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November 2 2013

November 4, 2013

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Federal workers must pay back jobless benefits

Paul Davidson, USA TODAY 12:04 a.m. EDT October 28, 2013

Labor Department says federal employees can’t get back pay and keep unemployment aid.

 

The federal government shutdown cost taxpayers billions of dollars but at least a tiny fraction will be recouped: Federal employees will get paid just once—not twice– for not working.

All federal employees who collected unemployment insurance during the 16-day shutdown will have to return the payments because the workers are also receiving back pay, the Labor Department said late last week.

The agency earlier this month said it expected to issue guidance that likely would result in most states requiring workers to repay the jobless benefits. It was expected that the guidance would let some states keep both the benefits and the retroactive pay, depending on laws in each state.

In Oregon, for instance, a law permits employees to keep the benefits even if they receive back pay, as long as they did not perform any services during their furloughs. About 730 federal workers in Oregon made an initial claim for unemployment insurance during the shutdown and received about $390,000 in benefits, the state Employment Department says. The state paid the benefits but said it expected to be reimbursed by the federal government.

But in guidance to states late last week, the Labor Department said that, because they were in “pay status,” all furloughed employees “were not ‘unemployed’ and are thus ineligible for unemployment benefits.”

The Oregon Employment Department said in a news release that it now will tell federal employees the benefits “are an overpayment and must be repaid.” It added that the Labor Department changed the directive it had issued earlier this month which said that federal employees were eligible for unemployment insurance.

Nationally, about 70,000 of the 400,000 federal employees furloughed during the shutdown applied for jobless benefits, but a much smaller number took the steps required to receive them, federal and state labor officials say. They generally collected the payments for just one week because they worked during parts of the shutdown’s first and third weeks.

Even before the Labor Department’s recent guidance, the agency had said it was clear that federal employees in most states would have to repay the benefits

 

DoD to better protect data on unclassified contractor networks

Oct. 25, 2013 – 06:00AM |

By Marcus Weisgerber

Staff writer

http://www.armytimes.com/article/20131025/NEWS04/310250008/DoD-better-protect-data-unclassified-contractor-networks

WASHINGTON — The Pentagon is moving to secure unclassified contractor networks in an attempt to better safeguard U.S. intellectual know-how.

The plan — put in place by Defense Secretary Chuck Hagel on Oct. 10 — hits the streets just weeks after Iran hacked an unclassified U.S. Navy computer network.

These actions will ensure that the department provides a cohesive, comprehensive and cost-effective approach to protect priority investments and future defense capabilities while maintaining efficient business operations with our industrial partners, Hagel wrote.

Hagel’s orders include changes that span Pentagon’s acquisition, intelligence and policy directorates, as well as the military services and other DoD entities.

Specifically, Hagel ordered his subordinates to take immediate action to improve the protection of unclassified controlled technical information that resides on or passes through defense contractor systems or networks.

The new guidance issued by Hagel packs more of a punch than prior directives because it will include mandates for unclassified contractor network security. Pentagon acquisition chief Frank Kendall is instructed to propose an amendment to current regulations pertaining to the safeguarding of this technical information.

This shall include necessary policy, guidance, and rulemaking activities, to include expansion of current cybersecurity information-sharing activities and programs, Hagel wrote.

DoD already has strict rules for how contractors handle classified data.

Pentagon officials have long lamented the lack of security for technical data on contractor networks. Smaller contractors lower down in the supply chain with lesser cyber defenses are thought to be soft targets for smart attackers, and both large and small contractors are routinely bombarded by attacks.

Hagel has also ordered the stand up of a joint analysis capability to assess technical information losses and determine consequences of those losses in order to inform requirements, acquisition, programmatic, and strategic courses of action.

The services shall identify critical acquisition and technology programs requiring higher levels of protection. Michael Vickers, undersecretary for intelligence, will oversee this initiative.

Protection of contractor networks has been thrust into the spotlight numerous times in recent months. Earlier this year, the Defense Science Board warned that China has attacked U.S. networks that contained information about dozens of defense weapon programs and technologies, including the Lockheed Martin F-22 Raptor and F-35 joint strike fighter.

 

Timeline: When to Expect a Possible Pay Raise, and Other Key Fiscal Deadlines

By Kellie Lunney

October 25, 2013

http://www.govexec.com/pay-benefits/2013/10/timeline-when-expect-possible-pay-raise-and-other-key-fiscal-deadlines/72668/?oref=dropdown

 

In just the past few weeks, the government shut down, reopened and skirted a default on its debts. We could all do without that kind of excitement for a while.

A while, in this case, is less than three months, roughly the amount of time left until the current continuing resolution funding agencies expires. Absent a grand budget bargain between Republicans and Democrats in December, the beginning of 2014 will put us right back where we were in September and October 2013. We’ve got new deadlines for the same old problems. Oh, and remember sequestration? Another round of automatic, governmentwide budget cuts hits in mid-January, unless Congress reverses them. Federal employees, many of whom were furloughed during the summer and again in the fall because of the shutdown, face the prospect of more unpaid leave or even layoffs heading into the new year.

There’s one bright spot for federal workers on the horizon: It’s looking more likely that they will get an across-the-board pay hike in 2014, the first such increase in three years. And the 2013 holiday season is looking relatively hassle-free, at least from a congressional perspective. Lawmakers were careful not to schedule any major upcoming deadlines that could disrupt holiday travel or family time.

Here’s an updated timeline of important dates for federal employees to watch over the next few months:

2013

◾Oct. 30: House and Senate budget conferees hold their first public meeting. The continuing resolution re-opening government included a provision creating the panel to come up with a deficit reduction plan before the end of the year.

◾Nov. 11: Open Season for health, dental, and vision insurance as well as flexible spending accounts begins. Federal employees might want to shop around for a better deal to save money in preparation for any possible future unpaid leave due to sequestration, or another shutdown.

◾Dec. 9: Open Season ends.

◾Dec. 13: The House and Senate budget conference committee presents its fiscal recommendations. A grand bargain is a long shot, considering the failure of the 2011 joint congressional supercommittee to produce a deficit reduction plan and avoid sequestration. The current House and Senate budgets are very different, so the conferees have their work cut out for them in finding common ground. Federal employees should pay attention to the negotiations and the panel’s recommendations. Feds’ pay and benefits have been on the table before in these discussions.

◾Dec. 16: Congress begins its holiday recess through the end of the year. During the past few years, both chambers have worked up to the end of December to debate and vote on important budget legislation. This year should be less chaotic since the next big budget deadline isn’t until Jan. 15. And Congress, as we all know, likes to procrastinate.

◾Dec. 31: Look for news regarding a possible civilian pay increase around this time, or an extension of the pay freeze, now in its third year. President Obama wants to give civilian employees (as well as military personnel) a 1 percent, across-the-board pay boost in 2014. The current continuing resolution does not prohibit one. If lawmakers do not pass a measure prohibiting a raise or extending the pay freeze, which doesn’t look likely at this time, then the president’s recommendation takes effect.

 

2014

◾Jan. 1: 1 percent across-the-board pay raise for federal civilian and military personnel takes effect unless Congress blocks it.

◾Jan. 15: Mark your calendars. This is an important date. The current continuing resolution funding the government expires and the automatic cuts under sequestration take effect for fiscal 2014 on this date, unless Congress changes the law before then. Agencies likely will start announcing furlough plans soon after, if the sequester remains in place. The FBI has already said it will furlough employees for 10 days if the sequester continues next year, and the Defense Department has said it might have to resort to laying off civilian employees.

◾Feb. 3: President Obama must submit his fiscal 2015 budget proposal to Congress by the first Monday in February. But Obama typically has been late delivering his blueprint, blaming sequestration and delaying his fiscal 2014 proposal until April 2013. It’s likely the fiscal 2015 proposal also will be late for similar reasons.

◾Feb. 7: The government hits its latest debt ceiling on this date. Unless there’s an extension before Feb. 7, the Treasury secretary will use emergency borrowing authority to give the government a few months’ wiggle room to avoid defaulting on its debts. One of the extraordinary measures that the government often has used to avoid a default is tapping into and suspending investments into the Civil Service Retirement and Disability Fund and halting the daily reinvestment of the government securities (G) fund, the most stable offering in the Thrift Savings Plan’s portfolio. The law requires the Treasury secretary to refill the coffers of the G Fund and the Civil Service Retirement Fund once the issue of the debt ceiling is resolved, and in addition, to make up for any interest lost on those investments during the suspension.

 

Pentagon weighs future of its inscrutable nonagenarian futurist, Andrew W. Marshall

By Craig Whitlock, Published: October 27

http://www.washingtonpost.com/world/national-security/pentagon-weighs-future-of-its-inscrutable-nonagenarian-futurist-andrew-marshall/2013/10/27/f9bda426-3cac-11e3-b6a9-da62c264f40e_story_1.html

From his office deep inside the Pentagon, Yoda has outlasted the Cold War, countless military conflicts and 10 presidential elections. But can he survive the sequester?

Yoda is the reverential nickname for Andrew W. Marshall, a legendary if mysterious figure in national security circles. A bald, enigmatic 92-year-old strategic guru, he resembles the Jedi master of “Star Wars” fame in more ways than one.

Since the Nixon administration, Marshall has directed the Pentagon’s secretive and obliquely named internal think tank, the Office of Net Assessment, which contemplates military strategy decades into the future. Over his long career, he has foretold the economic collapse of the Soviet Union, the rise of China and the spread of robotic warfare.

Today, confronting a budget crunch, Pentagon leaders are contemplating whether Marshall and his think tank have outlived their usefulness, or need to be reined in. The Office of Net Assessment costs taxpayers only about $10 million a year — pocket change in the $525 billion annual defense budget, but enough to face fresh scrutiny at a time of cutbacks.

Few places, however, are tougher to scrutinize. Many of Marshall’s studies and reports are classified. And he has to share them with only one man: the secretary of defense. Which reports actually get read, and which ones end up in history’s top-secret dustbin, is everybody else’s guess.

“There’s no real way to weigh it or figure out how much he pays” consultants for the reports, said a former senior defense official who spoke on the condition of anonymity to talk candidly about the Office of Net Assessment. “You can’t quite tell what the nation is getting out of it.”

Even so, the mere suggestion that the Pentagon might force its nonagenarian futurist to retire has sparked a backlash among Marshall’s heavyweight corps of supporters.

Several members of Congress, from both parties, have dashed off letters to Defense Secretary Chuck Hagel in protest. Former Pentagon chief Donald H. Rumsfeld tweeted that it would be a “serious mistake” to close the Office of Net Assessment and praised Marshall for being at the “forefront of strategy & transformation” for 40 years.

Others described Marshall’s intellect in Einsteinian terms. “Mr. Marshall’s brain is highly networked,” said John Arquilla, a professor at the Naval Postgraduate School in Monterey, Calif., who has known him for decades. He praised Marshall’s “mental suppleness” and said advanced age had not slowed him down.

“His mind is as sharp as ever,” Arquilla said. “He’s gotten not just a second wind but a third wind in recent years.”

Marshall has also demonstrated exceptional political acumen, hanging on to his job under 13 defense secretaries. He has nurtured generations of national security thinkers and helped find them jobs on Capitol Hill, in academia, at private think tanks and in other parts of the government. The last time the Pentagon tried to close his office, almost two decades ago, his acolytes saved it with a furious lobbying effort.

A hero to China’s military

Sensitive to Marshall’s iconic status, Pentagon officials are treading carefully this time around; they declined to elaborate publicly on the futurist’s future.

“The Department of Defense is currently assessing our missions, structure and programs in light of an evolving set of strategic challenges, as well as a constrained fiscal environment,” Lt. Col. Damien Pickart, a Pentagon spokesman, said in an e-mailed statement. “It would be premature to comment on pre-decisional issues.”

Another defense official, speaking on the condition of anonymity to discuss internal deliberations, said Hagel thinks that the Office of Net Assessment should be reorganized and that it “can be strengthened potentially by realigning it so that it remains close to him and his senior team.”

Marshall declined an interview request placed through a Pentagon spokesman. He shuns public appearances, doesn’t testify before Congress and permits himself to be quoted only on rare occasions.

Colleagues say he has always projected an inscrutable mystique. He generally keeps his thoughts to himself at conferences and meetings but can command attention just by twitching an eyebrow.

Although he is little known among Americans, Marshall enjoys an outsize reputation in Moscow and Beijing, where Russian and Chinese strategists have long admired his ideas, even if their countries were in the strategic crosshairs.

“Our great hero was Andy Marshall in the Pentagon,” Gen. Chen Zhou of the People’s Liberation Army said in an interview last year with the Economist. “We translated every word he wrote.”

‘Not very happy futures’

Marshall’s national security career began in 1949, the same year that Mao Zedong proclaimed the creation of the People’s Republic of China.

As a 28-year-old economist with a master’s degree, Marshall joined the Rand Corp., a nonprofit think tank that had just been created to perform research for the government. He burrowed into analyses of Soviet military programs, nuclear targeting and organizational behavior theory.

After a stint at the White House, Marshall was brought to the Pentagon in 1973 by then-Defense Secretary James Schlesinger to found the Office of Net Assessment. He concentrated on nuclear strategy and specialized in forecasting apocalyptic scenarios, some seemingly lifted from the satirical film “Dr. Strangelove.”

