federal Information Processing Standard 140-2-validated cryptographic module with protection for data-at-rest as well as data-in-transit, Good said.


Obama unveils plans for pared-down military

By Charley Keyes, CNN Senior National Security Producer

updated 12:51 PM EST, Thu January 5, 2012


Washington (CNN) — President Barack Obama unveiled his administration’s plan Thursday for a leaner, cheaper military, a reflection of Washington’s fiscal belt tightening and slower national economic growth.

The president insisted the new strategy — which eliminates the military’s ability to actively fight two major wars at once — will allow U.S. armed forces to effectively combat terrorism while confronting any new threats from countries like China and Iran.

“Over the next 10 years, the growth in the defense budget will slow, but the fact of the matter is this — it will still grow, because we have global responsibilities that demand our leadership,” Obama announced during a rare presidential visit to the Pentagon. “I firmly believe, and I think the American people understand, that we can keep our military strong — and our nation secure — with a defense budget that continues to be larger than roughly the next 10 countries combined.”

Alluding to the end of the U.S. military role in Iraq and plans to eventually withdraw from Afghanistan, Obama declared that “the tide of war is receding.”

“The question that this strategy answers is what kind of military will we need after the long wars of the last decade are over,” the president told reporters. “Yes, our military will be leaner, but the world must know — the United States is going to maintain our military superiority with Armed Forces that are agile, flexible and ready for the full range of contingencies and threats.”

The president was flanked by an array of top Pentagon brass during his remarks, including Defense Secretary Leon Panetta and Joint Chiefs of Staff Chairman Gen. Martin Dempsey.

Republicans immediately blasted the plan, characterizing it as a retreat from the reality of America’s global responsibilities.

The blueprint is “a lead-from-behind strategy for a left-behind America,” declared Rep. Buck McKeon of California, GOP chairman of the House Armed Services Committee. “The president has packaged our retreat from the world in the guise of a new strategy to mask his divestment of our military and national defense. This strategy ensures American decline in exchange for more failed domestic programs.”

McKeon asserted that “in order to justify massive cuts to our military, (Obama) has revoked the guarantee that America will support our allies, defend our interests, and defy our opponents. The president must understand that the world has always had, and will always have a leader. As America steps back, someone else will step forward.”

Among other things, Obama’s strategy singles out China and Iran, pledging to keep strategically critical sea lanes open and successfully combat missile, electronic, cyber and other threats.

“States such as China and Iran will continue to pursue asymmetric means to counter our power projections capabilities, while the proliferation of sophisticated weapons and technology will extend to non-state actors as well,” an administration document outlining the changes said.

Thursday’s announcement follows multiple missile tests by Iran in recent days and comments by Iranian leaders that they could choke off the Strait of Homuz, a major transit point for world oil supplies.

The new strategy is the result of months of study at the Pentagon. It reflects a high-stakes, high-wire balancing act by the president as he faces a more austere budget climate combined with continued high U.S. responsibilities at home and overseas.

“The balance between available resources and our security needs has never been more delicate,” the administration document noted.

In a signed introduction to the document, Obama called this a time of transition, noting the successful raid on the Osama bin Laden compound and the death of the al Qaeda leader, as well as the end to the war in Iraq and progress in Afghanistan.

“The fiscal choices we face are difficult ones, but there should be no doubt, here in the United States or around the world — we will keep our Armed Forces the best-trained, best-led, best equipped fighting force in history,” Obama wrote.

Titled “Sustaining U.S. Global Leadership: Priorities for 21st Century Defense,” the document provides the bare bones of a defense strategy that will become more detailed as the White House and Congress prepare the 2013 budget.

In a signal of how carefully the administration had orchestrated this announcement in the midst of fiscal austerity as well as a presidential campaign year, the nation’s highest ranking military man also threw his weight behind the reforms.

“It is a sound strategy,” Dempsey said in prepared remarks. “It ensures we remain the pre-eminent military in the world. It preserves the talent of the all-volunteer force. It takes into account the lessons of the last 10 years of war.”

Dempsey referred to the political uproar over the change from a two-war policy.

“Our strategy has always been about our ability to respond to global contingencies wherever and whenever they happen. This does not change,” Dempsey said. “We can and will always be able to do more than one thing at a time. More importantly, wherever we are confronted and in whatever sequence, we will win.”

He said he was pleased with the outcome of the strategy review. “It’s not perfect,” Dempsey said, but added, “It gives us what we need, in this world and within this budget.”

Panetta also weighed in, noting in prepared remarks “the continuing threat of violent extremism, proliferation of lethal weapons and materials, the destabilizing behavior of Iran and North Korea, the rise of new powers across Asia and the dramatic changes in the Middle East,”

“The U.S. joint force will be smaller and leaner, but its great strength will be that it is more agile, flexible, ready to deploy, innovative and technologically advanced,” Panetta said. The secretary noted that while the United States will maintain its obligations in Europe, the U.S. military force posture there will continue “to adapt and evolve.”

Panetta also took on conservative critics who have blasted the administration’s apparent step back from an active two-war strategy.

“Make no mistake — we will have the capability to confront and defeat more than one adversary at a time,” he said.

The document released Thursday noted the high cost of a decade of wars, with more than 46,000 men and women wounded and more than 6,200 members of the armed forces killed.

In another recognition of hard economic times, the strategy includes a promise to help veterans find work in the civilian economy.

As the Defense Department “reduces the size of the force, we will do so in a way that respects these sacrifices,” the administration document noted. “This means, among other things, taking concrete steps to facilitate the transition to those who will leave the service. These include supporting programs to help veterans translate their military skills for the civilian workforce and aid their search for jobs.”

