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October 31 2015

November 2, 2015




31 October 2015


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Congress and White House Reach Tentative Budget Deal



WASHINGTON — After five years of bitter clashes, Republican congressional leaders and President Obama on Monday night appeared to settle their last budget fight by reaching a tentative deal that would modestly increase spending over the next two years, cut some social programs, and raise the federal borrowing limit.

The accord, which must be approved by the House and the Senate, would avert a potentially cataclysmic default on the government’s debt and dispenses with perhaps the most divisive issue in the capital just before Speaker John A. Boehner is expected to turn over his gavel to Representative Paul D. Ryan of Wisconsin.

Shortly before midnight, House Republicans posted the text of the 144-page bill, which was labeled a “discussion draft” but appeared to reflect the tentative agreement as described by congressional aides throughout the day.

The agreement would raise spending by $80 billion over two years, not including a $32 billion increase included in an emergency war fund. Those increases would be offset by cuts in spending on Medicare and Social Security disability benefits, as well as savings or revenue from an array of other programs, including selling oil from the nation’s strategic petroleum reserves. The Medicare savings would come from cuts in payments to doctors and other health care providers.

The $80 billion increase amounts to little more than 1 percent per year of the nearly $4 trillion annual federal budget, but carries the politically charged significance of breaking through agreed-upon spending caps that Republicans had praised as a rare display of responsible cost-control and Democrats criticized as a wrongheaded drag on economic growth.

Nonetheless, the deal would represent a major breakthrough after years of gridlock in Congress, especially on fiscal issues, as each side compromised on core issues. It frees Mr. Obama from budget battles as he looks to secure his legacy in the remainder of his second term, and gives clean starts to Mr. Ryan as speaker and to Republicans trying to persuade voters that they can be an effective governing majority.

For Mr. Boehner, the deal would deliver on his pledge to clean up “the barn” by dispensing of potential crises in a way that he hoped would silence critics who said he overpromised and underdelivered. Mr. Boehner was repeatedly caught in spending fights between hard-line conservatives in his own party and a White House eager to blame Republicans for any impasse, such as the government shutdown in 2013.

With Mr. Boehner’s backing, the House moved with rare bipartisanship — employing an even rarer legislative maneuver — toward resolving another issue on the speaker’s final to-do list: reauthorization of the 81-year-old Export-Import Bank, the government’s lender of last resort for American exporters. The House voted, 246 to 177, to wrest a bill that would revive the bank’s charter from a hostile committee chairman and set it up for House passage on Tuesday.

About a fourth of Republicans joined all Democrats who were present in support of advancing the bill over the opposition of deep-pocketed conservative groups and the Banking Committee’s chairman, Representative Jeb Hensarling of Texas.

Opponents say the bank amounts to corporate welfare. Supporters argue that it promotes job creation by assisting export industries and earns money for the Treasury in the process. The bank has not been able to conduct new business since its charter lapsed in June.

The Senate approved a similar measure as part of a transportation bill that still must be negotiated with the House, and the majority leader, Mitch McConnell of Kentucky, opposes taking up the new bank measure. But House passage of the bill would strengthen proponents in the negotiations over the transportation measure.

An official briefed on the terms of the spending agreement said the deal fulfilled all of Mr. Boehner’s goals in the talks by securing long-term changes in social programs, offsetting spending increases with corresponding cuts or savings; increasing military spending; achieving a net reduction in the deficit; and locking in an agreement on spending for the 2017 fiscal year.

Democrats, too, said they had achieved their goals, particularly lifting the prior spending caps and by assuring roughly equal increases to military and nonmilitary programs.

The Treasury Department had said that the government would default on its debt if the statutory borrowing limit was not raised by Nov. 3. And a temporary spending measure, which kept the government from shutting down at the start of October, will run out on Dec. 11.

The tentative agreement reached Monday night would solve each of those problems. It would keep the government financed through Sept. 30, 2017, well after Mr. Obama leaves office. And, the debt limit would be raised — technically suspended, allowing the Treasury to borrow whatever it needs — until March 2017.

And while the annual spending caps would be raised for two years, the 10-year spending caps enacted in 2011 would remain in place. Those caps will frame spending negotiations between Mr. Obama’s successor and leaders of the next Congress.

Rank-and-file House Republicans, in particular, have been resistant to authorizing an increase in the debt limit without some accompanying adjustments to mandatory federal spending programs. They have voiced opposition even as financial experts warned of the potentially devastating economic consequences of a default, and noted that raising the limit merely covers previous expenses and does not authorize any new spending.

Mr. Obama has repeatedly said that he would not negotiate over raising the debt limit and Republican congressional leaders have generally acknowledged that they would be forced to increase the government’s borrowing authority one way or another.

Critics of the deal, who said Mr. Boehner was pushing through one last measure negotiated solely by the leadership, quickly began venting their anger on Twitter using the hashtag #zombiebudget.

Representative Justin Amash, Republican of Michigan, who is a member of the hard-right House Freedom Caucus, had posted his annoyance earlier in the day, saying, “It’s another ‘govern by crisis’ deal that doesn’t reflect the will of the House but rather the will of the speaker.”

Mr. Boehner, who announced his resignation last month after years of being hounded by hard-line lawmakers on his party’s right, had said he hoped to clear the way for his successor by dispensing with some tough issues. But talks seemed to falter after the majority leader, Representative Kevin McCarthy, abandoned his bid for speaker, and House Republicans wrestled with the question of who would lead their deeply fractured conference.

That question was resolved last week when Mr. Ryan, the powerful chairman of the Ways and Means Committee and one of his party’s leading voices on fiscal matters, announced that he would seek the speakership provided his colleagues rallied behind him. They did.

Mr. Ryan is set to be chosen as the Republican nominee for speaker on Wednesday and formally installed during a vote on the House floor on Thursday.

