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October 10, 2015

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10 October 2015

Newswire

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Kendall’s Remarks Inject Uncertainty Into M&A Market

By Andrew Clevenger 12:37 p.m. EDT October 4, 2015

http://www.defensenews.com/story/defense/policy-budget/industry/2015/10/04/kendalls-remarks-inject-uncertainty-into-m-market/73210190/

 

WASHINGTON — In an unanticipated move last week, Pentagon acquisitions chief Frank Kendall announced he would seek to deter future consolidation involving top tier defense contractors, a stance defense analysts said injects uncertainty into the defense market.

Lockheed Martin’s pending $9 billion acquisition of Sikorsky Aircraft, which US anti-trust regulators recently approved, does not violate the Pentagon’s proscription against primes merging with each other, Kendall noted in remarks to reporters. But it does move a high percentage of the market share for an entire line of products — military helicopters — into the largest defense prime contractor, which already holds a dominant position in high performance aircraft through the F-35 program, he said.

“Mergers such as this, combined with significant financial resources of the largest defense companies, strategically position the acquiring companies to dominate large parts of the defense industry,” Kendall said.

“With size comes power, and the department’s experience with large defense contractors is that they are not hesitant to use this power for corporate advantage. The trend toward fewer and larger prime contractors has the potential to affect innovation, limit the supply base, pose entry barriers to small, medium and large businesses, and ultimately reduce competition, resulting in higher prices to be paid by the American taxpayer in order to support our war fighters.”

In addition to working with anti-trust regulators at the Justice Department and Securities and Exchange Commission, the DoD “is convinced that we should work with the Congress to explore additional legal tools and policy to preserve the diversity and spirit of innovation,” Kendall said.

While Kendall was clear about his misgivings, his remarks may have created more confusion than clarity.

Loren Thompson, a defense-industry consultant and analyst with the Lexington Institute, said Kendall’s remarks would likely have a chilling effect on merger and acquisition activity in the defense sector, particularly among primes. If the Pentagon is departing from current anti-trust standards, it needs to spell out what the new standards are, he said.

“Traditionally, antitrust officials have looked at issues like horizontal or vertical market integration in reviewing a proposed deal. But now, simple size seems to have become a sticking point for the Pentagon,” he said. “It appears as though every prime that considers a significant transaction will have to think twice given these sort of nebulous concerns that the department has raised.”

The Department of Justice did not respond to a request for comment.

Another potential negative consequence of Kendall’s remarks, which seem to punish companies that perform, is that they might discourage large primes from fully participating in upcoming competitions, he said.

“He specifically cites the problem that was caused by Lockheed Martin prevailing in a winner-take-all competition for the F-35. He’s blaming them for winning on a program that the government itself set up,” Thompson said. “If I were Lockheed Martin, the message I’d be getting is I need to diversify away from defense to keep growing. And, since I’m being punished for winning the F-35 and getting too big, maybe I shouldn’t compete on anything else for a while.”

Steve Grundman, a former Pentagon industrial policy chief who is now a consultant and a member of the Atlantic Council, said if the Pentagon wants to stop private companies from conducting a transaction, it either needs a legal basis or enough power to push back. Legislative relief from Congress may be the more difficult option, he said.

“I think he’s going to have a much harder time getting new law to address the kinds of concerns that he described. However, if you want to be a defense contractor, the DoD is the biggest, baddest customer there is,” he said. “He may have better luck working it through policy choices, and acquisition choices and acquisition strategies.”

But there is a certain amount of risk attached to Kendall’s efforts, he said.

“One risk is that he actually, perhaps inadvertently, has imposed less rather than more clarity about the government’s merger policy toward defense firms,” Grundman said. Alternatively, “he could have his bluff called, and that’s not good for his stature and authority.”

Thompson also questioned whether congressional action would be an effective solution.

“Congress is not some finely tuned instrument that weighs all the issues analytically and concludes on an optimal outcome,” he said. “When you ask Congress to get involved, it’s open season; every little constituent interest and other narrow gauge concerns manifest itself in the process.”

Byron Callan, an analyst with Capital Alpha Partners, suggested the Pentagon could best reshape the competitive balance in the defense industry by tweaking its spending priorities to include non-traditional companies with potentially disruptive technologies.

“Congress can really only do so much in this. What you really have to do is start carving money out of programs, and creating lanes for new starts,” he said. “You have to change incentives to change behaviors, and the incentives are in the budget.”

With major contract awards becoming fewer and farther between, large defense companies have turned to stock dividends and share buybacks to appease shareholders, he said. For this business strategy to continue, management teams at primes may prefer the stability that comes with consolidation to the inherent disruption and instability that comes with innovation, he said.

“To me, they are loudly signaling, they are quite content with how things are,” he said of the large primes. “When you talk about lowering the barriers to entry and changing the competitive landscape, that’s highly disruptive.”

Congress has already given the Pentagon quite a bit of leeway by including various provisions in the National Defense Authorization Act giving the DoD authority to engage with outside companies, he said. Congress advanced the NDAA via conference committee last week, but President Obama threatened to veto the bill over its use of overseas contingency operations funds to work around sequestrations budget caps.

The question for the Pentagon’s leadership then becomes: Are you making cuts to major programs of record to fund these new initiatives that could change the balance of power in the defense sector, Callan said.

“If you want to keep Lockheed Martin on its toes with the F-35, then dramatically increase the pace on the 6th generation fighter,” he said.

Lockheed Martin immediately took issue with Kendall’s statement, and quickly issued a rebuttal.