“We tend to look at not very happy futures,” he once told The Post in an interview.

He also became a leading proponent of a theory known as the “revolution in military affairs,” which posits that the history of warfare has been marked by several brief but transformative bursts in technology and organizational strategy, from the chariot to the German blitzkrieg to the atomic bomb.

Such thinking has led Marshall to argue that some foundational weapons of the armed services — the tank, the aircraft carrier and short-range fighter jets — are doomed to obsolescence because of advances in missile technology. That has made him an unbeloved figure among some U.S. generals and admirals, who view him as an unrealistic radical and a threat to conventional military strategy.

Millions to consultants

For the past two decades, Marshall’s office has gamed out scenarios for war with China.

Critics say he has exaggerated that and other threats as justification for fatter defense budgets. But fans say the Pentagon needs more long-range, out-of-the-box thinking, not less.

“We think that office provides incredible value to the country at a time when we need strategy more than ever,” said Rep. J. Randy Forbes (R-Va.), a member of the House Armed Services Committee who helped sponsor a $10 million earmark last year for the Office of Net Assessment, nearly doubling its annual budget.

Forbes said that the office needs to be kept insulated from bureaucratic and political pressures and that it would fill an important niche long after Marshall steps down, whenever that might be.

“Obviously, I have enormous respect for Mr. Marshall,” Forbes said. “But this office is not just Andy Marshall. This office has spawned a number of great thinkers and ideas.”

The Office of Net Assessment contracts out much of its research to private think tanks. It recently commissioned a study titled “The Future of Africa” from Booz Allen Hamilton for $105,633, federal contracting records show.

A primary recipient of Marshall’s grant money is the Center for Strategic and Budgetary Assessments in Washington. The defense think tank, headed by retired Army Lt. Col. Andrew Krepinevich, a longtime Marshall disciple, generally receives about $2.75 million to $3 million a year.

The former senior defense official said the Office of Net Assessment pursues some worthwhile lines of study but suggested that more oversight and accountability are needed. “How much money should we be dishing out to outside parties to restate [these findings] again and again?” he said.

At the same time, the former official said Marshall is so well entrenched politically that it doesn’t make sense for the Pentagon to try to change his ways or force him out before he is ready to go.

“Everybody is worried about the perception that they would go against this legendary icon who brought down the Soviet Union single-handedly,” the former official said. “It’s not even worth it to challenge that narrative at this point.”

 

Patent law is so broken that casinos, supermarkets, and realtors are demanding change

BY TIMOTHY B. LEE

October 28 at 8:00 am

http://www.washingtonpost.com/blogs/the-switch/wp/2013/10/28/patent-law-is-so-broken-that-casinos-supermarkets-and-realtors-are-demanding-change/?wprss=rss_technology&wpisrc=nl_tech

 

In the last few years, patent litigation has become such a widespread problem that industries that traditionally had nothing to do with the patent system are demanding that Congress take action. The latest sign of that is a letter asking Congress to make it easier to invalidate low-quality patents.

The letter is signed by some high-tech lobbying groups that have long been active on patent issues. But, surprisingly, the letter also drew support from distinctly low-tech sectors of the economy, including casinos, supermarkets, chain restaurants, airlines, and the printing industry.

“It’s important to recognize that the problem of patent trolls are no longer limited to technology companies,” says Whit Askew of the American Gaming Association, which represents casinos and the manufacturers of gambling devices. “Over the last couple of years, we’ve unfortunately been bit by the patent troll lawsuit bug, where frivolous lawsuits have been filed against many in our industry.”

These predominantly brick-and-mortar business groups aren’t just demanding patent reform in the abstract. Askew and other letter signers are endorsing expansion of the clumsily-named “covered business method” program, which provides an expedited process for challenging patents at the U.S. Patent and Trademark Office (PTO). That’s significant because expansion of the CBM program has drawn the ire of some patent-rich software companies, including Microsoft, IBM, and Adobe.

Opponents of expanding the CBM program argue that procedural reforms, such as allowing technology vendors to intervene on behalf of their customers and forcing defeated patent plaintiffs to pay defendants’ legal bills, will be sufficient to bring the patent litigation crisis under control. And they worry that the defendant-friendly provisions of the CBM program will make it too difficult for the owners of legitimate patents to enforce their rights.

But Monday’s letter, whose more than two dozen signers include groups representing advertising agencies, publicly-owned power plants, real estate agents, hotels, and retailers, argues that these process-oriented reforms aren’t sufficient to solve the patent troll problem.

“Companies need an effective alternative for challenging validity [of patents] outside of the courtroom,” the letter argues. The CBM program “gives threatened companies a substantially less expensive way to challenge low quality patents. Other programs for challenging patent validity at the PTO do not allow the PTO to consider whether the patent is abstract, vague, or too broad,” which are common problems with patents used by trolls, the letter argues.

Industry groups that signed the letter say they were motivated to do so by a dramatic increase in the frequency of frivolous patent lawsuits. “We are now seeing [real estate] brokers receive demand letters for use of common technologies like scanner-copiers and website alert technologies,” says Gary Thomas, president of the National Association of Realtors.

“I’m a food lawyer,” says Erik Lieberman of the Food Marketing Institute, which represents grocery wholesalers as well as supermarkets. “Members bring us issues that impact them. A couple years ago they start coming to me saying ‘look this entity we’ve never heard of is sending us a demand letter asking us for $300,000 or $500,000 claiming we’re violating their patent.'”

Lieberman says many of the patents covered common technologies like the store locator function on a grocery store’s website or the use of QR codes in advertisements. Lieberman said that patent threats have now cost some of his larger clients millions of dollars in legal fees and staff time. And the burden can be especially serious for smaller supermarket chains that don’t have anyone on staff with experience handling patent issues.

For both Lieberman and the American Gaming Association’s Askew, low costs are one of the CBM program’s key advantages. The program “gives threatened companies a substantially less expensive way to challenge” low-quality patents, Askew says. It can take years for a court to reach a final ruling on a patent case. In contrast, the CBM program can end a lawsuit — and permanently eliminate a low-quality patent — in a matter of months, saving hundreds of thousands of dollars in legal fees.

The letter also notes that under the program, “small businesses are able to pool their resources in order to pay to have a [patent troll]’s patent reviewed.” That makes the program a particularly potent weapon against trolls that send letters to a large number of defendants seeking nuisance settlements.

Lieberman says that in the grocery business, “the profit margin is well under 1 percent,” so the costs of patent litigation “get passed down to consumers.”

The industries that signed the letter collectively have significant lobbying muscle. They could provide a counterweight to patent-rich companies who are squeamish about seeing their patent portfolios subjected to the kind of serious scrutiny the CBM program could make possible.

 

Cryptolocker: How to avoid getting infected and what to do if you are

There’s a new piece of ransomware in town; here’s how to protect your company’s assets

 

http://www.computerworld.com/s/article/9243537/Cryptolocker_How_to_avoid_getting_infected_and_what_to_do_if_you_are_?source=CTWNLE_nlt_thisweek_2013-10-28

 

Jonathan Hassell

October 25, 2013 (Computerworld)

 

There’s a big threat wiling around on the Internet right now: A particularly nasty piece of ransomware called Cryptolocker. Many, many organizations are being infected with this malware, but fortunately, there are surefire ways to avoid it and also ways to mitigate the damage without letting the lowlifes win.

What is Cryptolocker?

Cryptolocker comes in the door through social engineering. Usually the virus payload hides in an attachment to a phishing message, one purporting to be from a business copier like Xerox that is delivering a PDF of a scanned image, from a major delivery service like UPS orFedEx offering tracking information or from a bank letter confirming a wire or money transfer.

   

Cryptolocker’s ransom note to infected users.

The virus is, of course, an executable attachment, but interestingly the icon representing the executable is a PDF file. With Windows’ hidden extensions feature, the sender simply adds “.pdf” to the end of the file (Windows hides the .exe) and the unwitting user is fooled into thinking the attachment is a harmless PDF file from a trusted sender. It is, of course, anything but harmless.

Once Cryptolocker is in the door, it targets files with the following extensions:

*.odt, *.ods, *.odp, *.odm, *.odc, *.odb, *.doc, *.docx, *.docm, *.wps, *.xls, *.xlsx, *.xlsm, *.xlsb, *.xlk, *.ppt, *.pptx, *.pptm, *.mdb, *.accdb, *.pst, *.dwg, *.dxf, *.dxg, *.wpd, *.rtf, *.wb2, *.mdf, *.dbf, *.psd, *.pdd, *.pdf, *.eps, *.ai, *.indd, *.cdr, *.jpg, *.jpe, img_*.jpg, *.dng, *.3fr, *.arw, *.srf, *.sr2, *.bay, *.crw, *.cr2, *.dcr, *.kdc, *.erf, *.mef, *.mrw, *.nef, *.nrw, *.orf, *.raf, *.raw, *.rwl, *.rw2, *.r3d, *.ptx, *.pef, *.srw, *.x3f, *.der, *.cer, *.crt, *.pem, *.pfx, *.p12, *.p7b, *.p7c

When it finds a file matching that extension, it encrypts the file using a public key and then makes a record of the file in the Windows registry under HKEY_CURRENT_USER\Software\CryptoLocker\Files. It then prompts the user that his or her files have been encrypted and that he or she must use prepaid cards or Bitcoin to send hundreds of dollars to the author of the malware.

Once the payment has been made, the decryption usually begins. There is typically a four-day time limit on the payment option; the malware’s author claims the private key required to decrypt files will be deleted if the ransom is not received in time. If the private key is deleted, your files will essentially never be able to be decrypted — you could attempt to brute force the key, but as a practical matter, that would take on the order or thousands of years. Effectively, your files are gone.

Currently, the only versions of Cryptolocker in existence target files and folders on local drives and mapped drives. The malware does not currently attempt to perform its malfeasance over network-based universal naming convention paths, although one would surmise this would be a relatively simple change for the author of the ransomware to make.

Antivirus and anti-malware programs, either running on endpoints or performing inbound email message hygiene, have a particularly difficult time stopping this infection. Unless you have a blanket email filtering rule stripping out executable attachments, and that tool is intelligent enough to do so without allowing the user to request the item’s return from quarantine, you will see your users getting these phishing messages attempting to introduce Cryptolocker. It is only a matter of time.

Prevention: Software Restriction Policies and AppLocker

As of now, the best tool to use to prevent a Cryptolocker infection in the first place — since your options for remediating the infection involve time, money, data loss or all three — is a software restriction policy. There are two kinds: Regular software restriction policies, and then enhanced AppLocker policies. I’ll cover how to use both to prevent Cryptolocker infections.

Software Restriction Policies

Software Restriction Policies (SRPs) allow you to control or prevent the execution of certain programs through the use of Group Policy. You can use SRPs to block executable files from running in the specific user-space areas that Cryptolocker uses to launch itself in the first place. The best place to do this is through Group Policy, although if you’re a savvy home user or a smaller business without a domain, you can launch the Local Security Policy tool and do the same thing.

One tip: if you’re using Group Policy, create a new GPO for each restriction policy. This makes it easier to disable a policy that might be overly restrictive.

Here’s how to do it:

  1. Open up Local Security Policy or the Group Policy Object editor and create a new GPO. I’ll show you how to create two here — one for Windows XP machines (which use slightly different paths for the user space) and one for Windows Vista and later machines.
  2. Name the new GPO “SRP for XP to prevent Cryptolocker” or something similar for you to remember easily.
  3. Choose Computer Configuration and then navigate through Policies ‘ Windows Settings ‘ Security Settings ‘ Software Restriction Policies.
  4. Right-click Software Restriction Policies and choose New Software Restriction Policy from the context menu.
  5. Now, create the actual rules that will catch the software on which you want to enforce a restriction. Right-click Additional Rules in the left-hand pane. Choose New Path Rule.
  6. Under Path, enter %AppData%\*.exe.
  7. Under Security level, choose Disallowed.
  8. Enter a friendly description, like “Prevent programs from running in AppData.”
  9. Choose New Path Rule again, and make a new rule like the one just completed. Use the following table to fill out the remainder of this GPO.

                                                       
 

 

 

 

Path 

Security Level 

Suggested Description 

%AppData%\*.exe

Disallowed 

Prevent Cryptolocker executable from running in AppData* 

%AppData%\*\*.exe 

Disallowed 

Prevent virus payloads from executing in subfolders of AppData 

%UserProfile%\Local Settings\Temp\Rar*\*.exe 

Disallowed 

Prevent un-WinRARed executables in email attachments from running in the user space

%UserProfile%\Local Settings\Temp\7z*\*.exe 

Disallowed 

Prevent un-7Ziped executables in email attachments from running in the user space 

%UserProfile%\Local Settings\Temp\wz*\*.exe 

Disallowed 

Prevent un-WinZIPed executables in email attachments from running in the user space

%UserProfile%\Local Settings\Temp\*.zip\*.exe 

Disallowed 

Prevent unarchived executables in email attachments from running in the user space 

*Note this entry was covered in steps 5-8. It is included here for your easy reference later.

WinRAR and 7Zip are the names of compression programs commonly used in the Windows environment.

Close the policy.