An accord to lift the debt ceiling and settle the spending impasse before then would free Mr. Ryan to begin his speakership without a pending crisis, and potentially empower him to pursue some of the bold ideas he has put forward previously on tax and budget policy that helped catapult him to prominence and led to his being chosen as the Republican vice-presidential nominee in 2012.

Mr. Ryan played a crucial role in the last major spending deal, which he brokered along with Senator Patty Murray, Democrat of Washington.

The current negotiations were largely conducted at the staff level, involving senior aides to Mr. Boehner, Mr. McConnell, Representative Nancy Pelosi, the House Democratic leader, and Senator Harry Reid of Nevada, the Democratic leader, as well as White House staff members.

While the four Congressional leaders and Mr. Obama never met face-to-face in this round, aides said that there were frequent phone calls among the individual leaders as talks developed. Mr. Boehner’s resignation, announced on Sept. 25, lent additional urgency to the talks, as it became clear that negotiations could prove far more difficult once a new speaker was in place.

Aides said that the Social Security Disability Insurance program would be amended, in part to tighten and standardize eligibility requirements that now vary by state. That change was projected to save the government $5 billion.

In addition, the accord calls for eliminating a provision of the Affordable Care Act, not yet in force, that would require businesses with more than 200 employees to automatically enroll their workers for health insurance.

The emerging deal would also reallocate funds among Social Security program trust funds to ensure solvency of the disability insurance program. Such reallocations have occurred regularly over the decades but Republicans had opposed any new reallocation without changes to reduce costs of the program.

The prospective agreement would also prevent expected increases in out-of-pocket costs for millions of Medicare Part B beneficiaries. The increases would have been caused by the rare absence of a cost-of-living increase in Social Security for some beneficiaries, because of unusually low inflation.

Mr. Obama and Democratic leaders had insisted that any increases in military spending be matched with equal increases in spending on nonmilitary programs. The deal under consideration appears to meet that goal, as Republicans had previously agreed to increases in military spending.



Lt. Gen. Otto Commits Air Force To More Open Mission Systems

By Richard Whittle

on October 26, 2015 at 4:01 PM


The Air Force is expanding its Open Mission Systems standard because it is working so well, Lt. Gen. Robert Otto, deputy chief of staff for intelligence, surveillance and reconnaissance, said in a Monday interview with Breaking Defense.

“Our acquisition community is looking to — maybe proliferate is too strong a word — but broaden the concept,” Otto said. “We think it’s very important.”

Formally adopted April 30, 2014, after two years of collaboration with industry, the Open Mission Systems standard aims to foster competition on subcontracts by adopting the cell phone apps model. Just as Apple publishes standards for integrating technologies that allow other companies to develop applications that work with its iPhone, Open Mission Systems has prime aircraft contractors publish system architecture standards so other companies can make communications, radar and other mission technologies that work with the prime contractor’s platform.

“If you don’t have a published standard, then we go to the prime contractor for everything, and then you don’t have competition,” Otto said. “With an Open Mission System, we can integrate either new sensors or new capabilities or technological updates, and those can be competed separately, depending on how much of it is open. So we see an Open Mission System as a way for us to be able to have competition throughout the life cycle of a weapons system instead of just one competition up front and then it’s proprietary after that.”

Lockheed has tested a number of Open Mission Systems payloads on its U-2 Dragon Lady manned reconnaissance plane and Northrop has tested payloads on its unmanned RQ-4 Global Hawk. Boeing, Raytheon and General Atomics have agreed to the standard, too. “They’re all in,” Otto said.

On another subject, Otto said he largely – but not entirely — agrees with CIA legend Charlie Allen, who told BD last month that manned reconnaissance aircraft are on their way out.

“I have the utmost respect for Charlie Allen,” Otto said. “I have the pleasure of seeing him several times a year. I think he gets that mostly right.” But Otto added that going manned or unmanned is “really mission specific.”

“Charlie Allen, when I saw his comments, was referring mostly to…high altitude reconnaissance, and especially over dangerous territory,” Otto said. “If you’re going into contested airspace when you’re not otherwise at general war, it’d be a heck of a lot better to lose an unmanned airplane than a manned airplane. We proved that with Francis Gary Powers.”

Beyond that, Otto noted, manned aircraft can’t compete with drones for endurance. “We know that it’s hard for a pilot to do a mission – a solo pilot – longer than about 13 hours,” he said. “Our bomber crews have done some at about a day. But there comes a point at which the human becomes a limiting factor. So there are some mission sets that lean towards unmanned aircraft as the way to go.”

At the same time, Otto said, “We also have found, like in Afghanistan and Iraq, that when the weather’s kind of crummy, manned airplanes have a higher mission success rate because there’s somebody there that can dodge the weather and understands the intent and can work their way to a successful mission accomplishment. So while I think the future looks bright for unmanned airplanes, and especially in unmanned reconnaissance, I do believe that there are some roles today that manned airplanes are a better fit.”


Commentary: What To Ask About New Long Range Strike Bomber

By Jim Hasik and Rachel Rizzo 4:19 p.m. EDT October 26, 2015


The Defense Department will imminently award the long-awaited contract for the new Long Range Strike Bomber (LRS-B) to either Northrop Grumman or a team of Boeing and Lockheed Martin. So far, though, the program has been met with a mix of skepticism and cautious enthusiasm. The secrecy surrounding the aircraft’s development may be strategically appropriate, but it makes the program difficult to analyze. Some think the US Air Force should focus on developing capabilities in new means of war-fighting, such as swarming drones, rather than invest in a new big manned bomber. At this point, however, the leadership of the Air Force and the Defense Department has decided that the LRS-B is important enough to develop and procure. Whatever the program’s details, the difficult part starts now. Policymakers must ensure they ask the right questions about the aircraft’s necessity, its mission set and its cost.

