Category Archives: Global economy

Pentagon Declares Lockheed F-35 “Too Big to Fail”

F-35 Too Big to Fail

(Photo Credit: Staff Sgt. Staci Miller/US Air Force)

“DEFENSE NEWS” By Michael P. Hughes

“Officially begun in 2001, with roots extending back to the late 1980s, the F-35 program is nearly a decade behind schedule, and has  failed to meet many of its original design requirements.

It’s also become the most expensive defense program in world history, at about $1.5 trillion before the fighter is  phased out in 2070.

The F-35 was billed as a fighter jet that could do almost everything the U.S. military desired, serving the Air Force, Marine Corps and Navy — and even Britain’s Royal Air Force and Royal Navy — all in one aircraft design. It’s supposed to replace and improve upon several current — and aging — aircraft types with widely different missions. It’s marketed as a cost-effective, powerful multi-role fighter airplane significantly better than anything potential adversaries could build in the next two decades. But it’s turned out to be none of those things.

The unit cost per airplane, above $100 million, is roughly twice what was promised early on. Even after U.S. President Donald Trump lambasted the cost of the program in February, the price per plane dropped just $7 million — less than 7 percent.

And yet, the U.S. is still throwing huge sums of money at the project. Essentially, the Pentagon has declared the F-35 “ too big to fail.” As a retired member of the U.S. Air Force and current university professor of finance who has been involved in and studied military aviation and acquisitions, I find the F-35 to be one of the greatest boondoggles in recent military purchasing history.

Forget what’s already spent

The Pentagon is trying to argue that just because taxpayers have flushed more than $100 billion down the proverbial toilet so far, we must continue to throw billions more down that same toilet. That violates the most elementary financial principles of capital budgeting, which is the method companies and governments use to decide on investments. So-called sunk costs, the money already paid on a project, should never be a factor in investment decisions. Rather, spending should be based on how it will add value in the future.

Keeping the F-35 program alive is not only a gross waste in itself: Its funding could be spent on defense programs that are really useful and needed for national defense, such as  anti-drone systems to defend U.S. troops.

Part of the enormous cost has come as a result of an effort to share aircraft design and replacement parts across different branches of the military. In 2013, a study by the think tank Rand found that it would have been cheaper if the Air Force, Marine Corps and Navy had simply  designed and developed separate and more specialized aircraft to meet their specific operational requirements.

Not living up to top billing

The company building the F-35 has made grand claims. Lockheed Martin said the plane would be far better than current aircraft — “four times more effective” in air-to-air combat, “eight times more effective” in air-to-ground combat and “three times more effective” in recognizing and suppressing an enemy’s air defenses. It would, in fact, be “ second only to the F-22 in air superiority.” In addition, the F-35 was to have better range and require less logistics support than current military aircraft. The Pentagon is still calling the F-35 “ the most affordable, lethal, supportable, and survivable aircraft ever to be used.”

But that’s not how the plane has turned out. In January 2015, mock combat testing pitted the F-35 against an F-16, one of the fighters it is slated to replace. The F-35A was flown “clean” with empty weapon bays and without any drag-inducing and heavy, externally mounted weapons or fuel tanks. The F-16D, a heavier and somewhat less capable training version of the mainstay F-16C, was further encumbered with two 370-gallon external wing-mounted fuel tanks.

In spite of its significant advantages, the F-35A’s test pilot noted that the F-35A was less maneuverable and markedly inferior to the F-16D in a visual-range dogfight.

Stealth over power

One key reason the F-35 doesn’t possess the world-beating air-to-air prowess promised, and is likely not even adequate when compared with its current potential adversaries, is that it was designed first and foremost to be a stealthy airplane. This requirement has taken precedence over maneuverability, and likely above its overall air-to-air lethality. The Pentagon and especially the Air Force seem to be relying almost exclusively on the F-35’s stealth capabilities to succeed at its missions.

Like the F-117 and F-22, the F-35’s stealth capability greatly reduces, but does not eliminate, its radar cross-section, the signal that radar receivers see bouncing back off an airplane. The plane looks smaller on radar — perhaps like a bird rather than a plane — but is not invisible. The F-35 is designed to be stealthy primarily in the X-band, the radar frequency range most commonly used for targeting in air-to-air combat.

In other radar frequencies, the F-35 is not so stealthy, making it vulnerable to being tracked and shot down using current — and even obsolete — weapons. As far back as 1999 the same type of stealth technology was not able to prevent a U.S. Air Force F-117 flying over Kosovo from being located, tracked and shot down using an outdated Soviet radar and surface-to-air missile system. In the nearly two decades since, that incident has been studied in depth not only by the U.S., but also by potential adversaries seeking weaknesses in passive radar stealth aircraft.

Of course, radar is not the only way to locate and target an aircraft. One can also use an aircraft’s infrared emissions, which are created by friction-generated heat as it flies through the air, along with its hot engines. Several nations, particularly the Russians, have excellent passive infrared search and tracking systems that can locate and target enemy aircraft with great precision — sometimes using lasers to measure exact distances, but without needing radar.

It’s also very common in air-to-air battles for opposing planes to come close enough that their pilots can see each other. The F-35 is as visible as any other aircraft its size.

Analysts weigh in

Lockheed Martin and the Pentagon say the F-35’s superiority over its rivals lies in its ability to remain undetected, giving it “ first look, first shot, first kill.” Hugh Harkins, a highly respected author on military combat aircraft, called that claim “a marketing and publicity gimmick” in his book on Russia’s Sukhoi Su-35S, a potential opponent of the F-35. “In real terms an aircraft in the class of the F-35 cannot compete with the Su-35S for out and out performance such as speed, climb, altitude, and maneuverability,” he wrote.

Other critics have been even harsher. Pierre Sprey, a co-founding member of the so-called fighter mafia at the Pentagon and a co-designer of the F-16, calls the F-35 “inherently a terrible airplane” that is the product of “an exceptionally dumb piece of Air Force PR spin.” He has said the F-35 would likely lose a close-in combat encounter to a well-flown MiG-21, a 1950s Soviet fighter design. Robert Dorr, an Air Force veteran, career diplomat and military air combat historian, wrote in his book “Air Power Abandoned”: “The F-35 demonstrates repeatedly that it can’t live up to promises made for it. … It’s that bad.”