To protect Windows Vista and newer machines, create another GPO and call this one “SRP for Windows Vista and up to prevent Cryptolocker.” Repeat the steps above to create the SRP and create path rules based on the following table.

                                                       
 

Path 

Security Level 

Suggested Description 

%AppData%\*.exe

Disallowed 

Prevent Cryptolocker executable from running in AppData* 

%AppData%\*\*.exe 

Disallowed 

Prevent virus payloads from executing in subfolders of AppData 

%LocalAppData%\Temp\Rar*\*.exe 

Disallowed 

Prevent un-WinRARed executables in email attachments from running in the user space

%LocalAppData%\Temp\7z*\*.exe 

Disallowed 

Prevent un-7Ziped executables in email attachments from running in the user space 

%LocalAppData%\Temp\wz*\*.exe 

Disallowed 

Prevent un-WinZIPed executables in email attachments from running in the user space

%LocalAppData%\Temp\*.zip\*.exe 

Disallowed 

Prevent unarchived executables in email attachments from running in the user space 

Close the policy.

Once these GPOs get synchronized down to your machines — this can take up to three reboots to happen, so allow some time — when users attempt to open executables from email attachments, they’ll get an error saying their administrator has blocked the program. This will stop the Cryptolocker attachment in its tracks.

Unfortunately, taking this “block it all in those spots” approach means that other programs your users may install from the web, like GoTo Meeting reminders and other small utilities that do have legitimate purposes, will also be blocked. There is a solution, however: You can create ad-hoc allow rules in the software restriction policy GPOs. Windows allows these “whitelisted” apps before it denies anything else, so by defining these exceptions in the SRP GPO, you will instruct Windows to let those apps run while blocking everything else. Simply set the security level to Unrestricted, instead of Disallowed as we did above.

AppLocker

AppLocker is the SRP feature on steroids. However, it only works on Windows 7 Ultimate or Windows 7 Enterprise editions, or Windows 8 Pro or Windows 8 Enterprise edition, so if you’re still on Windows XP for the time being or you have a significant contingent of Windows Vista machines, AppLocker will not do anything for you.

But if you are a larger company with volume licenses that is deploying the enterprise editions of the OS, AppLocker is really helpful in preventing Cryptolocker infections because you can simply block programs from running — except those from specific software publishers that have signed certificates.

Here’s what to do:

  1. Create a new GPO.
  2. Right-click on it to edit, and then navigate through Computer Configuration, Windows Settings, Security Settings, Application Control Policies and AppLocker.
  3. Click Configure Rule Enforcement.
  4. Under Executable Rules, check the Configured box and then make sure Enforce Rules is selected from the drop-down box. Click OK.
  5. In the left pane, click Executable Rules.
  6. Right-click in the right pane and select Create New Rule.
  7. On the Before You Begin screen, click Next.
  8. On the Permissions screen, click Next.
  9. On the Conditions screen, select the Publisher condition and click Next.
  10. Click the Browse button and browse to any executable file on your system. It doesn’t matter which.
  11. Drag the slider up to Any Publisher and then click Next.
  12. Click Next on the Exceptions screen.
  13. Name the policy something like “Only run executables that are signed” and click Create.
  14. If this is your first time creating an AppLocker policy, Windows will prompt you to create default rules — go ahead and click Yes here.

NOTE: Also take this opportunity to review the permissions set on your file server share access control lists, or ACLs. Cryptolocker possesses no special capabilities to override deny permissions, so if the user who gets infected is logged into an account that has very limited permissions, the damage will be minimal. Conversely, if you allow the Everyone group Write access for the NTFS permissions on most of your file shares, and you use mapped drives, one Cryptolocker infection could put you into a world of hurt. Review your permissions now. Tighten where you can. Work with your line of business application vendors to further tighten loose permissions that are “required” for “supportability” — often these specifications are needlessly broad.

Using either an SRP or an AppLocker policy, you can prevent Cryptolocker from ever executing and save yourself a lot of problems.

Mitigation: Previous versions (shadow copies) and ShadowExplorer

If you are unlucky enough to have been infected with Cryptolocker, then there are some mitigation strategies available to you. (Of course, you can always restore from backups as well.) Both strategies involve a tool called Shadow Copies that is an integral part of the System Restore feature in Windows. This is turned on by default in client versions of Windows, and best practices for storage administration have you turning this on manually on Windows Server-based file servers. If you have left this setting alone, you likely have backups right on your computer or file share.

Previous versions

To restore the previous version of a file using the traditional Windows interface, just right-click the file in question and choose Properties. If System Restore is enabled or your administrator has enabled Shadow Copies through Group Policy, you should be able to see the Previous Versions tab in the Properties window. This will list all of the versions on record of the file. Choose a version before the Cryptolocker infection and then click either Copy to export a copy of the file somewhere else, or Restore to pop the backup right where the encrypted file belongs. You can open the files directly from this box too if you are not sure of the exact date and time of infection.

ShadowExplorer

ShadowExplorer is a downloadable free tool that makes it much easier to explore all of the available shadow copies on your system. This is a useful ability when you have a wide range of files infected with Cryptolocker and need to restore a swath of them at once.

When you install and run the tool, you can select the drive and the shadow copy date and time from the drop-down menu at the top of the window. Then, just like in a regular Windows Explorer menu, you can choose the folder and file you want, and then right-click and select Export. Choose the destination on your file system to put the exported shadow copies on, and then you have your backup restored. Of course, this is a previous version, so it may not have the most current updates to your files, but it is much better than having lost them completely or having to pay a ransom for them.

The last word

Cryptolocker sucks. Its creator is a piece of scum. To trick users into downloading something that encrypts their files and then to demand from them hundreds of dollars to give their own data back to them is despicable. Please, take steps now so you don’t have to be the one ponying up your money and enabling this trash to continue.

 

Brit Charged with Hacking Federal IT

Military, NASA, EPA Systems Breached

By Eric Chabrow, October 29, 2013. Follow Eric @GovInfoSecurity

http://www.govinfosecurity.com/brit-charged-hacking-federal-it-a-6177?rf=2013-10-29-eg&elq=c4531a1be85749b5b332b32cee161f35&elqCampaignId=8179

Prosecutors have charged a 28-year-old resident of Great Britain with hacking thousands of U.S. government computers, including those at the U.S. Army and a number of federal agencies, to steal massive amounts of confidential information.

On Oct. 25, British authorities arrested Lauri Love of Stradishall, a village about a 90-minute drive north of London. Love, working with others, illegally accessed U.S. government computers, including those of the U.S. Army, Missile Defense Agency, Environmental Protection Agency and NASA, according to allegations in an indictment from a federal district court grand jury in Newark, N.J.

The indictment, which also includes a charge of conspiracy, says the breaches resulted in millions of dollars in losses, but prosecutors didn’t explain how they calculated those damages. Prosecutors in Virginia also charged Love with attacks on other computers in the United States.

“As part of their alleged scheme, [Love and others] stole military data and personal identifying information belonging to servicemen and women,” U.S. Attorney Paul J. Fishmansays in a statement. “Such conduct endangers the security of our country and is an affront to those who serve.”

Love faces a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, on each of the two counts. Officials did not provide a specific amount of the loss.

According to reports in the British media, U.K. authorities were holding Love in connection with an investigation by Britain’s National Crime Agency. British authorities charged Love under the Computer Misuse Act, which allows individuals to be arrested for launching cyber-attacks from within the U.K. against computers anywhere in the world. The reports say information accessed by Love included budgeting data and the disposal of military facilities.

Attacks Occurred Over Past Year

The indictment unsealed in Newark federal court says Love and his cohorts hacked thousands of computer systems since last October. Once inside the compromised networks, Love and his conspirators placed back doors within the networks that allowed them to return to the compromised computers to steal confidential data, including the personally identifying information of thousands of individuals, some of whom serve in the U.S. military, as well as other nonpublic material.

Authorities say Love and his conspirators planned the attacks in secure online chat forums, where they identified vulnerable computer networks and decided what type of information to pilfer with the goal to disrupt the operations of the U.S. government.

Citing prosecutors, the Associated Press says the indictment includes parts of instant message conversations that Love allegedly had with his partners, including one boasting about hacking the space agency’s networks: “ahaha, we owning lots of nasa sites.” In another exchange, Love marvels at the information the group has accessed, writing “this … stuff is really sensitive,” according to prosecutors.

Authorities allege the conspirators, who reportedly also include an Australian and a Swede, implemented SQL injection attacks and exploited vulnerabilities in the ColdFusion web application platform, which some of the targeted agencies employed. Once they infiltrated the networks, Love and his conspirators placed malware on the systems, creating back doors and leaving the systems vulnerable for later access.

Authorities say the conspirators used proxy and Tor servers to launch the attacks to mask their IP addresses and frequently changed their nicknames in online chat rooms, using multiple identities to communicate with each other.

AP reports authorities charged Love in New Jersey because he allegedly used a server in Parsippany, N.J.

 


 

Echoes of Echelon in Charges of NSA Spying in Europe


http://online.wsj.com/news/articles/SB10001424127887323936404578579811316559112

Updated July 1, 2013 9:09 p.m. ET

BRUSSELS—It isn’t the first time the U.S. has found itself in the center of a storm about spying on allies. The allegations that the National Security Agency spied on European Union institutions and friendly countries in continental Europe and further afield echo a furor of more than a decade ago.

Then, European politicians were scandalized by disclosures about a U.S. signals intelligence project supposedly called Echelon, said to be able to capture and analyze electronic signals—phone calls, faxes, emails and more—around the world.

Like the Echelon claims, the latest allegations, presumably from the computer of former U.S. intelligence contractor Edward Snowden, suggest espionage not for national-security reasons but for possible commercial advantage. The EU is the largest trading bloc in the world, and Jonathan Eyal of the Royal United Services Institute think tank in London, says it “would be naive to think it wouldn’t be subject to interception.”

But there are important differences. The first is the detailed nature of the allegations, far more specific than in the Echelon controversy. The other is the scale of the operations.

Mr. Eyal says the allegations suggest the devotion of U.S. intelligence to so-called big data: vacuuming up details of electronic communications from around the world. But there is a drawback: “Big data mean big leaks.”

The U.S. intelligence services, criticized for “stove-piping” information before 9/11, now seem to be sharing too much.

The fierceness of the reaction is especially evident in Germany, where there is huge sensitivity to invasions of privacy because of the pervasive spying on individuals in East Germany and under the Nazis. However, former intelligence specialists suspect some theater in the shocked condemnations from European politicians.

Former NSA director Michael Hayden told CBS television on Sunday that the U.S. Fourth Amendment that is held to protect the privacy of Americans isn’t an international treaty. He added: “Any European who wants to go out and rend their garments with regard to international espionage should look first and find out what their own governments are doing.”

Indeed, espionage isn’t forbidden under international law and it is more pervasive than ever. Whereas 60 years ago the world had two-dozen intelligence services of any importance, now most countries have some capacity, specialists say.

Intelligence services are constrained by their capabilities—and whether the expected benefits of an operation outweigh the risks. “The reality,” one former spy said, “is that friends do spy on friends,” but it is important not to get caught.

In one high-profile American case, Jonathan Pollard, a former civilian intelligence analyst, was sentenced in 1987 to life in prison for passing classified information to Israel.

The latest allegations throw light on another feature of international intelligence: the very close relationship of the five English-speaking allies, the U.S., U.K., Canada, Australia and New Zealand, particularly in sharing of signals intelligence. This alliance is based on the proposition that its members won’t engage in covert action against one another.

It has long been an irritant in relations between continental Europe and “Anglo-Saxon” countries that flares when there are new disclosures, such as those this week.

There could be consequences.The allegations may sour negotiations over a free-trade accord between the U.S. and EU. The increasingly powerful European Parliament—and national regulators—also have the ability to throw sand in the machine of data sharing with the U.S., for example on air passengers and financial transactions.

 

 

 

 

Espionage? Moi?

Sure, Paris is a hypocrite when it comes to spying. But it isn’t alone.

BY ADAM RAWNSLEY | JULY 1, 2013


http://www.foreignpolicy.com/articles/2013/07/01/espionage_moi_france

If you buy the latest reporting out of Europe, France is outraged, simply outraged, at news that the National Security Agency has been eavesdropping on the European Union through its mission in New York and embassy in Washington. French political parties are now rumbling about offering asylum to Edward Snowden, the former NSA contractor at the center of the leaks. The French government is demanding answers from the United States about its snooping. Monsieur Le Président himself, François Hollande, is calling for an end to the spying.

All of which is pretty hilarious, given France’s penchant for stealing American defense technology, bugging American business executives and generally annoying U.S. counterintelligence officials. If you’ve been paying attention, you know that France is a proficient, notorious and unrepentant economic spy. “In economics, we are competitors, not allies,” Pierre Marion, the former director of France’s equivalent of the CIA, once said. “America has the most technical information of relevance. It is easily accessible. So naturally your country will receive the most attention from the intelligence services.”

It’s thus tempting to toss aside France’s protests as rank and witting hypocrisy over economic espionage, which of course they are. But the leaks about the NSA’s collection of economic information and the difficulty in explaining the differences in how it’s used on opposite sides of the Atlantic spell trouble for American cyberdiplomacy around the world.

