Live from Austin and Detroit; Exclusive with Army’s No. 2; New CR fears, and more.

Detroit and Austin, Texas, could not be more different cities, but the U.S. Army is betting on both of them to help win the wars of the future. I spent time in each city this past week, with the Army’s No. 2 civilian and with recently retired Gen. Tony Thomas, who led U.S. Special Operations Command — two leaders focused on the same big need. Ironically, it was colder in Austin last week then it was in Detroit.

When you think of American tech hubs, Austin is frequently mentioned as a new Silicon Valley. Apple, Google, Microsoft, they’re all in Austin, and so is Army Futures Command, which opened last year.

The Army has been in Detroit much longer. Motor City churned out trucks and aircraft for the military during World War II. 

Why are these two hubs related now? In the past week, I attended artificial intelligence conferences in both cities, the one in Austin hosted by startup SparkCongnitian and the one in Detroit hosted by the Association of the U.S. Army, or AUSA. While the feel, flair, showmanship and even the people were very different, they had the same goal. They believe AI, robotics and machine learning are the future.

In Detroit, the “Big Three” car makers need artificial intelligence for driverless vehicles envisioned in the future. It’s that same technology that the Army needs for its driverless convoys. The commercial potential is so great that Ford is transforming the 105-year-old Michigan Central Station rail depot into its tech campus. At the AUSA conference, Brig. Gen. Bryan J. Teff, commander of the Michigan Air National Guard, praised the automakers investments in AI and the University of Michigan for standing up another innovation center in Detroit.  And for the Army, the Detroit suburb of Warren, Michigan, is now home to its Ground Vehicle Systems Center, part of Futures Command. The group there is working on the Next Generation Combat Vehicle, part of the Army’s plans to reinvent tank warfare with AI, and one of the Army leaders’ top priorities.

The question is: Can Detroit support a high-tech workforce and will the planned commercial projects envisioned to breathe life into the city come to fruition? The Army will have to wait and see.

Welcome

You’ve reached the Defense One Global Business Brief by Marcus Weisgerber. A quick programming note, there will be no Global Business Brief next week due to the Thanksgiving holiday. We’re back on Dec. 5. Send along your tips and feedback to mweisgerber@defenseone.com or @MarcusReports. Check out the Global Business Brief archive here, and tell your friends to subscribe!

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One-On-One With Army’s No. 2 Civilian

James McPherson, has been serving as Army undersecretary since the summer. He’s technically the Army’s general counsel, but he has a lot more on his plate these days. The retired Navy rear admiral (who began his career in the Army when he enlisted during the Vietnam war-era), now finds himself with a large role in developing the Army’s fiscal 2021 budget proposal and new weapons. He invited me to accompany him to Detroit this week where he spoke at the AUSA artificial intelligence conference. Here are some excerpts from our discussion.

Next month’s chopping block. Army leaders plan to meet for a major program review in December. “Part of the exercise is going to be identifying programs out in the future that we no longer think support the National Defense Strategy,” McPherson said. Think of the review as the latest iteration of the Army’s “Night Court” review that last year identified $25 billion that the service planned to shift to high-priority projects over a five-year period. “We got the low-hanging fruit in Night Court; now it’s much more difficult decisions going forward,” he said. “But we have to do that because we suspect that no matter what happens in the election of next year, our budget is going to be flat going forward.” 

As I wrote a few weeks ago, the feeling inside the military and defense industry is the defense budget has peaked after years of solid growth. “We need to find savings within that flat budget to be able to fund our modernization efforts,” McPherson said. “That’s really the bottom line for us.”

The continuing resolution. Since Congress has not yet passed a fiscal 2020 defense appropriations bill (more on that below), the Pentagon is operating with the same budget it had last year. The military cannot start new projects or increase weapons production. “It’s hurt already,” McPherson said. “A lot of what we have been doing an aiming towards, programs that we wanted to start in fiscal year ‘20, we’re unable to do that right now because we are under a CR. That’s why the threat of a yearlong CR really concerns us — because we wouldn’t be able to do new starts at all for an entire year, which would really set us behind in our modernization effort.” Here is a list of every Army program impacted by Congress not passing a defense appropriations bill. More on the CR below. 