How did we get here?

How did the F-35 go from its conception as the most technologically advanced, do-it-all military aircraft in the world to a virtual turkey? Over the decades-long effort to meet a real military need for better aircraft, the F-35 program is the result of the merging or combination of several other separate and diverse projects into a set of requirements for an airplane that is trying to be everything to everybody.

In combat, the difference between winning and losing is often not very great. With second place all too often meaning death, the Pentagon seeks to provide warriors with the best possible equipment. The best tools are those that are tailor-made to address specific missions and types of combat. Seeking to accomplish more tasks with less money, defense planners looked for ways to economize.

For a fighter airplane, funding decisions become a balancing act of procuring not just the best aircraft possible, but enough of them to make an effective force. This has lead to the creation of so-called multi-role fighter aircraft, capable both in air-to-air combat and against ground targets. Where trade-offs have to happen, designers of most multi-role fighters emphasize aerial combat strength, reducing air-to-ground capabilities. With the F-35, it appears designers created an airplane that doesn’t do either mission exceptionally well. They have made the plane an inelegant jack-of-all-trades, but master of none — at great expense, both in the past and, apparently,  well into the future.

I believe the F-35 program should be immediately canceled; the technologies and systems developed for it should be used in more up-to-date and cost-effective aircraft designs. Specifically, the F-35 should be replaced with a series of new designs targeted toward the specific mission requirements of the individual branches of the armed forces, in lieu of a single aircraft design trying to be everything to everyone.”

This article was originally published on The Conversation .

About the Author

Image result for Michael P. Hughes is a professor of finance at Francis Marion University.

Michael P. Hughes is a professor of finance at Francis Marion University. He served more than 21 years in the U.S. Air Force. During that time, he spent more than 14 years in nuclear treaty monitoring and related activities, while the initial 7 years were in the aircraft maintenance and engineering (propulsion) arena with F-4 and F-15 aircraft.

National Geospatial Intelligence Agency (NGA) To Offer Data to Industry for Partnerships

NGA Federal News Radio

NGA Headquarters – Image:  “Federal News Radio”


“The idea: offer companies chunks of the “wonderland” of unclassified NGA data so they can use them to build new products or to test algorithms key to their products.

It’s a bold and rare move by a large and largely secretive government agency.

The top two leaders of the National Geospatial Intelligence Agency, Robert Cardillo and Susan Gordon, met with Anthony Vinci, now NGA’s director of plans and programs, to discuss ways to get more value from the agency’s incredibly valuable pools of data.

Using The Economist‘s description of data as the oil of today — the most valuable commodity in our economy — Vinci argued the agency must deploy it and help pay the American people back for the investment they have made in building the agency. If data is the new oil, Vinci said companies should “turn it into plastic,” adding value.

Cardillo told reporters would NGA would create a B corporation — in effect a non-profit government company — and hire an outsider to run it.

This, I think it’s fair to say, is not a slam dunk. Culturally, it will be challenging, Vinci admitted. “It’s straightforward, but it sort of breaks every rule we have in the IC (Intelligence Community).” The IC doesn’t share data and it doesn’t partner with outsiders, except for allied and friendly governments when needed.

This process may sidestep the whole process of generating a requirement for an intelligence system. “I don’t think that’s how problems can be solved any more,” Vinci said. The current system, which can be circumvented if an urgent need exists, is generally slow and restrictive, one that the Pentagon and the IC are increasingly trying to amend.

I spoke with three senior industry officials who listened to Vinci’s presentation and they were hopeful but cautious. All three said they thought the new effort could yield unexpected and useful returns on taxpayer’s investments in the data.

The biggest obstacle may be Congress. Although NGA would not be making money from the data sharing and it would not be releasing any data that could help our enemies, they would be sharing a government resource which voting taxpayers paid for and over which lawmakers have oversight. Whether the products resulting from the data would be licensed back to NGA, or allowed to generate profits for companies is all still to be determined.

“That’s part of what were trying to figure out Vinci told me,: “taxpayers paid for this data and how can we get that value back to them.”


Big Industry Winners in the Saudi Weapons Offer


(Photo Credit: FAYEZ NURELDINE/AFP/Getty Images)


“The big winner, at least on the platform side, is Lockheed Martin, with an estimated $29.1 billion in potential sales.

That includes seven THAAD missile defense batteries ($13.5 billion), and three KC-130J and 20 C-130J aircraft ($5.8 billion), as well as four multi-mission surface combatant ships ($6 billion)

Now that details of the $110 billion arms package offered to Saudi Arabia are known, Lockheed Martin appears to be the clear winner among American defense firms.

First, a caveat: Defense News broke the details of the roughly $84 billion in unknown weapons offerings that President Donald Trump brought with him on a May 20 visit to the Kingdom. But by the nature of how foreign military sales are completed, dollar totals are best-guess estimations and likely represent the ceiling for what could be spent. The figures listed may well come down, and the timeframes listed may well change, based on final negotiations around the equipment.

the company’s Sikorsky arm also benefited, with two types of Black Hawk variants: 14 MH-60R Seahawk rotorcraft ($2 billion) and 30 UH-60 rescue helicopters ($1.8 billion). That could potentially grow. A statement from Lockheed, released after the visit to Saudi Arabia, claimed that a deal was being reached with Saudi company Taqnia to “support final assembly and completion of an estimated 150 S-70 Black Hawk utility helicopters for the Saudi government.”

A few other companies also fared well.

Boeing cashed in with an eight-year sustainment deal ($6.25 billion) for their F-15 aircraft, along with a relatively small $20 million deal to run a study on recapitalizing Saudi’s older fleet of F-15 C/D aircraft.

Raytheon’s big win came from an unknown type of enhancement for the Patriot missile system ($6.65 billion). BAE, meanwhile, hopes to bring in $3.7 billion worth of work on its Bradley vehicle, with a pair of contracts – one to modify 400 existing vehicles, and another to produce 213 new ones. (The company may also cash out on an order for 180 Howitzers, worth $1.5 billion.)

There is also a $2 billion order for an unknown number of Mk-VI patrol boats, produced by SAFE Boats International.