Perhaps most importantly, policymakers should ask whether the LRS-B is urgently needed. Squadrons of the new bomber will not fly until the mid-2020s. While it is true that the average age of a B-52H is 53 years, a B-1B 28 years and a B-2A 20 years, the Air Force has long been advertising that it can keep the older bombers flying until about 2040. During the Cold War, B-52s mostly waited on strip alert, and since then the wings, fuselages, engines and cockpits have all been replaced. Military action over the last 15 years has mostly involved counterinsurgency and counterterrorism, so a new penetrating bomber was always easy to delay. Today, policymakers must think hard about what war will look like in 20 years and decide whether a new bomber is the right means for fighting it.

Secondly, policymakers must ask, “What is the LRS-B’s target set?” Here, opinions diverge regarding the utility of the program. Robert Haddick has argued that hunting mobile missiles is the LRS-B’s single most important mission. This effectively means that the bomber must be able to loiter undetected for a significant stretch of time in contested airspace. Even if the LRS-B were untargetable, it could still be detectable, and its presence would certainly be known from the impact of its weapons hitting targets. Furthermore, mobile missiles are very hard to find, and the United States’ track record of hunting them in several wars has been miserable. So, if the aircraft’s target set will instead comprise primarily fixed sites, why cannot cruise missiles and drones do the job?

Third, policymakers must keep a watchful eye on costs. The massive overruns on Lockheed Martin’s F-35 are merely the latest case in a long history of failure. The projected cost of the LRS-B is $41.7 billion over the next 10 years, and the USAF intends to keep the fixed unit price under $610 million. This might be doable, but so far it doesn’t look promising. Earlier this summer, the Air Force’s 10-year cost estimate for the program was revised from $33.1 billion up to $58.2 billion, and then back down to $41.7 billion. Capitol Hill was suitably unhappy about those blunders —  Rep. Jackie Speier of California called the discrepancies “massive.” The mistake was later tracked to a clerical error that originated outside the program office. All the same, a rocky start like this does not bode well.

The future of the US Air Force’s long-range strike capabilities should continue to be debated throughout the development process and production run of the LRS-B. If costs run over, policymakers must ask why and whether the aircraft is still worth pursuing at a higher price. As enemy air defenses adapt and mature and other technologies are developed, the Defense Department must ask whether the aircraft is still relevant. Policymakers now must ensure that they are asking the right overarching questions so that the Defense Department does not allow acquisition to drive strategy. The interests of any single program must be subordinated to those of security and the treasury.

James Hasik is a nonresident senior fellow for defense with the Brent Scowcroft Center on International Security at the Atlantic Council. Rachel Rizzo works on the Strategy Initiative in the Brent Scowcroft Center on International Security. The views expressed in this article are their own.



Northrop Grumman Wins Air Force’s Long Range Strike Bomber Contract

By Lara Seligman, Andrew Clevenger and Aaron Mehta 9:35 a.m. EDT October 28, 2015



WASHINGTON – Northrop Grumman has won the contract to build the US Air Force’s next-generation Long Range Strike Bomber (LRS-B), an industry-shaping award that breathes new life into the world’s sixth-largest defense company.

After US financial markets closed Tuesday evening, Defense Secretary Ash Carter and Air Force leadership announced that Northrop beat out the team of Boeing and Lockheed Martin for the contract, which is expected to top $55 billion over the life of the program. It’s the largest military aircraft contract since Lockheed Martin won the Joint Strike Fighter (JSF) more than a decade ago.

Northrop now has the Pentagon’s blessing to build a new fleet of aircraft to replace the Air Force’s aging B-52s and B-1s. As builder of the B-2 stealth bomber, Northrop beat out a joint Lockheed Martin-Boeing team in a closely watched competition that has lasted months longer than anticipated.

Speaking at the announcement, Air Force Secretary Deborah Lee James said the bomber would “allow the Air Force to operate in tomorrow’s high-end threat environment” and praised the work that went into the selection, in a move that sounded like a preemptive shot to any attempt by Boeing and Lockheed to challenge the award decision.

James said service acquisition officials “carefully considered” the offers from both teams, with the entire process carried out “with a high level of transparency with our industrial partners… we believe our decision represents the best value for our nation.”

The contract is broken up into two parts — the cost-plus incentive fee development contract awarded today, and a separate agreement on the first five low-rate initial production lots that will be fixed-price incentive fee. Those first five lots will cover the production of 21 bombers.

The service requested that two independent government cost estimators look at the program. The two groups projected that each bomber will cost $511 million in 2010 dollars on average if 100 planes are built, Air Force officials told reporters on Tuesday — substantially less than the original $550 million target cost set by then Secretary of Defense Robert Gates. This translates to $564 million per plane in fiscal year 2016 dollars.

LRS-B’s projected unit cost is higher compared to the B-1, but significantly lower relative to the $1.5 billion price tag of Northrop’s B-2, according to an Air Force handout. The expected development cost overall for LRS-B is also lower than for the B-2, at $23.5 billion.

The Air Force did not say the value of the contract announced on Tuesday.

At the announcement, service officials revealed:


•According to Lt. Gen. Arnold Bunch, the military acquisition deputy, the two bomber teams offered up proposals with all industrial partners included — meaning providers for subcomponents such as engines have already been decided. However, Bunch said that information would remain secret for security reasons.

•Risk-reduction efforts cost $1.9 billion from FY11 to FY15.

•A tentative date for initial operating capability is 2025, although Gen. Robin Rand, commander of Global Strike Command, indicated that could change.

•While many have referred to the bomber as the “B-3” as shorthand, Rand’s office will have final say on the designation, which has not been reached.

•Air Force officials will make themselves open to Boeing and Lockheed as early as Friday for an explanation of why Northrop was selected, Bunch said.