“There is no evidence to support the view that larger defense companies reduce competition or inhibit innovation,” a company spokesman said in a prepared statement. “In fact, we have consistently delivered the best and most sophisticated defense capabilities in the world.”

More than 60 percent of Lockheed’s work is performed by small and mid-sized companies acting as subcontractors, according to the statement.

“We believe that defense contractors should continue to be assessed based on the performance and effectiveness of the products and solutions offered, not on the size of their company,” the statement concluded.

The Aerospace Industries Association (AIA) also weighed in, noting that consolidation is market driven and follows downturns in defense spending, as in the 1990s.

“We’re seeing fewer and fewer new programs which start farther and farther apart,” the AIA said in a prepared statement. “With fewer programs for which to compete, the stakes for individual companies grow ever higher – loss of a contract competition could mean the end of a company’s ability to compete for defense work.  In this environment, it’s no surprise that industry is looking to become leaner and more efficient.”

Jeff Bialos, a partner at Sutherland Asbill & Brennan who specializes in aerospace and defense M&A and previously served as the Pentagon’s deputy undersecretary of defense for industrial policy, said Kendall’s concerns include that current law doesn’t give the Pentagon ample discretion to address certain implications of mergers for competition in defense markets. The question is not one of vertical or horizontal integration, he said, but rather of the influence that comes with an oversized position in the market.

Size alone is not anti-competitive under anti-trust laws, Bialos said. But it’s not hard to envision a scenario in which a company becomes so big, and involved in so many sectors of the defense business, that smaller firms are afraid to team with one of the large firm’s rivals for fear of angering the giant and being frozen out of future business.

“That’s the issue that I think that one might argue that current law doesn’t sufficiently address,” he said.

 

FAA Proposes $1.9 Million Civil Penalty Against SkyPan International for Allegedly Unauthorized Unmanned Aircraft Operations

 

by Press • 6 October 2015

http://www.suasnews.com/2015/10/38940/faa-proposes-1-9-million-civil-penalty-against-skypan-international-for-allegedly-unauthorized-unmanned-aircraft-operations/?utm_source=sUAS+News+Daily&utm_campaign=5a0409122a-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_b3c0776dde-5a0409122a-303662705&mc_cid=5a0409122a&mc_eid=ea2f95c862

 

The U.S. Department of Transportation’s Federal Aviation Administration (FAA) today announces the largest civil penalty the FAA has proposed against a UAS operator for endangering the safety of our airspace.

 

The FAA proposes a $1.9 million civil penalty against SkyPan International, Inc. of Chicago. Between March 21, 2012, and Dec. 15, 2014, SkyPan conducted 65 unauthorized operations in some of our most congested airspace and heavily populated cities, violating airspace regulations and various operating rules, the FAA alleges. These operations were illegal and not without risk.

The FAA alleges that the company conducted 65 unauthorized commercial UAS flights over various locations in New York City and Chicago between March 21, 2012 and Dec. 15, 2014. The flights involved aerial photography. Of those, 43 flew in the highly restricted New York Class B airspace.

“Flying unmanned aircraft in violation of the Federal Aviation Regulations is illegal and can be dangerous,” said FAA Administrator Michael Huerta. “We have the safest airspace in the world, and everyone who uses it must understand and observe our comprehensive set of rules and regulations.”

SkyPan operated the 43 flights in the New York Class B airspace without receiving an air traffic control clearance to access it, the FAA alleges. Additionally, the agency alleges the aircraft was not equipped with a two-way radio, transponder, and altitude-reporting equipment.

The FAA further alleges that on all 65 flights, the aircraft lacked an airworthiness certificate and effective registration, and SkyPan did not have a Certificate of Waiver or Authorization for the operations.

 

SkyPan operated the aircraft in a careless or reckless manner so as to endanger lives or property, the FAA alleges.

SkyPan has 30 days after receiving the FAA’s enforcement letter to respond to the agency.

 

 

New Pentagon Equipment Is No Longer Pushing the Envelope

October 5, 2015 By Marcus Weisgerber

Acquisition chief Frank Kendall says the cost of the Defense Department’s major projects are falling, but the arms being purchased are less technologically advanced.

http://www.defenseone.com/management/2015/10/new-pentagon-equipment-no-longer-pushing-envelope/122539/

For the past six years, a newly cost-conscious Pentagon has aimed to buy arms that are less complex and use more existing or commercial technology. And it’s worked. The cost of major projects is dropping, says Frank Kendall, the defense undersecretary for acquisition. And he has the data to prove it.

But the bad news, Kendall says in a new 210-page report, is that Pentagon arms buyers have become so risk-adverse that America’s cutting-edge weapons aren’t quite so cutting-edge. And that’s allowing China and Russia to catch up.

“In my view, our new product pipeline is not as robust as it should be at a time when our technological superiority is being seriously challenged by potential adversaries,” Kendall said in his report, which analyzes the state of Pentagon’s massive, multibillion-dollar acquisition establishment.

He’s not alone. Last month at a military conference in London, the Dutch air force chief called out the U.S. Army’s effort to build future helicopters, saying it doesn’t push the envelope enough. Lt. Gen. Alexander Schnitger declared that the two primary designs now being evaluated are unambitious and could fall far short of what NATO needs to win a war in 2040.

Kendall has been sounding the alarm that the U.S. military’s technological superiority over its potential foes is narrowing, particularly when it comes to new Chinese equipment.

“In some areas we may not be pushing the state-of-the-art enough in terms of technical performance,” he wrote.

