WH eyes arms programs; NDAA notes; Which candidate is tops in defense industry funding?; and more...

It’s hard to find a better place to network with top defense officials, industry executives, and lawmakers and their staff than the Reagan National Defense Forum, held this past weekend in Simi Valley, California. Take that with a grain of salt if you like (I’ve moderated panels there for the past two years), but I can’t think of another event that features fireside chats with four of the Joint Chiefs.

The Forum is also a place to get a sense of the Trump administration’s priorities. This year, National Security Adviser Robert O'Brien called out the broken weapons elevators on the Navy’s first Ford-class aircraft carrier.

“Spending $13 billion on a vessel and then accepting delivery of that vessel with elevators that don’t work and are unusable is not acceptable,” O’Brien said. “President Trump is a businessman and he knows a bad deal when he sees one.”

Top industry executives took O’Brien’s complaint as more than a prod to the Navy and its shipbuilders. It’s also a reminder that this White House, more so than previous administrations, is focused not just on big national security policy issues, like sending forces abroad, but also on defense industrial policy issues and programs.

Recall, soon after Trump’s election, his tweets about the cost of a new Air Force One and the F-35 Joint Strike Fighter, signaled his administration would place a greater focus on lowering the price of new weapons.

In 2017, then-Navy Secretary Richard Spencer said he told Trump to fire him if the problems with the Ford’s munitions lifts weren’t fixed. (Defense Secretary Mark Esper fired Spencer last month, but not because of the Ford’s still-broken elevators.)

Earlier this week, acting Navy Secretary Thomas Modly said in a memo to the force (more on that below) that he wants “all hands on deck to make the USS Gerald R. Ford (CVN 78) ready as a warship as soon as practically possible.”

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NDAA Almost Through Congress

And the White House indicated earlier this week that Trump would sign the fiscal 2020 defense policy bill, which the House passed on Wednesday. Of note:

• The NDAA would create a U.S. Space Force, a sixth branch of the military that would be part of the Department of Air Force, just as the U.S. Marine Corps is part of the Department of the Navy. The new service will only draw troops from current Air Force personnel. It will be overseen by a four-star general called the chief of space operations. The top officer will become a member of the Joint Chiefs one year after the Space Force stand up. Todd Harrison, director of Defense Budget Analysis and the director of the Aerospace Security Project at the Center for Strategic and International Studies, writes: “It is the most significant reorganization of DoD since Goldwater Nichols more than thirty years ago.” CNA — which previously conducted a congressionally mandated study about creating a space force  — has a new blog post about the best ways to stand up the new service branch.
• The Space Development Agency — the much-debated organization tasked with buying hundreds of cheap, low-Earth orbit satellites to back up higher-flying, larger and more expensive military ones — would be overseen by the Air Force, not the defense undersecretary for research and engineering, as it is now. Harrison said the move runs counter to what undersecretary Mike Griffin had tried to do by using the Missile Defense Agency model for space. “The challenge with the MDA model is that it produces weapon systems that have to live in a service, but the services often are not fully on board with them (i.e. Army puts [Ground-Based Midcourse Defense] in the National Guard rather than the active force). Moving SDA to the Space Force will help prevent that from happening,” Harrison writes.
• Lawmakers back the Pentagon’s decision to eject Turkey from the F-35 program. “The conferees support the removal of the Government of Turkey from the F-35 program due to its purchase of the S-400 Russian air defense system. As such, the conferees would support procurement by the Department of Defense of all F-35A aircraft procured by the Government of Turkey.”
• In an apparent effort to keep costs down on the new Air Force One, which is being called the VC-25B, lawmakers included language restricting the Air Force and Boeing from carrying out “over and above work” without congressional approval.
• Removed: an amendment that would have kept oversight of firearms exports under the State Department. Instead, such sales will be overseen by the Commerce Department. (Read an arms-control expert’s argument against the move, here.)
• Congress looks to accelerate purchases of light-attack planes by synchronizing Air Force and U.S. Special Operations Command efforts. The NDAA contains “an amendment that expresses a sense of the Congress on the importance of [U.S. Special Operations Command] and the Secretary of the Air Force fully coordinating and collaborating on the experimental activities associated with the Air Force light attack aircraft initiative to inform future activities for USSOCOM and the Department of the Air Force regarding procurement of the light attack aircraft platform.”
• From Byron Callan at Capital Alpha Partners: “Total Procurement for FY20 is authorized at $144 billion, down from $147 billion compared to FY19. However, RDT&E was authorized at $103 billion, up from $95 billion enacted in FY19. The increase in RDT&E is consistent with DoD’s shifting investment in next generation weapons/support kit.”

