Category Archives: Global economy

The One Year Budget Cycle Must Go

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         Photo Courtesy “Dabble With” dot com     

By  Ken Larson                               
Having  dealt with the funding process in the government contracting industry  (both large and small business) for over 40 years through many  administrations and much frustration, I can discuss with  some  credibility a major weakness in the huge machine we call the US  Federal  Government — the one year budget cycle. Its tail end is whipping everybody this month and we have undergone previous sanctimonious “Shutdowns”, with the promise of more to come.

A huge reason for much of the largess in this entire area is the one year budget cycle in which the US Government is entrenched.

About mid-summer every agency begins to get paranoid about whether or not they have spent all their money, worried about having to return some and be cut back the next year. They flood the market with sources sought notifications and open solicitations to get the money committed. Many of these projects are meaningless.

Then during the last fiscal month (September) proposals are stacked up all over the place and everything is bottle-necked. If you are a small business trying to get the paperwork processed and be under contract before the new fiscal year starts you are facing a major challenge.

Surely the one year cycle has become a ludicrous exercise we can no longer afford and our government is choking on it. It is a political monstrosity that occurs too frequently to be managed.

Government must lay out a formal baseline over multiple years (I suggest at least 2 fiscal years – ideally 4 – tied to a presidential election)  – then fund in accordance with it and hold some principals in the agencies funded accountable by controlling their spending incrementally – not once year in a panic mode.

Naturally exigencies can occur. A management reserve can be set aside if events mandate scope changes in the baseline due to unforeseen circumstances. Congress could approve such baseline changes as they arise.

There is a management technique for the above that DOD, NASA and the major agencies require by regulation in large government contracts.    It is called “Earned Value Management” and it came about as a result of some of the biggest White Elephant overruns in Defense Department History.

http://www.smalltofeds.com/2008/…

I contend we have one of the biggest White Elephants ever in front of us (a National Debt approaching $20 Trillion)

We need to get this mess under control, manage our finances and our debt or it will manage us into default.

 

Secrets That Highly Successful Government Contractors Use Everyday

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“WASHINGTON TECHNOLOGY”

“What does it take to deliver at least 20 percent revenue growth year after year?

Last month, we released a new study of high-growth firms, including 445 government contractors. We found three key findings from that study that your  business can use to improve your growth prospects.

Each of these findings can be folded into a cohesive strategy. And a characteristic of high-growth firms is that they often employ all three.

Strategy 1: High-Growth Government Contractors Specialize

Our first finding was that high-growth government contractors tend to specialize. Interestingly, so do the firms that exhibited little or no growth. The difference was what they chose to specialize in.

As you can see in Figure 1 below, high-growth firms often focus on solving a particular challenge or providing a specialized service. In fact, high-growth contractors were two-and-a-half times more likely to be highly specialized. No-growth firms that described a specialty usually specialized in an industry.

~ most valuable digital content

Why does specialization matter? In a related finding, 68 percent  of buyers cited specialized skills and expertise as their top criterion when selecting a firm. Specialization implies expertise, and buyers value that.

Takeaway: Try to define an area of focus for your firm. As you do so, consider building it around a specialized service or common client challenge.

Strategy 2: High-Growth Contractors Are Well Differentiated

According to our research, high-growth firms are three times more likely than their no-growth peers to have a strong differentiator.

Differentiation is the way in which a business separates itself from other similar firms. Usually this difference is expressed in the language a contractor uses to describe itself or its services. But there is more to a differentiator than lip service. It has to meet three criteria. A differentiator must be:

  1. True
  2. Relevant
  3. Provable

And of course, it must be different from most of your competitors. Figure 2 lists the differentiators cited most often by the high-growth firms in our study.

~ most valuable digital content

Now, this data begs the question, how can a characteristic that’s favored by over 80 percent of high-growth firms still be a differentiator?  After all, isn’t the point of a differentiator to be different?

The answer is that many of the responses in Figure 2 are aggregated and categorized. That means “The expertise of our team,” for example, represents a diverse range of answers that are more specialized than the generic category name implies. A firm that differentiates around its expertise might have deep experience in a narrow discipline, such as conducting insider threat risk assessments or designing secure but welcoming embassy facilities.

Takeaway: Figure out how you are different from your competitors and develop messaging to convey this to your audiences. Make sure your differentiators really are in fact truly different.

Strategy 3: High-Growth Firms Invest in Marketing Techniques that Build Their Visibility and Reputation

While high-growth firms grow much faster than their peers, they actually invest less time and money doing so. That means their marketing is more efficient. Figure 3 lists the 10 most favored marketing techniques of high-growth and no-growth firms.

~ most valuable digital content

One thing you will notice is that high-growth firms tend to use more marketing techniques overall than their no-growth brethren. Now let’s look at the five techniques high-growth contractors identified as having the most impact on their business.

~ most valuable digital content

All five of these share two characteristics: 1) they build the firm’s visibility, and 2) they leverage their expertise to enhance their reputation.

The top technique, partnership marketing, deserves a little explanation. Traditional partnership marketing is a strategy in which a firm seeks out other firms, associations or organizations that share one or more target audiences with the firm but don’t directly compete with them. The two parties then pool their resources and market jointly to their audience. For instance they might conduct joint webinars or promote each other’s services to their client lists.

In the case of government contractors, however, partnership marketing takes an interesting twist. Often the partnering firms are direct competitors, but because they have different characteristics, they need each other from time to time to qualify for an RFP or comply with a regulatory requirement, such as 8(a) or HUBZone certification.