Defense contractors and civilian workers also will feel the impact of Thursday’s announcement and how it ripples through the system of defense contracts in coming years. Boeing has announced it will close a plant that produces B-52 and 767 tankers and employs more than 2,160 workers in Wichita, Kansas.

“The decision to close our Wichita facility was difficult but ultimately was based on a thorough study of the current and future market environment and our ability to remain competitive while meeting our customers’ needs with the best and most affordable solutions,” Mark Bass, Boeing vice president, said in a press release.


DARPA Aims to Repurpose Retired Satellites

Agency wants to send mini robots into space to recycle and reuse antennas from more than 1,300 dormant satellites in geostationary orbit above the earth.

By Elizabeth Montalbano, InformationWeek
January 04, 2012

The Department of Defense (DOD) wants to create a new satellite and robotic system to repurpose $300 billion worth of retired satellites that are currently sitting in geostationary orbit (GEO) over the earth.

Through its Phoenix program, the Defense Advanced Research Projects Agency (DARPA) will award $36 million to contractors to help it reuse some of the more than 1,300 satellites in GEO to create a new communications system for military personnel, according to a broad agency announcement posted on

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Their position in the GEO makes them prime targets for reuse because the satellites have large radio frequency apertures that can cover large areas of the earth’s surface, according to the announcement. The program hopes to send smaller, companion satellites into space to connect with the dormant satellites to reuse the apertures.

It won’t be an easy task. “Phoenix seeks to demonstrate around-the-clock, globally persistent communication capability for warfighters more economically, by robotically removing and re-using GEO-based space apertures and antennas from decommissioned satellites in the graveyard or disposal orbit,” according to the announcement.

To do this, the agency aims to build “satlets” or “nano satellites” that can hitch a ride to the GEO on a commercial satellite launch. In theory, they would then robotically attach to the antenna of a non-operational satellite and create a new space communications system.

The Phoenix program also aims to create a payload orbital delivery system (PODS) to securely send the satlets or nano satellites to the GEO on their missions. These would hook up in space with a separately developed satellite-servicing spacecraft in the GEO to robotically assemble the new communications system in space. New robotic tools such as mechanical arms to do the assembly are also part of the program’s vision.

DARPA aims to demonstrate at least one successful aperture repurposing using a robotic spacecraft between 2015 and 2016. Interested parties have until Feb. 6 to respond to the announcement.

DARPA has a number of programs ongoing to make better use of satellites, including one that aims to wirelessly connect a cluster of small satellites so they can communicate as one entity with facilities on the ground.

The agency also aims to make it less expensive to send smaller satellites like the one it will use for the Phoenix program into space autonomously through a new launch system rather than as part of the payload alongside larger satellites.


Boeing to close Wichita plant with 2,160 jobs


Wednesday – 1/4/2012, 9:10pm ET


Associated Press

WICHITA, Kan. (AP) – The Boeing Co., for decades the brand that helped support Wichita’s claim as the aviation capital of the world, announced Wednesday it will shut down facilities in the city by the end of 2013 and send work to plants in three other states as it deals with defense spending cutbacks.

The closure will cost 2,160 workers their jobs and end the firm’s presence in an area where it has been a major employer for generations.

The decision was not a surprise because Boeing said in November it was looking at closing the Wichita plant. But it still drew an angry response from Kansas lawmakers who helped Boeing land a lucrative Air Force refueling tanker project in February and had expected thousands of jobs to come to Wichita with it. Instead, the tanker work will go to Boeing’s facilities near Seattle.

“Boeing’s announcement is that things have changed,” U.S. Sen. Jerry Moran said. “Well, the only thing that really has changed in my mind in the last year is Boeing now has the contract. When they made the commitments, they didn’t.”

Mark Bass, a Boeing vice president, said the market for defense work has changed dramatically in the past 18 months and the Wichita facility wasn’t competitive because of its size and high labor costs. The site includes 97 buildings with 2 million square feet.

Bass declined to say how much the company expected to save by moving the work elsewhere.

Wichita had hoped the number of jobs at the facility would grow after Boeing won the contract worth at least $35 billion to build 179 Air Force refueling tankers. Modification work on the planes was expected to generate 7,500 direct and indirect jobs with an overall economic impact of nearly $390 million.

Boeing said 24 Kansas-based suppliers for the refueling tanker project will still provide parts as planned.


The first layoffs in Wichita are expected in the second half of 2012. While the Seattle area will build the tankers and handle their modifications, engineering work will move to Oklahoma City and future aircraft maintenance, modification and support will go to San Antonio, Texas.

The three states combined could pick up as many as 1,400 jobs, with Oklahoma City gaining 800 and San Antonio getting 300 to 400. The Seattle area will add 200 tanker construction jobs but about 100 support positions from there will move to Oklahoma City in the shuffle, Bass said. Wichita workers will be allowed to apply for jobs in the other locations.

Boeing said it will continue to have a significant impact on the Kansas economy and its aerospace industry. The Chicago-based company spent more than $3.2 billion with 475 Kansas suppliers last year. Kansas is the fourth largest state in its supplier network.

But that wasn’t enough for lawmakers like U.S. Sen. Pat Roberts of Kansas, who said Boeing had promised as recently as February to remain in Wichita if it received the tanker contract. Roberts and others urged the company to reconsider.

Moran called Boeing’s move “a blow to our mental health as well as our pocketbooks.” Kansas officials are still willing to do what it takes to keep the Boeing plant open, but “it’s difficult to negotiate with someone who hasn’t kept their word,” he said.