What remains unknown at this time — details about the plane itself. The size, weight and payload remain unknowns, as do the extent of its stealth capabilities.

Northrop’s win is a game-changer for the aerospace company, which is currently the sixth-largest defense contractor, behind Lockheed and Boeing. With the contract in hand, Northrop will no longer struggle to retain its grip on the combat aircraft market. Not only does the bomber contract boost Northrop’s aviation capital, it also likely keeps the company’s Palmdale, California, facility afloat.

Northrop’s win is unlikely to directly result in a seismic reshaping of the aerospace and defense landscape, analysts said.

The bigger issue for the defense industrial base is who the subcontractors are for engines, avionics and other major subsystems on the project, many areas of which are classified, said Byron Callan of Capital Alpha Partners.

“As much as there’s all this attention on Lockheed/Boeing and Northrop Grumman, it has much broader implications for the rest of the aerospace defense industry,” he told Defense News before the announcement revealed that the subcontractors had already been selected.

A spokesman for engine manufacturer Pratt & Whitney, which makes the F135 engine used to power the F-35 joint strike fighter, said the company “congratulates Northrop Grumman for their selection on this very important program” but declined “to comment on any other questions regarding the Long Range Strike Bomber program.”

The Air Force indicated Tuesday that the Pentagon structured the competition so that the health of the industrial base would not be a factor in the final decision. The selection was made based on the cost and technical proposals, officials said.

“We’re always concerned about the industrial base in general,” said Assistant Secretary of the Air Force for Acquisition William A. LaPlante, adding that “the specific industrial base was not at all a criteria in the source selection.”

In a June research report, RBC Capital Market’s Robert Stallard’s foresaw little impact on any of the major players’ stock prices resulting from today’s selection.

“From a stock perspective, we think many in the investment community think Northrop is a Buy either way as it goes up on a win, and without a win it MUST break itself up. We’re less convinced of this strategy in the near term as we think NOC is pretty decent the way it is, has growth from F-35 and will be in strong position for UCLASS, but a loss would certainly excite some investors on consolidation,” he noted.

Richard Aboulafia, an analyst with the Teal Group, said Northrop Grumman’s victory means “they’ll be the second biggest combat aircraft prime, and possibly the only survivor other than Lockheed Martin by the time the next generation of combat aircraft competitions arrive. As for Boeing, they can either gradually return to being the mostly civil jetliner company they were before they bought McDonnell Douglas, or they can make a bid for Northrop’s combat aircraft unit.”

But recent comments by Pentagon acquisition chief Frank Kendall on consolidation among primes threw icewater on the suggestion that Boeing would move to buy Northrop now that it won the contract, Callan said.

“Wall Street will still speculate that [because] Northrop won, it will get taken over,” he said. “That’s implausible, at this point, as long as current leadership is around. It’s just not clear to that a new set of people in 2017 are going to have radically different views than Kendall and company.”

Unsurprisingly, the two competitors released statements reflecting the results.

“The Air Force has made the right decision for our nation’s security,” Wes Bush, chairman, chief executive officer and president of Northrop Grumman, said in a statement. “As the company that developed and delivered the B-2 Spirit stealth bomber, we look forward to providing the Air Force with a highly-capable and affordable next-generation Long-Range Strike Bomber.

“Our team has the resources in place to execute this important program, and we’re ready to get to work,” Bush added in the statement.

Boeing and Lockheed, meanwhile, said they were “disappointed by today’s announcement.”

“We will have further discussions with our customer before determining our next steps,” the statement said. “We are interested in knowing how the competition was scored in terms of price and risk, as we believe that the combination of Boeing and Lockheed Martin offers unparalleled experience, capability and resources for this critically important recapitalization program.”


Protest Likely

So what’s next?

For the Pentagon, the hard part is about to begin. A bid protest seems inevitable given that LRS-B is the first major military aircraft acquisition program since the JSF award in 2001, and likely the last until the sixth-generation fighter next decade. A lengthy protest period could not only delay the program’s start, but also set up a nasty public relations fight.

Boeing and Lockheed will likely wage intense lobbying campaigns to rally support for a protest. Boeing is expected to tap the Missouri delegation, including influential Democratic Sen. Claire McCaskill and Republican Sen. Roy Blunt, while Lockheed will look to the Texas delegation, particularly Fort Worth’s Republican Rep. Kay Granger and House Armed Services Committee Chairman Rep. William “Mac” Thornberry, also a Republican.

Earlier on Tuesday, before the announcement and after a hearing on streamlining defense acquisitions, Thornberry acknowledged concerns over a possible LSR-B protest and the litigious nature of acquisitions in general.

“It’s part of the way acquisition culture has developed that every bid award has protests, and you’re expected to protest – basically with no penalty,” he told reporters. “So, a number of members have had ideas about improving that situation, and it’s something that we will continue to discuss.”


Northrop Focused on Future Production

One expert predicted the Missouri and Texas delegations will come out swinging for the Boeing-Lockheed team.

“McCaskill will go to war for this and Texas will back it,” one defense analyst told Defense News.

Of the two, Boeing clearly has the most at stake. While Lockheed’s position is safe, with the JSF about to ramp up production, Northrop’s win could squeeze Boeing out of the combat-aircraft manufacturing market. Most of the company’s products are commercial derivatives, like the KC-46A tanker, and its two remaining military aircraft lines are coming to a close. The last Navy F/A-18 will be delivered in 2018, and the final Air Force F-15 will be delivered in early 2019. After that, the company’s St. Louis factory may be shuttered.

To keep the St. Louis facility afloat, the US Navy could opt to extend the F/A-18 line for up to 10 years, a move that could bridge the gap between now and the sixth-generation fighter, which is expected to go into production in the late 2020s. Winning a contract to build the Air Force’s new fleet of trainers could also hold St. Louis over, but as one of several competitors, Boeing can’t bank on a positive outcome.