Historically, big Pentagon weapons programs have been susceptible to “requirements creep,” the accretion of program goals that have slowed development and sent costs skyward. The VH-71 effort to replace Marine One — the presidential helicopter — fell apart in large part because the requirements were still being changed even as aircraft were being built.

To fix this, Kendall and others have instituted changes — under the broad name of Better Buying Power
that locked down program requirements early on. But in a rapid-changing world, and with U.S. weapons-development timelines still measures in years, Kendall’s new report seems to question whether locking in requirements early is the best way to proceed.

Now he argues that not all cost growth is bad, particularly when it responds to a global threat.

“Simply delivering what was initially required on cost and schedule can lead to failure in achieving our evolving national security mission — the reason defense acquisition exists in the first place,” he writes.

On the flip side, Kendall says, many of the acquisition reforms put in place by him and his predecessor, current Defense Secretary Ashton Carter, are working. Defense firms are making more profit based on performance and companies are “doing a better job of meeting cost targets.”

An initiative called “should-cost,” appears “to be taking hold,” which is a “major cultural change,”  Kendall wrote. Should-cost “requires our managers to actively seek ways to save money and to set targets for doing so, not just to stay within their budgets,” he said.

Shay Assad is the director of defense pricing — the person who determines what projects should cost the Pentagon. He cited a “space-related procurement” in which the Pentagon saved $900 million in a single year. In another project, the Pentagon saved more than $2 billion over a five-year period.

“We’ve saved billions of dollars, I know we have,” Assad said.

In a certain helicopter deal, the Pentagon entered negotiations predicting that a multiyear contract might save 10 percent; instead, they squeezed 20 percent out, he said.

“What we’re trying to get the companies to focus on is accepting challenging, but doable cost,” Assad said in a July interview. “Those companies that are, they’re making more profit.”

Kendall’s report found that subcontractors to major firms are making a higher percentage of profit than the company’s they are supplying. “Since 2001, first-tier subcontractors earned higher margins than their associated prime contractors on the same program,” he wrote.

The report also fired shots at lawmakers — including Sen. John McCain, R-Ariz., chairman of the Senate Armed Services Committee — who have proposed to give more acquisition power to the uniformed service chiefs. After 2017, according to the proposed legislation, new major projects would be overseen by the military services, while the defense undersecretary for acquisition would thereafter control only joint projects or service-specific ones the defense secretary delegates.

McCain and supporters of his legislation argue the changes add accountability to acquisition projects. Kendall says the data in his report shows that Better Buying Power is working and that lawmakers shouldn’t just make change to make change.

“I encourage the stakeholders of defense acquisition to examine this report, prior reports, and other data-driven analyses to help guide ongoing discussions and policymaking,” he said. “While it is important to continue improving our policies and practices, change for change’s sake isn’t the answer. We should use experience supported by data-driven analysis to help ensure we don’t embrace policy reforms that carry unintended adverse consequences.”

 

 

First Interim Standards For Unmanned Aircraft Unveiled

http://aviationweek.com/commercial-aviation/first-interim-standards-unmanned-aircraft-unveiled

Oct 6, 2015 Graham Warwick | Aviation Daily

 

The U.S. aviation group charged with developing standards to enable unmanned aircraft to fly in unrestricted airspace has completed the first documents for key systems, but cautions they are limited in scope and application.

RTCA Special Committee (SC) 228 has released interim minimum operational performance standards (MOPS) for the detect-and-avoid (DAA) system and command-and-control (C2) data link. Final document release is planned for 2016, after verification and validation testing of system performance.

 

SC-228 was formed in 2011 after the disbandment of SC-203, an earlier group formed in 2004 to define overarching standards for UAS but discontinued because of lack of progress. SC-228 comprised nearly 500 members from government and industry.

The MOPS focus on an initial scenario: civil unmanned aircraft flying to and from Class A controlled airspace (above 18,000 ft.) under instrument flight rules. The DAA MOPS does not apply to small UAS (below 55 lb.) flying below 500 ft. The C2 MOPS applies to C- and L-band links, but not satcom.

The initial DAA MOPS will enable launch and recovery within Class D, E and G airspace, but excludes surface operations, flight within the airport visual flight rules (VFR) traffic pattern and operations in Class B or C airspace around airports. Operations in Class A and special-use airspace are outside SC-228’s scope.

The DAA MOPS specifies a collection of sensors on the UAS to detect other cooperative and uncooperative aircraft and software to provide the pilot in the ground control station with awareness of proximate traffic and suggest guidance on remaining well clear of other aircraft and avoid collisions.

The sensors are active Mode S surveillance and Automatic Dependent Surveillance–Broadcast (ADS-B) to detect aircraft with transponders and TCAS 2 collision-avoidance systems; and radar to detect other aircraft and validate ADS-B. A separate interim MOPS for the air-to-air radar also has been released.

The DAA MOPS include a control-station standard for controls and displays that allow the pilot-in-command to transit through Class D and E aircraft to/from 18,000 ft. and Class G uncontrolled airspace. The DAA specification allows both automatic and manual modes, but pilot-in-the-loop is the minimum with automatic and pilot-on-the-loop as optional.

The C2 MOPS, meanwhile, define the minimum performance standards for the control and non-payload communications data link. Functions include sending commands to the UAS, receiving information from the onboard DAA system and supporting pilot-to-ATC communications.

The system includes airborne and ground-based radios and antennas operating at 960-1164 MHZ (L-band) or 5030-5090 MHz (C-band). RTCA says the MOPS differ from other standards in that they have to include the propagation path between the ground and airborne radios.