Takeaway: Don’t waste your limited marketing dollars on timeworn tactics that no longer produce results. Instead, model your marketing on today’s most successful government contractors.

If you are wondering why your firm is stuck in the doldrums while others grow quickly, take heart. There are changes you can make to change your fortunes.

Reposition your firm as a specialist, clearly articulate how your firm is different, and look to the high-growth firms in your industry to uncover what marketing techniques are most effective.”

About the Author

Elizabeth Harr is a partner with Hinge Marketing and leads the firm’s technology and consulting practice. She is the co-author of two books, the Visible Expert and the Buyer’s Brain.

https://washingtontechnology.com/articles/2017/04/14/insights-harr-differentiation-and-success.aspx

 

Revolving Door Picking Up Speed at the Pentagon and Homeland Security

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Pentagon Revolving Door

“THE INTERCEPT”

“Defense firms have eagerly watched as Trump recently unveiled a budget calling for $54 billion in additional military spending next year.

President Trump has weaponized the revolving door by appointing defense contractors and their lobbyists to key government positions as he seeks to rapidly expand the military budget and homeland security programs.”


“The spending spree will provide a brand new opportunity for defense lobbyists to get business for their clients. And the most effective lobbying generally involves contacting former colleagues in positions of power.

Two Department of Homeland Security appointments Trump announced Tuesday morning are perfect examples.

Benjamin Cassidy, installed by Trump as assistant secretary for legislative affairs, previously worked as a senior executive at Boeing’s international business sector, marketing Boeing military products abroad. Jonathan Rath Hoffman, named assistant secretary for public affairs, previously worked as a consultant to the Chertoff Group, the sprawling homeland security consulting firm founded by former Secretary of Homeland Security Michael Chertoff. The firm has come under fire for advising a variety of firms seeking government contracts, including for full-body scanners deemed invasive by privacy activists. Hoffman also led a state chapter of a neoconservative military-contractor advocacy organization during the 2016 presidential campaign. Neither position requires Senate confirmation.

Personnel from major defense companies now occupy the highest ranks of the administration including cabinet members and political appointees charged with implementing the Trump agenda. At least 15 officials with financial ties to defense contractors have been either nominated or appointed so far, with potentially more industry names on the way as Trump has yet to nominate a variety of roles in the government, including Army and Navy secretaries.

Before their confirmations, Jim Mattis and John Kelly, the secretaries of the departments of Defense and Homeland Security, were primarily paid by defense firms.

Mattis was paid $242,000, along with up to $500,000 in vested stock options, as director of General Dynamics, a company that produces submarines, tanks, and a range of munitions for the military. Mattis also received speaking fees from several firms, including Northrop Grumman. Kelly previously served in a number of roles at defense contracting consulting and lobbying firms and worked directly as an adviser to Dyncorp, a company that contracts with the Immigrations and Customs Enforcement.

Major lobbying groups for the arms companies, including the National Defense Industrial Association and the Aerospace Industries Association, welcomed the selection of Secretary Mattis, who has already scheduled meetings with industry executives. Secretary Kelly has pledged to work more closely with the private sector, promising greater collaboration with private firms to accomplish his agency’s goals.

To carry out this private-sector friendly agenda, defense officials have taken major roles throughout Trump’s administration.

Pat Shanahan, nominated last week by Trump to serve as deputy secretary of defense, is a vice president at Boeing who formerly led the company’s missile defense subsidiary. Disclosures show that Elaine Duke, the nominee for deputy secretary of homeland security, previously consulted for Booz Allen Hamilton, General Dynamics, and the Columbia Group, a small contractor that builds unmanned naval drones.

The nominee to lead the Air Force, former New Mexico Congresswoman Heather Wilson, worked as a consultant to a Lockheed Martin subsidiary after retiring from public office. The company sought Wilson’s help to maintain a $2.4 billion a year contract to manage Sandia National Laboratories, the premiere nuclear weapons research facility, and to keep the contract closed to competition. “Lockheed Martin should aggressively lobby Congress, but keep a low profile,” Wilson urged the company in a memo revealed later by an inspector general report.

Trump’s pick for national security council chief of staff, retired Lt. Gen. Keith Kellogg, has worked at a variety of defense contracting companies. After serving in senior roles in Iraq’s provisional government after the 2003 invasion, Kellogg left the government for the private sector. He told the Washington Post in 2005 that he joined Oracle to “establish a homeland security business unit” at the firm, and later joined CACI International, a company with major contracts in the wars in Iraq and Afghanistan. Following CACI, Kellogg joined Cubic Defense in 2009 to develop the company’s combat training business.

A list of temporary political appointees recently published by ProPublica reveals a number of less-known influence peddlers who have taken senior roles in the administration.

Chad Wolf and Lora Ries, two recently appointed advisers at the Department of Homeland Security, are formerly registered defense lobbyists. Wolf lobbied for Harris Corp. and the United Launch Alliance, a partnership between Boeing and Lockheed Martin. Ries previously lobbied for a range of defense and homeland security contractors, including Altegrity, Boeing, Implant Sciences Corp., General Dynamics, L1 Identity Solutions, and TASC Inc.

In the White House, one of the newest members of the National Economic Council staff is Michael Catanzaro, formerly a registered lobbyist working for both Boeing and Halliburton.

