The INSIDER - July 26, 2012

Editor's Note: Updated July 27 at 10:43 a.m. Up in the Air. Today's front-pagers, plus a few more: Air Force Commands Link Up To Create Pilot Cyber Acquisition Program In an effort to revamp the way the Air Force acquires cyber capabilities -- and to ensure the end product is delivered far more promptly than in a traditional acquisition program -- the service recently launched a pilot program that will bring all of the parties involved in cyber acquisition together in a single location and give them the latitude to pursue the rapid development and procurement of cyber technology. Air Force Prepared To Return FY-13 Money Reprogrammed From LAIRCM The Air Force says $57 million in savings it generated from altering the force structure of its legacy C-130 cargo aircraft fleet and funneled toward missile and ammunition procurement is reversible if Congress chooses to impose a different plan for retiring aircraft. Most AMPed C-130s In 'Flyable Storage' As Program Waits On Congress The Air Force's C-130 Avionics Modernization Program remains in a state of limbo in which the upgraded aircraft already delivered for operational testing are stuck on the ground, while prime contractor Boeing continues to deliver training systems and modification kits that may never be installed on a C-130. Bidding Closes On D-RAPCON; ITT Exelis Opts Out Of Competition The Air Force's contracting competition for the Deployable Radar Approach Control air traffic system will most likely involve just two members of industry, Raytheon and Lockheed Martin, after a third chose not to submit a proposal before bidding closed on July 26. Air Force To Leverage Commercial Sales For EELV Starting In FY-13 The Air Force wants to stabilize the production profile of the Evolved Expendable Launch Vehicle program in fiscal year 2013 by moving toward block buys amid concerns that the service is not doing enough to meet the Government Accountability Office's concerns. Air Force Targets Tankers For Fiscal Year 2013 Fuel Efficiency Initiatives The Air Force is moving ahead with several fuel efficiency initiatives with its KC-10 Extender and KC-135R Stratotanker via a drag reduction program and engine modification upgrade kits in fiscal year 2013, according to a senior official. Air Force Energy Plan To Be Added To Quadrennial Defense Review The Air Force is in the process of updating its energy plan, which would add the service's energy mission to the Defense Department's Quadrennial Defense Review, and expects its senior leaders to sign off on that plan in the near future. DOCUMENT ALERT: DOD IG Assessment Of Air Force Global Strike Command In a July 20, 2012, report, the Defense Department inspector general's office evaluates Air Force Global Strike Command's "organizational structures, roles and responsibilities." GAO Report On The EELV Program The July 26, 2012, Government Accountability Office report finds that the Defense Department is "addressing knowledge gaps in its new [Evolved Expendable Launch Vehicle] acquisition strategy." DOD Enterprise Energy Information Management CRD The July 11, 2012, capability requirements document outlines the Defense Department's plan to "reduce the cost and improve the security of energy used on our fixed installations." China Syndrome. Inside the Pentagon's top story today: Draft Report Urges Accepting Mutual Nuclear Vulnerability With China The United States should declare that mutual nuclear vulnerability with China is a "fact of life" for both countries rather than investing in strategic offensive and defensive capabilities designed to negate China's nuclear forces, according to a draft report prepared by a federal advisory panel led by former Defense Secretary William Perry. Inside the Pentagon obtained a copy of the May 23 draft report, a product of the State Department's International Security Advisory Board. Last year, then-Under Secretary of State for Arms Control and International Security Ellen Tauscher commissioned the report on "maintaining U.S.-China strategic stability." The 2010 Nuclear Posture Review report called for pursuing "strategic stability" with China, but whether the U.S. government should declare mutual nuclear vulnerability has been a subject of debate. The draft report states that China's efforts to build a "survivable second-generation sea-based and mobile land-based nuclear force" are advancing and will in time produce a "larger and less vulnerable force with more (from 25 to about 100) [intercontinental ballistic missiles] capable of striking the United States." Chinese perceptions of U.S. intentions, missile defenses and nuclear and precision conventional strike capabilities will likely steer decisions about China's nuclear force posture, the panel writes. Chinese leaders have "been determined to maintain a credible nuclear deterrent regardless of U.S. choices and will almost certainly have the necessary financial and technological resources to continue to do so," the draft report argues. DOCUMENT ALERT: Draft ISAB Report On China The May 23, 2012, draft report from the International Security Advisory Board discusses U.S.-China strategic stability. And: DOD Sends Congress Independent Assessment On Asia-Pacific Region The Defense Department has sent Congress an independent assessment of the United States defense posture in the U.S. Pacific Command area of responsibility, along with Defense Secretary Leon Panetta's comments on the study. Money Matters. Taking stock of sequestration: Initial FY-13 Deals Exempt From Sequester, But DOD Would Face $50 Billion Bill Defense Department contracts awarded during the first quarter of fiscal year 2013 would essentially be exempt from sequestration, but that is providing little comfort to the industrial base given that the budget-cutting mechanism would still confront DOD with roughly $50 billion in cuts in FY-13. Were sequestration to take effect at the start of 2013, any FY-13 funds put under contract between October 2012 and Jan. 2, 2013, would be spared sequestration's cuts, but understanding