Lest you doubt that France has dirty hands in corporate spying, there’s a long, storied and public bill of particulars against La République Française’s intelligence agencies.

France’s espionage against American companies, described as “aggressive and massive,” dates back to the 1960s and is largely born out of a desire to prop up its defense industry, according to a report from the Government Accountability Office, which delicately referred to France as “Country B.” France lacks a domestic defense market large enough to support cutting edge development so it opts to steal American military technology in order to save R&D costs and enjoy advanced weaponry for its own military and competitive for exports abroad.

France’s economic espionage hasn’t been confined solely to America’s defense industrial base, though. In the late 1980s, French intelligence reportedly spied on premiere firms such as Texas Instruments and IBM in a bid to help out its domestic computer industry. Reports of hidden microphones in the seats of Air France picking up the indiscreet business chatter of American executives have since become common intelligence lore.

The snooping burst into the public sphere during the 1993 Paris Air Show, the world’s biggest aerospace confab. It’s usually prom for the aviation industry, a chance for countries to show off their latest and greatest fighter jets and commercial airliner. But the show hit a sour note when a CIA document listing dozens of American companies targeted for espionage by France leaked to the public, prompting firms like Pratt & Whitney and Hughes Aircraft to hold back products or withdraw from the show entirely.

 

The spying continues even today, according a recent U.S. National Intelligence Estimate. The NIE declared France, alongside Russia and Israel, to be in a distant but respectable second place behind China in using cyberespionage for economic gain.

 

White House backs global spying

By Julian Pecquet and Justin Sink     – 10/28/13 08:35 PM ET


http://thehill.com/homenews/administration/331085-white-house-backs-global-spying#ixzz2j7lvX2Ef

The White House on Monday defended the National Security Agency amid criticism from world leaders over its surveillance efforts.

The Obama administration’s already politically awkward dilemma became more challenging when a top Democratic ally slammed the latest allegations of spying on world leaders.

Senate Intelligence Committee Chairwoman Dianne Feinstein (D-Calif.), a staunch NSA supporter, said Monday that she “totally opposed” spying on U.S. allies. She called for a “total review” of intelligence gathering.

Meanwhile, nine European parliamentarians arrived in Washington, D.C., to investigate the latest revelations from former NSA contractor Edward Snowden.

These include claims that the agency tapped German Chancellor Angela Merkel’s cellphone and monitored the communications of tens of millions of French and Spanish citizens.

White House press secretary Jay Carney said the NSA’s work “saves lives.”

“If we’re going to keep our citizens and our allies safe, we have to continue to stay ahead of these changes, and that’s what our intelligence community has been doing extraordinarily well,” Carney said.

But there’s evidence the controversy is wearing on the White House both at home and abroad.

Foreign governments that have been subjected to U.S. spying have launched at least three separate efforts aimed at curtailing the practice.

Germany and Brazil have joined hands at the United Nations on a resolution enshrining an international right to privacy. At least 19 other countries have signed on, according to Foreign Policy, including U.S. allies France and Mexico.

Germany and France are leading an effort to craft a new code of conduct between spy agencies on both sides of the Atlantic. The heads of Germany’s intelligence services are expected to travel to Washington, D.C., shortly to meet with administration officials.

Nine European Union (EU) lawmakers met Monday with the chairman of the House Intelligence panel and officials from the departments of Commerce, Treasury and Homeland Security as they kicked off a weeklong visit. The legislators are members of the European Parliament’s Civil Liberties panel, which has been tasked with conducting an in-depth inquiry into the electronic mass surveillance of EU citizens.

“These are concerns we feel have to be taken seriously,” Claude Moraes, the lead author of the committee’s report, told reporters after meeting with House Intelligence Committee Chairman Mike Rogers (R-Mich.) on Capitol Hill.

Rogers said he’d had a “very candid” meeting with the Europeans, “which is important if we’re going to get through some of our differences.” He said the panel would be sending a delegation to Brussels, the de facto EU capital, “soon.”

Moraes praised Rogers’s move to “continue this discussion in Brussels because trust has to be rebuilt.”

Republicans on Capitol Hill slammed the president after The Wall Street Journal reported that Obama was unaware the NSA was targeting Merkel’s cellphone before an internal audit earlier this summer.

“If the executive did not know, it’s a mistake of both the people doing it not informing their superiors, and their superiors not questioning what was going on,” Sen. John McCain (R-Ariz.) told the paper.

The Arizona lawmaker called for a congressional investigation and hearings examining the nation’s surveillance techniques in light of the revelations.

At the White House, Carney would not confirm whether Obama had been in the dark over the surveillance program.

The administration hopes that by cooperating with European investigators and stressing the security benefits of surveillance programs, it can sooth concerns.

“We understand that German officials plan to travel to Washington in coming weeks, and the U.S. government looks forward to meeting with them,” National Security Council spokeswoman Caitlin Hayden told The Hill.

Still, EU leaders have warned there will be consequences if the NSA doesn’t back down.

“The NSA scandal was a wake-up call,” European Parliament President Martin Schulz said last week after legislators voted to recommend suspending data sharing on terrorism financing. “Now that there is evidence that EU embassies, European parliaments, European heads of government and citizens have been spied on by the USA on a grand scale, the European Parliament has called for the suspension of the TFTP [Terrorist Finance Tracking Program] Agreement.”

The European Parliament warns there could also be “consequences” for the sharing of airline passenger manifests with the Department of Homeland Security as well as “safe harbor” privacy certifications allowing companies to transfer data on European customers to the U.S. Some European lawmakers are also pressing for a delay in a U.S.-EU trade pact that would be the world’s most expansive to date.

Some U.S. intelligence experts think the latest trans-Atlantic row will blow over soon enough, however. They agree with the White House and Congress that U.S. allies are also heavily engaged in spying and are merely responding to public pressure.

“Yes, everybody does it, but not everybody has the same capabilities as the U.S.,” said Paul Pillar, a 28-year veteran of the U.S. intelligence service who’s now teaching at Georgetown University. “The officials who are part of the delegation know that full well; they also know that when something like this becomes public, they can’t just say, ‘Everybody does it, so we don’t care.’ They have to express public umbrage.”

 

Microsoft plans to stop issuing security patches for Windows XP next April, leaving mllions of PCs even more vulnerable to hackers.

Byron Acohido, USA TODAY 12 p.m. EDT October 29, 2013

http://www.usatoday.com/story/cybertruth/2013/10/29/windows-xp-users-six-times-more-likely-to-be-hacked/3287615/

SEATTLE – Microsoft’s venerable Windows XP operating is six times more likely to be successfully hacked than newer Windows 7 and Windows 8 personal computers.

Microsoft disclosed that metric at the RSA Conference in Amsterdam this morning. The software giant hopes to compel XP users to dump XP and upgrade to Windows 7 or Windows 8 — before it ends all XP support, including issuing security patches. That will happen come April 8, 2014.

“XP has been a beloved operating system for millions and millions of people around the world, but after 12 years of service it simply can’t mitigate the threats we’re seeing modern-day attackers use,” says Tim Rains, director of Microsoft Trustworthy Computing.

Criminal hackers, as you might imagine, can’t wait until April 8. That’s because most consumers are clueless about the true scope of security risks. And thousands of companies, for economic and operational reasons, appear intent on continuing to use XP machines well after Microsoft officially stops supporting XP, which was launched in October 2001.

But the intense good-guy vs. bad-guy race to find and exploit new holes in Windows 7 and Windows 8 is not going to stop. The key point is this: Microsoft will continue to issue security patches for Windows 7 and 8, but not for XP.

Security experts anticipate that cybercriminals will move to take advantage.Historically, about two thirds of malware developed for Windows 7, for instance, work well on Windows XP, says Wolfgang Kandek, chief technology officer at vulnerability management firm Qualys.

Every time Microsoft issues new security patches for Windows 7 or 8, which it does on the first Tuesday of each month, hackers will get a list of fresh, never-to-be-patched security holes in most XP machines still in use.

“Attackers can take information about new problems with Windows 7 and say, ‘I wonder if this works also in XP,'” says Kandek. “With no more patches available, XP will make a good target for hackers.”

The sheer number of Windows XP machines still in operation provide ample incentive for the bad guys. Of the estimated 1.3 billion Windows PCs in use globally, some 21% use Window XP, according to StatCounter. And if you count the the PCs accessing the Internet, as NetMarketShare.com does, some 31% are Windows XP machines.

Microsoft has stuck by XP longer than any previous version. It went eight years before cutting support for Windows NT, 11 years before doing the same with Windows 2000 and it will go 13 years before pulling the plug on XP, points out Rob Kraus, research director at security management firm Solutionary.

“Having an operating system in place for 13 years is a testament to the work Microsoft has put into the OS,” Kraus says.

It was with XP Service Pack 2 in 2004 that Microsoft first enabled firewalls for Windows users by default. Subsequently, the software giant endured costly delays in the launch of XP’s successor, Windows Vista, mainly to make major security upgrades. And then it reinforced those security protections in Windows 7 and 8.

“Microsoft fundamentally redesigned the operating system after XP,” says Phil Lieberman, president of security consultancy Lieberman Software. “Trying to patch such an old operating system is akin to doing repairs to an old building that everybody agrees needs to be torn down.”

Even so, it’s highly likely millions of consumer and business XP machines will continue in use after April 8. A French company, Arkoon, has even begun offering a service that will identify vulnerabilities in XP machines after Microsoft stops issuing security patches.

And Microsoft itself is offering a failsafe for companies who can’t , or won’t, sunset XP. They might qualify to purchase “custom support” from Microsoft to receive critical security updates and related technical support.

Companies that face switching large numbers of XP workstations or that risk losing use of old business apps that won’t run well on newer versions of Windows must do the cost vs. benefit calculation.

Pierluigi Stella, Chief Technology Officer of Network Box USA , says for many companies still using XP, the wisest course will be to bite the bullet and upgrade.

“Generally speaking, most of companies typically can be migrated without major issues,” he says. “It’s only a matter of planning, budgeting and executing.”

 

NSA director Keith Alexander says European spying reports are false

By JENNIFER EPSTEIN and JOSH GERSTEIN | 10/29/13 2:56 PM EDT

http://www.politico.com/story/2013/10/nsa-director-keith-alexander-says-european-spying-reports-99043.html#ixzz2j8msw2ML

National Security Agency director Gen. Keith Alexander on Tuesday called “completely false” press reports that the NSA had gathered information on millions of telephone calls in countries across Europe.

At a House Intelligence Committee hearing, Alexander said the data in question came from foreign intelligence agencies and was usually gathered outside Europe.

“This is not information we collected on European citizens,” Alexander said, citing reports of snooping in Italy France, and Spain. “It represents information that we and our NATO allies have collected in defense of our countries and in support of military operations.”

Director of National Intelligence James Clapper sought to reassure a worldwide audience Tuesday that the U.S. is not cavalier about the privacy of Americans or foreigners.

“What we do not do is spy unlawfully on Americans or, for that matter, spy indiscriminately on the citizens of any country,” Clapper said during the House hearing. “We do not spy on anyone except for valid foreign intelligence purposes.”

The hearing came as European leaders and citizens are in an uproar about reports of widespread U.S. surveillance of e-mails and telephone communications both of average citizens and of prominent politicians.

Speaking in advance of the House hearing, White House press secretary Jay Carney would not confirm a Wall Street Journal’s story that some snooping attributed to the NSA in other reports was conducted by French and Spanish intelligence services in war zones and then passed to the NSA.

“We have important cooperative relationships with the security agencies and intelligence agencies” of allies around the world, Carney said, but he declined to “get into the specific alleged intelligence activities.”

Citing documents provided by Edward Snowden, newspapers in Italy, France and Spain have reported in recent days that the NSA monitored tens of millions of phone calls in both countries.

During his appearance on Capitol Hill, Clapper also warned Congress not to overreact to the stream of disclosures by passing legislation that undermines important counterterrorism programs.

“We must remain mindful of the potential impact of over-correcting the authorizations of the intelligence community,” Clapper said.

Other players in Congress are already moving ahead with reform legislation. Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) and House Judiciary Committee member Jim Sensenbrenner (R-Wis.) introduced legislation Tuesday that would end a National Security Agency program that collects information on virtually all telephone calls made to, from or within the United States.

The House narrowly defeated a similar measure in July, but the prospects for such an aggressive move passing Congress are doubtful. Democrats in the Senate appear divided about the notion of cutting off the domestic call-tracking program.

A member of the European delegation in Washington to discuss surveillance issues suggested that the intelligence sharing might have extended into surveillance of foreign leaders, and that the NSA may not have directly tapped into German Chancellor Angela Merkel’s cell phone.

“The truth of a lot of these allegations has still not been actually explored properly,” European Parliament member Timothy Kirkhope told POLITICO on Monday.

“Who it was for instance who was listening to the chancellor’s conversations, if they were? Was it the Americans at all? I’m not convinced myself. I think it may be closer to home,” he said cryptically.

The White House is considering ending U.S. surveillance of friendly foreign leaders, but no final decisions have been made, a senior administration official told POLITICO late Monday. “While we have made some individual changes…we have not made across the board changes in policy like, for example, terminating intelligence collection that might be aimed at all allies,” the official said.