Palanatir Technology’s Justin Mikolay, formerly a chief in-house lobbyist for the company who worked to win over billions of dollars in Army contracts, was quietly appointed to serve as a special assistant in the Office of the Secretary of Defense.

Several appointees are associated with SBD Advisors, a consulting that firm that advertises its ability to facilitate “engagements between the technology and defense sectors,” and is advised by a high profile team of former government leaders, including former Chairman of the Joint Chiefs of Staff retired Adm. Mike Mullen and former National Security Agency Director of Operations Ron Moultrie.

SBD Advisors’d Sally Donnelly and Tony DeMartino work as temporary political appointees at the Office of the Defense Secretary, according to the list assembled by ProPublica. Kristan King Nevins, recently appointed as chief of staff to Second Lady Karen Pence, also previously worked at SBD Advisors as the director of communications.

The Trump administration is the “military-industrial complex personified,” said William Hartung, director of the Arms & Security Project at the Center for International Policy. Hartung noted that while the administration is bringing arms industry officials into government, it is also demanding a massive increase in military spending and appears to be escalating conflicts in Syria and Yemen.

In short, the Trump proposals are an armsmaker’s dream come true,” he said. “

https://theintercept.com/2017/03/21/revolving-door-military/

 

 

Military Contract Manufacturing There When You Need It

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Electronic Contracting

“MILITARY AND AEROSPACE ELECTRONICS”

“The nation’s prime defense contractors often find themselves with too many orders to handle with in-house expertise.

That’s where electronics contract manufacturing comes in.

With the rapid expansion of high-tech military equipment and componentry, thousands of small specialty manufacturers have come into being, with the initial big boost during with the Space Race of the 1960s.

Throughout that period – and with even greater frequency since the turn of the century – contract manufacturing of military electronics grew into a major industry in its own right. Working primarily for systems integrators, contract manufacturers typically focus on specific areas, such as machining; mechanical and electrical assemblies; power systems; lasers; optics; sensors; robotics; vehicular controls; RF systems; satellite instrumentation; environmental stress screening; G-force testing; and electronic circuit card assembly.

“In the last 10 years, if you look at industry consolidation, that tends to support systems integration, which intuitively should mean more contract manufacturing,” says Matt Turpin, CEO of contract manufacturer Zentech Manufacturing Inc. in Windsor Mill, Md. “Given the peaks and troughs of the mil-aero business, any company that tried to stay vertically integrated would probably die. Given the rate of technology change, vertical integration would not, in general, be able to keep up.”

The role of industry consolidation

This is the primary reason that big systems integrators like Lockheed Martin, Northrop Grumman, and L-3 rely on best-in-breed contract manufacturing,” Turpin says. “The economics don’t really support them trying to do it all in-house. If you try to bring in that capability for just your stuff, you can’t even out the troughs in mil-aero the way an independent contract manufacturer can.”

Contract manufacturing of military electronics is significantly different from the model in use in many other industries, where the contract manufacturer produces complete products under the contractor’s brand.

In the military market, the contract manufacturer may produce unique components designed by the contractor or provide its own designs, developments, prototyping and modeling, assemblies, fabrication, tooling, manufacturing, qualification testing, procurement, and logistics services to meet the contractor’s requirements.

Representative of that is Jabil Circuit Inc. in St. Petersburg, Fla. With $18 billion in annual revenues, Jabil is the third largest contract manufacturer in the world – behind Taiwan’s Hon Hai Precision Industry (Foxconn) and Singapore’s Flextronics International Ltd.

Trailing closely behind Jabil in size are U.S. contract manufacturers Sanmina Corp. in San Jose, Calif.; Benchmark Electronics Inc. in Angleton, Texas; and Plexus Corp. in Neenah, Wis.

Jabil promotes its second largest division, Defense and Aerospace, as providing a skilled workforce for aerospace and defense manufacturing, design, and supply chain management for high-mix, low- to medium-volume products and electronic and mechanical solutions to complement original equipment manufacturers’ core competencies and reduce program costs.

“Systems integrators are still doing a lot of work in-house, but are outsourcing more each year, although the increase is not that great,” says Mike Matthes, president of the Jabil Aerospace and Defense division.

Demonstrating Value

“We have to provide a value proposition to show it is more advantageous to outsource electronics manufacturing than to keep it in-house, which allows them to focus more on their strategic plans and not worry about the actual manufacturing,” Matthes says. “Jabil is moving into a new capability – aerospace machining – and entering into agreements to provide that to defense and civilian companies.” Contract manufacturers also have to grow their capabilities to retain that value, he points out.

“We do electronic manufacturing and systems integration, but not the machining portion,” Matthes continues. “At Jabil Green Point, our largest division, we do machining, mostly in China, but not for aerospace. It’s not an easy capability to master and we’re working with our customers to develop and launch that. Some of that will be based in the U.S., other parts in Asia. Military contracting would have to be done in the U.S., including a new facility. Almost everything we have at this time is commercial aerospace, but we will be working toward that.”

Jabil’s high volume of non-military contract manufacturing is fairly common among the larger contract manufacturers, much of it for overseas customers, although many of the smaller companies have focused their efforts tightly on items in demand by U.S. military contractors. While the vast majority of such contracts are with industry, some contract manufacturers do have direct contracts with the military services and the U.S. Department of Defense (DOD).

