Under a B-52 with Gen. Goldfein; 11% cut to USAF budget request?; New Mideast arms-export numbers, and more…

At Barksdale Air Force Base in Louisiana this week, Gen. Dave Goldfein stepped under the wing of a B-52 bomber whose engine — one of eight on the aircraft — was built in 1964, just a few years after the Air Force chief of staff was born.

An enlisted airman explained step-by-step how to start the engines, a complex process that takes about 10 minutes. It’s a far cry from modern jets that start when a pilot flips a switch. With the 1950s-era B-52 slated to fly for another two decades — until the last of the stealthy B-21s roll off Northrop Grumman’s line —  the Air Force has decided in principle to replace the old engines. But other funding priorities may prevent it, Goldfein said.

“I’m absolutely convinced that we need to do it,” the chief of staff said in an interview. “The question will be whether we’ll be able to fit it in with the topline [budget] we receive given all the other challenges we face and all the missions we’re responsible for.”

The B-52 engines are among several decades-old weapons the Air Force needs to replace in the next few years. It will be among the projects discussed when top generals huddle in coming weeks to hash out their 2019 budget proposal to Congress.

Their debate will be complicated by several facts. First, Congress has not yet passed a defense budget for the fiscal year that began more than two weeks ago. Second, the Pentagon’s 2018 budget request was $52 billion above legally mandated caps. Third, the budgets passed by the House and Senate’s Defense committees are even farther above those caps. Unless lawmakers agree on a way to remove or circumvent those caps, all the excess will be chopped out through sequestration.

That would shear $15 billion, more than 11 percent, from the Air Force’s $132 billion request, with dire consequences, Goldfein said.

“We’re going to stop flying. We’re going to ground squadrons like we did the last time” sequestration was triggered, in 2013, he said. “Our readiness numbers are going to absolutely tumble...We’re going to stop hiring civilians, but we’re not going to keep civilians from retiring.”

Goldfein noted that most Air Force aircraft overhauls are done by civilians in maintenance depots across the country.

“I look at some of the civilian workforce in our depots as magicians,” he said. “You look at those airplanes we saw on the ramp today. A lot of what keeps them airborne are incredible young men and women that are maintaining on the flight line and a force of magicians in the depot. If I can’t hire them — if I can’t keep that civilian workforce alive and working — it’s going to be devastating to the force.”

Put even more bluntly: “I’m worried if we are sequestered, it will break the force,” Goldfein said.

Goldfein and other senior Air Force officials described the force as stretched like a rubber band. He and his entourage hopscotched from Barksdale to Offutt Air Force Base in Nebraska where old Boeing 707s, largely built in the 1960s, make up a bespoke fleet of intelligence aircraft that support current operations in the Middle East as well as the strategic nuclear mission.

Modernization of the Air Force’s nuclear forces will be “absolutely affected” if the budget caps remain in place, Goldfein said. The Air Force is in the early stages of developing new stealth bombers, intercontinental ballistic missiles and long-range nuclear cruise missiles.

I asked Goldfein: what can you do to convince Congress to remove the caps?

“We just keep making the case,” he said. “At the end of the day, this is about Congress coming together to pass a budget to commit to the defense of the nation. This is not a good time in our history to be looking at automatic cuts that are going to have such a devastating effect.”

Welcome

Greetings from Kirtland Air Force Base in Albuquerque, New Mexico, and welcome to the Defense One Global Business Brief by Marcus Weisgerber. I’m here with Gen. Dave Goldfein, the U.S. Air Force chief of staff, who is checking out nuclear bases across the country. As always, send your tips, feedback and random thoughts to mweisgerber@defenseone.com or @MarcusReports. Check out the Global Business Brief archive here, and tell your friends to subscribe!

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What’s Next for the Air Force’s International Affairs Directorate

When Maj. Gen. Larry Martin was sent in 2013 to lead the Air Force’s International Affairs directorate, his boss said he was going to be a “gunrunner.” But he discovered that the job is about more than arms exports. “What I know four years later is how comprehensive the Air Force’s security cooperation effort is,” said Martin, now the assistant deputy undersecretary of the Air Force for International Affairs. He retires out of the Pentagon this week after a 32-year military career.