NDAA reference guides:

• A summary of the conference report is here.
• The full 3,488-page conference report is here.
• The 741-page joint explanatory statement is here.

• Tom Karako from CSIS has an infographic about missile defense policy here.

Dec. 20: Budget Doomsday

Even if the NDAA gets signed this week, avoiding a shutdown would require Congress to pass some sort of appropriations measure by Dec. 20, when the current continuing resolution expires. Is it time to overhaul the federal budget process? More on that here.

CR Impact on the Army

At the Reagan Forum, Army Secretary Ryan McCarthy said that his service has already ordered a 2 percent cut in operations-and-maintenance funding because the Pentagon is operating at lower fiscal 2019 spending levels.

Those cuts could be deeper if lawmakers don’t pass an appropriations bill by Dec. 20, the last day the government spending stopgap measure, called a continuing resolution, or CR.

“It would be at least that much if not more.” if the continuing resolution is extended beyond December and into the next calendar year, McCarthy said Saturday. “We have $3.5 billion in buying power that is frozen. That’s about north of 70 programs that we’re going to start that are new.”

The Army cannot increase production levels for 37 projects, McCarthy said. “The defense industry’s sitting there like a catcher over home plate waiting for the ball and we just haven’t thrown it yet,” he said. 

Also frozen: $1.1 billion to renovate barracks and living quarters.

“We’re in a crisis mode in housing,” McCarthy said. “One-third of our portfolio, 23,000 homes are what we call Q4 — quality of the lowest caliber. We need a budget today.”

Acting SecNav Sets Priorities

On Dec. 6, Thomas Modly issued the first of what he says will be weekly “vectors” to the force. Among other things, he said he wants the Navy to have a plan to have “355 (or more) ships, unmanned underwater vehicles and unmanned surface vehicles for the greater global naval power, within 10 years.” Modley said he is “convinced that dominant naval force is the primary engine of our National Defense Strategy (NDS) and we must plan for it, and most importantly, resource it, accordingly.” His three priorities:

• Designing a future integrated naval force structure.
• Advancing our intellectual capacity and ethical excellence.
• Accelerating digital modernization across the force.

Read the memo here.

Defense Industry Backs Bernie Sanders

That’s according to data compiled by Winslow Wheeler and detailed in the The American Conservative. Wheeler writes: “As of early December, Sanders had out-collected [President] Trump $172,803 to $148,218 in defense industry contributions, a difference of 17 percent. And his margin had been growing in October and November.” Here’s how Sanders contribution stack up against his Democrat primary rivals: “His total defense industry contributions ($172,803) roughly doubled those of Buttigieg ($88,494) and Elizabeth Warren ($83,429), and more than tripled those of Joe Biden ($49,540),” Wheeler writes.

SIPRI Ranks Defense Contractors

By the calculations of the Stockholm International Peace Research Institute (which left out Chinese firms), the top defense firms by 2018 revenues were Lockheed Martin, Boeing, Northrop Grumman, Raytheon, and General Dynamics. 

For comparison’s sake, here’s the list Defense News put out earlier this year, which ranks a Chinese firm No. 5.

Making Moves

• President Trump on Dec. 9 nominated James McPherson to be Army undersecretary.
• Bharat Amin has been named executive vice president and chief information officer of Huntington Ingalls Industries. “In this newly created position, Amin will be responsible for establishing the company’s information technology and digital strategic direction with a focus on cyber security capabilities through engagement with HII’s executive and division leadership teams. In collaboration with the business units, Amin will lead corporate IT governance and provide functional oversight,” the company said in a Dec. 11 statement. Amin start on Jan. 1 and will report to Mike Petters, Huntington Ingalls president and CEO.
• Collins Aerospace CEO Kelly Ortberg has been elected chairman of the Aerospace Industries Association board of governors for 2020. Kathy Warden, Northrop Grumman chairman, CEO and president, will serve as vice chairman. 
• Kori Schake has joined the American Enterprise Institute as the director of foreign and defense policy studies. Schake had previously been with the International Institute for Strategic Studies.