Republican Gov. Sam Brownback promised Kansas will pursue opportunities in commercial aircraft manufacturing. Aircraft makers like Cessna Aircraft Co., Hawker Beechcraft and Bombardier still have plants in Wichita, which Brownback said remains “the best place in the world to build airplanes.”

Kansas Democratic Party chair Joan Wagnon said the decision shows that throwing money at wealthy corporations doesn’t guarantee loyalty or longevity.

“Despite all the economic incentives and tax breaks, of which there were many, and despite the loyalty of Boeing’s workers and its long history in Kansas, Boeing turned its back on a community and a state that supported the corporation generously through tough times,” Wagnon said.

But the news was welcomed elsewhere.

“The decision of the Boeing Company to move tanker work to Washington is bitter-sweet,” said Everett Mayor Ray Stephenson, noting Wichita Mayor Carl Brewer’s support for an American-made tanker. “I was grateful for his support and am saddened for the workers and families in Wichita. That said, Everett stands ready to support additional aerospace work in the Puget Sound region.”

Brewer, who once worked for Boeing, said the disappointment in Boeing’s decision to abandon its 80-year relationship with Wichita and Kansas “will not diminish anytime soon.” The city, county and state have invested too many taxpayer dollars in Boeing to take the announcement lightly, he said.


Boeing has had a facility in Wichita since it bought the Stearman Aircraft Co. in 1929.


Employment at the plant peaked during World War II, when its 40,000 workers included President Barack Obama’s grandmother Madelyn Dunham, who worked the night shift as a supervisor on the B-29 bomber assembly line.


The company remained Wichita’s largest employer for decades after the war.


It still had about 15,000 workers in the city in 2005, when it spun off its commercial aircraft operations in Kansas and Oklahoma. After the divestiture, Boeing kept 4,500 workers for its defense work in Wichita but layoffs have since slashed that number.


Spirit AeroSystems, which took over Boeing’s commercial aircraft operations, still makes parts for Boeing in Wichita.


Jeremy Hill, director of Wichita State University’s Center for Economic Development and Business Research, said most Boeing workers are likely to stay in the area and find other jobs. But the company’s departure is a psychological blow.


“It was something that was very important to people here, something they recognized, something they would tell other people when they came and visited,” Hill said. “Boeing has that name that’s household and recognized, and it had a value to people when they promote the area.”


Defense technology to grow despite Pentagon budget cuts
By Bob Brewin 01/05/12

As the Defense Department slashes its budget by at least $487 billion in 10 years, technology investment is one of the few areas that will continue to grow, according to a new military strategy that President Obama and Pentagon officials released Thursday.

The increased spending will focus on cyberspace, intelligence systems, space and science research, according to the review.

President Obama told a Pentagon press briefing that Defense has to develop “smart, strategic priorities.” Specifically, he called for enhanced intelligence, surveillance and reconnaissance systems.

In his written introduction to the review, Obama said the new strategy will “ensure that our military is agile, flexible and ready for the full range of contingencies.” He added this includes investments to ensure that the United States can prevail in all domains of military operations, including cyberspace.

Defense Secretary Leon Panetta said broad cuts in the new Defense budget, due for release in late January, do not apply to investments in technology, including unmanned systems, space capabilities and “particularly cyberspace capabilities.”

Defense budgeted $3.2 billion for cybersecurity in 2012. The Pentagon, Panetta said, must continue to invest “in new capabilities to maintain a decisive edge.”

He declined to provide specific funding figures for any military programs, deferring that action until release of the 2013 Defense budget. But, Panetta said, the strategy will drive the structure of the budget.

Deputy Secretary of Defense Ashton B. Carter said the new strategy envisions budget increases in “all aspects of cyber,” along with science and technology research. Defense cannot abandon that research, Carter said, as it would be akin to “eating our seed corn.”

Highlighting the importance of networks and space systems in the future, the strategy document said: “Modern armed forces cannot conduct high-temp, effective operations without reliable information and communication networks and assured access to cyberspace and space. Today space systems and their supporting infrastructure face a range of threats that may degrade, disrupt or destroy assets. Accordingly, DoD will continue to work with domestic and international allies and partners and invest in advanced capabilities to defend its networks, operational capability and resiliency in cyberspace and space.”

Trey Hodgkins, vice president of national security and procurement policy at TechAmerica, an industry trade group, said the new military strategy reflects an increasing awareness within Defense that technology, including information technology, sits at the core of multiple missions, and the Pentagon has to continue to beef up investments in this area.

Obama pointed out that the new military strategy shifts the Pentagon focus from Europe and the Mideast to the Asia-Pacifc region, including a beefed-up U.S. force presence in Australia that he announced in November 2011.

“As we end today’s wars, we will focus on a broader range of challenges and opportunities, including the security and prosperity of the Asia-Pacific [region],” Obama wrote in his introduction to the review. This shift includes dealing with the growth of the military power of China, which should be balanced by greater U.S. military presence in the region, the document said.

Hodgkins said this increased focus on the Asia-Pacific region will boost the importance of the U.S. Pacific Command headquartered in Honolulu and will require greater Defense network capacity in the region.

Air Force to provide Special Ops flight crews with iPads

By Bob Brewin 01/03/12

The Air Force Special Operations Command plans to junk paper navigation charts and technical manuals and replace them with digital versions stored on Apple iPad tablet computers issued to every crew member. The shift from paper to digital materials follows similar moves by operators in the commercial aviation industry.

The command said in a Dec. 29, 2011, justification and approval notice that it plans to acquire 2,861 iPad 2s to serve as electronic flight bags for its crews. Air Force officials determined after a three-month product evaluation completed last fall that only the Apple tablet met the command’s requirements.