The previously unreported list includes roughly 104,000 air to surface weapons, including 27,000 GBU-38 designs ($1.24 billion, Boeing), 9,000 GBU-31v3 designs ($690 million, Boeing), 9,000 GBU-31v1 designs ($490 million, Boeing), 50,000 GBU-12 designs ($1.67 billion, Lockheed and Raytheon) and 9,000 GBU-10 designs ($370 million, Lockheed and Raytheon.)

Known unknowns
But there is a chance for more growth, based on a set of unspecified aircraft and satellite programs. The list includes $2 billion for a light air support aircraft, type and quantity to be decided later. It also includes another $2 billion for four new aircraft to replace the Kingdom’s Tactical Airborne Surveillance System, which serves a similar role to the U.S. Air Force JSTARS.

The light air support seems to have a fairly small list of options: either Textron with it’s AT-6 (or, perhaps, its Scorpion jet, still in search of a first customer) or the Embraer/Sierra Nevada team’s A-29 Super Tucano. Both the UAE and Jordan have ordered the A-29, so buying the Super Tucano would give the Kingdom commonality with two of its closest allies.

The wildcard may be the U.S. Air Force’s OA-X experiment, which is holding a flyoff between the Scorpion, AT-6 and A-29 this summer. In theory, the Air Force is looking at replacing the A-10 with one of the three planes, but the service has been careful to stress this summer’s action is more of a fact-finding exercise than a downselect. At the same time, if the USAF shows a preference for one of the jets, the Saudis may look in the same direction.

As to the TASS replacement, the first question is whether the Saudis look to glom onto the JSTARS recapitalization, which should be awarded sometime in fiscal year 2018. If so, Boeing, a Northrop Grumman/L-3/General Dynamics team and a Lockheed Martin/ Bombardier team would benefit here.

However, the TASS and JSTARS setups are somewhat different, and it may be the Saudis would look for a custom solution.

Meanwhile, the Kingdom has been offered a clutch of satellites, with as-yet-unknown designs: two “Remote Sensing Satellites” estimated at $800 million and two satellite communications & space based early warning systems estimated at $4 billion.

Given the focus on missile defense, the space based early warning systems could well be a derivative of Lockheed’s Space Based Infrared System (SBIRS) missile defense satellite. If so, the U.S. may be able to seek an arrangement with the Kingdom on information sharing, which would widen the overall capability of the missile tracking system.

How quickly these contracts can be pushed through the system is an open question. Roman Schweizer, an analyst with Cowen Washington Research Group, wrote in a note to investors Friday that “precision munitions and missile defense remain top priorities for the Kingdom.”

“We think the elements of the package will probably go through as individual items, which could reduce opposition. We think some of the more easily defined items that have been either sold to Saudi before or to other countries could proceed quickly (such as THAAD, Patriot, precision munitions, helicopters, F-15, C-130Js, etc.),” he wrote.”

Female Veteran Business Leaders Share Tips for Success

Female Veteran Business Leaders

Photo Credit: Master Sgt. Jenifer Calhoun/Air Force


“Highlights of last month’s Women Veterans Leadership Summit organized by The Mission Continues was a panel from prominent business leaders on how to navigate the transition from military life to civilian careers.

Below are excerpts from that event, designed to focus on ways women leaving the service can use their experience to succeed in workplaces very different than their military posts:

** Know your mission

Amy Gravitt, executive vice president at HBO Programming, is a Navy veteran who served on board the USS Constellation in Persian Gulf:

“It was quite a change going from the Navy to the entertainment industry. I took an unpaid internship with a production company. So I went from being a lieutenant and having a ton of responsibility and having people who worked for me to being the low man on the totem pole, by far.

“What got me my start in the industry and got me to where I am now is that I was the best intern. I went into this industry that was a mess and had no systems in place, and I started organizing it like my division on the ship …

“The company I worked for was George Clooney and Steven Soderberg’s company, and there were a lot of eager film students there who wanted to talk to them about films and ideas. And I knew they did not want to hear my ideas. They weren’t interested in me pitching them movies.

“So, I did the job that made their lives easier, and I was recognized for that.”

** Appreciate your service

Paula Boggs, founder of Boggs Media, served as an Army attorney and later when on to roles in the U.S. Attorney’s office and various technology firms.

“By the time I got to Dell, there were very few people who had military experience. I was like a unicorn. But because of that, there was heightened awareness of who the military was and what they were doing. And this was pre-9/11.

“A lot of tech companies are heavily male. So I was a unicorn in the sense of being a veteran, and a unicorn in the sense of being a woman. All the greater in figuring out how to capitalize on those two things in a setting like that…

“As a team building exercise, we were doing war games, playing Army … There was a moment when Michael Dell, founder of the company, just stopped and said, ‘Guys, Paula really did this!’ And you’d see this awe, this transformative moment. ‘She did something we can only play at.’

“Never underestimate how special being a veteran is, particularly in this post 9/11 environment … There’s this moment now in the country where veterans are not understood, but there is an elevated awareness of who you are and the specialness of the service you have given.”

** Embrace the civilian workplace

Nana Adae, executive director at JP Morgan Private Bank, spent seven years in the Navy specializing in communications and signals, including assignments in Japan, Greece and Spain.

“One of the things that I stress is that people just need to know you, because if it’s all about whether or not people like you, that’s a very superficial way of thinking about how you’re going to be judged.

“And unfortunately as women, I think a lot of times we put our head down. We just want to work. We don’t want to have any of the noise about who we really are or what’s going on with us because that might complicate things.

“But truthfully, in the work environment, the more successful people are the people who are known.”

** Don’t exaggerate your skills or limitations

Gravitt: “You’ll make a million mistakes along the way … so don’t be too eager to move up quickly. Make sure you’re ready to ride without the training wheels before you take them off.”

“When you make a mistake, apologize once and move on. Nobody else is going to obsess about your mistake, so you shouldn’t. Just figure out what you can learn from it.

“It doesn’t mean you have terrible instincts. It doesn’t mean that you’re bad at your job. It just means that you made a mistake. People do it all the time.”

** Keep looking for mentors

Boggs: “One of the most powerful mentors for me was my last assignment. I worked in the White House on the Iran-Contra investigation. My boss was a civilian, middle-aged white guy. I was a 20-something black female.