Testing to support development of the DAA and C2 standards already has been conducted by NASA, the Air Force Research Laboratory and others. In September, NASA completed a third phase of intruder-encounter testing with its Ikhana UAS (General Atomics Predator B) equipped with a General Atomics air-to-air radar, BAE Systems ADS-B and Honeywell TCAS.

According to the interim MOPS, the next phase in standards development will establish DAA system requirements needed to extend operations in Class E and G beyond transiting the airspace, and may include avoidance of other hazards such as terrain and weather.

“Further requirements will be developed to enable operations in the airport VFR traffic pattern or in Class B and C airspace,” the MOPS say. “Finally, requirements will be investigated that will permit UAS to accept visual separation clearances, conduct taxi operations and perform automatic DAA maneuvers.” Phase 2 of the C2 MOPS development would bring in satcoms.

 

Lasers Could Be Coming To The F-35

October 6, 2015 By Patrick Tucker

http://www.defenseone.com/technology/2015/10/lasers-could-be-coming-f-35/122581/

 

Lockheed Martin’s new modular fiber lasers now convert fully 40 percent of input energy to output, which means that — along with advances in manufacturing, targeting, and size-weight-power minimization — the company’s now talking about putting a laser weapon on the F-35 Joint Strike Fighter.

“We are absolutely looking at concepts for integration,” Robert Afzal, the company’s senior fellow of laser systems and sensors, told reporters yesterday.

Unlike solid-state bulk lasers that rely on crystal components, or powerful but unstable chemical lasers, fiber lasers generate their beams inside fiber optics, making the device more flexible and efficient. Afzal compared it to a prism that works in reverse. Whereas a prism takes light and fractures it into beams of different colors, a fiber laser merges several beams into one.

Moreover, Lockheed Martin has developed a way to adjust a laser weapon’s output by adding modules, allowing it to be tailored for missions or threats.

The company is under contract to deliver a 60-kilowatt fiber laser to the Pentagon next year. “The Army has the option to add more modules and increase power from 60kW to 120kW as a result of the laser’s modularity,” the company said in a press release.

“Because the laser is so electrically efficient, the laser weapon will be smaller than previous technologies,” said Afzal.

Those efficiency gains could make it suitable for jets. The company faces competition from rival General Atomics, which has already delivered a 150-kilowatt solid-state laser to the Pentagon for testing and is looking into mounting one on the company’s Predator C drone.

The Air Force has recently become more bold in its predictions that a laser could be airborne by 2020. For instance, the Missile Defense Agency recently announced that they were revamping the Airborne Laser Program that was shuttered in 2012. The goal is to fly an airborne laser demonstrator in 2021.

“Everybody thinks you have a tendency to talk about high-powered microwaves and lasers and it’s kind of science fiction,” Air Combat Command leader Gen. Herbert Carlisle, the leader of Air Combat Command, said at the recent Air Force Association Air and Space Conference. “But this is a reality. … I believe that we will have a directed energy capability in a pod that can be mounted on a fighter aircraft very soon.”

Afzal cautioned that an F-35 laser was currently mostly a topic of interest and discussion within the company.

“What we’re doing is we’re looking at the concepts. How would a system even go into the F-35? And we’re also looking into the utility and doing models and calculations to see the utility,” he said.

And Air Force officials have hinted that they’re interested in putting a laser on the jet, although other have noted that such a weapon would primarily be intended to protect a plane from enemy aircraft — something the F-35’s stealth features are already supposed to do.

“We’re certainly talking to the Air Force about their plans, their roadmap, for developing laser weapons for F-35 and other platforms. We would want to do that in partnership with the Air Force,” said Iain Mckinnie, business development lead for Laser Sensors and Systems, Lockheed Martin Mission Systems and Training..

 

Senate Moves Defense Policy Bill One Step Closer to Obama’s Veto Pen

October 6, 2015 By Molly O’Toole

http://www.defenseone.com/news/2015/10/senate-moves-defense-policy-bill-one-step-closer-obamas-veto-pen/122601/

 

The Senate has moved the annual defense policy bill one step closer to passage and President Barack Obama’s desk, where he has promised to veto it. But the upper chamber did so with a somewhat surprising amount of Democratic support, indicating the Republican majority has enough votes to override the threatened veto.

As the vote trickled by on Tuesday, Sen. Bob Corker, R-Tenn., had told Defense One: “The question is, is there going to be 60 votes.”

But the Senate advanced the fiscal year 2016 bill, known as the NDAA, by a vote of 73 to 26. Twenty-one Democrats voted for the $612 billion bill, despite the Obama administration’s opposition to what they call a “gimmick” — using the Pentagon’s war chest, the Overseas Contingency Operations fund, or OCO, to increase military spending while skirting the budget caps. Only one Republican, presidential candidate Sen. Rand Paul, Ky., voted nay.

The vote on final passage — which could come as soon as Wednesday — will likely see less Democratic support. But Tuesday’s count suggested proponents have comfortably secured the necessary 67 votes, or two-thirds majority, to override Obama’s veto.

Senate Minority Leader Harry Reid, D-Nev., had hinted before the vote that when the president ultimately kicks the bill back to Congress, Democrats will fall in the party line. “My Democrats, our Democrats, have stated without any question if it comes time that we sustain a presidential veto, that will be done,” he said.

Sen. John McCain, R-Ariz., chairman of the Armed Services Committee who shepherded the bill through conference negotiations with the House, reminded colleagues the NDAA is a military spending blueprint, and doesn’t actually appropriate any funds.