“It’s a combination,” says Zentech’s Turpin. “We have two divisions, one with a long history of direct contracts, primarily with the Navy. The other does fewer direct contacts, but in the last five years contracts with the Army at Aberdeen Proving Ground and a blanket purchase agreement with the Navy have increased. But most are with industry,” he says.

“For us, the U.S. government – and certainly DOD – are huge customers with lots of opportunity, predominantly subcontract work for primes, especially as we come out of sequestration, where defense dollars really did shrink a lot,” adds Jabil’s Matthes. “As we move forward under the new administration, there certainly are possibilities for increased defense spending.”

Prime defense contractors are reluctant to surrender their manufacturing capabilities to contract manufacturers.

“The primes have their own manufacturing and to move it out they would have to cut jobs and close factories, which is never palatable for anyone,” Matthes says. “And moving jobs and changing the labor landscape is never popular, even if the work remains in the U.S. It does become popular when the benefits outweigh concerns, so our job is to show where that value is.”

Industry diversity

U.S. military electronics contract manufacturers come in all sizes, representing the full gamut of needs from systems prime contractors and, to a lesser extent, the military services themselves. By focusing their efforts and investments in specialty technologies and workers, they can make themselves too valuable to the defense industry at large to be taken in-house by individual companies.

Representatives of that diversity include: NEO Tech in Chatsworth, Calif., with a focus on advanced IP protections systems, anti-counterfeit protection, and upgrading or replacing out-of-date legacy systems for its aerospace and defense customers.

“The obsolescence of electronic components is a serious challenge in the aerospace and defense markets. Many of the ICs designed into systems have shorter life cycles than the end products in these markets,” according to a company document. “NEO Tech has implemented a supply- chain design for the industry that can support long product life cycles. NEO Tech Obsolescence Mitigation helps customers through the obsolescence process so disruption to ongoing programs is mitigated.”

Many contract manufacturers also are prime contractors themselves, typically on smaller systems for the military services.

One such is Sparton Corp. in De Leon Springs, Fla., which focuses on specialized technologies like embedded systems, RF, lasers, optics, sensors, and robotics for uses as varied as undersea warfare to cockpit controls to satellite communications, as well as aerospace and military printed circuit board assemblies.

Sypris Electronics in Tampa, Fla., a division of Sypris Solutions in Louisville, Ky., offers complete electronic manufacturing services (EMS) from circuit card assemblies to complex box builds and systems integration. Their approach is based on a Lean/Six Sigma, continuous improvement culture cultivated through internal investments.

TeligentEMS LLC in Havana, Fla., another ITAR and ISO 9001 registered contract manufacturer, offers product manufacturing services in a wide range of technologies, including unattended ground sensors, GPS tracking devices, spread spectrum transceivers, and handheld communication devices. The company promotes its capabilities in “technically complex defense projects, combined with strong configuration management capabilities and organizational flexibility.”

Specializing in electronic, electro-mechanical, and electro-optical equipment, the engineering group at TRICOR Systems Inc. in Elgin, Ill., develops complete packages for their customers, from concept to operating manuals. That has included a broad array of products, under contract and for sale directly by TRICOR, from extremely complex to simple test equipment, hardware and software simulators, illuminator systems, and airborne black boxes.

Steady work flow

Commercial and non-military government contracts provide the ability to “even-out the troughs” as defense spending changes from year to year and administration to administration. Homeland security, for example, has grown significantly as a market in which contract manufacturers can find customers and is expected to continue to grow for the foreseeable future. That also applies – primarily in the U.S. – to investments in cyber-related hardware and chem/bio-detection equipment. Globally, industry experts say there has been a stated focus on improving commercial air fleets.

The resulting increased demand for contract manufacturers has led not only to growing competition but also to closer industry oversight.

“For existing EMS companies, if there is more demand for military equipment, most U.S.-built, there will be an uptick of military assembly work in the U.S., but it also is likely to incentivize people to get into the market, either through acquisitions or expansion,” says Zentech’s Turpin. “To an outsider looking in, military electronics may seem pretty simple, but hiring and maintaining a skilled workforce, and maintaining a balance through the peaks and troughs is a different story.”

About three years ago, industry standards group IPC – Association Connecting Electronics Industries in Bannockburn, Ill., came up with a list of trusted sources. “Competition to receive that is brutal,” Turpin says.

IPC describes its origin and purpose on its website: “IPC Validation Services was created to answer a recognized need identified in an industry survey – 75 percent of responding engineers and executive management from OEMs, EMS providers, and industry suppliers viewed a supplier qualification program as vital to their business. For EMS providers and industry suppliers, IPC Validation Services provides the opportunity to become part of a network of trusted sources that industry will look to first and foremost when evaluating existing and potential business partners.

“Participating EMS providers and supplier companies will be audited by IPC Validation Services – the authoritative, objective source for quality conformance and data reporting – to earn certification through the Qualified Products List (QPL) and Qualified Manufacturers List (QML) programs. Once certification is achieved, EMS companies and industry suppliers earn the right to a high level of visibility throughout the industry,” the IPC description reads.

Disruptive technologies

Industry leaders largely agree that coming disruptive technologies, including further advances in miniaturization and evolution of the Internet of Things, also will change the world of electronics contract manufacturing.

“There are many disruptive technologies being developed right now, but nobody knows which ones will actually displace an existing technology in a way that is efficient and effective in meeting military SWaP [size, weight and power] requirements or commercial requirements for quality. Everything active will be disrupted by such things as nanotech, nanostructures, new fabrication techniques other than 3D printing – which itself is changing so fast, making prototyping faster and less expensive, for example,” Zentech’s Turpin says.