That came after Sen. Dianne Feinstein (D-Calif.), the chairwoman of the Senate Intelligence Committee, made a more sweeping claim, saying that the White House had told her that “collection on our allies will not continue.” That assessment, the administration official said, was “not accurate.”

 

Treasury says taxpayers’ GM bailout loss now $9.7B

Fred Meier, USA TODAY 3:37 p.m. EDT October 29, 2013

http://www.usatoday.com/money/

The latest quarterly report from the Treasury Department says it has booked a $9.7 billion loss on the $49.5 billion bailout of General Motors.

The report to Congress is from Treasury’s special inspector general overseeing TARP, the Troubled Asset Relief Program that was the bailout fund for troubled financial and auto companies.

Taxpayers originally held 60.8% of GM in exchange for the bailout loans. Treasury has been selling down that stake and says in the report:

“Through a series of stock sales, Treasury has divested its preferred stock and most of its common stock, reducing its stake to 7.3%. Because the common stock sales have all taken place below Treasury’s break-even price, Treasury has so far booked a loss of $9.7 billion on the sales.”

The 7.3% equates to about 101 million shares of GM common stock, and to break even it now would have to sell those shares for an average of about $150. GM closed Monday at $35.80 making the remaining taxpayer stake worth about $3.6 billion.

The Treasury is conducting a new round of selling and has said it will divest all the shares by the end of the first quarter.

 

Motorola’s modular smartphone will be the anti-iPhone

http://www.washingtonpost.com/blogs/the-switch/wp/2013/10/29/motorolas-modular-smartphone-will-be-the-anti-iphone/?wprss=rss_technology&wpisrc=nl_tech


 

BY BRIAN FUNG

October 29 at 10:17 am


(Motorola)

Google owns Motorola. So it’s no surprise that Motorola’s latest smartphone idea draws inspiration from Google’s Android operating system — and offers another foil to Apple’s “closed” iOS.

Motorola’s vision of the future smartphone is open source: The device’s hardware will be customizable, and not just when you’re buying it from the store. The company’s Project Ara hopes to turn your phone into a physical platform. As with PCs, the device will be modular, meaning users can swap out components whenever they feel like it. Did you drop your phone and break the screen? Just replace the part that’s damaged all by yourself. Want to take better pictures? Just unplug the camera and slip in a new one. The phone will automatically detect the new component and integrate it into the rest of the system.

In many ways, a completely modular phone would be the antithesis of the iPhone. Those iconic smartphones, by design, are not upgradable — at least, not unless you fork over several hundred dollars for a new one. Consumers can’t easily take an iPhone apart and see what’s inside, let alone install new parts themselves. All that mystery and secrecy makes the iPhone seem kind of magical — and thus impenetrable to the average user.

Motorola’s bet, however, is that consumers will appreciate a more accessible smartphone, one that users can tinker with and repair themselves without having to go to a Genius Bar or another company store for help. (That convenience could also inspire users to hold on to their devices longer, reducing e-waste and countering the trend in the device industry toward shorter and shorter product life-cycles.)

Motorola appears to be so convinced of the modular future that it’s partnered with the Dutch designer Dave Hakkens, whose similar Phonebloks concept has won over nearly 1 million supporters. 

 

 

DoD’s top officers lack skills needed to lead tomorrow’s military, report says


Monday – 10/28/2013, 2:00pm EDT

http://www.federalnewsradio.com/145/3492845/Report-DoDs-top-officers-lack-skills-needed-to-lead-tomorrows-military

By     Michael O’Connell

Retired Lt. Gen. Dave Barno, senior adviser and fellow, Center for a New American Security

Today’s generals and admirals don’t have the skills to address tomorrow’s military challenges, a new report concludes. Just because you’re a good soldier doesn’t mean you’re a good office manager.

Retired Lt. Gen. Dave Barno, a former top commander in Afghanistan, said that the military’s top leaders have been through 12 years of demanding conflicts in two different theaters of war, but that has not prepared them for the enterprise side of managing in the Department of Defense. He’s the author of a new report released today by the Center for a New American Security addressing this concern.

“Since 2003, we fought a very long, bloody war in Iraq alongside the one in Afghanistan,” he said. “And the general officer corps, and in many cases admirals in the Navy, have been deeply involved in this. For the last decade, it has been in some ways their entire focus. So, their ability to have broadening assignments and even have their normal educational opportunities to grow into their positions and to learn the bigger enterprise of defense has been missing in a lot of ways.”

Barno told the Federal Drive with Tom Temin and Emily Kopp incoming generals need time to learn how to do their jobs.

These days, it’s rare for a general to have an assignment last four or five years. Typically, tours of duty last only one or two years, which doesn’t allow them the opportunity to really learn their jobs in depth, Barno said.

“One of our recommendations is to make some significant changes to how long we keep successful people in their positions,” Barno.

Looking back over 40 years, Barno said he found shorter tours to be a relatively recent phenomenon. For example, Adm. Hyman Rickover, who many considered the father of the Navy’s nuclear propulsion program, held his job for more than three decades. More recently, Gen. Stanley A. McChrystal was commander of the Joint Special Operations Command for five years.

It’s not just how much time officers spend on an assignment, it’s also the lack of scope in the work they’re focused on, Barno said. Officers specialize on combat and combat-related tasks, usually through the first 20 years of their careers. After that, though, as they become flag officers, those same officers are expected to acquire a whole new skill set.

“They’re expected to go from being very, very proficient at a fairly narrow set of skills, in some ways, to being good at everything,” Barno said. “That’s where the term general comes from. They are generalists. But the world that they’re going to inherent looks a lot less like the combat or combat-support environment they grew up in. It looks a lot like corporate business.”

Barno found that two-thirds of what general-rank officers do is “managing the enterprise” of the military, something they have very little experience doing.

“They can sometimes fall short when they’re put in those positions, which are the predominant positions they find as flag officers,” Barno said.

He recommended that at about the selection point for a two-star general, an officer should be put in one of two tracks. The first track would focus on combat, where an officer would continue to receive warfighting training so he or she could continue to lead the military’s warfighting effort.

The second would be an enterprise track, which accounts for more than half of all the general and admiral positions in the military.

Barno said this track would resemble an MBA program that would provide “an education in how to run our corporate enterprise, which the Defense Department is perhaps one of the largest in the world. They need something like that.”

The study also found education for generals and admirals drops significantly when compared to the first 20 years of their careers.

“Once you become a general, you can count your educational opportunities in days or weeks,” Barno said. “For an additional 15 or 20 years of service, that just doesn’t seem to make sense to us.”

Sequestration and budget cuts have impacted the entire military, so it’s not surprising that funding for training senior officers remains tight — not just for general ranks either, but for up and coming majors and lieutenant colonels, who will be the military’s future leaders.

In addition, the report suggests the military expand the opportunities for officers in their first 20 years to learn more about enterprise. Some of that may include training with industry and seeing how non-defense agencies do their work.

DoD should also look at expanding opportunities for graduate-level education and training, according to the report.

“That has diminished by probably 75 percent of what it was when I was a junior officer, just primarily due to budget cuts,” Barno said. “That’s an incredible opportunity for officers to get to know their counterparts out there in the broader population by being in civilian graduate schools, and also just broaden their horizons beyond the very narrow military warfighting focus.”

 

McKeon Taps Thornberry to Lead Acquisition Reform Effort

http://armedservices.house.gov/index.cfm/2013/10/mckeon-taps-thornberry-to-lead-reform-effort

Oct 29 2013

Washington, D.C. – House Armed Services Committee Chairman Howard P. “Buck” McKeon today announced that Vice Chairman Mac Thornberry will lead a long-term effort to reform the Department of Defense including a hard look at acquisition.

At an Armed Services Committee hearing today, Chairman McKeon said:

“While this Committee has led successful efforts to improve the way the Department acquires items and services, there are still significant challenges facing the defense acquisition system. We cannot afford a costly and ineffective acquisition system, particularly when faced with devastating impacts of repeated budget cuts and sequestration. The Congress, together with the Department of Defense and industry, must be willing to do the hard work to find root causes, look past band-aid fixes and parochial interests, and have the courage to implement meaningful, lasting reform. To this end, I have asked our Vice Chairman, Mr. Thornberry, in consultation with our ranking member, to engage in a long-term DOD reform effort that includes a hard look at acquisition.”

Vice Chairman Thornberry wrote an op-ed for Real Clear Defense today outlining his goals for the new acquisition reform effort.

Reforming a Defense Acquisition System That Costs Money, Lives

By Vice Chairman Mac Thornberry

Real Clear Defense

October 29, 2013

A scan of any week’s headlines makes clear that the world is not getting any safer, nor are our security challenges getting any simpler. We face a complex array of threats, known and unknown.Yet, we will have to meet those threats with tight defense budgets for the foreseeable future. Even if Congress and the President can agree to find other savings to replace further defense cuts under sequestration — which we should — the United States will still have to meet essentially unlimited threats with quite limited resources. That means it is more important than ever to get the most value possible out of each dollar spent on our national security.

Too much of the money spent now is not used as efficiently or as effectively as it should be. Upward of 10 percent of the entire federal discretionary budget goes to buying things for our troops, ranging from tanks to toilet paper. Reform of defense acquisition – the goods as well as the services we buy – must be a top priority. There are a lot of good people in and out of government who work hard to see that our military is provided with the best. But they operate in a system that too often works against them. Heavy federal regulations drive up the cost of military hardware.

There are nearly 2000 pages of acquisition regulations on the books, many of which have not been reviewed in years. Too often, Congress and the Pentagon respond to cost overruns by adding another law or an additional oversight office.The situation has gotten so bad that in order to supply our troops in Iraq andAfghanistan, entire new streamlined procurement systems were created in order to circumvent the normal process.To his credit, Secretary Hagel recently announced an effort to cut 20 per cent of headquarters personnel over the next several years.

But cuts alone, whether in people or in programs, will not fix the system. It will take Republicans and Democrats, House and Senate, Defense Department and Military Services, industry and trade associations, as well as smart, experienced individuals in and out of government all working together to fix these problems.The cost of the current system is enormous.

Too much money and manpower is poured into processes and systems that do not yield a single bullet or minute of training. The weapons and equipment that are produced are too often late and over budget. But the cost is in more than just dollars. Delays in getting top quality equipment into the hands of our troops can cost lives, and the overall security of our nation can be affected.Later this week, a bust of Sir Winston Churchill will be unveiled for permanent display in the United States Capitol.

Upon his appointment as Minister of Munitions toward the end of World War I, Churchill found decision-making at the Ministry a bureaucratic mess. He once remarked that “Everyone claims his margin at every stage, and the sum of the margins is usually ‘no’.” Churchill reorganized and simplified decision-making at the Ministry, and the results included a doubling or better in the production of tanks, field guns, and aircraft, all of which were crucial to final victory.The volatile security environment, our budget constraints, and changes in the way DOD operates have all come together to make this the time to act on defense reform in our own time. The bottom line is that we can do better – and we must.

Rep. Mac Thornberry (R-TX) is the Vice Chairman of the House Armed Services Committee and Chairman of the HASC Subcommittee on Intelligence, Emerging Threats and Capabilities.

 

Retirees to get 1.5 percent inflation increase to benefits

BY ERIC YODER

http://www.washingtonpost.com/blogs/federal-eye/wp/2013/10/30/retirees-to-get-1-5-percent-inflation-increase-to-benefits/

October 30 at 9:16 am

Federal retirees, Social Security recipients, military retirees and beneficiaries of several other government programs will receive an increase of 1.5 percent in their benefits in January.

The cost of living adjustment, or COLA, is based on a figure announced this morning by the Labor Department reflecting inflation over the 12 months ending in September.

Joseph A. Beaudoin, president of the National Active and Retired Federal Employees Association, called the COLA “welcome news for countless Americans who rely on the increase to keep up with the rising price of food, housing, transportation and medical care.”

As of October 2012, there were 1,933,062 federal retirees, about three-fourths of them drawing benefits from the Civil Service Retirement System, which generally applies to those hired into the government before 1984.

The average monthly CSRS benefit was $3,181 for retirees. For those receiving benefits under the newer Federal Employees Retirement System, the average retiree annuity was $1,175. The figures don’t take into account the 1.7 percent inflation adjustment paid in January of this year.

That means the COLA translates into a monthly increase of about $50 on average under CSRS and $20 under FERS; however, with some exceptions, FERS doesn’t pay COLAs to retirees under age 62.

In addition, there were 576,467 survivor beneficiaries with an average benefit of $1,446 per month under CSRS and $484 under FERS as of last October, the most recent accounting of federal retirement figures.

While civil service retirement benefits on average are lower under FERS, those under that system also pay into Social Security and receive benefits from that program. Social Security is not part of the CSRS system, and while CSRS retirees may be eligible for Social Security through other employment, those benefits may be relatively low and typically are subject to an offset that further reduces their value.

The COLA for retirees is determined separately from the raise for active employees. A 1 percent raise for employees is in the works, although not yet finalized. That raise, which would be the first increase in salary rates since 2010, would take effect in early January, varying somewhat by agency pay cycles; it would not go to members of Congress, however.

Beaudoin said the inflation measure the government uses to set the COLA understates cost increases experienced by retirees, who spend a larger percentage of their incomes on health care than does the general population. The average enrollee premium for the health plan that covers federal employees and retirees will rise by 4.4 percent in 2014.