“Don’t say you support the men and women in uniform, come to the floor and say that, and then vote against this bill,” he said.

Earlier this summer Democrats vowed the real fight over defense spending would occur with the appropriations bills and budget. Having passed a short-term spending fix to keep the government running, in the past days Democrats have also resumed lobbying against the final NDAA negotiated with the House.

Sen. Dick Durbin, D-Ill., the No. 2 Senate Democrat, argued Tuesday that passing the NDAA locks in what’s essentially a dodge by Republicans to avoid the broader budget negotiations so badly needed.

“We want to give our troops the very best treatment, but we certainly don’t want to shortchange the other side of the government, the non-defense side, and that’s what the budget negotiations are all about,” he said. “So Republican after Republican comes to the floor and says the Democrats just don’t care about the military. It’s not true.”

The Republican majority in both chambers, for their part, has pushed hard against Obama’s veto threat, invoking national security and support for the troops.

“This is not the time to flip-flop on the men and women who protect us,” Senate Majority Leader Mitch McConnell, R-Ky., said. “This is not the time to flip-flop on America’s defense. Certainly not in this age of daunting global threats.”

House Armed Services Committee Chairman Mac Thornberry, R-Texas, said in a statement after the House passed the NDAA conference report Thursday, “The only redline the President is willing to enforce is vetoing the bill that pays or troops. Is that the legacy he really seeks?”

In the end, while revealing more divisions among Democrats than their leadership may like, the Senate’s actions this week may be moot — while Senate Republicans may have enough votes to override a veto, Thornberry and his Republican colleagues in the House do not. The House passed the NDAA 270 to 156 — meaning Obama still looks to have the final say, and it’s back to the drawing board.

 

Cutting OCO May Be Solution For NDAA: Kendall

By Colin Clark

on October 06, 2015 at 7:05 PM

http://breakingdefense.com/2015/10/cutting-oco-may-be-solution-for-ndaa-kendall/

 

WASHINGTON: If the National Defense Authorization Act really is vetoed by President Obama, the Pentagon’s top acquisition official thinks slicing out the Overseas Contingency Funding and leaving the rest of the bills as is might work.

Frank Kendall, undersecretary for acquisition, technology and logistics, also said that another Continuing Resolution in December covering the all of fiscal 2016 would probably mean serious cuts to procurement, because the Pentagon would first protect operations and readiness money.

Kendall, speaking at an event put on by DefenseOne, said this may mean interrupting multi-year contracts, which could cost both contractors and the military substantial amounts. He wouldn’t name them, but Kendall said that he’s drawn up a list of programs they might need to delay or push out “until we have more budget certainty.”

Congress is, of course, a right mess now. House Republicans are in ferment as the more rational members of their party, who oppose shutting down the government, are confronted by the people who drove out House Speaker John Boehner. Until the speakership is determined, there won’t be any hints, let alone clarity, about what the House will do on spending. Once the speaker is chosen, we will then face the battle between the so-called fiscal hawks and the other elements. They will have to decide whether to stall a spending bill, pass one, or be incredibly irresponsible and settle on a Continuing Resolution.

The good news is that the Senate is much less dominated by the irrational elements of the party and so is less likely to accept a shutdown. But the House has to vote on a spending bill so…

Kendall, who opposed Sen. John McCain’s acquisition reforms that gave increased power to the service chiefs, said today that he welcomed all efforts to increase the chiefs involvement in requirements because that helps control costs from the beginning of a program. He and the three service acquisition executives, — Heidi Shyu of the Army, Sean Stackley of the Navy Department, and Bill LaPlante of the Air Force — stressed how important it was to embed the changes they have striven to make over the last few years: configuration steering boards, should-cost pricing, greater control of requirements throughout a program’s development and greatly improved training for the acquisition professionals who make the system work. They — probably — have one year left to do it.

 

 

Researcher: DARPA effort will rate cybersecurity of software for public

October 05, 2015

http://insidecybersecurity.com/share/3776

 

 

The cybersecurity of commercial software and systems will be independently rated in a new Pentagon-funded initiative, creating an unprecedented, publicly available tool for companies and individual consumers to find the most secure products in the marketplace, prominent security researcher Peiter Zatko told Inside Cybersecurity.

Zatko, a.k.a. Mudge, came to fame — and testified before Congress in 1998 — as a member of the high-profile hacker group the L0pht. He later went on to spearhead cybersecurity research at the Defense Advanced Research Projects Agency before joining Google in 2013.

In June, however, he announced he would leave his position at Google to stand up a new cybersecurity entity modeled on Underwriters Laboratories, the global independent safety science company known for product safety standards development, testing and certification. He has also compared the effort to Consumer Reports, which was formed as a nonprofit in 1936 to provide unbiased product testing and ratings.

Zatko’s new endeavor picked up speed in late September when his Cyber Independent Testing Laboratory LLC in Waltham MA, won a $499,935 contract for “Consumer Security Reports” from the Air Force, which made the award on behalf of DARPA.

Buyers of software and systems badly need a way to discern which products have relatively better cybersecurity, according to Zatko.

“There have been enough stories in the news that your average consumer (corporation or individual) knows that they need better security,” he told Inside Cybersecurity last week in an interview via email. “They know security is important, and that they don’t have it, but they don’t have any idea on how to get it, which is frustrating and upsetting. They want to make better, more informed decisions, but don’t have the tools to do so.”

The new initiative will provide unbiased product ratings for the public good, he said.