Boeing potentially has another option: It could try to buy Northrop’s aerospace unit. Once Northrop has completed the LRS-B design, divesting the business to another party might make sense to investors, according to analysts who spoke to Defense News on background to talk openly about the contract award.

On the other hand, some analysts say Boeing is unlikely to be shut out of the business of designing and producing combat aircraft. The company does not need an LRS-B victory to stay in business and has not signaled that it would rethink its business strategy based on the recent contract award, Callan said.

LRS-B is unusually mature for a program at this stage of development, as the Air Force has already completed much of the testing and risk reduction. Although there are no indications a complete prototype has flown, the team has already built component prototypes and scale models for testing. LaPlante recently indicated the plane could begin flying relatively soon after selection.

The next challenge for Northrop will be integrating the mature technologies already developed in LRS-B’s pre-award phase. The main areas of risk are integrating the engines and placing antennas onto the airframe, officials have said.

Part of the reason the LRS-B program is so advanced at this stage is due to being handled by the Rapid Capabilities Office, a small group inside Air Force acquisitions that handles secretive programs such as the X-37B space plane. Right now, there is no plan to change the LRS-B program management, officials have said, but the Pentagon may re-evaluate as the program moves forward.

The Air Force plans to buy 80 to 100 Long Range Strike-Bombers to replace its aging B-52s and B-1s, which the service plans to retire in the mid-2040s. The new aircraft will be significantly stealthier than the B-2, capable of carrying conventional and nuclear weapons. Initial operating capability is slated for the mid-2020s, with nuclear certification planned two years after that.

The target price is $550 million per plane in 2010 dollars. To help achieve that price point, the Air Force is looking to draw on available, mature technologies, rather than launching new developments. At the same time, the Air Force will use an open-architecture approach to design a plane that can be easily upgraded with new technologies over its lifetime.



Budget deal gives DOD stability, almost all its money


By Leo Shane III and Joe Gould, Staff writers 2:25 p.m. EDT October 27, 2015

A sweeping new two-year budget deal unveiled by the White House and congressional leaders late Monday would give Pentagon planners the fiscal stability they have been begging for, but falls about $5 billion short of what they hoped to receive in fiscal 2016.

If finalized, the agreement would stave off the threat of a government shutdown for the rest of President Obama’s term and raise the national debt ceiling until spring 2017. It also would be the second partial fix to the mandatory federal budget caps that were passed by Congress in 2011 and have been lamented ever since.

Under details of the “bipartisan budget act” provided by House Republican leaders, the caps on defense spending would be raised by about $25 billion for each of the next two fiscal years, to $548 billion in fiscal 2016 and $551 billion in fiscal 2017.

That, combined with nearly $59 billion in overseas contingency operations (OCO) funding for each of the next two years, would nearly match Pentagon budget plans for the near future.

Obama and congressional Democrats had opposed any budget plan to fully fund defense spending without equal increases in non-defense programs and stalled a series of federal appropriations measures — including the fiscal 2016 defense budget — over the spending fight.

In addition, Obama vetoed the 2016 National Defense Authorization Act last week over those spending differences, despite Republican assertions that the measure was largely a policy bill separate from the budget impasse.

Under the compromise, non-defense spending caps would be upped by $25 billion in fiscal 2016 and $15 billion in 2016, and another nearly $15 billion would be added in non-military costs to the temporary war funding accounts each of the next two years.

The move comes just days before House Speaker John Boehner, R-Ohio, leaves Congress and less than a week before the nation’s borrowing authority is set to run out. Boehner said his chamber would vote on the measure by week’s end and that he expects bipartisan support for the deal.

“The agreement isn’t perfect by any means, but the alternative was a clean debt-ceiling decrease without any support for our troops, without any entitlement reforms,” he said Tuesday. “So this is a good deal, for our troops, our taxpayers and the American people.”

Several members of the House and Senate Armed Services Committees indicated that they would support the measure, even though the $607 billion in fiscal 2016 defense spending falls about $50 billion short of the mark they’ve been lobbying for all year.

Earlier this month, 102 House Republicans sent a letter to chamber leaders calling for a federal budget that “fully funds defense” at a $612 billion total. Rep. Mike Turner, R-Ohio, who helped organize that effort, on Monday indicated that he would back the new deal, despite the shortfall.

“There is tremendous value in a two-year deal, as it provides the Department of Defense with the certainty it needs to plan for and execute various missions around the world,” he said in a statement.

Sen. John McCain, R-Arizona, chairman of the Senate Armed Services Committee, told The Hill newspaper late Monday that he was “not happy, but I’m largely satisfied” with the budget deal.

“I think it’s the best deal we can probably get,” he said. “It’s bipartisan, and it prevents a government shutdown.”

House Armed Services Committee Chairman Rep. William “Mac” Thornberry, R-Texas, said that while the pact was “not ideal” for defense and had not repaired four years of cuts, two years of predictability at a level close to the president’s budget request and the GOP’s budget plan was good enough for him. If anything, he faulted the offsets to reach the deal.

“I don’t think it’s what anybody would choose, but if you look at it for defense, it’s better than the other alternatives,” Thornberry said. “Not only do we set this year’s number, but next year’s number. That enables us to get into the programmatics and the policy, and not spend as much energy on the budget.”

Despite offsets that may prove unpopular, Thornberry said he believes the deal will have the votes to pass, given the “significant bloc of members … who really put defense at the height of their priorities.”

As to where the $5 billion difference would come from, Thornberry said it represents “real money, real capability that we lose,” but that the committee will be working with appropriators to match the cuts in each bill.

On the 2016 NDAA, lawmakers could override the president’s veto or have a new bill that adjusts funding to reflect the deal, Thornberry said. Either way, he was confident that the bill he and McCain had worked months to craft would be approved by Congress “one way or another.”