He urged that Congress reject proposals to switch to the “chained” consumer price index measure designed to take into account changes in buying patterns and that would produce slightly lower annual COLA figures. Instead, an inflation measure that better reflects spending by older persons should be used, he said in a statement.

COLAs on civil service benefits, although not on Social Security payments, are prorated for those on the retirement rolls less than a full year.

The annual COLA announcement was delayed two weeks because of the partial government shutdown this month.

 

Sharing Data Between Top Secret and Unclassified Security Domains

October 31, 2013

http://defense-update.com/20131031_sharing-data-top-secret-unclassified-security-domains.html

Lockheed Martin has developed a cyber security solution that allows intelligence to be securely shared among personnel working at all security levels – from highly classified intelligence sites to unclassified users in the field. This high assurance information solution, called Trusted Sentinel, allows data to be manually and/or automatically transferred between two or more differing security domains by using a single consolidated configuration of hardware and software.

“In today’s complex cyber threat environment, protecting and securing our data is critical,” said Jim Quinn, vice president of C4ISR Systems for Lockheed Martin Information Systems & Global Solutions. “Trusted Sentinel addresses the difficult challenge of sharing relevant information across security domains and between organizational echelons.”

Trusted Sentinel supports the secure flow of intelligence data between all clearance levels by ensuring that sensitive information does not escape the highest clearance levels. It also ensures that information traveling back up the chain from un-cleared sources does not contain malicious code that could corrupt secure networks. By incorporating a suite of network protection capabilities that ‘guards’ classified data from unauthorized access, Trusted Sentinel controls the release of information commensurate with the security level of the information being processed, including clearance level, formal access approval and user need as determined by assigned confidentiality requirements.

Trusted Sentinel was developed by combining the capabilities of two of Lockheed Martin’s Unified Cross Domain Management Office (UCDMO)-approved Cross Domain Solutions. The UCDMO is a joint Department of Defense and Intelligence Community organization that provides centralized coordination and oversight of cross-domain initiatives across these communities. The solution, which has received design approval from the accrediting organization, is being prepared for placement into an operational environment.

 

How General Motors Was Really Saved: The Untold True Story Of The Most Important Bankruptcy In U.S. History

Editor’s Note: Lots of people–including President Obama–have trumpeted their role in the success of the government-backed turnaround plan that saved General Motors, the most important industrial company in the history of the United States.

But on the fifth anniversary of the crisis, Forbes presents an exclusive, unprecedented look at what really happened during GM’s darkest days, how a tiny band of corporate outsiders and turnaround experts convened in Detroit and hatched a radical plan that ultimately set the foundation for the salvation of the company.

Author Jay Alix, one of the most respected experts on corporate bankruptcy in America, was the architect of that plan, and now, for the first time, he reveals How General Motors Was Really Saved.

Forbes.com

By Jay Alix

http://www.forbes.com/sites/danbigman/2013/10/30/how-general-motors-was-really-saved-the-untold-true-story-of-the-most-important-bankruptcy-in-u-s-history/

For months the news was horrific, a pounding beat of warm-up obituaries for what once had been America’s greatest and most influential corporation: General Motors. At death’s door or already in the graveyard were Bear Stearns, Lehman Brothers, Merrill Lynch, AIG and Citibank. The mood was apocalyptic.

With car sales in a free fall from the worst economic downturn since the Great Depression, GM was losing billions and running out of cash. By the time the company closed its books on 2008 it would be in the red by a staggering $30.9 billion. Chief executive Rick Wagoner led the auto delegation in Washington seeking government funding to save the industry and keep GM out of bankruptcy.

Five years later, after an unprecedented government equity investment, GM is thriving and the Treasury plans to sell its remaining stake in the coming months. With countless articles and books now written about the GM restructuring and turnaround–not to mention three years of trumpeting by the Obama Administration taking full credit for the turnaround’s success–the most startling aspect of the prevailing narrative is that the core of how the restructuring really happened, inside GM, is yet to be fully told.

In the popular version of the company’s turnaround story, as GM teetered toward liquidation in 2009, an Obama-appointed SWAT team, led by financier Steven Rattner, swept in and hatched a radical plan: Through a novel use of the bankruptcy code they would save the company by segregating and spinning out its valuable assets, while Washington furnished billions in taxpayer funds to make sure the company was viable.

The real GM turnaround story, significant in saving the auto industry and the economy, is contrary to the one that has been published. In fact, the plan that was developed, implemented and then funded by the government was devised inside GM well before President Obama took office. In what follows, the inside story of this historic chapter in American business unfolds, laying bare the key facts.

GM’s extraordinary turnaround began long before Wagoner went to Washington in search of a massive loan to keep GM alive. My involvement in that story began in GM’s darkest days, five years ago on Sunday, Nov. 23, 2008, when I visited Wagoner at his home that morning, presenting a novel plan to save General Motors.

As a consultant with expertise in restructurings and turnarounds, I had completed a half-dozen assignments at GM over the years. I had worked with Wagoner in 1992 when he became chief financial officer. I was asked to come in for a two-year stint as CEO of GM’s National Car Rental, the first time GM had recruited an outsider to lead a turnaround in one of its subsidiaries.

By 2008 I had over 20 years of experience with the auto industry and almost 30 years of working on turnarounds. But for the past eight years I had backed away from business and my firm, AlixPartners, to care for my daughters after the death of my wife. I was essentially “retired.” But GM’s enveloping crisis and my friendship with Wagoner would bring me out.

Early on that November Sunday I called Wagoner at his home in a Detroit suburb. I asked to see him right away, explaining that I had a new idea that could help save the company.

Three hours later I walked through his front door and into his family room. I knew Wagoner believed GM could not survive a bankruptcy. Studies showed consumer confidence would crash. No one would buy a car from a company that was bankrupt. However, what I knew about the economic crisis and GM’s rapidly deteriorating liquidity position told me the company had no choice but to prepare for a bankruptcy.

Yet I agreed with Wagoner. For a global company as big and complex as GM, a “normal” bankruptcy would tie up the company’s affairs for years, driving away customers, resulting in a tumultuous liquidation. It had happened to other companies a fraction of GM’s size. It would mean the end of GM.

“I don’t think the company will survive a bankruptcy,” he told me. “And no one has shown me a plan that would allow it to survive a bankruptcy.”

 

“Filing bankruptcy may be inevitable, Rick. But it doesn’t have to be a company-killing bankruptcy,” I said. “I think we can create a unique strategy that allows GM to survive bankruptcy.”

To be sure, my idea, sketched out on a few pages, was provocative. I knew as I pitched it to Wagoner that it might raise eyebrows, if not outright objection, from others who believed their plans would be safer.

In short, I proposed that GM split into two very separate parts before filing: “NewCo,” a new company with a clean balance sheet, taking on GM’s best brands and operations; and “OldCo,” the leftover GM with most of the liabilities. All of the operational restructuring to make the new company profitable would also occur before a bankruptcy filing so GM could go through bankruptcy in a matter of days–not months or years with creditors and other litigants fighting over the corporate carcass while the revenue line crashes.

Seeking funding from the government, or any source, we would use Bankruptcy Code Section 363, which allows a company to sell assets under a court-approved sale. Typically, 363 is used to sell specific assets, from a chair and desk to a factory or division, but not the entire stand-alone company. Under this strategy GM could postpone filing a plan of reorganization and a disclosure statement, which consume months and fuel a blizzard of litigation while market share and enterprise value bleed away.

Wagoner listened, challenging every assumption. After discussing it with board members, Rick asked me to come to GM and work on the plan, one of several alternatives GM would consider. I volunteered to help GM on a pro bono basis. But what I could never anticipate was how deep and strong the opposition to my plan would ultimately be.

***

On Tuesday, Dec. 2, I pulled into GM’s Detroit headquarters at 7 a.m. after most of the company’s executives had already arrived for work. I was given a small cubicle and conference room on the 38th floor, a spacious but empty place that held GM’s corporate boardroom and a warren of cubicles reserved for visiting executives and board members.

Each day I would be the sole person who got off the elevator on 38, one floor down from where Wagoner and his team worked. It was eerie and quiet, the main wall lined with large oil paintings of GM’s past chairmen. I’d walk past those gilded frames daily, feeling the full weight of their gaze, reminded of the history and past glory of what had been the most powerful corporation on earth.

Spending 18 hours a day digging through the numbers in GM’s filings, I began working in greater detail on the outlines of the plan and making some assumptions on what assets should be transferred to NewCo and what would stay in OldCo, which I dubbed Motors Liquidation. There were thousands of crucial questions that had to be asked and answered with management: Which brands and factories would survive? Which ones would the company have to give up? What would be the endgame strategy? What would be the enterprise value of NewCo? The liquidation value of OldCo?

Wagoner and COO Fritz Henderson were developing three alternative plans. First, they hoped to avoid bankruptcy altogether, believing the government would provide enough funding to bring GM through the crisis. At least two cabinet members in the Bush Administration and others had provided assurances to Rick and board members that government help would be forthcoming.

 

Second was a “prepackaged” bankruptcy plan being developed by general counsel Robert Osborne with Harvey R. Miller, the dean of the bankruptcy bar and senior partner at Weil, Gotshal & Manges. Under this plan, GM would prepare a reorganization in cooperation with its bond creditors that would take effect once the company went into a Chapter 11 bankruptcy. The goal of a so-called prepack is to shorten and simplify the bankruptcy process.

Miller commanded great respect in bankruptcy circles and in the GM boardroom, and for good reason. At the age of 75 Miller was the only attorney in the country who had successfully dealt with as many high-profile bankruptcies. Miller was already in the middle of the largest corporate liquidation ever, at Lehman Brothers.

And third was the NewCo plan, based on years of experience at AlixPartners, where we had a major role in 50 of the 180 largest bankruptcies over $1 billion in the past 15 years. GM had also retained Martin Bienenstock, the restructuring and corporate governance leader from Dewey & LeBoeuf, to help develop the NewCo plan as well.

Inside and outside GM, the pressures mounted. Each day the company lost more money and got closer to running out of cash. In Washington several prominent politicians began calling for Wagoner’s resignation. On Dec. 7 Senator Chris Dodd, the Connecticut Democrat, told Face the Nation’ s Bob Schieffer that Wagoner had to move on.

The next day I went to see Wagoner to offer encouragement and advice. It is not unusual for a CEO to lose his job when his company is forced into bankruptcy and a major restructuring. I’d seen this play out many times before and learned the boss should never volunteer his resignation without first putting in place the things that would help the organization survive. I wanted to help fortify Rick’s resolve and keep us all focused on the endgame.

From my perspective Wagoner had been unfairly treated by many politicians and the media. Since taking over as CEO in 2000, working closely with Fritz and vice chairman Bob Lutz, Rick orchestrated large, dramatic changes at the company. They closed GM’s quality, productivity and fuel-economy gaps with the world’s best automakers, winning numerous car and truck awards. They built a highly profitable business in China, the world’s biggest potential car market. They reduced the company’s workforce by 143,000 employees, to 243,000. They reached a historic agreement with the UAW that cut in half hourly pay for new employees and significantly scaled back the traditional retiree benefit packages that had been crippling the company, while also funding over $100 billion in unfunded retiree obligations. And he was able to accomplish all these changes without causing massive disruptions among GM’s dealers or major strikes with the unions.

Ultimately, those structural changes positioned the company not only to survive but also to bring about the extraordinary turnaround. But now, with the economy and the company in free fall, all of that hard work seemed to be forgotten.

It was late in the day on Dec. 8, around 5:30 p.m., when I walked into Wagoner’s office.

“Rick, do not resign or even offer to resign,” I told him. “Later you may have to fall on your sword to get the funding deal done with the government, but don’t do it until we get the three things we need. If you’re going to be killed on the battlefield, we need to make it worth it.”

 

“And what is that exactly?” he pressed me.

“We have to get government funding of $40 billion to $50 billion. Plus, we need an agreement with the government and GM’s board to do the NewCo plan. And we must put a qualified successor in place. It must be Fritz and not some government guy. It’s going to be painful for you, but you’ve got to stay on the horse until we get all three.”

Wagoner was already there. He had no intention of resigning and was determined to complete his mission. I gave him a bear hug, letting him know he had my full support.

***

When we gathered for a telephonic board meeting on Dec. 15, the mood was urgent, the tension high. Only two weeks after arriving at GM I was about to present the plan to the board of directors in a conference room outside Wagoner’s office. Also on the phone were the company’s lawyers and investment bankers.

A Spiderphone was in the middle of the table for what would be a historic meeting of the board. Only three days earlier the Senate had abandoned negotiations to provide funding for the auto industry. Suddenly a free-fall bankruptcy within days loomed large. Consideration of the NewCo plan, now refined with the help of chief financial officer Ray Young and other senior finance staffers, took on greater urgency as we were just two weeks away from running out of cash.

“I know the company has many lawyers and bankers working on other approaches,” I said. “I know many of the people doing the work, and I’ve worked with many of them over the years. But I have an alternative strategy for the board’s consideration. I suspect there might be some controversy over it, but I believe this could be lifesaving for General Motors.”