the big picture requires further explanation, said Pentagon spokeswoman Lt. Col. Elizabeth Robbins. Sequestration would not affect current contracts funded with obligated FY-12 funds. Anything put on contract between now and Sept. 30, the end of the fiscal year, also would not be affected, Robbins said. Unobligated dollars appropriated in past years would be subject to sequestration. Also, all FY-13 dollars are subject to sequestration, Robbins said. This means that during the first quarter of FY-13, October through December 2012, funds will be obligated as normal. If sequestration goes into effect in January, it will impact the entire fiscal year, resulting in roughly $50 billion in cuts, Robbins said. The number for defense programs is $55 billion, of which DOD would face the lion's share or about $50 billion, she said. Meanwhile: Northrop Grumman: Sequestration Could Cause Lower Revenues, Profits Northrop Grumman could face lower revenues, profits and cash flows if sequestration gets triggered and the company is preparing contingency plans for various scenarios involving defense budget cuts, Wes Bush, the company's chairman, chief executive officer and president, said Wednesday. Ship Shape. CBO sizes up the Navy's plans, again: CBO Analysis Of The Navy's FY-13 Shipbuilding Plan The July 2012 Congressional Budget Office report analyzes the Navy's fiscal year 2013 shipbuilding plan. Our coverage: CBO: Navy Continues To Greatly Underestimate Shipbuilding Costs The Navy is greatly underestimating how much it will cost to build ships in the coming years, although the service is not off by as much as last year, according to the Congressional Budget Office's latest annual report on shipbuilding. In last year's report, CBO said the Navy was underestimating long-term costs of new ship construction by an average of $4.4 billion annually based on the office's analysis of the Navy's fiscal year 2012 to 2041 shipbuilding plan. In this year's report, issued today, CBO states the Navy expects to spend $18.8 billion per year from 2013 to 2042, but argues the correct figure is actually about $22 billion, a difference of $3.2 billion per year. Cloudy Days. Back to Inside the Pentagon's front page: DOD Shifts Three Key Services To Cloud, Achieving White House Goals The Pentagon has achieved the objectives of the White House's "cloud first" policy by shifting three major services to the cloud within an 18-month period, a senior Defense Department official said. The federal chief information officer's December 2010 "25 Point Implementation Plan to Reform Federal Information Technology Management" required each agency to identify three "must move" services within three months of the plan's release, to move one of these services to the cloud by December 2011 and to shift the remaining two by June. In a July 20 interview, David DeVries, the deputy DOD CIO for information enterprise, said the department has moved enterprise email, enterprise portal service and the customer relationship management platform to the cloud as part of this federal effort. Eye on Energy. Two stories today on fuel issues: DOD Issues Alternative Fuels Guidance To Steer FY-14 Investments The Pentagon has released an alternative fuels policy to steer investment decisions in the fiscal year 2014 budget cycle. With Omnibus Pending, DOD Faces $1.5 Billion Shortfall Tied To Fuel Unless Congress approves the Defense Department's omnibus reprogramming request, DOD will face a budget shortfall of at least $1.5 billion due to rising fuel prices, according to a DOD spokeswoman. And three documents on fuels and other energy issues: DOD Alternative Fuels Policy For Operational Platforms The July 5, 2012, memo outlines the Defense Department's alternative fuels policy for operational platforms. DOD Briefing Slides On Operational Energy The June 27, 2012, briefing slides outline the Defense Department's operational energy strategy. Sen. Inhofe Letter To Mabus On Green Fleet Costs In a July 24, 2012, letter to Navy Secretary Ray Mabus, Sen. James Inhofe (R-OK) requests a detailed report on the total cost of a recent event highlighting the Navy's great "Green Fleet" and expressed concern for the cost of "greening" the U.S. military at a time of drastic budget cuts. Grab Bag. More news: Congress Approves Multimillion-Dollar Counterterrorism Aid Package Congress has approved a new multimillion-dollar package of counterterrorism aid proposed by the Pentagon to better enable the deployment of Estonian troops alongside U.S. forces in Afghanistan and to bolster the national militaries of Mauritania, Niger and Yemen. Industry Reaction To New Cyber Rule Positive; Some Tweaks Sought The Pentagon's new interim final rule for the Defense Industrial Base Voluntary Cybersecurity and Information Assurance program drew public comments on issues ranging from privacy concerns to questions about the time frame for reporting security breaches, but contractors and civil liberties advocates generally reacted positively to the rule. DOCUMENT ALERT: DOD Voluntary Cyber Security And Information Assurance Final Rule In a May 11, 2012, Federal Register notice, the Defense Department published "an interim final rule to establish a voluntary cyber security information sharing program between DOD and eligible [defense industrial base] companies." Main Event. IDGA takes on cyber defense in the Big Apple: Cyber Defense Strategies: Protecting critical infrastructure & enterprise August 27 - 29, 2012 - Sentry Centers - Midtown West, New York, NA IDGA's Cyber Defense Strategies is specifically designed to serve as the venue where we can gather as a community to confront the growing Cyber threat and develop responsive tactics and solutions. The growing severity and frequency of these attacks demonstrate a need for increased protection. In order to remain economically competitive, and even more so important, to safeguard our nation's critical infrastructure, we must be sufficiently armed with the latest resources and knowledge to stay ahead of potential assaults. -- Dan Dupont