Command officials tested tablets in five aircraft, including the vertical takeoff and landing CV-22 Osprey, and determined that the iPad “outmatched all peer competitors — not only meeting but exceeding AFSOC mission specifications.”

The iPads will contain digital versions of National Geospatial-Intelligence Agency Flight Information Publications for navigation, which are updated as often as every month, and aircraft technical manuals. The transition to an electronic flight bag will cut printing costs and reduce the time needed to manually distribute paper versions, the notice said.

The Air Mobility Command conducted a test of electronic flight bags in 2011 and said it plans to make a decision this spring on using them in its entire fleet of cargo aircraft after it conducts an in-depth analysis. Maj. Gen. Rick Martin, director of operations for the command, said it “has been looking at tablet and mobile devices for several years as possible tools for increasing mission productivity, decreasing office automation costs and achieving other potential benefits such as portability and flexibility.”

Maj. Pete Birchenough, who ran the Air Mobility Command tablet computer flight test, said switching to digital products would cut down on the massive amount of paper manuals and flight charts carried on each aircraft, which he estimated to be about 70 pounds.

In May 2011, the Federal Aviation Administration approved the use of iPads as electronic flight bags for commercial carriers using digital navigation charts provided by the Jeppesen division of Boeing.

Last August, United Continental Holdings announced it will provide all 11,000 of its pilots with iPad electronic flight bags loaded with Jeppesen Mobile FliteDeck software that includes global navigation charts.

The Air Force Special Operations Command plans to equip its iPads with GoodReader software from Good.iware, which meets mission security requirements. GoodReader encrypts individual files to ensure data is secure even if an iPhone or iPad is lost or stolen. AFSOC said its iPads will be equipped with Wi-Fi communications for manual updates through a global network infrastructure.

The iPad procurement is not vendor specific and any Apple reseller can bid on the contract, the AFSOC notice said.


Shifts at Pentagon reflect dual realities of different threats, tighter budgets

By Yochi J. DreazenNational JournalJanuary 5, 2012


The Obama administration’s high-profile rollout of its new military blueprint for the years ahead was designed to do two very different things: mark a decisive shift away from manpower-heavy counterinsurgencies like Afghanistan and shield the White House from Republican criticism over its plans for significant cuts to the Pentagon budget.

The blueprint personally unveiled by President Obama on Thursday during an unusual visit to the Pentagon has far — reaching implications for the U.S. military, Washington’s friends abroad, and the defense industry – and its congressional protectors — here at home.

The document represents the administration’s clearest public expression to date of how it believes the U.S. should prepare to respond to major security challenges in an era of shrinking budgets. Military funding will fall by more than $450 billion in the years ahead; if automatic sequestration cuts take effect, it will lose roughly $500 billion more.

The new strategy is the product of a widespread view across the Pentagon’s military and civilian leadership that ground wars like Afghanistan are a thing of the past while air and naval conflicts with nations like Iran or China represent the most important threats of the future. The document explicitly said the Pentagon will shift military and financial resources away from Europe and toward the Middle East and Asia — Pacific regions.

Defense Secretary Leon Panetta and Joint Chiefs of Staff Chairman Gen. Martin Dempsey made clear that the new thinking would mean potentially significant cuts to the size of the Army and Marine Corps, as well as to expensive weapons programs.

“The U.S. joint force will be smaller and it will be leaner,” Panetta said. “The Army and Marine Corps will no longer need to be sized to support the kind of large — scale, long-term stability operations that dominated military priorities … over the past decade.”

Both men have previously indicated that the purchases of costly armaments like the F-35 Joint Strike Fighter, the most expensive warplane ever built, and several next-generation types of warships may be slowed or reduced to save money, though they offered no new details on Thursday.

Canceling or curtailing planned weapons buys is always difficult politically because lawmakers typically work to shield armaments built in their states as a way of saving jobs. It is likely to be even harder now because of election-year partisanship and legitimate concerns about the Pentagon taking steps that would almost certainly mean job losses at a time of deep economic weakness throughout the U.S.

Talk of reducing the size of the nation’s ground forces is likewise sparking fierce GOP criticism on Capitol Hill and from leading Republican presidential candidates like Mitt Romney, who has said – without specifying how he’d pay for it – that he’d expand the forces instead.

The politically perilous road ahead was clear from Panetta and Dempsey’s steadfast refusals to offer any concrete details about how many troops will be cut, what programs may be eliminated, and whether military pensions or benefits will be reduced. Instead, the two men said specifics about those contentious issues won’t be made public until the administration releases its budget proposals next month.

Obama used his brief remarks at the Pentagon – the first time a president had ever taken this step – to argue that the coming cuts stem from a careful review of the likeliest threats to the nation and have the full support of the Defense Department’s military and civilian leadership. He reinforced the latter point by surrounding himself with the Joint Chiefs of Staff and top civilian officials during his remarks.

Republicans, for their part, argue that the cuts will weaken American national security and stem from an election-year desire to reduce Pentagon funding to shield costly entitlement programs.

The president, anticipating such criticism, said the Pentagon’s budget will continue to grow in the years ahead, albeit at a slower pace.

“The defense budget will still be larger than it was toward the end of the Bush administration,” Obama said. “And I firmly believe, and I think the American people understand, that we can keep our military strong and our nation secure with a defense budget that continues to be larger than roughly the next 10 countries combined.”

Obama’s comments didn’t stop Republican congressional leaders from attacking the new strategy document almost immediately after it was released.