“Our intention is to provide them with the information and tools they need, in a non-partisan fashion, and without profit incentives getting in the way of providing unbiased and quantified ratings of the software and systems they are purchasing,” Zatko said. “Think of this as a cybersecurity parallel to nutritional facts on food, energy star ratings on appliances, or vehicle information guides in the windows of new cars.”

“Firmware is definitely included” among the products that will be tested and rated, he said. “Hardware is not the main focus, but does come into play in certain situations.”

The endeavor will also tackle cybersecurity issues related to the ever-expanding Internet of Things, or IoT for short.

“Understanding the hygiene of the software/firmware you are purchasing or deploying, and whether the development process included efforts to harden the product and ensure robustness is needed to understand the risk you currently carry in your environment,” he said.

“The IoT is a part of this environment,” he continued. “We will include analysis and comparative ratings, on the robustness and security in software, for IoT devices as well as more traditional operating systems, applications and services.”

The results of this work will help buyers and the cyber insurance business assess cyber risks, Zatko said.

“We will be making the results and methodologies publicly available,” he said. “This will provide consumers, companies, insurance and actuarial teams, with quantifiable measurements of ‘how much risk’ different products or solutions introduce to your environment.”

The scope of the effort, DARPA spokesman Jared Adams told Inside Cybersecurity via email, is to apply and extend state-of-the-art automated program analysis — static and dynamic — to produce “an expressive security rating, not dissimilar to how the existing determines safety ratings for safes and vaults by using attacker tactics techniques and procedures . . . to identify the areas with highest implementation risk.”

“The cyber metrics and measurements are designed to provide managers the ability to evaluate and quantify risk in their present and future information technology environments and to quantifiably compare the security and robustness of software packages and components,” Adams said.

The automated evaluations provided by Cyber Independent Testing Laboratory “will also aid in the early identification and reporting of entire classes of vulnerabilities targeted by the existing security exploit market,” he added.

The timing on deliverables under the contract is to be determined, Adams said.

The Cyber Independent Testing Laboratory “is proposed in two tracks that run in parallel,” he said. The first track defines the metrics, ratings and certifications required to provide actionable measurements of software risk. The second track describes the mechanisms and processes needed to assess existing software according to the metrics defined in the first track.

A “key feature” of the second track, Adams said, “is devaluing the current exploit market by automating static and runtime integrity analysis at scale.” — Christopher J. Castelli (ccastelli@iwpnews.com)

 

Pentagon leaders bracing for budget uncertainty

Amber Corrin, Senior Staff Writer 3:25 p.m. EDT October 9, 2015

http://www.c4isrnet.com/story/military-tech/budget/2015/10/06/pentagon-leaders-bracing-for-budget-uncertainty/73465598/

 

The military is having a case of fiscal déjà vu: Amid ongoing discord on Capitol Hill, the threats of a continuing resolution and a repeat round of sequestration is striking fear throughout the Pentagon.

Just as passage of the 2016 National Defense Authorization Act teetered on the Senate floor, top Pentagon acquisition officials took the stage a few miles away in Arlington, Virginia, to warn, yet again, of the dangers posed by looming fiscal uncertainty.

Speaking Oct. 6 at Defense One’s State of Defense Acquisition event, the military secretaries overseeing weapons-buying emphasized the damage inflicted by sequestration in 2013, when sweeping budget cuts trimmed 10 percent of spending across the board. This time around could be even worse.

“The 2013 experience — which was relatively minor compared to what we’re staring at in 2016 — we’re still recovering from that,” said Sean Stackley, Navy assistant secretary for research, development and acquisition. “By and large, the uncertainty of not knowing what your budget will be puts you in shackles in terms of executing over the course of the year.”

Stackley said that whether it’s a continuing resolution or more sequestration, it translates to roughly an $11 billion hit to the Navy.

In the Air Force there was additional measurable damage. Dr. William LaPlante, assistant secretary of the Air Force for acquisition, pointed to the service’s Space Fence surveillance system as plain evidence of the impact of budget uncertainty — to the tune of some $120 million in costs and a year behind schedule.

“We had gone through source selection…we were about ready to do the award in September 2013, but nobody knew the budget. We decided we couldn’t do the award because…if we didn’t get the budget we thought we’d get, we would just have to cancel the program. And we weren’t going to do that,” LaPlante said. “So we decided to wait until after the budget was settled. And by the time we figured out what the budget was and we decided we could do it, the prices weren’t good anymore in the proposal. We had to redo the entire source selection.”

Frank Kendall, undersecretary of Defense for acquisition, technology and logistics, said he thinks the Pentagon is keeping up well with the urgent needs of current conflicts. But in the case of another continuing resolution or sequestration, budget focus will go toward readiness and training, with procurement, research and development taking hits — and Kendall said he’s planning accordingly.

“I’ve given [Deputy Defense Secretary Robert Work] a list of the major commitments we’d be making in 2016, with some thoughts on which ones we would defer because of the uncertainty,” Kendall said. “Some of the things we were planning are going to have to be deferred.”

 

Interview: Gen. Ellen Pawlikowski, US Air Force Materiel Command

By Lara Seligman 11:46 a.m. EDT October 6, 2015

http://www.defensenews.com/story/defense/policy-budget/leaders/interviews/2015/10/06/interview-gen-ellen-pawlikowski-us-air-force-materiel-command/73446828/

 

WASHINGTON — As commander of US Air Force Materiel Command, Gen. Ellen Pawlikowski has a lot on her plate. Headquartered at Wright-Patterson Air Force Base near Dayton, Ohio, AFMC  provides logistics support and acquisition management services for weapon systems across the Air Force. As AFMC chief, Pawlikowski oversees development and transition of technology to the war fighter.