“On the surface, not like me at all. But saw something in me that reminded him of himself, and became my champion for the first 15 years of my career.”

“Years later, someone wrote an article where I called him the most significant mentor of my career. He called me and said, ‘Paula, I never considered myself your mentor. You were just my friend.’ But he was that to me.”

“Mentors can be everywhere … keep an active peripheral vision, because you just never know.”

Leo Shane III covers Congress, Veterans Affairs and the White House for Military Times. He can be reached at

Tight Government Agency Budgets Bring a Silver Lining

Risk vs. Opportunitiy -



“Growing funding pressures and uncertainty place a growing onus on agencies to navigate the turbulence in new and innovative ways.

Thus, far from being a market killer, it actually presents opportunity.

For years, the question of when the government might return to “regular order” –that is, a “normal” process in which appropriations are essentially completed by the end of September—has been a prominent one.

Agency leaders, industry, and others, have continually and appropriately harped on the deleterious impacts of the funding yo-yo that has dominated the scene for far too long.
And if there was one thing many hoped for as a result of having one party in control of both the White House and Congress, it was a return to regular order.

Well, it’s probably not going to happen. As virtually all recent reports have indicated, the budget debate within the parties, let alone between the parties, remains fierce and the chances of getting a full year fiscal 2018 funding bill by Sept. 30th are slim indeed.

President Trump’s budget blueprint – the “skinny budget” — generated plenty of debate; the release of his full proposed budget will only turn up the heat further. No  budget resolutions have yet been proposed, let alone passed, and no spending instructions given to the appropriations committees.

Beyond that, consider what else Congress has to deal with over the next four months: the farm insurance bill; the children’s insurance program (CHIP); health care; possibly tax reform; and, of course, the debt ceiling. In other words, while a complex and many-layered debate is virtually certain, it has not yet really begun and one or more continuing resolutions appear almost certain.

To complicate matters further, the Senate cannot even take up the budget until after it finishes with health care, because as soon as a budget bill is passed the rules change previously instituted by the Democrats (requiring only a majority vote) will revert back to the standard rule under which 60 votes will be needed.

Thus, the betting is that another continuing resolution, or a series of them, will be needed.

And that is never a good thing for smart planning and program execution.

Nonetheless, it would appear that over the years most agencies have actually gotten pretty good at adjusting to the external dynamics and finding a way to do their jobs. Even as agencies struggled with the White House’s early budget instructions, most continued to operate relatively normally. And that has mostly carried over to the market as well.

Unlike what we saw with sequestration—the impacts of which were seen and felt months before it went into effect—the impacts of the potential or expected spending reductions are not reflected in a broad market slow-down. In fact, with the exception of State and EPA,  just the opposite seems to be happening.

Through the first two quarters of fiscal 2017, civilian agency spending on professional services and IT both grew by double digits over the same period last year. At the Defense Department, for which we only have data for the first quarter, the pattern was the same (16 percent for professional services; 10 percent for IT).

And while it may seem counter-intuitive, this is actually consistent with what we’ve seen in recent years. Often, those agencies under the toughest budgetary pressures have also been those in which the market has performed best.

Again, this is in part the result of agencies having learned to operate amidst the chaos. But more importantly, it appears to validate another key market dynamic: as agencies are forced to be more and more selective with their funding, their highest priority missions, and thus those most fully funded, tend to be highly tech-centric (cyber, analytics, automation, etc.).

Almost by definition, those missions require more private sector support than other, more routine operations. Thus, market growth in a constrained environment is not only possible, it is likely.

Going forward, aside from major reductions in mission or service, agencies’ best hopes and strategies for dealing with the budget realities largely lie in aggressively expanding the degree to which they capitalize on opportunities to substantially reduce costs (and improve service) across the board, driven by the emergence of the digital economy.

It’s happening across the commercial sector; and this budget could well catalyze a similar transition in government.

This is not to say that predictability and stability should not still be a goal. It absolutely should be. Nor is it to suggest that some budget cuts won’t have very real negative impacts on segments of industry. They will.

But as the data and other trends suggest, stability may not be the holy grail it once appeared to be. ”

About the Author

Stan Soloway

Stan Soloway is a former deputy undersecretary of Defense and former president and chief executive officer of the Professional Services Council. He is now the CEO of Celero Strategies.

Defense Companies Are Here To Stay


“DEFENSE NEWS” By Charles Mahoney

“Like it or not, government agencies responsible for national security are dependent on private defense firms.

These companies are primarily responsible to shareholders rather than the American people. How can they be held accountable to the nation’s interests?

What is certain is that for-profit military and intelligence firms will remain an integral part of U.S. national defense. My research focuses on the changing nature of the private defense industry. Military contracting is still big business, although media coverage of private military firms has diminished since the withdrawal of the U.S. from Iraq in 2011. Today, contractors’ work ranges from assisting in drone missions to analyzing signals intelligence to training police forces in fragile countries like Afghanistan.”


Image: “Defense News”

“New frontiers

In recent years, private military companies have adapted to changing demands from U.S. defense agencies. During the wars in Iraq and Afghanistan, the U.S. military relied heavily on contractors to support counterinsurgency operations. However, high-profile incidents of alleged human rights abuses by the company CACI at Abu Ghraib prison in Iraq and Blackwater at Nisour Square, Iraq brought to light the difficulty the American military faces monitoring private defense companies.

At the same time, Americans have since become averse to nation-building campaigns in failing states. So, private defense firms have shifted away from supporting “boots on the ground.” Instead, they are increasingly assisting military and intelligence agencies with counterterrorism and cybersecurity.

While the American people generally want to avoid deploying troops to conflict zones, they still demand protection from terrorism. The Pentagon, CIA and other defense agencies receive assistance in these areas from private companies with expertise in drone warfare, special forces operations and analysis of electronic surveillance of potential terrorist threats. These traditionally were duties of public employees.

Cybersecurity is another area in which private military companies see increasing demand. Information gleaned from hacking government agencies, world leaders and political campaigns can be used by rogue states like Russia and nonstate actors like WikiLeaks to harm American interests.

Serving the public interest?