“This is a lead-from-behind strategy for a left-behind America,” said House Armed Services Committee Chairman Buck McKeon, R-Calif. “The president has packaged our retreat from the world in the guise of a new strategy to mask his divestment of our military and national defense.”

McKeon’s office also released a fact sheet accusing Obama of working to end the mission in Afghanistan “to save money,” abandoning a half-century of U.S. global force presence, and repeating the “mistakes of the past” by paring down a military that will need to be rebuilt the next time U.S. security is threatened.


Some of the criticism stemmed from press reports that the Pentagon would formally abandon a long-standing belief that it needed to be prepared to fight two large-scale ground wars at the same time.


The notion that the U.S. could – or should – have that ability has long been largely a fiction. Donald Rumsfeld was arguing the so-called “two-war doctrine” was outdated more than a decade ago, and his successor, Robert Gates, regularly said that there was no foreseeable possibility of large-scale ground conflicts in the near future.

More substantively, the military wasn’t able to find enough troops to fight even the small-scale wars in Iraq and Afghanistan simultaneously; the Bush administration’s decision to invade Iraq left commanders in Afghanistan with so few forces that the Taliban insurgency there roared back to life.

The new document says the U.S. will retain the ability of fighting one ground war while “denying and deterring aggression” elsewhere, including using limited amounts of ground forces in the second conflict. Panetta and Dempsey used their comments at the press conference to argue that the Pentagon wasn’t abandoning its ability to fight two enemies at the same time.

“The reality is that you could face a land war in Korea and at the same time face threats in the Straits of Hormuz,” Panetta said, adding that he believed both conflicts could be prosecuted successfully and simultaneously.

Dempsey echoed those remarks, arguing that “we can and always will be able to do more than one thing at a time.”

That sort of confidence doesn’t always pan out; earlier predictions of success in Iraq and Afghanistan have often proven to be, at best, premature. The new document represents the Obama administration’s best thinking about how to get out ahead of coming challenges rather than being forced to react to them. How the plans will fare on the battlefields of the future, and on the political battlegrounds here at home, remains to be seen.


Emphasis on air defenses good news for Wright-Patt despite cuts

Dayton Daily News

By Anthony Shoemaker | Thursday, January 5, 2012, 10:55 AM


President Obama on Thursday promised that a smaller, more flexible and technologically capable U.S. military will emerge from a decade of upcoming, multibillion-dollar budget cuts. But Congress and the public won’t learn details of those cuts until Obama presents his defense budget to Congress in the coming weeks.

Obama and his top military advisers, summarizing the results of weeks of defense budget analysis, said the Pentagon will invest in unmanned aircraft; intelligence, surveillance and reconnaissance; new military technology, and cyberspace capabilities.

Those plans could benefit Wright-Patterson Air Force Base, home to the Air Force Research Laboratory which directs research and development; the Aeronautical Systems Center, which manages unmanned aircraft programs including the Predator, Reaper and Global Hawk; and the Air Force Institute of Technology, the post-graduate school which trains officers and Defense Department civilians in cyberspace warfare and defense, among other subjects.

But Obama’s still-unspecified plans for phasing out Cold War-legacy weapons programs and other weapons not regarded as vital to fighting future wars could have an impact on the Aeronautical Systems Center, home of the work force that manages an array of Air Force weapons programs.

“Our military will be leaner,” Obama told a Pentagon news conference Thursday, flanked by Defense Secretary Leon Panetta and Army Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff. “But the fact of the matter is this … the defense budget will still be larger than it was toward the end of the Bush administration.”

Michael Gessel, a vice president of the Dayton Development Coalition, said that Pentagon documents and Panetta’s comments emphasize support for intelligence, surveillance and reconnaissance – work which is done by the National Air and Space Intelligence Center at Wright-Patterson to inform top U.S. civilian and military leadership about adversaries’ aerospace capabilities. The Springfield Air National Guard Base also hosts some intelligence work.

The Air Force Research Laboratory’s sensors directorate at Wright-Patterson, which supports intelligence work, could be affected by the administration’s plans for supporting defense science and technology programs, Gessel said.

Obama’s military plans represent a good news-bad news scenario for Wright-Patterson, said Loren Thompson, a defense analyst with the Lexington Institute in Arlington, Va. Obama is placing new emphasis on long-range air power, space and cyber capabilities, Thompson said.

“That should be good news for the Air Force Materiel Command,” he said of the major command headquartered at Wright-Patterson. “However, it comes against the backdrop of budget cuts that are likely to disproportionately target the weapons accounts.”

The U.S. defense budget will still be larger than those of the next 10 countries combined, Obama said.

U.S. Rep. Mike Turner, R-Centerville, a member of the House Armed Services Committee, described Obama’s announcement as “a retreat from our strategic posture of the past 60 years.”

“While I share his goal of a more efficient fighting force, I remain concerned that countries such as Iran and China will seek to fill the gaps we leave behind,” Turner said. “In addition, his plan could eliminate programs which have the end goal of making our military more efficient. For example, programs which seek to revolutionize logistics for the Air Force may be on the chopping block.”

That could include the Expeditionary Combat Support System project, intended to establish a uniform computer network across the Air Force for logistics and acquisition that would replace old computer networks unable to communicate with each other. Computer Sciences Corp., in Beavercreek, is the Air Force’s prime contractor for the project.


Turner also said he believes that the administration plans reductions in U.S. nuclear weapons. That should be done only if adversaries commit to similar nuclear arms reductions, Turner said.


Others in Congress also criticized Obama’s direction.