In the face of increasing threats from Russia and China, not to mention persistent budget uncertainty, Pawlikowski’s main focus is ensuring the Air Force has the tools it needs to fight all over the world.

Q. What is your take on the state of Air Force Materiel Command?

A. The command is in really excellent shape, so that gives me a good foundation. But there are lots of opportunities as we look to the future to do things better and to be more supportive. A real focus for us in the Air Force is strategic agility. If you look at the world environment with all of the different activities, whether it is now we are fighting ISIL, the next minute we are dealing with Putin, we are finding ourselves needing to be able to move and bring different capabilities around the world very rapidly and as effectively as we can. Whether it is sending F-22s to Europe or flying MQ-9s 24/7, all of those things cannot happen if Air Force Material Command does not do their job. So my major focus is to leverage on the great foundation that is there, and now let us work as a team to figure out how we become more agile.

Q. What is AFMC’s role in the Air Force’s plan to increase strategic agility?

A. If we are going to have strategic agility in 2030, the weapon systems that we are delivering and starting to develop have to have adaptability, versatility and cost effectiveness to enable us to be agile. Because what does agile mean? You need to be able to change and adapt to different environments. So some of our focus is on that when it comes to the new systems we are developing and the modifications we are doing to current systems.

One example is swarming UAVs, where we are applying new technologies like autonomy that allows us to have small, affordable UAVs. MQ-9s are great; it is not that expensive. Global Hawk is very expensive.

Another example of putting adaptability and agility into systems is taking a look at our existing systems. So my life-cycle management center is looking at the B-2, the F-15 and the F-16. We are focusing on putting open mission systems on the B-2 so that when I get a new avionics capability I do not have to spend a billion dollars to put it on the B-2; I can just take that same box and put it there.

We are also trying to build 3D models of the airplanes. And by doing that we can build a model for the things we need in weeks instead of months for an airplane, days instead of weeks for the weapon, and then dramatically reduce the amount of time I need to actually do flight tests. I can much more quickly bring a new weapon to bear for the Air Force because I do not have to spend time and money doing extra flight tests.

On the other end of the spectrum I was thrilled to see that the command in the Air Force Sustainment Center is applying additive manufacturing. It used to take us months, arguably even a year, before we could replicate an obsolete part. Now, we can apply additive manufacturing and we can make the part in three days.

Q. In the future, would you like to see the Air Force make more parts in-house?

A. I would love to see that. Instead of flying parts or having them stockpiled in certain places, maybe all I have is the digital design and an additive manufacturing tool and I make the part instead. That reduces the storage, it helps to eliminate dealing with obsolescence and people not building the parts anymore. We are a long way from doing that, but if I can cut off bits and pieces as we go forward with techniques like that, I think I am all the better.

Q. We have learned that Air Force is going about acquisition of the long-range strike bomber [LRSB] in a different way than usual. Would you like to see this process applied to other programs?

A. Absolutely. I love to steal good ideas and make them work. The Air Force is going to be putting a much stronger focus on development planning. Development planning is pulling together what do you think the requirements are, what is in the realm of the possible in terms of technologies? It’s kind of a cycle. It starts out with, “tell me what you need, tell me what you’ve got.” And when you first start that process, the “tell me what you’ve got” may be technical concepts, technical ideas. The “tell me what you need” may be concepts of operation that are uninformed about what you’ve got. And to bring the two together, you start with modeling and simulation. You get to the point where some of the technology now becomes not just models and simulations but experimentation. And then after experimentation becomes prototyping. And that cycle continues.

Q. Can you give me an example?

A. Suppose we focused on what we need for air superiority in 2030. Maybe once a year we cycle back and we look at our planning and you say, “this really works and the technology is pretty mature, and we could probably put this on the F-35 in 2025.” We do not need to wait until 2030. And that process is very similar to what we did on the LRSB up front. What we want to do is we want take that a step further. Instead of getting into a particular platform and family of systems, let us go to a concept. For air superiority, maybe the answer is not a brand new airplane, because I can leverage cyber tools more effectively, or I can use space to complement. And so we will be focusing on the tools to do that and looking at a couple of pathfinders along the way.

Q. How else has the Air Force’s experience with LRSB impacted development planning?

A. There is a certain streamlining that we do with the Rapid Capabilities Office [RCO], which is handling LRSB, that we do not do across all of our programs. We want to try to apply that. We also want to take good techniques like open mission systems. OMS is another example of what came out of LRSB.

Some of this is like back to the future. It is in our blood. It is something that the Air Force has done but we kind of strayed away from it. And you might say that the RCO was part of getting us back into it because we were able to do it there for LRSB.

Q. How does a continuing resolution impact AFMC?

A. It would be very hard on AFMC. A yearlong CR would freeze the budget at the fiscal year 2015 level. And even at sequestration levels, FY ’16 was higher. If we had a yearlong CR, first of all, new starts would not start. The programs that we are going to ramp up, we can’t. The third thing that bothers me the most is our logistics complexes. We plan for what is going to be the throughput for aircraft that are going to come in for depot maintenance. And if that funding is done through the weapons system sustainment line and the flying hour program, and if those numbers do not have the appropriate ramp-up, that means that I will not be able to put the throughput through the air logistics complexes. Which means that coming out of it, I am going to have some real issues in FY ’17 because I am going to have planes that should have gone through depot that did not get through depot. And we have that scheduled based on what they need to ensure that we can continue to safely fly them.