Most defense analysts now acknowledge that the question is not whether to privatize, but where to draw the line. If the U.S. government is going to work extensively with contractors, it requires a more robust oversight system. Government agencies and courts also need assurances they can hold defense firms accountable if they break the law overseas.

During the Iraq War, this was a point of serious contention. It was unclear what legal jurisdiction applied to employees of private defense firms. The uncertain legal status of contractors caused significant tension between the U.S. and the government of Iraq and hampered American counterinsurgency efforts.

Here are three ways Congress could increase accountability for private defense firms as the industry becomes more enmeshed in national security.

  • Congress could create an independent regulatory agency to report on contractors’ performance. While major firms in the industry insist they can regulate themselves, an independent oversight agency could more adequately assess how defense contractors perform.
  • As things stand now, the U.S. government often overlooks bad behavior and renews contracts with companies that have less than stellar records. Instead, the government could more severely penalize firms that do not fulfill the terms of their agreements.
  • Government employees often transition from public service into lucrative positions at billion-dollar defense corporations. Stricter rules to limit this “revolving door” would make government employees more willing to penalize firms.

Private defense contractors will likely be a major part of U.S. national defense for the foreseeable future. Diligent oversight and regulation of companies in this rapidly evolving industry, I believe, are necessary to ensure that these firms advance the public good of American security.”

Charles Mahoney is a professor of political science at California State University, Long Beach. His commentary was originally published on The Conversation .




Defense Industry Execs Among Top-Paid Female CEOs

IBM CEO Virginia Rometty Getty Images

IBM CEO Virginia Rometty (Getty Images Bloomberg)

“General Dynamics and Lockheed Martin are among the top-paid female CEOs, according to a report by The Associated Press.

The study notes that the highest paid female CEO was Virginia Rometty at International Business Machines Corp. With an increase in pay of 63 percent, she was paid $32.3 million last year.

General Dynamics CEO Phebe Novakovic is fifth on the list. According to the study conducted by executive data firm Equilar and AP, she was paid $21.2 million last year — a 4 percent increase from 2015.

Companies who had filed proxy statements with federal regulators between Jan. 1 and April 30, 2016, were taken from the Standard & Poor’s 500 index for the study. Equilar and AP excluded any CEOs that were hired within the last two years, to exclude any sign-on bonuses, and added together their earnings including salary, bonuses, perks, stock option awards and any other compensations”






Navy Will Lean on Drone Ships and Modularity to Expand Fleet Size


An unmanned boat operates autonomously during a U.S. Navy demonstration. The future Navy may rely heavily on unmanned ships. John F. Williams/U.S. Navy


“The Navy’s top officer said he’s looking for ways to build the service to a strength equivalent to 355 ships by the mid-2020s.

But it’s unlikely that all those ships will be traditionally manned and operated platforms.

In a nine-page document released Wednesday examining the future Navy, Chief of Naval Operations Adm. John Richardson consolidated the findings of three recent studies examining the target future force. He agreed with the conclusion of all three that the Navy needs “on the order” of 350 ships, up from its current 275, and calls for an “exponential” pace to deliver the growth decades ahead of current projections.

“I will tell you that my sense is that we’re on the dawn of something very substantial in naval warfare,” Richardson told reporters in a conference call Monday evening. “Something as substantial as the transition from sail to steam … from wood to ironclad … as the advent of nuclear propulsion in terms of what  it means for our naval power.”

To reach the target fleet size by the 2020s, Richardson said the Navy plans to do a few traditional things, including extending the service life of existing platforms. The workhorse Arleigh Burke-class destroyer is one example of a platform likely to be extended for this purpose, he said.

This and other platforms will be evaluated individually to find ways to increase their power and capability, both by networking them with other assets around the fleet and by installing transformative emerging technologies to extend their reach, Richardson said. He mentioned technologies ranging from unmanned and autonomous enhancements; information warfare and directed energy; and 3D printing and robotics as candidates for this effort to boost capability.

“Platforms on an individual basis need to become informationalized, need to become more capable platform by platform,” he said. “In my gut, there’s a real urgency to move out on this as briskly as possible, prioritize achieving this future Navy much sooner than projections might have led some to believe.”

While capability enhancements will allow the Navy to do more with fewer ships, Richardson said the service nonetheless needs to amp up ship construction as a crucial part of its fleet growth plan.

“There is kind of a demand for presence at different parts around the world,” he said. “And this has been an important part of that body of studies. You really need to be there to provide credible options. You can’t be virtually present and provide that credible option.”

According to the new analysis, the Navy asserts that the current industrial base could build 29 more ships and nearly 300 more aircraft over the next seven years than the current shipbuilding plan calls for.

And these ships will be built differently than they have in the past, Richardson said. The future of Navy shipbuilding, he said, lies in modular platforms that could be easily upgraded with the most current warfighting technology, maximizing their effectiveness.

“In all, analysis shows that today’s industrial base has the capacity to construct 29 more ships and almost 300 more aircraft over the next seven years than our current plan,” the document states. “Those platforms are ones that we are confident will continue to be relevant in the coming decades, and can better incorporate the modular approach described above.”

“The hull and power plant will last, ostensibly, the life of the ship,” Richardson said. “But we’ll design the rest of it, use the very latest technology that we have right now, but it will also be built to step into the future faster, to modernize faster, really from the ground up … so part of the ship that’s built to last, if you will, part of the ship that’s built to grow and modernize.”

Unmanned platforms, both surface and undersea vessels and aircraft, will also play a larger role in the future fleet.

Richardson offered few details on how many of these unmanned platforms would be built into the target fleet size number or what roles they would take on. But the future Navy document says they will play a key role in driving down unit cost of construction and will network with manned platforms to maximize reach.

“There is no question that unmanned systems must also be an integral part of the future fleet,” the document states. “The advantages such systems offer are even greater when they incorporate autonomy and machine learning. And these platforms must be affordable enough to buy them in large numbers, and networked in order to expand our presence in key areas.”

Many decisions have yet to be made. Richardson said Navy analysis puts the cost of the planned ship buildup at far less than the $102 billion per year for 30 years that the Congressional Budget Office assessed in April. But it’s still more than the Navy has traditionally spent on annual shipbuilding, he said, and a final way forward in terms of cost and budgeting is still being determined.