“In order to justify massive cuts to our military, he has revoked the guarantee that America will support our allies, defend our interests, and defy our opponents,” said U.S. Rep. Howard “Buck” McKeon, R-Calif., chairman of the House Armed Services Committee. “As America steps back, someone else will step forward.”

Sen. Joe Lieberman, I-Conn., of the Senate Armed Services Committee, said: “No matter how these changes are explained, the fact is that the defense strategy is being altered mainly for budgetary reasons, not because we have arrived at a new strategic calculation that we are actually safer.”

Spending on military personnel, operations and maintenance are all targets for spending cuts, said Richard Aboulafia, a defense analyst with Teal Group Corp. in Fairfax, Va. Military research and development spending stands at about $80 billion across the services and could see cuts of 10 percent, but procurement and R&D still represent investments that could be key to modernizing the military, Aboulafia said.

The administration’s budget deal with Congress of last summer calls for $487 billion in defense cuts over the next decade. An additional $500 billion in cuts may be required starting in January 2013, unless Congress reverses those automatic, across-the-board cuts set in motion by Congress’ failure to make additional budget cuts late in 2011. Those additional cuts would be damaging and would result in a “hollowed-out military,” Panetta said.

The $662 billion defense budget planned for next year is $27 billion less than Obama wanted and $43 billion less than Congress gave the Pentagon this year.

Panetta and Dempsey said the smaller, leaner American military force of the future will still be able to respond to more than one crisis at a time around the globe. While air and sea power will be emphasized, cuts in ground forces are considered likely, which would affect the Army and Marine Corps.

“There is no question that we have to make some trade-offs,” Panetta said. “Budget cuts of this magnitude will inevitably affect the size and capability of our military.”

Defense contractors are making overtures to Republican presidential candidates, and U.S. military readiness is sure to be an issue in this presidential election year.

The administration hasn’t said what changes it will propose in military pay and benefits, a politically sensitive topic. The Defense Department has said, though, that it does not plan to make changes in compensation that would affect those now serving.

The Pentagon would have to be reworking the military for the future anyway in response to changes in the world, but the U.S. budget deficit and need for cuts has increased the urgency for the modernization, Panetta said.

The United States will focus its strategic preparedness on the Asia-Pacific region and Middle East, will keep its defense commitments to Europe and NATO, and will rely on strategic partnerships or helping allies build their own defense capabilities in other parts of the world, Panetta said.


U.S. military technology developments must be focused on the Asia-Pacific region where China is developing capabilities that could threaten American satellites and aircraft involved in intelligence-gathering, Thompson said.

“In Iraq and Afghanistan, the air power was sufficient as long as we improved the ability to collect and use intelligence,” Thompson said. “America is more and more focused on the Chinese. It’s a very different kind of a threat.”

The Associated Press contributed to this report.


U.S. report sees perils to America’s tech future

In report, Commerce Department looks at competitive threats and internal weaknesses


Patrick Thibodeau

January 6, 2012

The ability of the U.S. to compete globally is eroding, according to a federal report released Friday that described itself as a “call to arms.”

The report, which has a strong emphasis on technology, warns in stark terms that “some elements of the U.S. economy are losing their competitive edge.”

The report, titled the “The Competitiveness and Innovative Capacity of the United States,” was prepared by the U.S. Department of Commerce, which said the report reflected “bipartisan priorities.”

“This is a topic of pivotal importance,” said Commerce Secretary John Bryson, in a statement. “Our ability to innovate as a nation will determine what kind of economy – what kind of country – our children and grandchildren will inherit.”

The report sees problems in many areas.

It points out, for instance, that the U.S. ran a trade surplus in “advanced technology products,” which includes biotechnology products, computers, semiconductors and robotics, until 2002. In 2010, however, the U.S. “ran an $81 billion trade deficit in this critically important sector.”

Many of the warnings raised in the report may seem familiar. It is an amalgamation of previous studies with similar warnings, coupled with updated data produced by government agencies, private-sector think tanks and university researchers.

Many of its concerns can be found in a National Academy of Science report, “Rising above the Gathering Storm, Rapidly Approaching Category 5.” That report was originally released in 2005 and updated five years later with the warning that “the nation’s outlook has worsened.”

But the report released Friday is the work of President Obama’s administration. It was required by the America Competes Act that was signed into law one year ago this month. The law allocated $50 billion for research funding and education in science, technology, engineering and math (STEM).

Despite that investment, the report sees cracks in research spending. Specifically, in 1980 the federal government provided about 70% of all dollars spent on basic research, but since then the government’s share of basic research funding given to all entities has fallen to 57%. The government maintains that innovation is the key to job creation and lists companies that were created with the help of government research. Among those companies is Google, whose founders, Larry Page and Sergey Brin, received government research funding as students to develop some of their ideas.

The problems that the U.S. is facing are evident in a number of key areas, especially income.

From 1980 to 1999, real median household income increased about 20%. Since then, real median household income has stalled, “and even before the Great Recession, real median household income fell from $53,252 in 1999 to $52,823 in 2007 (in 2010 dollars),” the report said.

The report also points out that “individuals at the very top of the income distribution have fared better during this time than others; one study found that between 1993 and 2008, income grew almost 4% per year for those with incomes in the top 1% of the income distribution.”

In regard to STEM training, the report makes an argument for immigration reform that enables foreign students to remain in the U.S. It doesn’t offer specifics on an approach for accomplishing this, or look at the debate around this issue. In 2010, there were 7.6 million STEM workers in the U.S., representing about one in 18 workers. Computer and math occupations account for close to half the STEM employment.

The U.S., the report said, produces fewer STEM graduates relative to other developed countries. Citing data from the Organization for Economic Co-operation and Development (OCED), the report said that in 2009, nearly 13% of U.S. graduates with bachelor’s degrees were in STEM fields, near the bottom of OCED countries.