After carefully laying out the details and time sequence of the NewCo plan, I drew to a close.

Well,” one director asked over the phone system, “I want to hear what Harvey Miller has to say about this. Is there a precedent for this, Mr. Miller?”

Miller’s deep baritone voice filled the room, pointing out that the idea was unorthodox and lacked precedence.

Other attorneys chimed in, claiming the plan oversimplified the situation and there would be major problems with it. Yet another added that this would not be viewed well by the court and doubted any judge would allow it. Collectively, they characterized it as a long shot, discouraging the directors from thinking the plan could ever succeed.

Hearing all the disapproving words amplified from speakers in the ceiling, I felt ambushed by general counsel Osborne, who was strongly advocating for a prepackaged bankruptcy strategy, which he believed was the only way to go. Unbeknownst to me he had previously proposed the idea to GM’s board, naively believing GM could complete a prepack bankruptcy in 30 days.

GM’s most senior leaders had been working with me on the NewCo plan around the clock. I felt strongly this alternative approach could succeed, and I knew that any other type of Chapter 11 strategy would kill vehicle sales and lead to the demise of GM. Now it seemed as if the NewCo plan could be dead on arrival.

“If the attorneys feel this is a waste of time and corporate resources, I don’t know why we would pursue this,” stated another director.

A chilling silence descended upon the room, broken by Kent Kresa, the former CEO of Northrop Grumman and a GM board member since 2003.

“I understand this has some risk attached to it, but we’re in a very risky state right now,” he said. “And I understand it may even be unusual and unprecedented. But it’s certainly creative, and quite frankly, it’s the most innovative idea we’ve heard so far that has real potential in it. I think it deserves further consideration and development.”

Rick then addressed another lawyer on the call, Martin Bienenstock.

“Well, I’ve actually studied the problem, too, and there’s a way for this to work,” said Bienenstock. “Almost all bankruptcies are unique and the Code does allow for the transfer of assets. I can’t imagine a judge taking on this problem and not wanting to solve it. We’ve done a preliminary analysis, and it’s not as crazy as it sounds. It’s unique and compelling.”

“Okay, we’ve heard both sides of it,” Rick said after others spoke, smartly bringing the debate to a reasonable close. “I suggest we continue working to develop both the prepack plan and the NewCo option, while seeking the funding to avoid Chapter 11 if at all possible.”

The meeting adjourned without a vote. I left the room disappointed to hear Osborne’s legal chorus so dead set against NewCo and surprised their remarks had stopped all real discussion of the plan. But I also was relieved the plan was not completely dead, at least not yet.

***

Over the next weeks I worked closely with Bienenstock, assistant general counsel Mike Millikin, Al Koch of AlixPartners and GM senior vice president John Smith on the NewCo plan. We huddled dozens of times with Wagoner and Henderson to work out which brands GM would ultimately have to give up (Hummer, Saturn, Saab and Pontiac) and which ones it would keep (Chevrolet, Cadillac, GMC and Buick). Informed debate and deep analysis of structural costs led to decisions about projects, factories, brands and countries.

On Sunday afternoon, Mar. 29, Wagoner called me. It was a call I had hoped would never come–but here it was.

“Jay,” he said, “I wanted to give you a heads-up. The Administration wants me to step aside. The President is going to hold a press conference tomorrow morning.”

Wagoner told me Henderson would be named CEO.

“What about the bankruptcy?” I asked.

“They’re enamored with the 363 NewCo plan. They seem bound and determined to make us file Chapter 11 and do NewCo. … This is really tough,” he said.

“I’m so sorry,” I said, pausing, “but … you got the money. They’re doing the NewCo plan, and Fritz is your successor. … You’ve succeeded. You got the three things.”

 

Rick responded with resigned acknowledgment, then said, “Please help Fritz in any way you can,” before hanging up.

Rick’s personal sacrifice was not in vain. Months of hard work had paid off. The assets and liabilities had been selected. The NewCo legal entities and $45 billion tax-loss strategy had been developed. The strategy I pitched to Wagoner in his living room four and a half months earlier was the plan chosen by Team Auto in a meeting on Apr. 3, 2009 in Washington. Treasury agreed to fully fund NewCo with equity, and thus it became the chosen path to save the company.

By late April NewCo implementation was well under way. The bankruptcy filing would occur in New York within weeks. My partner, Al Koch of AlixPartners, would become the chief restructuring officer running OldCo, now officially named Motors Liquidation, Inc. In my notes, I jotted: “My work is finished … impact from this day forward will be negligible. … Treasury’s in control. Time to get back to my girls.”

On June 1, 2009 General Motors filed for bankruptcy in New York, with $82 billion in assets and $173 billion in liabilities. It was the largest industrial bankruptcy in history. Harvey Miller and his team masterfully defended and guided the NewCo plan through the bankruptcy court, successfully making it their own. New GM exited bankruptcy protection on July 10, 2009–in a mere 40 days, as designed. Fritz called and thanked me.

There would be many other twists and turns to GM’s narrative, but the company got its fresh start using the NewCo plan, and the industry was saved with government funding from both Presidents Bush and Obama. In March 2009 President Obama cited a “failure of leadership” as his reason for forcing out Wagoner. In fact, it was Wagoner’s exercise of leadership through years of wrenching change and then simultaneously seeking government funding while developing three restructuring plans that put GM in position to survive the worst economic collapse since the Great Depression and complete its turnaround, which, ironically, became a key campaign issue in the reelection of Barack Obama in 2012.

 

Los Angeles to Form Centralized Cyber Command

Mayor: Efficiency Plus Cost Savings Equals More Security

http://www.govinfosecurity.com/la-to-form-centralized-cyber-command-a-6185?rf=2013-10-31-eg&elq=263e7c8d10034ac3acd95fd7a25a51d7&elqCampaignId=8205

By Eric Chabrow, October 31, 2013.

Follow Eric @GovInfoSecurity

Influenced by President Obama’s executive order on cybersecurity, the mayor of Los Angeles on Oct. 30 announced the creation of a Cyber Intrusion Command Center to centralize information security standards across city agencies.

In signing an executive directive, Mayor Eric Garcetti says he’s working to break down silos between city departments. “This makes us more efficient, more cost effective and in this context, more secure,” he says.

Garcetti, in a statement, says the center will provide a single, focused team responsible for implementing enhanced security standards across city departments and serve as a rapid reaction force to cyber-attacks. The new center will be assisted by the FBI and Secret Service, although Garcetti didn’t explain how those agencies will help the new command center.

In the executive directive, Garcetti cites Obama’s executive order that fathered the cybersecurity framework being developed (see Obama, CEOs Meet on Cybersecurity Framework), as well as comments on cyberthreats made by National Intelligence Director James Clapper and then-Defense Secretary Leon Panetta as rationale for creating the center.

Protecting Basic Services

The mayor put the threat in local terms. “Today, our traffic lights, our routing system for trash pick-up and so much more are electronic,” he says. “Cybersecurity means protecting the basic services at the core of city government, and it means protecting our critical infrastructure like our port and airport, which we know are top targets.”

Details on how the center will function, including its leadership, are pending. By mid-November, the mayor will organize a working group of key city departments to propose a detailed organizational structure for the center. The working group will present the proposed structure to the mayor by late November.

The directive calls on the center to:

  • Facilitate the identification and investigation of cyberthreats and intrusions against city assets;
  • Guarantee incidents are quickly and thoroughly investigated by the appropriate law enforcement agency;
  • Promote dissemination of cybersecurity alerts and information;
  • Provide uniform governance structure accountable to city leadership;
  • Coordinate incident response and remediation across the city;
  • Serve as an advisory body to city departments;
  • Sponsor independent security assessments to reduce security risks;
  • Ensure awareness of best practices.

Enhancing Cybersecurity

According to the directive, all departments must contribute personnel, resources and data to the center, report information about significant cyber-related events that occur, identify personnel who require notification about distributed threat information and provide resources for cooperative actions as situations may require.

Besides participating in the center, Garcetti directs each department to enhance its own cybersecurity.

The mayor used the executive directive to reinforce to city departments and employees minimum IT security standards, such as limiting access to data and networks, requiring new passwords every 90 days, requiring updates to anti-virus software, planning for business continuity and disaster recovery and promoting a culture of cybersecurity awareness.

“City employees are our first line of defense in ensuring that city systems are protected from intruders,” Garcetti says. “Employees are in the best position to protect the systems, and are in the best position to report problems at an early stage before the issue impacts the city more broadly.”

 

Is China Building a Trojan Horse into NATO Through Turkey?

http://www.defenseone.com/ideas/2013/10/china-building-trojan-horse-nato-through-turkey/72980/?oref=defenseone_today_nl

by Aki Peritz and Mieke Eoyang

October 31, 2013

The People’s Republic of China may be building a new Trojan horse in the modern lands of ancient Troy — but this time it seems the mission is to penetrate not a walled city, but NATO’s security architecture.

Turkey currently is negotiating a contract with China’s missile builders, the China Precision Machinery Import-Export Corporation (CPMIEC), which beat competing bids from Raytheon/Lockheed Martin and a few other foreign firms. While it seems Turkey is saving money on the deal — the Chinese bid to sell the FD-2000 surface-to-air missile system came in at $3.44 billion, while the other bids were around $4 billion — Ankara’s behavior suggests it believes it can have its security cake and eat it too.

It’s unclear what is the Turkish word for chutzpah, but Turkey already has a missile defense system defending it in NATO’s Raytheon-built Patriot system, courtesy of Germany, the Netherlands, and the United States. Ankara requested it last year. As part of the NATO Air Defense Ground Environment, other countries have already picked up half of the tab of Turkish missile defense needs. This is because Ankara took advantage of the interoperable missile defense systems among NATO’s 28-country alliance. The civil war in neighboring Syria legitimately threatened Turkey and its allies quickly answered the call.

The Turks knows full well that if events ever go south — say, if Syria or Iran devolve into a shooting war that sucks them in– NATO will back them in a military conflict. If Turkey was serious about missile defense, it would have bought the American Patriot system that has a proven track record and avoided wasting money on an inferior Chinese program. It’s like buying a motorcycle when you really need an SUV. Instead, Turkey might be cutting itself off from the alliance if they now try to deploy the Chinese technology. And allowing Beijing spies into NATO’s backyard seems to be a secondary concern for the Turks.

Of course, the Turkish government has been well-informed of the many pitfalls of purchasing this Chinese system. For example, President Barack Obama twice told Turkish Prime Minister Recep Tayyip Erdoğan that there will be major interoperability issues between the Chinese and NATO systems. Despite a top Turkish Defense Ministry official brushing these problems aside,

China’s system is copied heavily from the Russian model, so its technical architecture is completely different than the Western model. And just as China’s cartridges won’t fit into NATO’s rifles, Turkey will have to perform major technical surgery to synchronize the NATO and Chinese systems, reconfiguring sensors and radars to be able to operate on both systems. This of course, will cost a lot of money and may not work in the end.

Even if it’s technically possible, other NATO countries will balk at having a highly-advanced, potentially adversarial structure integrated into their top-secret missile system. According to one defense analyst, “[NATO] member nations will refuse any cooperation with Turkey for the integration of the Chinese system into the alliance’s assets deployed in Turkey.” As another British defense analyst told the Financial Times, “This type of arrangement, which requires the transfer of design information, is not feasible for American military firms.” And not just Chinese technology, but Chinese cyber, military and missile personnel will theoretically be working next to NATO resources, providing Beijing an intelligence foothold in these critical national security fields.

It remains unclear whether Turkey’s strategy for missile defense buys extends to other parts of the defense acquisition process, for there are ramifications with working with a sanctioned Chinese company that, since 2006, has been banned from working with American firms. U.S. companies now might think twice about selling Turkey fighter aircraft like F-16s or F-35s, or advanced radar systems, because Chinese technology will compromise their systems. It might even be illegal for U.S. corporations to work with Turkish businesses once the deal is complete.

All in all, Turkey might be thinking they worked out a great arrangement because it saved money and forged a deal with a growing economic powerhouse. But this will affect U.S. national security almost as much as Turkey’s because we too have interests in the region and in the cohesiveness of the NATO alliance. Every American and allied policymaker who interacts with his or her Turkish counterparts should underscore this fact.

The contract isn’t signed in stone; Erdoğan hinted that the deal may still be in play. Let’s hope the Turkish president has a change of heart; recall the Trojan War ended rather poorly for King Priam and his people because of a fatal, stupid, self-inflicted wound. Let’s hope Turkey’s modern-day leaders reflect upon the folly of the ancient Anatolians and remember to beware Chinese defense corporations bearing gifts.

 

FAA changes safety rules so airline passengers can use electronic gadgets from gate-to-gate

By Associated Press, Updated: Thursday, October 31, 10:31 AM

http://www.washingtonpost.com/politics/faa-changes-safety-rules-so-airline-passengers-can-use-electronic-gadgets-from-gate-to-gate/2013/10/31/e140ce58-4235-11e3-b028-de922d7a3f47_story.html?wpisrc=al_national

WASHINGTON — Government safety rules are changing to let airline passengers use most electronic devices from gate-to-gate.

The change will let passengers read, work, play games, watch movies and listen to music — but not make cellphone calls.