“Quantum computing is another that will change everything in the future, if and when they get it nailed down – how manufacturing and product development are done,” Turpin continues. “As relates to EMS companies, all that further underscores and exacerbates the issues surrounding capital investment. These technologies are not cheap and it doesn’t make sense for a prime to invest in such technologies with only relatively small production requirements.”

As more new and disruptive technologies come out, it will be incumbent on the primes to determine which EMS companies have the right people and equipment to build their products and properly use those technologies. Those in charge of contracting complex, high-reliability, military and aerospace assemblies will have to place even more emphasis on who is building those components by fully understanding the problems, challenges, and risks involved.

“If you use the wrong electronics contract manufacturer, no matter how good they may be, if they don’t have the right people or equipment, you could end up killing your own business,” Turpin warns.

Jabil’s Matthes agrees, but does not believe such new developments constitute an immediate concern for military electronics contract manufacturing.

“I see disruptive technologies that will take hold, but not in the short term,” Turpin says. “When you have a force out there fighting, if you are going to change the equipment they are using, you will have to do a lot of testing before making that move, which could take years. It could be a long time before it finds its way into the field to any large extent,” he predicts.

“So in the next few years, I don’t think disruptive tech will be a big changer; it will be more policy, funding, and outsourcing strategies from the primes,” Turpin says. “The big technology trends are going to make their way in, but will require a lot of time to mature and meet pretty stringent reliability and operating requirements. So while those will slowly become part of it, they will be slower to adoption than on the commercial side.”

Government and industry policies

For the military, then, technology changes will not be as important to contract manufacturing as new government policies, especially given the anticipated changes of the new Trump Administration. That also applies to changes in how the military does business, moving more toward autonomous systems, major improvements in battery technology, and overall energy requirements and technologies, with the commercial sector leading the way. Continuing advances in materials science also will shape that future.

Regardless of how quickly new technologies and new demands on contract manufacturing develop, they are on the horizon and primes and contract manufacturers will have to prepare themselves for them.

“Wherever there is change, there is opportunity; it just depends on how well you are positioned to take advantage of it, especially in areas in which you are investing,” says Jabil’s Matthes. “The trick is to invest in the right technologies at the right time.” Jabil’s size will be an advantage that will enable company executives to make strategic decisions rather than betting the company. “The more resources you have, the easier it is to fund that type of research and development.

“We are a Fortune 150 company, about $18 billion in annual revenue and 180,000 employees worldwide,” Matthes says. “That can be an advantage in having a breadth of resources and capabilities, but it can be a disadvantage if a customer fears we’re so large, their work might get lost. But divisionalizing our business units and keeping each customer with its own business unit manager makes the connection much more intimate and gives the feel of a smaller, more nimble company.”

For the next decade, Zentech’s Turpin sees a future depending on increased investment in manufacturing technologies for the military electronics market, in the U.S. and abroad.

“I would love to say increased profitability will mark the decade, but I say that tongue-in-cheek due to the continuing peaks and troughs in mil-aero. Nevertheless, the promise of increased military spending should be good for business,” Turpin says. “Other changes for contract manufacturing to stay in business, especially on the mil-aero side, will mean more new investments in capital equipment. When new technology comes out, you need equipment to work it and inspect it in order to compete.”

While all military electronics contract manufacturing must be done by U.S. companies at plants in the United States, successful competition for customers – primarily commercial – around the world is important to the ability of contract manufacturers to maintain a steady level of business and invest in the appropriate technologies and expertise.

Domestic manufacturing

In one of the first efforts to support advanced domestic manufacturing technologies, the U.S. Congress approved the Revitalize American Manufacturing and Innovation (RAMI) Act in 2014. It was designed to use federal and private matching funds to create an initial network of as many as 15 institutes around the country, pursuing areas of greatest interest to industry.

The resulting National Network for Manufacturing Innovation, renamed Manufacturing USA in 2016, established nine institutes in its first years of operation, with another six planned for 2017. The long-term goal is for as many as 45 public-private partnerships, each with its own technology focus area, but working toward a common goal, to secure America’s technological future through manufacturing innovation, education, and collaboration.

Seen as a major boost for prime and contract manufacturers, the Manufacturing USA network is operated by the inter-agency Advanced Manufacturing National Program Office (AMNPO), headquartered in the National Institute of Standards and Technology at the Department of Commerce. The office is staffed by representatives from federal agencies with manufacturing-related missions, as well as fellows from manufacturing companies and universities, all working with DOD, NASA, the National Science Foundation, and the departments of Energy, Education, and Agriculture.

As it has grown and adjusted to continuing rapid changes in technologies, manufacturing processes, and market demand, but the organization says it has not changed its overarching mission:

  • “to convene and enable industry-led, private-public partnerships focused on manufacturing innovation and engaging U.S. universities; and
  • “to design and implement an integrated whole-of-government advanced manufacturing initiative to facilitate collaboration and information sharing across federal agencies.

“By coordinating federal resources and programs, the AMNPO enhances technology transfer in U.S. manufacturing industries and helps companies overcome technical obstacles to scale up new technologies and products.”

Turpin describes it as the best effort to date to help contract manufacturers, primes, and the military maintain the nation’s technological lead.

Manufacturing goals

“At a macro level, the U.S. does a lot of things extremely well, but one thing it has not done well is have a national manufacturing strategy. Other countries have a very defined national strategy to embrace, enhance, and grow advanced manufacturing in their nations,” Turpin explains.