“We have to be open to the fact that if we want a larger, more powerful Navy, that’s going to require some resources to get there,” he said. “But we have to do everything inside the Navy to make sure that we’re prioritizing the right thing, we put those resources to the thing that’s going to deliver more naval power per dollar.”

According to the document, the Navy will take the year 2018 to “consolidate readiness and achieve better balance” across the service.

“We need to determine the best way to get the most overall capability in relevant timeframes, which will result from a mix of new and modernized hulls,” the document states. “From that starting point, we must focus our intellectual energies on defining the optimal mix of platforms for the future, within a timeframe appropriate to the dynamic complexity we face now and that will only intensify in the future.”

The first steps of the Navy’s fleet growth plan will likely become clearer later this spring with the president’s fiscal 2018 defense budget request.”

The Media Ignores What Matters More

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“Hey Big Media, here are two dozen matters to which you’re not giving faintly adequate thought and attention.

The New York Times has even unveiled a portentous new promotional slogan — “The truth is now more important than ever.” For its part, TheWashington Post grimly warns that “democracy dies in darkness,” and is offering itself as a source of illumination.

Meanwhile, National Public Radio fundraising campaigns are sounding an increasingly panicky note. Give, listener, lest you be personally responsible for the demise of the republic that we are bravely fighting to save from extinction.

Some examples of national security issues that presently receive short shrift or are ignored altogether by the Fourth Estate.

Accomplishing the ‘mission’

Since the immediate aftermath of World War II, the United States has been committed to defending key allies in Europe and East Asia.  Not long thereafter, U.S. security guarantees were extended to the Middle East, as well.

Under what circumstances can Americans expect nations in these regions to assume responsibility for managing their own affairs? To put it another way, when if ever might U.S. forces actually come home?

And if it is incumbent upon the United States to police vast swaths of the planet in perpetuity, how should momentous changes in the international order — the rise of China, for example, or accelerating climate change — affect the U.S. approach to doing so?

American military supremacy

The United States military is undoubtedly the world’s finest.  It’s also far and away the most generously funded, with policymakers offering U.S. troops no shortage of opportunities to practice their craft. So why doesn’t this great military ever win anything?

Why in recent decades have those forces been unable to accomplish Washington’s stated wartime objectives? Why has the now 15-year-old war on terror failed to result in even a single real success anywhere in the Greater Middle East? Could it be that we’ve taken the wrong approach? What should we be doing differently?

America’s empire of bases

The U.S. military today garrisons the planet in a fashion without historical precedent. Successive administrations, regardless of party, justify and perpetuate this policy by insisting that positioning U.S. forces in distant lands fosters peace, stability and security.

In the present century, however, perpetuating this practice has visibly had the opposite effect. In the eyes of many of those called upon to “host” American bases, the permanent presence of such forces smacks of occupation. They resist. Why should U.S. policymakers expect otherwise?

Supporting the troops

In present-day America, expressing reverence for those who serve in uniform is something akin to a religious obligation. Everyone professes to cherish America’s “warriors.” Yet such bountiful, if superficial, expressions of regard camouflage a growing gap between those who serve and those who applaud from the sidelines.

Our present-day military system, based on the misnamed all-volunteer force, is neither democratic nor effective. Why has discussion and debate about its deficiencies not found a place among the nation’s political priorities? 

Prerogatives of the commander-in-chief

Are there any military actions that the president of the United States may not order on his own authority? If so, what are they?  Bit by bit, decade by decade, Congress has abdicated its assigned role in authorizing war.

Today, it merely rubberstamps what presidents decide to do — or simply stays mum. Who does this deference to an imperial presidency benefit? Have U.S. policies thereby become more prudent, enlightened and successful?


A policy of assassination, secretly implemented under the aegis of the CIA during the early Cold War, yielded few substantive successes. When the secrets were revealed, however, the U.S. government suffered considerable embarrassment, so much so that presidents foresworepolitically motivated murder.

After 9/11, however, Washington returned to the assassination business in a big way and on a global scale, using drones. Today, the only secret is the sequence of names on the current presidential hit list, euphemistically known as the White House “disposition matrix.”

But does assassination actually advance U.S. interests? Or does it merely recruit replacements for the terrorists it liquidates? How can we measure its costs, whether direct or indirect? What dangers and vulnerabilities does this practice invite?

The war formerly known as the ‘Global War on Terrorism’

What precisely is Washington’s present strategy for defeating violent jihadism? What sequence of planned actions or steps is expected to yield success? If no such strategy exists, why is that the case?  How is it that the absence of strategy — not to mention an agreed upon definition of “success” — doesn’t even qualify for discussion here?

The conflict commonly referred to as the Afghanistan War is now the longest in U.S. history — having lasted longer than the Civil War, World War I and World War II combined. What is the Pentagon’s plan for concluding that conflict? When might Americans expect it to end? On what terms?

The Persian Gulf

Americans once believed that their prosperity and way of life depended on having assured access to Persian Gulf oil.

Today, that is no longer the case. The United States is once more an oil-exporter. Available and accessible reserves of oil and natural gas in North America are far greater than was once believed. Yet the assumption that the Persian Gulf still qualifies as crucial to American national security persists in Washington. Why?

Hyping terrorism

Each year terrorist attacks kill far fewer Americans than do auto accidents, drug overdoses or even lightning strikes. Yet in the allocation of government resources, preventing terrorist attacks takes precedence over preventing all three of the others combined. Why is that?

Deaths that matter and deaths that don’t

Why do terrorist attacks that kill a handful of Europeans command infinitely more American attention than do terrorist attacks that kill far larger numbers of Arabs? A terrorist attack that kills citizens of France or Belgium elicits from the United States heartfelt expressions of sympathy and solidarity.

A terrorist attack that kills Egyptians or Iraqis elicits shrugs. Why the difference? To what extent does race provide the answer to that question?

Israeli nukes

What purpose is served by indulging the pretense that Israel does not have nuclear weapons?

Peace in the Holy Land

What purpose is served by indulging illusions that a “two-state solution” offers a plausible resolution to the Israeli-Palestinian conflict? As remorselessly as white settlers once encroached upon territory inhabited by Native American tribes, Israeli settlers expand their presence in the occupied territories year by year.