“Nobody [is] going to walk away” from the myriad policy provisions it contained, including defense-acquisitions reform measures, Thorberry said. He predicted that a plan to resurrect the NDAA would emerge next week, after the pending leadership change is resolved.

Pentagon officials repeatedly have labeled the $612 billion defense budget level as the “lower ragged edge” of what needs to be spent to preserve military readiness. However, they have also largely rejected one-year budget strategies that they argue do not provide enough long-term stability for the procurement and planning process.

On Tuesday, Defense Secretary Ash Carter told members of the Senate Armed Services Committee that he hadn’t yet read all of the budget deal details, but he called it a “major positive development.”

“As I’ve said consistently since March and continue to believe, Washington needs to come together behind a multiyear budget deal that supports our defense strategy, the troops and their families, and all elements of Americans’ national security and strength,” he said.

The deal not only opens a path to pass a new defense appropriations bill in coming weeks, but also for lawmakers to revisit the vetoed authorization bill, which contains a host of specialty pay renewals and an overhaul of the military retirement system, among other reforms.

But it’s also likely to irritate fiscal conservatives who had resisted plans to raise defense spending and flatly opposed plans to increase other domestic program budgets.

To offset the extra spending, the budget deal includes the sale of millions of barrels of oil from the Strategic Petroleum Reserve over the next decade, modifications in federal health care rules, a handful of minor tax code changes and several other revenue changes.

The deal also eliminates a host of budget-related fights for incoming House Speaker Paul Ryan, R-Wis., and delivers some level of budgetary calm during next year’s presidential election.


LRS-B: Why Northrop Grumman Won Next U.S. Bomber

Oct 27, 2015 Bill Sweetman | Aviation Week & Space Technology

Northrop Grumman is the winner of the Long-Range Strike Bomber (LRS-B) contest, beating a rival team with six times its annual sales.

The U.S. Air Force announced Oct. 27 that Northrop Grumman beat a Boeing/Lockheed Martin team in a competition to develop and build 100 of the bombers, which are expected to reach initial operational capability in the mid-2020s. The Pentagon says the next phase of the work, engineering and manufacturing development (EMD), should cost $21.4 billion in 2010 dollars, including the delivery of an unspecified number of test aircraft.

Another $1.9 billion has already been spent on risk reduction, bringing both competing teams through the initial design phase. In 2016 dollars, the estimated EMD cost is $23.5 billion, the Pentagon says. The B-2 cost $37.2 billion to develop in 2016 dollars.

The Air Force also says that the average procurement unit cost for the Northrop Grumman bomber (which does not have a formal designation yet) will be $511 million in 2010 dollars, assuming a 100-aircraft buy ($564 million in 2016 dollars). This figure, the result of two independent Pentagon estimates, is lower than the $550 million (2010 dollars) goal that was set in 2011, when then-Defense Secretary Robert Gates approved the start of the program.

Northrop Grumman’s contract includes fixed-price incentive options for the first five batches of low-rate initial production aircraft, comprising 21 bombers. The price for those aircraft (which will be higher than the average) has not been disclosed. Through production, the program has been estimated to represent $80 billion in business. The LRS-B is expected to be operational in the mid-2020s. The exact date will depend on initial operational capability criteria, such as a certain number of aircraft in service, which are still to be determined by the Air Force’s Global Strike Command.

The stakes for LRS-B were so huge that industry analysts have long predicted that the losing bidder would protest the award. Boeing is no stranger to that tactic. In 2008, the company successfully protested the Air Force’s 2008 award of a contract for refueling tankers to a Northrop-EADS team and ultimately won the contract in a second competition. Boeing and Lockheed Martin said in a joint statement that they were “disappointed by today’s announcement (and) interested in knowing how the competition was scored in terms of price and risk.” The Air Force says it will start debriefing the loser on Friday, and there is a 100-day period in which to lodge a protest.

“The Air Force has made the right decision for our nation’s security,” said Wes Bush, Northrop Grumman president, chairman and CEO. “Our team has the resources in place to execute this important program.”

For the time being, however, the make-up of Northrop Grumman’s team is a secret, as are most attributes of the program. Not even the engine subcontractor is disclosed, although the Air Force said today that all major subsystems have been selected. Although most analysts agree it is overwhelmingly likely that the bomber will resemble a smaller cousin of the B-2, a blended wing-body aircraft with two engines and an unrefueled radius of action of around 2,500 nm, no such details have been confirmed.

Details of the selection process also remain highly classified, but it is likely that the winning bid rested on Northrop Grumman’s operational experience with wide-band, all-aspect stealth technology on the B-2 bomber and the still-secret RQ-180 intelligence, surveillance and reconnaissance (ISR) unmanned air vehicle.

A concept of an early Northrop Grumman Next-Generation Bomber design prepared for Aviation Week by Jozef Gatial in 2008.

But the winning formula was most likely not just a question of delivering more stealth or more range. In LRS-B, the winner had to meet a complex set of requirements that stress risk reduction, an open systems architecture, agile management and manufacturing technology.

The LRS-B contest was unique in three particularly important ways. First, the requirement had emerged from the ashes of the previous Next-Generation Bomber program (NGB), canceled in April 2009, with its goals scaled down and schedule stretched out, and unit cost as a key performance parameter (KPP).

Second, rather than funding demonstration programs, the Pentagon supported two teams through preliminary design review (PDR), probably for almost two years, 2013-15.

A third key feature of the LRS-B is that its management has been assigned to the Air Force’s Rapid Capabilities Office (RCO), which, Air Force acquisition chief William LaPlante said Oct. 21, has “an incredible track record of delivering eye-watering capabilities—not just one-offs, but things going into production.”