“Significant economic competitors — such as South Korea (26.3%), Germany (24.5%), Canada (19.2%), and the United Kingdom (18.1%) — are on the long list of countries producing a much higher percentage of STEM graduates,” the report said.

One in five STEM workers is foreign born, with 63% coming from Asia, the report said. The foreign-born share of STEM workers with graduate degrees is 44%.


Aerospace Rises in Pentagon Strategy

By Amy Butler, Jen DiMascio

Washington, Washington

President Barack Obama’s changing of the Pentagon’s global military focus from Europe to the Middle East and Asia-Pacific regions could breathe new life into dormant plans for a new stealthy bomber, and fuel the development of improved intelligence and surveillance aircraft and ballistic- and cruise-missile defenses around the globe.

Overall, the new military strategy is the White House’s attempt to curb defense spending, which has ballooned since the terrorist attacks of 2001 and contributed to a massive federal deficit. “The growth will be slow, but [the budget] will still grow,” Obama told reporters.

Congress has agreed to cut $487 billion from the military’s budget over the next decade, though senior defense officials promised only to make reductions strategically. A law passed in August would mandate another $600 billion in defense cuts in January 2013 if legislators fail to reduce the federal deficit by $1.2 trillion.

Though specific programmatic cuts will be outlined within the next month, the strategy calls for a reduction in the end strength for U.S. Army and Marine Corps ground forces and a likely commensurate cut in numbers for their equipment. Program terminations are also probable, as Obama said he wants to dispose of Cold War weapon systems.

By contrast, a boost is expected in the longer-range strategic forces capable of conducting campaigns in anti-access environments such as China, Iran and North Korea. The strategy specifically calls for a new stealthy bomber, which has been an on-again, off-again project led by the U.S. Air Force, though it does not provide a fielding date. Also specifically referenced in the strategy are improvements to missile defenses, likely building off of the nascent Phased Adaptive Approach being fielded to protect Europe and the Eastern U.S. from both regional and intercontinental ballistic missiles. Improved “resiliency and effectiveness” of space-based capabilities is also specifically mentioned.

While ground forces associated with the counterinsurgency (COIN) operations will be reduced, the aircraft designed to assist them will not lose support, says Deputy Defense Secretary Ashton Carter. “A lot of what we have learned in the COIN business transcends the COIN business,” says Adm. James Winnefeld, vice chairman of the Joint Chiefs of Staff. This points to longevity in such fleets as the Air Force’s MC-12W Project Liberty intelligence, surveillance and reconnaissance aircraft, designed specifically to support COIN and anti-improvised explosive device operations in Iraq and Afghanistan. It is unclear, however, whether new projects in these areas, such as expanding the Army’s Enhanced Medium-Altitude Reconnaissance and Surveillance System, will be funded.

Defense Secretary Leon Panetta underscored continued support for ISR systems as well as space capabilities, unmanned aircraft and cybersystems.

Underlying the need for such equipment is a shift in the Pentagon’s global footprint. The new Obama military strategy includes a significant decrease in U.S. military presence in Europe and a focus on countering threats in Asia and the Middle East. “Most European countries are now producers of security rather than consumers of it,” allowing for a “strategic opportunity” to rebalance the U.S. military in Europe, the strategy says. Washington is pursuing a “smart defense” approach to pooling resources with European allies rather than simply basing large numbers of U.S. forces on the continent.

In Latin America and in Africa, where some insurgent and Al Qaeda affiliates operate, the Pentagon sees “innovative methods” of maintaining a U.S. presence, according to the strategy. This could include small special operations units outfitted to train local security forces or partnerships tailored for a specific region, says Michele Flournoy, deputy undersecretary of defense for policy.

Though end strength, especially in the ground forces, will come down, the Pentagon is embracing a policy of what it calls “reversibility.” That would allow for reconstitution of such forces and their equipment if a surge is needed for a particular mission. “Reversibility is the concept that we have used to remind ourselves that we want to act in such a way . . . that we preserve options for the future,” despite near-term cuts, Carter says. The cuts “are causing us—out of necessity—to have to stop certain things, pause certain things and slow down certain things, and in each case we want, to the extent that we can do so, to preserve the ability to change course.”

Reversibility is also applicable to the industrial base, he adds. “As we make program changes, we want to make sure that 10-15 years from now we still have an industrial base that supports our key weapons systems even if we are not able to buy in those areas at the rates or in the volumes that we had planned before we were handed this $487 billion cut.”

Furthermore, Carter says Pentagon leaders are taking measures to protect the science and technology budget, which is where innovations are fostered. “We want to make sure we don’t eat the seed corn,” Carter says.

While no specific mention of potential F-35 cuts was made, the $380 billion program could emerge with all three variants intact, though production numbers will likely decrease in the next five years. According to Reuters, that decrease could be as many as 120 fighters.

Anti-access technologies are included in the strategy among those critical for future defense forces. Carter noted only that “we want it. We want it to succeed [and] that is why we are working so intensely on it managerially.”

Japan and Israel are pushing their F-35 buys starting in 2014 for delivery in 2016. That will relieve some pressure on the U.S., but the international buy is far smaller than the projected U.S. cut.

Although the program has picked up new customers, the economic crisis and pressure on budgets abroad is forcing Lockheed Martin to fight for every sale, even in countries that have signed up as partners. The fighter’s fate is in question, for example, in Italy, a key partner (see article below).