“The IPC was very active in lobbying Congress to set up the RAMI Act. The advanced manufacturing centers being created throughout the country to focus on building up the next generation of manufacturing in the U.S. should help the military and commercial worlds.”

In a strategic plan for Manufac-turing USA issued in February 2016, Commerce Secretary Penny Pritzker noted that manufacturing “innovation is the lifeblood of our economy, supporting one-third of our economic growth,” from the largest defense and commercial companies to the smallest contract manufacturers and suppliers. “Having a cutting-edge manufacturing sector that remains a step ahead of the global competition is not simply nice to have, it is a ‘must have’ for our country to thrive, now and in the future,” she wrote. “In today’s advanced manufacturing industries – those that make the highest-value goods, pay the highest wages, and export all over the world – product and process innovation are two sides of the same coin. Inventing, designing, making, and improving happen in concert, which requires a collaborative environment that brings together researchers and companies throughout the supply chain.

“America has all the essential ingredients to form innovation ecosystems, including universities and government labs that excel at basic science and technology research, top-flight original equipment manufacturers, capable suppliers, enterprising start-ups, and a new generation of workers,” Pritzker wrote. “The NNMI Program assembles our diverse competitive assets – the people, organizations, and resources – necessary for the United States to stay at the head of the pack in the global race to out-innovate – and out-produce – the competition… [laying] the foundation for American manufacturing competitiveness for generations to come.”

http://www.militaryaerospace.com/search.html?q=Contract+manufacturing%253A+there+when+you+need+it&x=13&y=1

 

 

 

 

 

 

 

 

 

68 years of NATO: 10 things You Might Not Know About the North Atlantic Treaty Organization

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What is NATO NATO Global Interdependence

IMAGE: NATO GLOBAL INTER-DEPENDENCY

“MILITARY TIMES”

“On April 4, 1949, the United States was joined by Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal and the United Kingdom in signing the agreement.

Since then, NATO members have remained committed to the collective defense principle — Article 5 of the treaty — that regards an attack on one member country as an attack on all member countries.

In recognition of the treaty’s anniversary, here are 10 things you might not know about NATO:

10. From 12 to 28 member countries

Over the 68 years since the original 12 countries signed the North Atlantic Treaty, an additional 16 countries have become members in the international agreement. Turkey and Greece were the first additional countries to join in 1952, followed by then-West Germany in 1955. Albania and Croatia are the most recent two countries to join NATO, becoming members in 2009.

9. Separate, yet derived from the United Nations

While NATO is a separate international organization from the U.N., it derives its authority from Article 51 of the United Nations Charter. Article 51 of the charter reaffirms the rights of independent states to individually or collectively defend themselves.

8. NATO and the Warsaw Pact

Originally the Treaty of Friendship, Co-operation, and Mutual Assistance, the Warsaw Pact was created on May 14, 1955, in response to West Germany joining NATO,according to the U.S. State Department’s Office of the Historian. During the Cold War, nearly all of Europe was divided between NATO and the Warsaw Pact, with East Germany joining the Soviet Union for the pact. All former Warsaw Pact countries except for Russia — Albania, Bulgaria, the Czech Republic, Hungary, Romania and Slovakia — have since become NATO members, with East Germany reuniting with the rest of Germany in 1990.

7. Air policing in Eastern Europe

F-15C theater security package arrives in Europe

Pilots assigned to the 159th Expeditionary Fighter Squadron exit their F-15C Eagles after landing at Leeuwarden Air Base, Netherlands, April 1, 2015. The F-15s from the Florida and Oregon Air National Guard are deployed to Europe as the first ever ANG theater security package here. These F-15s will conduct training alongside our NATO allies to strengthen interoperability and to demonstrate U.S. commitment to the security and stability of Europe. (U.S. Air Force photo/ Staff Sgt. Ryan Crane)Photo Credit: Staff Sgt. Ryan Crane/Air ForceNATO allies support member countries in Eastern Europe who do not have their own fighter jets by providing year-round 24/7 airspace defense for Albania, Estonia, Latvia, Lithuania and Slovenia.

6. An integrated command

NATO maintains a permanent, integrated command in which both military and civilian personnel from all member countries work collectively. This includes two strategic commands based in Belgium and the U.S., joint force commands in the Netherlands and Italy, air command in Germany, land command in Turkey and maritime command in the U.K.

5. The only invocation of Article 5

“The Parties agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all,” reads Article 5 of the North Atlantic Treaty.

If a NATO member or members invoke Article 5, all members will assist the attacked party, which includes the use of armed force. The only time that Article 5 has been invoked was in response to the Sept. 11, 2001, attacks in New York City and Washington. In addition to military assistance in Afghanistan, NATO allies assisted with Operation Eagle Assist and Operation Active Endeavour. Eagle Assist ran from October 2001 to May 2002, consisting of NATO E-3 AWACS assisting with airspace defense and security over the U.S. Active Endeavour involved maritime patrols in the Mediterranean, with the goal of preventing movement of weapons of mass destruction and terrorists.

4. New NATO members around the corner?

Four countries want to join NATO: Bosnia-Herzegovina, Georgia, Montenegro and the former Yugoslav Republic of Macedonia all aspire to join the treaty.