Significantly, LaPlante describes the 80-strong LRS-B project office within the RCO as like the team that produced the Lockheed F-117 stealth fighter 35 years ago: “A small empowered group of warfighters, acquisition people and maintainers.” Although the RCO’s only acknowledged aerospace platform is the Boeing X-37B spaceplane, its technical focus can be gauged by the fact that a 2012 recruitment notice for its deputy director identified only three mandatory areas of “significant experience . . . low-observables, counter low-observables and electronic warfare.” Like the F-117, the LRS-B is apparently designed to meet its goals with mature subsystems in a new platform.

However, LaPlante added, the RCO team has substantial oversight from the Pentagon, Congress and Government Accountability Office, and the program incorporates red team/blue team exercises to validate it against possible threats.

The LRS-B contest set an average procurement unit cost of $550 million—in fiscal 2010 dollars based on building 100 aircraft—as a KPP. “The risk is that you pick the wrong number. If you have firm requirements and do the analytics, you have a shot at pulling that off,” LaPlante says.

Some of the key technologies in the LRS-B are both secret and mature. “Not only have some technologies been wind-tunnel-tested, prototyped or flown—some of them have been used operationally,” LaPlante said Oct. 21.

However, LaPlante also emphasized that delays and overruns cannot be eliminated. “Integration is always a risk,” he said, “and we have put together a schedule with the right margins to accommodate delays.”

LRS-B, too, is planned to be upgraded easily and competitively, “with space and weight provision for things we can’t imagine today,” LaPlante said. Open architecture, he said, could allow the Pentagon to procure a new or upgraded subsystem competitively, “provide it to the prime and say, integrate this.” Along with the cost of maintaining the bomber’s low-observable systems, upgrades will account for a large proportion of the bomber’s life-cycle cost—which will be much greater than its procurement bill.

There is one other way in which LRS-B will differ from other programs: its production rate. The number is based on a “fundable profile, without the big ramp-up you see on F-35,” LaPlante said. “We have set it up to be resilient,” with affordable annual funding. “That would be $550 million times your production rate, which might be seven or eight per year,” he said. The rate is much lower than recent combat aircraft programs but also means the line will be moving until almost 2040. Many bomber advocates quietly argue that if LRS-B delivers, and Asia-Pacific operations remain important, the Air Force will need more than 100 of the bombers.

Northrop Grumman is less than one-sixth the size of the Boeing, Lockheed Martin and Raytheon team, with total revenues of $160 billion. Boeing and Lockheed Martin agreed to team on NGB in early 2007 and revealed that arrangement in January 2008. The team re-formed for LRS-B, adding Raytheon. Together, Lockheed Martin and Boeing have been prime contractors on almost every combat aircraft in U.S. service today, while Lockheed Martin has been the prime contractor on four out of five production stealth programs.


But the fact that they were allowed to team for NGB and then re-form the team for LRS-B indicated that the Pentagon leadership did not see this as an impediment to a fair fight. Rules have changed, too. Briefing reporters Oct. 21, LaPlante emphasized the importance of independent cost estimates—produced by the Pentagon’s Cost Assessment and Program Evaluation (CAPE) directorate—under the 2009 Weapon Systems Acquisition Reform Act. “All programs have an independent estimate, and we are funded to that level,” LaPlante said. Nor is the estimate a single review process: The program office has been briefing CAPE estimators from the outset.

The development cost quoted today is the independent cost estimate, not the winner’s or program office’s estimate. The goal is to make underbidding less likely and less effective.

Not only did Boeing and Lockheed Martin outgun their rival fiscally, but they were also teamed on a government-funded demonstrator aircraft, identified as the Next-Generation Long-Ranger Strike Demonstrator, under an effort that started in the early days of NGB and continued after the ambitious bomber was canceled. The stealth-technology group within Boeing’s Phantom Works, headed by Alan Wiechman, led the low-observables side of the program, although Lockheed Martin’s Skunk Works built the airframe.

Alongside stealth, Phantom Works pioneered the use of new manufacturing technology. This has led to the closely held Boeing-wide initiative known as Black Diamond, which was identified this summer as a possible major competitive advantage in LRS-B.

Lockheed Martin brought its experience with stealth systems integration to the party. But the history of the F-22—where upgrades have been constrained by a tightly integrated architecture, so that every change requires painstaking regression testing to ensure that other functions are not affected—was exactly what the LRS-B program’s open architecture is designed to avoid.

While Northrop Grumman may have shared some NGLRS-D technology, the most important experience that company brought to the table may well have been the RQ-180. From conversations with industry sources, it appears that one of the major breakthroughs in the design of this very stealthy, high-altitude UAV was its combination of stealth with aerodynamic and propulsive efficiency, largely the result of better computational fluid dynamics (CFD) and computational electromagnetics (CEM).

The B-2 had achieved a high level of stealth, but the design was a difficult compromise between stealth and aerodynamics, and the complex shape of the center body and wing section, with strongly three-dimensional stream and shock patterns, pushed the state of the art in both computer modeling and testing. Given its high fuel fraction, its 6,000-nm unrefueled range showed that, at best, its efficiency was no better than that of the B-52.

In sharp contrast, some early-2000s Northrop Grumman designs were described by one engineer as having “sailplane-like” efficiency. While the RQ-180 will almost certainly be shown to be a much lighter aircraft than the LRS-B, its wingspan is likely quite close to that of the bomber, and its development will have validated the CFD and CEM codes used in the design, along with radar-absorbent materials and coatings. The UAV will also be providing operational experience with new stealth technologies, underpinning Northrop Grumman estimates of the LRS-B’s operating cost.

While Lockheed Martin’s RQ-170 UAV is widely considered to have been an RCO program, meaning that all three aircraft companies in the LRS-B competition have worked with RCO, the RQ-180 experience would be most relevant.