You can see that it is going to create a backlog. So from my perspective it is going to make it very hard across the board for us. We are going to get caught behind the power curve in our development programs, in our production programs, and in our sustainment activities.

Q. What are your thoughts on Air Force Secretary Deborah Lee James’ new initiative to speed up weapons delivery?

A. The problem is that if we keep on doing the same thing we always did, we are always going to get the same result. And some of the things that we are trying to do is to be able to do things faster, more effectively, at lower cost. And we have shown over the last five years that we can beat these independent cost estimates for the cost. That is really what the “should cost” is, can I beat that independent cost estimate? We have shown amazing success.

What the “should schedule” says is can we take that to schedule? And I think some of that stemmed from having the industry come forward with some innovative ways. If the industry says I can do it to here and they are willing to sign up for it, then why can’t I do it?

Q. What are your thoughts on the recent acquisition reform proposals out of Congress?

A. I have been doing this a long time and I have seen a lot of acquisition reform initiatives. First of all, I am always in favor of a reset every once in a while when it comes to the acquisition rules, because it is kind of like the tax code. You get all these things that are on there, and then what some things originally intended to do kind of evolves into other things. I will say that I think both the Senate and House leadership have actually engaged us and given us an opportunity to give our insights. Some of the things they are doing I think are really good ideas. Others I think the devil is in the details of how they are implemented. I kind of like to wait and see.

 

 

Rasmussen Reports

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

Saturday, October 10, 2015

 

Next week, it’s the Democrats’ turn: The first of six scheduled debates between Hillary Clinton and the four other announced candidates for the party’s presidential nomination in 2016. Joe Biden is still a no-show.

But a look at the numbers makes it clear that the debate is already a win for Clinton. Barring a major gaffe, she’s still going to be comfortably ahead of her challengers among Democratic voters nationally, none of whom is likely to land a punch on her.

Following the recent school shooting in Oregon, look for Clinton to come out swinging for gun control, a popular position among Democrats but far less so among voters at large.

The former first lady and secretary of State is also likely to rally to Planned Parenthood’s defense. Voter attitudes about Planned Parenthood haven’t changed in the nearly three months since the release of the first secretly-taken video showing representatives of the group discussing the sales value of body parts of aborted babies. But for a sizable majority, Planned Parenthood is an issue they’ll remember come election time, particularly pro-life voters. 

Voters still insist they value substance over more superficial factors when deciding whom to vote for, but they are a bit more likely to admit their emotions play a role.

How aggressively to fight to defund Planned Parenthood is one of the issues that is roiling House Republicans as they struggle to find a successor to succeed John Boehner as speaker of the House. The key question for House Republicans now is whether they want a speaker who will fight more or one who like Boehner hopes periodic strategic wins will put the party in a better place come the next election.

As for the Republican presidential contest, Donald Trump remains an odds-on favorite for the party’s nomination, according to the latest Trump Change survey.

The current president continues to earn mediocre marks with daily job approval ratings in the negative mid-teens.

Syria clearly has the Obama administration in a tizzy. On Friday, it announced the end of a program to create a rebel force in that Middle Eastern country, “an acknowledgement,” according to the New York Times, “that the beleaguered program had failed to produce any kind of ground combat forces capable of taking on the Islamic State in Syria.”

Complicating the situation is Russia’s stepped-up military role to help its ally, embattled Syrian President Bashar al-Assad, and to fight the growing presence of the radical Islamic group ISIS. Some lawmakers are proposing that the U.S. military establish a no-fly zone in Syria to protect civilians in that civil war-torn country, and voters here tend to think that’s a good idea. But they also worry that it may lead to a U.S.-Russian military conflict. 

With Russia and Iran joining in the fight against ISIS, do U.S. voters consider the enemies of our enemy now our friends?

Many of the refugees flooding into Europe claim they are fleeing the Syrian civil war. To help Europe deal with this problem, the Obama administration plans to increase the total number of refugees allowed to resettle here to 185,000 over the next two years. Voters don’t approve and think the thousands of Syrian refugees included in that number are a threat to America’s national security.

Voters already question whether the government is focusing enough on the threat of radical Islamic terrorism here at home, and 68% think any decision by the federal government to allow large numbers of refugees to enter the United States should require the approval of Congress before it can be enacted. 

Fifty-two percent (52%) of voters believe Islam as practiced today encourages violence more than most other religions, and 75% say Islamic religious leaders need to do more to emphasize the peaceful beliefs of their faith. This helps explain why 51% agree with Republican presidential hopeful Ben Carson and say they wouldn’t vote for a Muslim for president

Sharyl Attkisson explored the Syrian refugee question in the first edition of her new program “Full Measure” which debuted last Sunday on Sinclair Broadcasting Group stations throughout the country. Tune in to this weekend to the next edition of “Full Measure” with Sharyl Attkisson, featuring “Full Measure-Rasmussen Reports” polling.

Supporters of bringing more refugees here and of granting amnesty to those in this country illegally often note that the United States is a nation of immigrants. But only 16% of voters believe America’s origins require it to take in more refugees than any other nation

In other surveys last week:

— Just 26% of voters think the United States is headed in the right direction.

— Following a disappointing government jobs report for September, most voters continue to express frustration over the economy. 

— In Rasmussen Reports’ most recent Consumer Spending Report, the spending index jumped seven points, and that increase appears to be the result of more anticipated spending on clothing, footwear and accessories.

— Americans continue to be diligent about their medical checkups, and slightly fewer report that they’ve been scolded by their doctor for unhealthy habits.

— Something about the past year must have been good for Americans because more are reporting better health than they have in quite some time.

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