“Any European state which can contribute to the security and principles of the Alliance can be invited to join. It is up to the country concerned to decide if it wishes to seek membership,” according to NATO. The allied members assess NATO applicants and require “a wide range of political, economic and security reforms” to be implemented before they can join.

3. International partners

Spanish forces conducting a UN peacekeeping mission in Lebanon.

Spanish forces conducting a UN peacekeeping mission in Lebanon.Photo Credit: Hussein Malla/APNATO maintains a relationship with many other nations and international organizations. The U.N., the European Union and the Organization for Security and Co-operation in Europe maintain strong relationships with NATO. Since 2005, the African Union has received support from NATO. Other initiatives such as the Istanbul Cooperation Initiative, the Mediterranean Dialogue and the European-Atlantic Partnership Council have fostered relationships with non-members in Europe, North Africa and the Middle East. Additionally, NATO maintains relationships with its Partners Across the Globe. These include Afghanistan, Australia, Iraq, Japan, Pakistan, South Korea, New Zealand and Mongolia.

2. Supreme Allied Commanders always American

Dwight  Eisenhower

General Dwight D. Eisenhower, Supreme Allied commander, leaves his closed staff car behind because of the mud and boards a jeep in Europe to start on his recent tour of the fighting front in November 1944.Photo Credit: APThe Supreme Allied Commander, or the Supreme Allied Commander Europe, is the military head of NATO, serving as the head of Allied Command Europe and the head of Allied Command Operations. This position has always been held by American generals, with the first being future president, then-Army Gen. Dwight D. Eisenhower. The current commander is Army Gen. Curtis M. Scaparrotti.

1. So who is paying for NATO?

German Chancellor Angela Merkel, President Donald Trump

President Donald Trump meets with German Chancellor Angela Merkel in the Oval Office of the White House in Washington, Friday, March 17, 2017.Photo Credit: Evan Vucci/APPresident Donald Trump has made headlines both during his campaign and once elected president, asserting his belief that NATO allies need to pay more. While Trump has been criticized for his words regarding the alliance, he is not the first president to highlight the need for NATO allies to pay more.

NATO allies are meant to spend two percent of their gross domestic product on defense. In 2016, only five of the allies — the U.S., the U.K., Greece, Estonia and Poland — were at or above the minimum spending target. The U.S. spent 3.61 percent of its GDP on defense in 2016. Canada, Slovenia, Spain, Belgium and Luxembourg all spent the least, respectively, with Luxembourg putting 0.44 percent of its GDP toward defense.

President Obama called on NATO allies to contribute their share as well, according to the Washington Post.

“[E]very NATO member should be contributing its full share — 2 percent of GDP — toward our common security, something that doesn’t always happen,” said President Obama during a April 2016 speech in Germany. “And I’ll be honest, sometimes Europe has been complacent about its own defense.”

In addition to President Obama, President Trump’s campaign opponent, former Secretary of State Hillary Clinton has also raised the issue of NATO members spending more on defense.”

http://www.militarytimes.com/articles/68-years-of-nato-10-things-you-might-not-know-about-the-north-atlantic-treaty-organization

 

Frustrated by Industry Behavior, Defense Officials Put CEOs on Notice

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Kickthemallout dot com

Image:  Kickthemallout.com

“NATIONAL DEFENSE MAGAZINE”

“Defense contractors can expect the Pentagon to take increasingly tough negotiating positions as future procurements move forward.

That was in a nutshell the message delivered by senior officials last week at an industry conference in Washington, D.C.

In extensive comments to an audience of executives and investors, Director of Defense Pricing Shay Assad and F-35 Program Executive Officer Lt. Gen. Christopher Bogdan made it clear that they intend to push contractors into a corner.

Defense companies are in the best financial shape in years, but little of that windfall is trickling down into military programs, they complained. The government will seek to regain leverage and press contractors to “bring down the cost of DoD weapon systems,” Assad said at the annual McAleese Credit Suisse defense programs conference.

Government buyers and contract negotiators are encouraged by the Trump administration’s hard-line business approach, Assad said. “When you get somebody who is president of the United States and who understands precisely what you do for a living … This is terrific from my point of view.”

Assad for years has been a thorn in the side of Pentagon contractors as his office oversees pricing negotiations. He suggested the Defense Department is unhappy with the attitude of many defense companies that put profit ahead of the customer’s interest. His priorities going forward: Getting better deals for the Defense Department and looking for ways to increase competition in the market.

The F-35 joint strike fighter, the Pentagon’s largest weapons acquisition, is poised to become a litmus test for the new approach to negotiating with industry. “I am excited about the opportunities,” Assad said.

There is no one specifically to blame for the F-35 being far more expensive than anticipated, said Assad, but he believes that from now on, the Pentagon will look to  manufacturers to deliver cost reductions.

Executives from prime contractor Lockheed Martin have insisted that as soon as production ramps up, the unit price of the aircraft will drop. Assad is skeptical, however. “It’s not as simple as, ‘We increase the rate and that reduces the price,’” he said. “It’s not what this is about. This is about reducing the cost of building the product. We’ll get the inherent benefits of rate as we go along.”

As the Pentagon and Lockheed prepare for the next round of low-rate production contract negotiations, there are concerns that suppliers are not doing everything they could be doing to reduce the cost. “There is a lot of room for improvement at Lockheed Martin and the supply chain,” said Assad. One central question the government will ask is, “What should we be paying for the JSF?” he said. “We need to look deep. … We know what we’re paying. But what does it cost and, more importantly, what should it cost? I think you’ll see a focus on that over the next year.”