Panetta said that as budget details emerge, some members of Congress may oppose specific decisions. But he is “confident Congress will support what we’re trying to do.” Reaction from Capitol Hill has been mixed.

Rep. Buck McKeon (R-Calif.), chairman of the House Armed Services Committee, is casting the new strategy as a move that would weaken security. “This is a lead-from-behind strategy for a left-behind America. The president has packaged our retreat from the world in the guise of a new strategy to mask his divestment of our military and national defense,” McKeon said.

The top Democrat on the House Armed Services Committee, Rep. Adam Smith (Wash.), praised the strategy.

Sen. John McCain (Ariz.), the top Republican on the Senate Armed Services Committee, says he will closely examine the new strategy.

“I understand the need for reductions in defense spending, but we must also address the broader cultural problem plaguing our defense establishment: the waste, inefficiency, and ineffective programs that result from an overly consolidated military-industrial-congressional complex,” McCain said in a statement. “We must eliminate the shameless cost overruns that characterize too many of our defense programs.”

The strategy and comments by Pentagon officials hint at a reduction in the military’s nuclear force, drawing the ire of Rep. Michael Turner (R-Ohio), chairman of the House Armed Services strategic forces subcommittee. “Deeper nuclear cuts will actually undermine the president’s stated shift of focus to the Pacific,” Turner said, adding that the strategy document shows no signs of plans that would “put national missile defense first.”

The Missile Defense Agency is struggling to cut its annual budget, which is usually $9 billion, by up to $1.5 billion. At the same time, the agency is trying to fulfill the White House’s 2009 mandate for an incremental, Phased Adaptive Approach (PAA) to fielding regional missile defenses in Europe. It is unclear whether the MDA will have enough money to develop a new high-speed interceptor as well as satellites needed for midcourse tracking of ballistic missile targets to make good on the PAA plan by 2020.

Flournoy also said the U.S. missile defense partnership with Japan—much of which is encompassed in the Raytheon SM-3 IIA interceptor program—will continue. But she stopped short of saying whether the U.S. will adapt the PAA construct in the Pacific region.

Defense officials underscore the need to continue efforts to reduce overhead costs inside the Defense Department and at its contractors. Some companies, such as Northrop Grumman and Lockheed Martin, have taken measures to reduce their workforces, and others, such as Boeing, are also closing facilities (see p. 18).

Along with cuts to investment accounts and overhead, Pentagon officials say they will trim personnel costs, which are a perennial problem. Health care and retirement cost growth has substantially outpaced the growth of the force, analysts say.

Former Lockheed Martin CEO Norman Augustine is famous for saying that in the year 2054, the Pentagon will be able to afford just one very expensive jet for all the services to share. That trend now applies to personnel, says Marine Corps Maj. Gen. (ret.) Arnold Punaro.

“We’re heading in the exact same direction,” he says, adding that the U.S. may produce the finest soldiers on Earth, “but four people aren’t going to be able to meet all of our commitments.”

DOD: Industry partnerships still central despite budget cuts


New report from defense industry task force reveals budget-cutting fears

By Amber Corrin

•Jan 06, 2012


Editor’s note: This article was originally published by our sister site Defense Systems.


Although the Defense Department is going to be operating under sharply reduced budgets in coming years, it will continue to rely on the private sector, according to a top acqusition official.


Frank Kendall, undersecretary of defense for acquisition, technology and logistics, said in a conference call held Jan. 6 that the department had convened a joint DOD-private sector task force to determine the potential effects on industry of impending budget cuts and the military drawdown in Southwest Asia.

The task force has helped guide some of DOD’s strategy outlined Jan. 5 by President Barack Obama and Defense Secretary Leon Panetta, Kendall indicated. He was optimistic despite a new report from the task force that revealed worries over the projected spending decreases.

“The industrial base was considered throughout the review as part of total force structure,” Kendall said. “The department is dependent on the industrial base as a partner in the defense enterprise. But less is less…you cannot expect the market to continue to grow as it has in the past.”

He said technology remains one area that likely will still see investment and the private sector’s partnership would remain critical to military operations.

“Our continued dominance will rely on technological superiority,” he said. “While we will be taking budget cuts, there will be high priority areas of investment,” including cyber, intelligence, surveillance, reconnaissance and space.

Although the private sector isn’t being shut out of DOD’s strategic decision making, defense industry executives are worried about the cuts. Their concerns were outlined in a report dated Nov. 11, 2011, but released Jan. 6.

“This report paints an alarming picture for the future of the aerospace and defense industry,” Marion Blakey, president of the Aerospace Industries Association, said in a release. “Yesterday Secretary Panetta outlined very severe reductions in the defense budget. Any further cuts will cripple crucial industrial base capabilities in the national security sector.”

AIA was part of the Defense Industrial Base Task Force; other groups included the Professional Services Council and the National Defense Industrial Association. The task force’s report assessed the effects of two scenarios: the $480 billion defense spending reduction over 10 years that Obama and Panetta outlined Jan. 5, and the $1 trillion across-the-board cuts that could result from sequestration triggered by the congressional supercommittee’s failure to agree on federal budget cuts.

“Cuts beyond $480 billion…would render major segments of the defense industry unable to produce critical products and components, leaving wide gaps in the domestic capacity needed to sustain an acceptable margin of military superiority in the future,” the report stated.

According to Kendall, he and Deputy Defense Secretary Ashton Carter have met with the task force, and Panetta is slated to meet with members in two weeks.

Kendall stressed that he believes the cuts and strategy implementation are doable, and that industry has a seat at the table as DOD’s leadership determines strategy.

“I believe we can execute the strategy within the context of budget constraints and still preserve military and industrial base,” he said.


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