As they do, the likelihood of creating a viable Palestinian state becomes ever more improbable. To pretend otherwise is the equivalent of thinking that one day Trump might prefer the rusticity of Camp David to the glitz of Mar-a-Lago.

Merchandizing death

When it comes to arms sales, there is no need to Make America Great Again.  The United States ranks number one by a comfortable margin, with long-time allies Saudi Arabia and Israel leading recipients of those arms.

Each year, the Saudis — per capita gross domestic product $20,000 — purchase hundreds of millions of dollars of U.S. weapons. Israel — per capita gross domestic product $38,000 — gets several billion dollars worth of such weaponry annually courtesy of the American taxpayer.

If the Saudis pay for U.S. arms, why shouldn’t the Israelis? They can certainly afford to do so.

Our friends the Saudis, part one

Fifteen of the 19 hijackers on 9/11 were Saudis. What does that fact signify?

Our friends the Saudis, part two

If indeed Saudi Arabia and Iran are competing to determine which nation will enjoy the upper hand in the Persian Gulf, why should the United States favor Saudi Arabia? In what sense do Saudi values align more closely with American values than do Iranian ones?

Our friends the Pakistanis

Pakistan behaves like a rogue state. It is a nuclear weapons proliferator. It supports the Taliban. For years, it provided sanctuary to Osama Bin Laden. Yet U.S. policymakers treat Pakistan as if it were an ally.

Why? In what ways do U.S. and Pakistani interests or values coincide? If there are none, why not say so?

Free-loading Europeans

Why can’t Europe, “whole and free,” its population and economy considerably larger than Russia’s, defend itself? It’s altogether commendable that U.S. policymakers should express support for Polish independence and root for the Baltic republics.

But how does it make sense for the United States to care more about the wellbeing of people living in Eastern Europe than do people living in Western Europe?

The mother of all ‘special relationships’

The United States and the United Kingdom have a “special relationship” dating from the days of Franklin Roosevelt and Winston Churchill. Apart from keeping the Public Broadcasting Service supplied with costume dramas and stories featuring eccentric detectives, what is the rationale for that partnership today?

Why should U.S. relations with Great Britain, a fading power, be any more “special” than its relations with a rising power like India? Why should the bonds connecting Americans and Britons be any more intimate than those connecting Americans and Mexicans? Why does a republic now approaching the 241st anniversary of its independence still need a “mother country”?

The old nuclear disarmament razzmatazz

American presidents routinely cite their hope for the worldwide elimination of nuclear weapons. Yet the United States maintains nuclear strike forces on full alert, has embarked on a costly and comprehensive trillion-dollar modernization of its nuclear arsenal and even refuses to adopt a no-first-use posture when it comes to nuclear war.

The truth is that the United States will consider surrendering its nukes only after every other nation on the planet has done so first. How does American nuclear hypocrisy affect the prospects for global nuclear disarmament or even simply for the non-proliferation of such weaponry?

American policymakers take it for granted that their country’s sphere of influence is global, which, in turn, provides the rationale for the deployment of U.S. military forces to scores of countries. Yet when it comes to nations like China, Russia or Iran, Washington takes the position that spheres of influence are obsolete and a concept that should no longer be applicable to the practice of statecraft.

So Chinese, Russian and Iranian forces should remain where they belong — in China, Russia and Iran.  To stray beyond that constitutes a provocation, as well as a threat to global peace and order.

Why should these other nations play by American rules? Why shouldn’t similar rules apply to the United States?

Double standards, part two

Washington claims that it supports and upholds international law. Yet when international law gets in the way of what American policymakers want to do, they disregard it. They start wars, violate the sovereignty of other nations and authorize agents of the United States to kidnap, imprison, torture and kill.

They do these things with impunity, only forced to reverse their actions on the rare occasions when U.S. courts find them illegal. Why should other powers treat international norms as sacrosanct since the United States does so only when convenient? 

Double standards, part three

The United States condemns the indiscriminate killing of civilians in wartime. Yet over the last three-quarters of a century, it killed civilians regularly and often on a massive scale. By what logic, since the 1940s, has the killing of Germans, Japanese, Koreans, Vietnamese, Laotians, Cambodians, Afghans and others by U.S. air power been any less reprehensible than the Syrian government’s use of “barrel bombs” to kill Syrians today?

On what basis should Americans accept Pentagon claims that, when civilians are killed these days by U.S. forces, the acts are invariably accidental, whereas Syrian forces kill civilians intentionally and out of malice?

Why exclude incompetence or the fog of war as explanations? And why, for instance, does the United States regularly gloss over or ignore altogether the noncombatants that Saudi forces, with U.S. assistance, are routinely killing in Yemen?

Moral obligations

When confronted with some egregious violation of human rights, members of the chattering classes frequently express an urge for the United States to “do something.” Holocaust analogies sprout like dandelions. Newspaper columnists recycle copy first used when Cambodians were slaughtering other Cambodians en masse or whenever Hutus and Tutsis went at it.

Proponents of action — typically advocating military intervention — argue that the United States has a moral obligation to aid those victimized by injustice or cruelty anywhere on Earth. But what determines the pecking order of such moral obligations? Which comes first, a responsibility to redress the crimes of others or a responsibility to redress crimes committed by Americans?

Who has a greater claim to U.S. assistance, Syrians suffering today under the boot of Bashar Al Assad or Iraqis, their country shattered by the U.S. invasion of 2003? Where do the Vietnamese fit into the queue? How about the Filipinos, brutally denied independence and forcibly incorporated into an American empire as the 19th century ended?

Or African-Americans, whose ancestors were imported as slaves? Or, for that matter, dispossessed and disinherited Native Americans? Is there a statute of limitations that applies to moral obligations? And if not, shouldn’t those who have waited longest for justice or reparations receive priority attention?

Let me suggest that any one of these two dozen issues — none seriously covered, discussed or debated in the American media or in the political mainstream — bears more directly on the wellbeing of the United States and our prospects for avoiding global conflict than anything Trump may have said or done during his first 100 days as president.

Collectively, they define the core of the national security challenges that presently confront this country, even as they languish on the periphery of American politics.