Despite the B-2’s reputation for high cost, Northrop Grumman says its experience with the program was a plus. “It is behaving like a legacy aircraft now,” says one company executive, with flight-hour costs that are not out of line with other small-volume fleets of large aircraft in the Air Force. Operating costs for such aircraft, the company says, seem to be driven by fixed costs and by the inevitably slow learning curve for depot-maintenance visits. Each B-2 today goes into depot for 12 months every nine years. At the same time, the B-2’s signatures “have improved significantly” through the use of new materials.


Northrop Grumman has also made a radical move to contain its costs, although its impact on the LRS-B bid is uncertain: Under the codename Project Magellan, it has established a manned-aircraft center of excellence in Melbourne, Florida. Across the U.S. combat-aircraft business, this represents a reversal of a decades-long consolidation that has seen major engineering locations dwindle to three centers: Los Angeles/Palmdale, St. Louis and Fort Worth. The company has already opened a new 220,000-sq.-ft. building in Melbourne and has plans for another new 500,000-sq.-ft., 1,500-person facility by 2019


Huerta Announces UAS Registration Task Force Members

by Press

Federal Aviation Administration (FAA) Administrator Michael Huerta today announced the membership of the Unmanned Aircraft Systems (UAS) Registration Task Force. Earl Lawrence, Director of the FAA’s UAS Integration Office, and Dave Vos of Google X will co-chair the group.

Department of Transportation (DOT) Secretary Anthony Foxx and Administrator Huerta announced the formation of the Task Force last week. The Task Force membership represents a range of stakeholder viewpoints, interests and knowledge of the objectives and scope. Task Force membership was by invitation only and participation is voluntary.

Interested parties who are not members of the Task Force may submit comments to the public docket. The Federal Register notice is available for viewing here.

Sec. Foxx set a deadline of Nov. 20 for the Task Force to complete its recommendations and work is already underway. The group will meet formally from Nov. 3-5 before developing recommendations on a streamlined registration process and minimum requirements on which unmanned aircraft should be registered. Given the urgency of this issue, the DOT and FAA will move expeditiously to consider the Task Force’s recommendations. 

Task Force Members include:

Nancy Egan – 3D Robotics
Richard Hanson – Academy of Model Aeronautics
George Novak – Aerospace Industries Association
Chuck Hogeman and Randy Kenagy – Air Line Pilots Association
Jim Coon – Aircraft Owners and Pilots Association
Sean Cassidy – Amazon Prime Air
Ben Gielow–Amazon Retail
Justin Towles – American Association of Airport Executives
Brian Wynne – Association of Unmanned Vehicle Systems International
Parker Brugge – Best Buy
Douglas Johnson – Consumer Electronics Association
Brendan Schulman – DJI
Paul Feldman – General Aviation Manufacturers Association
Dave Vos – GoogleX (Co-Chair)
Tony Bates – GoPro
Matt Zuccaro – Helicopter Association International
Mike Fergus – International Association of Chiefs of Police
John Perry – Management Association for Private Photogrammetric Surveyors
Brandon Declet – Measure
Randall Burdett – National Association of State Aviation Officials
Sarah Wolf – National Business Aviation Association
Baptiste Tripard – Parrot
Tyler Collins – PrecisionHawk
Gregory McNeal – Small UAV Coalition
Thomas Head – Walmart

Along with the FAA and DOT, the following federal agencies will provide expert support to the Task Force: Department of Commerce, Department of Defense, Department of Homeland Security, Department of the Interior, Office of Management and Budget, National Aeronautics and Space Administration and the Department of State.

Rasmussen Reports

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

Bottom of Form

Saturday, October 31, 2015

Right now voters look at the presidential race and think they’re damned if they do, damned if they don’t.

Hillary Clinton and Donald Trump lead the contests for the Democratic and Republican presidential nominations, but most voters don’t trust either one of them.

Just 52% of Republicans think the candidates running for their party’s nomination are a good cross-section of voter attitudes in the GOP. Conservatives are a lot happier with the candidates, though, than moderates and liberals are.

No wonder looking ahead to next year’s presidential contest, most voters expect more of the same: Two candidates with whom they have very little in common

Wednesday night’s Republican presidential debate was a textbook example of the media bias voters have complained about in surveys for years.

Trump is still the clear leader of the GOP pack in our first survey since the debate.
Most Republicans continue to think Trump is likely to be their party’s nominee.

The budget plan negotiated by Democrats and GOP congressional leaders and passed Thursday by the House despite strong conservative opposition is just the kind of thing feeding Republican voter support for outsider candidates like Trump and Ben Carson, the ones who haven’t held office before.

Wisconsin Congressman Paul Ryan was elected speaker of the House on Thursday to replace John Boehner. But a plurality (45%) of voters doesn’t expect a Ryan speakership to be much of a change. 

Clinton continues to receive millions in campaign contributions to fuel her bid for the White House; Trump’s campaign is almost entirely self-financed. Most voters continue to believe the government should regulate campaign contributions, but they also still feel that publishing the names of all contributors is more important than limiting what they give.

Looking for a big difference between the two major political parties? Most Democrats view socialism favorably; most Republicans do not.

Voters still think policies that are pro-free market are important for the economy, but are they more important than those that reduce the income gap between rich and poor?

Hard work used to be synonymous with some degree of success, but most voters think the economy now frowns on those who work hard in this country.

Just 32% of voters believe the government should require every American to buy or obtain health insurance as is now required under President Obama’s new national health care law. That’s the lowest level of support to date.

The president’s daily job approval rating continues to track in the negative teens.

In other surveys last week:

— Twenty-seven percent (27%) now think the country is heading in the right direction.

Daylight Saving Time ends tonight, and most Americans will remember to change their clocks. But not all will change them the right way.

Is America a healthy nation? Is it getting healthier? We decided to find out what America thinks.

Halloween isn’t an important holiday to most Americans, but they still think kids should be able to celebrate it in the schools.



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