The Federal Aviation Administration says airlines can allow passengers to use the devices during takeoffs and landings on planes that meet certain criteria for protecting aircraft systems from electronic interference.

Most new airliners are expected to meet the criteria, but changes won’t happen immediately. Timing will depend upon the airline.

Connections to the Internet to surf, exchange emails, text or download data will still be prohibited below 10,000 feet. Heavier devices like laptops will have to be stowed. Passengers will be told to switch their smartphones, tablets and other devices to airplane mode.

Cellphone calls will still be prohibited.

A travel industry group welcomed the changes, calling them common-sense accommodations for a traveling public now bristling with technology. “We’re pleased the FAA recognizes that an enjoyable passenger experience is not incompatible with safety and security,” said Roger Dow, CEO of the U.S. Travel Association.

Rapid Prototyping the New Model

Sikorsky’s New Norm Saves Money, Time

Oct. 31, 2013 – 05:20PM | By AARON MEHTA | Comments

Samir Mehta, president of Military Systems at helicopter giant Sikorsky, talks JMR, rapid prototyping and future markets.

http://www.defensenews.com/article/20131031/DEFREG02/310310025/Rapid-Prototyping-New-Model?odyssey=mod_sectionstories

WASHINGTON — At last week’s Association of the United States Army (AUSA) conference, few programs stood out like the Joint Multi-Role (JMR) demonstrator competition. The winner will be in prime position to eventually replace the Army’s Black Hawk, Apache, Chinook and Kiowa rotorcraft fleet. Defense News sat down with Samir Mehta, president of Military Systems at helicopter giant Sikorsky, to talk JMR, rapid prototyping and future markets.

Q. You have done three “rapid prototyping” projects, the Raider, Matrix and now Defiant. Is this the new model for the company?

A. Yes. I think it is the new model, because at a time when resources are tight, things like time to market, speed of innovation, when the aircraft gets fielded, when we can start performing our customers missions, that’s incredibly important. With long development programs, every year the program goes is another year the budgeting could be messed with. It could be cut, defunded, there are a lot of things that could happen. So every year of development is a year of vulnerability for a budgeting standpoint.

If you can essentially reduce the time it takes to develop, you’re also reducing the resources it takes to develop. Flight test is now a confirmation of the technologies you developed, not experimenting with the technologies you’ve developed.

Q. What tools are you specifically thinking of?

A. System integration laboratories have come a long way. In years past, you had all of these independent systems being developed, and then the first time they’ve come together to work is in the actual test aircraft themselves. You get to work out the kinks and the issues there, not 10 minutes after you roll out first flight, which is a very different risk and cost equation. The advance in simulation also, being able to do much higher fidelity of real-world missions, helps the designers understand what the aircraft capabilities need to be.

 

Q. How do those tools come into play when developing new technologies?

A. From a business standpoint, you don’t start making investment in technologies or initiatives without fully understanding what the length and size of that investment is going to be. Rapid prototyping allows us, as business people, to make investments. I don’t look at it as an opportunity to reduce R&D. I see it as an opportunity to take your R&D and fund more than one key project.

If you look at our company, between Joint Multi-Role, the work on Matrix, the work on the S-97 Raider, the work that we’re doing on making our core products better, the work we are doing in manufacturing technology — in order to fund those activities now and not have rapid prototyping, we’d either be spending twice as much or we wouldn’t be doing half of it.

 

Q. Do you expect rapid prototyping to spread?

A. I think it will become an industry standard. That’s not to say everyone will be on an even playing field. We’re an early adaptor of rapid prototyping so I think we’re doing fairly well in this area. I think it just takes a continuous investment, making sure those tools are updated. It’s not without cost or without resources; 40 percent of the engineers we have on the [Army’s Joint Multi-Role program], the future of the company, have less than 10 years of engineering experience. To them, rapid prototyping is obvious. It’s not a leap forward; it’s not something that’s a paradigm shift. It’s the only way they know. For them, things like rapid prototyping are just second nature.

Q. As a company that’s focused on a niche area, is it easier to defend R&D spending?

A. It’s never easy. You have to remember we’re part of a bigger company. Sikorsky is part of a $65 billion industrial powerhouse in United Technologies. When it comes time for us to make significant investments, we’re like everyone else in the company, we have to go and convince the corporate parent that it’s the right level of investment. The fact we’re focused and do one thing well, that’s great. But our parent company does more than one thing, and they’re the ones who have to ultimately bless our larger scale investments.

Q. Do you expect R&D to expand or contract in the short term?

A. I think it will continue to be a significant investment for us. In terms of expansion or contraction, a lot of that depends what happens in the next few years with our customer. Our plan is to stay relatively consistent with our level of development. What has changed is the nature of who we work with, using industry partnerships more effectively, like we’re doing with Boeing on Joint Multi-Role. Now it’s not just about your dollars, talent and expertise. It’s being able to leverage that for the broader industry, forming a partnership and understanding that with that you not only have an efficient use of dollars but you’re not the only one betting on a big technology.

Q. Will that be a trend?

A. Absolutely. I am convinced. Clearly, there’s pressure on RDT&E budgets. I think it starts with that. The days of the government coming and fully funding your program from cradle to grave appears to be over. With that understanding comes the need for industry to step up and make investments, and that’s a tough proposition. It’s always easier to pool your investment, because, from a financial standpoint, it makes sense, and it’s the old one-plus-one equals three equation. We have advancements we’re making every single day that both companies acknowledge we would not be able to do on our own.

Q. Talk about the Boeing partnership on Defiant, your JMR demonstrator.

A. It’s interesting. The scope of the partnership includes not just JMR. It includes future vertical lift, and it includes anything that could replace it. This is not a technology demonstrator partnership. We’re in it for the long haul. This will be a 30-40 year partnership. I can’t think of anything which was so integral to both companies’ core businesses for a period of 30-40 years. It’s game changing.

Q. Analysts expect market dropoff for military rotorcraft in the next decade. How do you position the company to handle that?

A. It’s very easy to take a look at US defense funding in isolation and say that it will be the bellwether of the entire industry, because the US government is the biggest helicopter operator in the world. I’m not saying it’s not important or impactful, but I think you’ll see increased spending on sophisticated equipment in international markets, especially emerging economies with higher growth rates, rapid expansion of their economy and an appetite to be more active in international affairs.

We [also] have an extraordinarily strong commercial business right now. That’s one of the benefits of being diversified. If you took military OEM [original equipment manufacturer] business and that was the key determining factor of the health of our company or industry, you could paint a pretty grim picture. If you take it all in totality and you look at the next three to five years, it starts to become a pretty balanced picture.

Q. Which markets in particular?

A. First and foremost on my mind is Turkey. They’ve been a great customer, there’s 150 Black Hawks in Turkey, and they’re looking to buy 109 more. That’s a program we’ve been very closely involved in and are hopefully looking forward to the last stages of a binding contract here in the next several weeks. Beyond that, there’s a lot of interest in India, certainly the Middle East; we have a solid base of countries in South America from which to grow. It really is broad base, and it’s global.

Q. Is it easier to partner with local firms or to go it alone?

A. We can do both. It really depends on the maturity of the aerospace industry and the desire of the country that is procuring the helicopter. There is a growing sophisticated aerospace industry outside the US. Turkey, for instance, has much more sophistication than they get credit for. So when we do countries like Turkey, industrialization is a key requirement. And it’s not industrialization in the old mode of offsets where you buy 109 helicopters and I promise that my sister division will buy raw material from a copper mine, or something like that. Now it’s about some technology transfer, but more importantly, allowing the countries we sell to to have greater independence in supporting the aircraft after procurement and even designing and building their own aircraft.

Aerospace is one of those very attractive sectors, because it’s a great way to promote your national interests but also indirectly spur growth in STEM. I haven’t talked to an international customer yet who says ‘I don’t have an interest in further developing my country, I just want your helicopters.’

Q. How do you work with a customer like the Pentagon amidst all the uncertainty?

A. The first thing we do is understand that often it’s not the customer that we’re talking to that is the cause of the uncertainty. It’s important for us to articulate that, and it’s important for us to understand that, in many cases, the services we deal with, the program officer we’re dealing with are quite frankly in a tough environment. It’s not that they know there’s a plan and they don’t want to tell us; it’s that they don’t know. That indecision and uncertainty, I think, pervades the entire leadership right now probably all the way up to the leadership of the country.

As an example, we were in the situation with the shutdown that we were going to lose our DCMA [Defense Contract Management Agency] quality assurance inspectors. The amount of uncertainty and consternation that causes our company, who are very reliant on DCMA to keep the assembly line moving, is incredible. We can come to a gridlock on our manufacturing floor within 24-48 hours. So the key for us is what the impact of that would likely be and then go communicate that impact to the outside world and the leadership. Our leadership, whether in the Pentagon or with elected officials, need to know the decision they are making, that whatever savings they think they are making by furloughing 45 inspectors, evaporates in 10 minutes by not having three or four thousand people be able to show up and come to work.

 

In the meantime, while you have the ability to manufacture, it’s about executing. Now, more than ever, it’s important to execute on the programs you have. This is not a good time to be behind schedule and overrun your costs. This is not the time to be a wounded program.

Q. Any long term delays from the shutdown?

A. Quite frankly we’re trying to play catch up right now which is not the most efficient way to do business. Three or four days [without DCMA inspectors], which doesn’t seem like a lot, when you are a manufacturer, three or four days of disruption is significant. It takes you much longer than three to four days to recover from that. We’ll get there, though; we’re not going to miss a delivery.

 

Rasmussen Reports

What They Told Us: Reviewing Last Week’s Key Polls

Zombie nation?  For a sizable number of Americans, it’s a better alternative than the government we’ve got.

Thirty-seven percent (37%) of American Adults believe zombies would do a better job than the federal government running the country today. An equal number (37%) have more confidence in the feds, but another 26% can’t decide between the two.

This should come as no surprise given that 64% of Likely U.S. Voters now view the federal government unfavorably, with 34% who have a Very Unfavorable opinion of it.

Case in point: Obamacare, which is off to such a shambling start that even some Democrats are questioning it.

Voters overwhelmingly want to scrap or change the new health care law, with 43% who want to repeal it entirely and start over and 35% who would prefer Congress go through the law piece by piece to improve it. Just 18% want to leave the law as is. But voters are evenly divided over whether Health and Human Services Secretary Kathleen Sebelius should lose her job because of the law’s troubled debut.

Voters remain overwhelmingly positive about the health care they receive, although they are less enthusiastic about the overall U.S. health care system. But 52% continue to predict that health care in this country will get worse under Obamacare

Just 25% of voters believe the United States is heading in the right direction. Still, that’s the first time since just before the government shutdown began on October 1 that over 20% have felt that way.

The president’s total job approval inched up a point to 49% in October, a month that saw both the implementation of the health care law and the partial shutdown. The president’s daily job approval ratings have been worsening this week, though, as more bad news about the health care law emerges. 

As for one of Obama’s possible successors, 43% of voters think the circumstances surrounding the murder of Ambassador Christopher Stevens and three other Americans in Benghazi, Libya will hurt Hillary Clinton’s chances for the presidency in 2016. 

Voters are evenly divided at 42% apiece when asked whether they agree more politically with the president or with the average member of the Tea Party. However, there’s an enormous partisan divide. When it comes to the major issues facing the nation, 77% of Democrats say Obama’s views are closest to their own. Seventy-six percent (76%) of Republicans and 51% of unaffiliated voters identify more closely with the average member of the Tea Party.

Democrats hold a six-point lead over Republicans – 43% to 37% – on the latest Generic Congressional Ballot

The economy doesn’t seem to offer much reassurance about how the federal government’s been doing.

Five years after the Wall Street meltdown, a plurality (48%) of voters still believes the government bailouts of the financial industry were a bad move

Most consumers and investors believe the country is still in a recession. 

Only 33% of Americans believe the U.S. economy will be stronger in a year’s time, while 41% think it will grow weaker by then. 

Just 38% say the economy is fair to people who are willing to work hard, a new low. 

Fewer than half (47%) of Americans believe it’s still possible for anyone in this country looking for work to find a job

Only 24% think the stock market will be higher a year from now

In other surveys last week:

Rasmussen Reports’ final survey of the Virginia gubernatorial race finds Democrat Terry McAuliffe with a seven-point lead over Republican Ken Cuccinelli – 43% to 36%. 

— Sixty-nine percent (69%) of voters favor the use of unmanned drone aircraft to kill al Qaeda and Taliban terrorists overseas, even though 64% believe it’s at least somewhat likely that drone strikes overseas have killed more innocent civilians than the U.S. government is officially reporting

— Just 18% favor the use of unmanned drones by police agencies in the United States. 

— Forty-one percent (41%) of Americans think the U.S. legal system worries too much about the separation of church and state

— When we asked what America thinks about driving, we discovered some interesting things. 

— Most Americans put their family and friends before their pet, but for one-in-10, their pet comes first

— While most adults don’t dress up in a costume or go trick or treating, 61% of Americans think Halloween is children and adults. Even though many schools don’t allow it, 63% believe students should be allowed to wear costumes and bring candy to school for Halloween

Twenty-five percent (25%) of Americans believe in ghosts. 

— Daylight Saving Time ends tonight, but only 36% think there is still a need for DST in America today

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