How much damage Trump’s presidency wreaks before it ends remains to be seen. Yet he himself is a transient phenomenon. To allow his pratfalls and shenanigans to divert attention from matters sure to persist when he finally departs the stage is to make a grievous error.

It may well be that, as the Times insists, the truth is now more important than ever. If so, finding the truth requires looking in the right places and asking the right questions.”



Court Raises Bar on Buy America Act

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“If a company claims U.S. origin for products assembled from foreign parts, a recent U.S. Court of International Trade decision may affect its ability to sell those products to the U.S. government.

This higher U.S. origin standard raises very important new considerations for importers, government contractors and manufacturers that wish to claim that finished products assembled from foreign parts are U.S. origin and thus eligible for sale to the U.S. government, including the Department of Defense.

In a decision issued in December — Energizer Battery, Inc. v. United States — the court stated that Customs and Border Protection was right when it found that Energizer’s Generation II military flashlight, while assembled in the United States, is of Chinese origin for government procurement purposes. It reached that decision in part because virtually all of the flashlight’s components are of Chinese origin, even though it was assembled into a finished item in the United States.

Customs argued that the Chinese component parts were not “substantially transformed” by the relatively simple assembly process occurring in the United States such that Energizer could claim the flashlight is of U.S. origin. Even though a great deal of the product assembly occurred in the United States, the U.S. Court agreed the flashlight was not U.S. origin. The decision was not appealed, making it the law of the land.

This higher U.S. origin standard raises very important new considerations for importers, government contractors and manufacturers that wish to claim that finished products assembled from foreign parts are U.S. origin and thus eligible for sale to the U.S. government, including the Department of Defense.

Government procurement of items for military use is subject to a variety of often confusing laws and regulations, including the Buy America Act provisions of the Trade Agreements Act of 1979 that were at issue in Energizer. The act imposes restrictions on the U.S. government’s ability to procure products that are of foreign origin, although the law permits the president to waive Buy America requirements for eligible products from certain countries. China is not a country that qualifies for waiver, however, although many input materials, parts and components are made there.

Under the rules, a product that does not qualify for a waiver is subject to a “substantial transformation” analysis to determine whether it is a “U.S. origin” product — despite being produced from parts that are imported from foreign countries. Customs also enforces the law that every article of foreign origin imported into the United States shall be marked to indicate the country of origin — with some minor exceptions.

In Energizer, the court said assembly operations in the U.S. for foreign parts is not enough, by itself, to claim that the resulting product is U.S. origin and eligible for sale to the Defense Department. Too many companies are taking this overly simplistic approach and putting themselves at risk of substantial penalties. Whether a product comprising foreign components may claim U.S. origin is a more complex, very fact and law-specific question, requiring consideration of a variety of production, assembly and import processes.

Under U.S. law — 19 U.S.C. § 2518(4)(B) — a product is “substantially transformed” if it becomes a “new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed.” But the test is not as simple as some thought before Energizer. Now, the substantial transformation analysis requires a case-by-case analysis of multiple factors, including the country of origin of the foreign components, the extent of processing that occurs in the country of origin relative to assembly and production operations in the United States, and whether the U.S. processing results in a product with a new name or identity sufficient to meet the substantially higher bar established by Energizer.

Given the fact-specific nature of the analysis, Energizer highlights that the criteria considered may vary from case to case. After Energizer, if a company is assembling foreign parts into a product that it wants to call U.S. origin — and sell to DoD or another federal agency that requires U.S. origin items — it needs to revisit its analysis to determine if its product qualifies.

Specifically, the Energizer decision analyzes several key questions that companies selling products claiming to be of U.S. origin and comprised of or assembled from foreign parts must now consider.

What is the nature of the assembly process in the United States post-importation? Is it minor or complex? Does the assembly and post-importation processing in the United States change the foreign components into a different product? Is the end-use of the components pre-determined at the time of importation?

In analyzing these questions, the court relied on several critical facts to conclude that no substantial transformation occurred. It emphasized, for example, that final assembly and packaging of Energizer’s Generation II military flashlight at its U.S. facility does not change or alter the shape, material composition, or name of the Chinese component parts.

Among other factors, the court noted that these particular Chinese components did not undergo a change in use during processing in the United States and, instead, had a pre-determined use as parts of the flashlight at the time of importation.

While these are central aspects of the court’s analysis for this product, any company selling a “U.S. origin” product made of foreign parts should now reexamine the “totality of circumstances” surrounding the production, importation and completion of the product to ensure compliance.

Interestingly, Energizer is the first appeal in which the Court of International Trade interpreted the meaning of “substantial transformation” in the context of the Buy America provisions of the Trade Agreements Act of 1979. As government contractors, importers, manufacturers and others aim to take advantage of any anticipated Buy America initiatives under a Trump administration, and increased defense spending, knowing how to deal with the Energizer case will be critical for compliant federal sales programs.

Companies that fail to properly label a product’s country of origin risk noncompliance with a number of criminal and civil provisions. For example, the law governing the labeling of imported articles provides that mislabeled products are subject to monetary penalties and may be seized by Customs and withheld from delivery until the labeling errors are corrected.

Where Customs finds evidence that a product was intentionally mislabeled, companies are subject to additional criminal and monetary penalties. Furthermore, improper labeling can render a product ineligible for government procurement. Depending on the exact nature of the mislabeling or mischaracterization of the country of origin of an article, additional provisions of the law or regulations may be implicated.

Moreover, some companies have been accused in whistleblower suits of making false claims to the U.S. government about the U.S. origin of their products. A number have been forced to pay substantial penalties, a good portion of which may be paid to the internal whistleblower — or competitor — who alerted the government about the false claim.

The Energizer decision highlights the critical importance that companies closely examine their sourcing and manufacturing before claiming that a product is of U.S. origin. This analysis under the applicable law can seem daunting given the complex nature of many companies’ sourcing patterns and production processes. Most manufacturers have at least some percentage of foreign components, even if products are not wholly made of non-U.S. parts. But the analysis should be conducted to ensure compliance with U.S. law and to avoid future problems.

If claiming U.S. origin for products assembled from foreign components, it is recommended that companies take steps to conduct a risk analysis and/or audit to determine whether they are compliant with Buy America provisions, including the tough new Energizer test. ”