Martin said the need to strengthen alliances has been reinforced by Goldfein, Defense Secretary Jim Mattis, Air Force Secretary Heather Wilson.

Here are some takeaways from my interview with Martin on Monday.

• The Air Force has instituted new training for its 577 security cooperation officers, most of whom are at U.S. embassies around the world. “The workforce that does security cooperation doesn’t have all of the professional tools that they need,” Martin said. “One of the efforts under [the fiscal 2017] NDAA is security cooperation workforce modernization,” which is being led by the Defense Security Cooperation Agency.

• The Air Force is getting faster at delivering what’s called a letter of offer and acceptance, a document that lays out the specifics of deals between the U.S. and a foreign country, say, to transfer weapons and equipment. “There’s more work to be done in going forward with that,” he said. “How do we make good decisions to balance demand with supply.”

• Solidifying a requirement early in the process speeds up foreign military sales.

• Air Force International Affairs is developing options “for how we might better present forces to meet that security cooperation” in Southwest Asia and other areas to combat violent extremism.

US Clears Greek F-16 Upgrades

Two noteworthy foreign arms deals…and one neat report. First up: The U.S. approved a $2.4-billion upgrade to Greek F-16 combat aircraft. Announced during Prime Minister Alexis Tsipras’ visit to Washington this week, the deal includes radars, missions computers, and lots of new electronics. Greece wants what’s called the “Block V” configuration, an upgrade package offered by F-16 maker Lockheed Martin. This “will bolster the Hellenic Air Force’s ability to support NATO and remain interoperable with the U.S. and the NATO alliance,” the Pentagon said in a statement. “It will also help Greece sustain operations in the future, thereby reducing the threat the alliance’s enemies pose to the U.S. and the alliance.”

New Middle East arms sales report. We’ve written lots on U.S. arms sales to Saudi Arabia of late, but here’s a good summary of U.S. defense exports to the Middle East since 1950. From the Congressional Research Service, here.

More on That Bomb Shortage

Lt. Gen. Arnold Bunch, the U.S. Air Force military deputy for acquisition, confirmed a Bloomberg report from earlier this month that the Air Force would increase production of Joint Direct Attack Munitions, the Boeing-made satellite-guided tail kits for bombs. Remember, Air Force leaders said that Congress’ inability to pass a defense budget was hampering them from buying more bombs for the air campaign against the Islamic State.

Earnings on the Way

Most big defense firms report third-quarter earnings next week. In his Oct. 13 note to investors, Rob Stallard, aerospace and defense analyst with Vertical Research Partners, predicts “steady improvement in revenue growth and the outlook, with steady margins and cashflow...However, this is likely to be overshadowed by those soft guides for ’18,” he writes. “Defense contractors have traditionally guided conservatively, and so there is an inherent risk that initial forecasts for next year disappoint versus expectations. History teaches us that these dips have proved to be good entry points for defense stocks.”

The earnings calls will also be the first time analysts get to question the CEOs of UTC, Northrop, and Boeing about their recently announced purchases of, respectively, Rockwell Collins, Orbital ATK and Aurora Flight Sciences.

Key Dates: Lockheed Martin and United Technologies report on Oct. 24. Boeing, General Dynamics and Northrop Grumman on Oct. 25. Raytheon reports on Oct. 26 and Rockwell Collins on Oct. 27.

How Much Money Does the Pentagon Need?

About $679 billion, according to a new report from Mackenzie Eaglen of the American Enterprise Institute. That would “provide a credible down payment on rebuilding the armed forces,” she writes. That figure is “about $134 billion per year above the Budget Control Act caps extrapolated through 2022, for a total of $672 billion in additional defense funding above the BCA levels.” Put another way: it is “roughly equal to funding lost from the past five years relative to Secretary Robert Gates’ 2012 budget proposal.”

Making Moves

Just two weeks after Boeing said it would buy Aurora Flight Sciences, Boeing named Mark Cherry the head of its Phantom Works research & development sector. He replaces Darryl Davis, who has lead the division for a decade. Boeing, in a statement, said Davis has been “moved into a company-wide program management role reporting to Greg Smith, chief financial officer and executive vice president of Enterprise Performance & Strategy.” Cherry is the president and chief operating officer of Aurora. Speaking of Aurora, it has named Matthew Hutchison its new COO.