Backup communications satellites. McPherson touted the Pentagon’s early work to develop a constellation of low-Earth orbit of communications satellites that could back up larger, military communications satellites. Military officials frequently warn that Russia or China could shoot down large satellites, which cannot maneuver. “The concept is to put up a constellation of satellites that are no bigger than a breadbox,” he said. Dozens could be launched simultaneously. “It will be a tremendous communications device if that comes to fruition,” McPherson said. Not only would they serve as a backup, but they would be “hard to take down because there would be so many of them.”

More About the Defense Budget

Let the leaks begin as people look to protect pet projects and trial balloons are released. Foreign Policy’s Lara Seligman with this week’s scoop that the U.S. Air Force is considering scrapping more than half of its high-altitude Global Hawk spy drones. Why does this matter? Well, Iran shot down a Navy version of the Global Hawk earlier this year. While it can fly high, the Global Hawk cannot evade surface-to-air missiles. The Global Hawk was supposed to replace the famed U-2 spy plane, but lawmakers have regularly balked at that idea.

“DoD leadership has been very clear that there would have to be trade-offs in investment portfolios that would cut or divest systems deemed less relevant to a conflict with Russia or China (or an adversary backed and supplied by one or both of those countries),” analyst Byron Callan of Capital Alpha Partners wrote in a Nov. 19 note to investors. “It’s possible that the cut is reversed before the budget is formally submitted to Congress or it could be reversed by Congress.” 

The Air Force might not want the Global Hawk, but NATO does. The alliance will soon receive its first of five drones, which will be based in Sicily. Also, NATO will spent $1 billion to update its AWACS radar planes.

New shutdown deadline: House lawmakers voted to extend a temporary government funding bill through Dec. 20. The Senate needs to pass and President Trump needs to sign the measure by midnight or the government will shut down. Tick tock, tick tock, tick tock.

Shipbuilders Say CR Will Halt Hiring

...and people are needed as the Navy tries to increase the size of its fleet. Here’s a letter from shipbuilders to lawmakers urging them to pass a fiscal 2020 defense appropriations bill. “The effects of a Continuing Resolution (CR) are detrimental to the shipyard industrial base’s ability to support the nation’s Navy, Coast Guard, and other agencies,” shipbuilding executives wrote. “A recent survey conducted by the [Shipbuilders Council of America] found that if the government continues to operate under a CR, 94% of companies surveyed will have to halt hiring for their workforce and limit their investment in future planning and material procurement.”

Vice President Mike Pence touted shipbuilding jobs at Fincantieri’s Marinette Marine, in Wisconsin, where the Lockheed Martin version of the Navy’s Littoral Combat Ship is built. Fincantieri is also competing to build new Navy frigates. The veep blamed Democrats for Congress’ not passing a fiscal 2020 defense appropriations bill. Pence touted Fincantieri “creating 700 new jobs right here in the heart of the Heartland.” But those 700 jobs are tied to winning the multibillion-dollar frigate deal in which its competing against four other companies. Right now, Marinette Marine has 70 job openings posted on its website.

Flashback: In May, we told you about all of the manufacturing updates that were happening at Huntington Ingalls’ Newport News Shipbuilding to meet the Navy’s demand for ships and submarines. 

Dubai Air Show Highlights

Brazil’s Embraer has re-branded the KC-390 twin-engine cargo jet into the C-390 Millennium and has signed a pact with Boeing to market the plane around the world. The new joint venture will be known as “Boeing Embraer - Defense.” The two companies have been increasingly working together ever since Boeing said last year it would take control of Embraer’s commercial airplane business. 

Speed read:

• UAE to buy two Saab GlobalEye airborne early warning planes
• Boeing Says U.S. Air Force gave company ICBM info to competitor Northrop Grumman
• UAE is indigenously building an attack plane

Who’s In Charge of 5G?

A bipartisan group of senators say an executive branch coordinator is needed to manage that security concern. They urged President Trump’s National Security Advisor Robert O’Brien “to designate a senior coordinator dedicated to leading the nation’s effort to develop and deploy next-generation communications technologies.”

From the letter: “While we appreciate the progress being made within and across departments and agencies, we are concerned that their respective approaches are not informed by a coherent national strategy,” they write. “In our view, the current national level approach to 5G comprises of a dispersed coalition of common concern, rather than a coordinated, interagency activity. Without a national strategy, facilitated by a common understanding of the geopolitical and technical impact of 5G and future telecommunications advancements, we expect each agency will continue to operate within its own mandate, rather than identifying national authority and policy deficiencies that do not neatly fall into a single department or agency. This fractured approach will not be sufficient to rise to the challenge the country faces.”