The Pentagon will be asking contractors to squeeze savings from their lower-tier suppliers, Assad and Bogdan noted. That will require a complex probe into how each component of the F-35 is made, a process they describe as a “delayering” of the supply chain. Under this approach, a company could consolidate subcontractors that do duplicative work, for instance. For every supplier, there’s additional administrative costs that are passed on and adds to the price of equipment.

Assad said the industry has to step up. “This is no secret to the investor,” he said. “The defense industry writ large in the last five years bought back $85 billion of their own stocks. That’s a pretty big number.” The Pentagon expects the industry to pour some of those returns into innovative technology for the military, he added. “We’re looking to find ways to make companies make meaningful investments.”

In conversations with leaders from non-defense commercial firms, Assad has been impressed by the “huge investments they make in areas so they can improve their market share. We don’t get a lot of that in this industry. And so we’re looking to find ways to reward companies that are stepping up to the plate.”

Assad took a swipe at the F-35 industry team for having suggested that the government co-fund a new round of “affordability” initiatives. In the commercial sector, customers do not give companies money to reduce cost, he said. “We’re looking for a sense of urgency. And frankly we want to reward the companies that do [these investments], and distinguish between those that do and those that don’t.”

He cautioned that he is not proposing that the government “suppress profit margins.” The Pentagon wants companies to be financially successful, he said, but needs the industry to help reduce prices.

In the F-35 program, Lockheed and top subcontractors BAE Systems and Northrop Grumman in 2014 funded a $170 million project called “Blueprint for affordability” to squeeze savings from the manufacturing process. Assad said that effort “has been modestly effective” but more is needed. Of a program that is forecast to produce at nearly 3,000 airplanes, “we only bought 400,” so there are billions of dollars in savings still to be extracted.

“We know companies are all trying to protect the interests of shareholders. And we respect that. We expect them to. But we are trying to protect the interests of the United States taxpayers and war fighters. Sometimes those two interests collide. And I don’t want to give any impression that somehow the JSF negotiation process is different than what we’re doing every day with other companies.”

The Pentagon intends to drive a hard bargain in other upcoming programs like the B-21 long-range bomber, the T-X trainer aircraft and the next-generation intercontinental ballistic missile, said Assad. “We should expect companies to be willing to invest in cost reduction. I’m not talking about buying in. I’m talking strictly making investments to reduce cost.”

Assad said he does not buy the industry’s argument that they are hesitant to invest because defense funding is unstable. And he rebuffed industry assertions that defense systems are expensive because red tape adds cost. By some estimates, defense-unique procurement regulations account for 20 to 30 percent of the cost of a system. “We hear a lot about the cost of doing business with DoD, a lot of angst and arm waving,” but Assad said he has yet to see reliable data that proves that point.

“Every time we go through these exercises nobody shows us the money.” In one case, he heard from a contractor who claimed the “earned value management” accounting system that DoD requires adds too much cost. When he asked for data, he said, the company came back 18 months later and the answer was that two additional people were needed to run EVM. “It is the cost of doing business, there’s nothing there, it’s all hypothetical discussion and no real data.”

Bogdan said the F-35 program is progressing and he is satisfied for the most part, except for the price. He recently concluded that there is more room for savings and lowered the bar — from an $85 million per airplane price tag by 2019 to $80 million by 2020.

“We have over 200 operational airplanes in the field. But the elephant in the room is affordability.” The $80 million goal is for an F-35A model, including the engine and contractor fee. said Bogdan. “That’s the target.”

Bogdan’s office will be negotiating F-35 production lot 11 this summer with Lockheed Martin. “What I see is a lot more has to be done to get cost out of the airplane.” Bigger production runs and multiyear contracts will help, but he wants the industry to take more aggressive actions now.

With a supplier base of 1,300 vendors, “we have to figure out how to delayer the supply chain. There is a lot to be gained in delayering 1,300 suppliers. I don’t disagree with Mr. Assad that there are things that industry could be doing today to drive cost out of this airplane that they ought to be doing themselves. If not, the government is going to help them do it.”

The message from Assad and others is that “we have to roll up our sleeves,” said Bogdan. “Just because I know what it costs doesn’t mean I should be satisfied.”

Like Assad, he seemed unimpressed by the Blueprint for Affordability initiative. “It was OK, just OK,” said Bogdan. “We took the low-hanging fruit. Industry invested $170 million in cost reduction initiatives. In my mind they didn’t invest in anything. It was money they didn’t have in their pocket for one to two years. They get paid back and get a premium. Savings were OK, but not as much as we thought we could have.”

The industry team has proposed a second phase of the Blueprint for Affordability. Initially the companies asked DoD to pitch in $100 million but the JPO said no. “As we move forward, we are looking for deeper savings, getting below the lower-tier suppliers,” said Bogdan. “I have to figure out how to energize the supply chain from the ground up, not from the top down.”

Lockheed Martin’s F-35 manager Jeff Babione, told reporters last week at a news conference that the company was taking significant actions to bring down costs. “Since the first LRIP we have reduced the price by 62 percent,” he said. “We are on a trajectory to get to $85 million in 2019. Between lots 11 and 14 the production will accelerate, which is essential to cost reduction, he said. “This is the opportunity to use economies of scale, apply additional pressure to reduce cost. This is extremely important, so we can procure parts at more cost effective rates. If we don’t have that ramp up the cost flattens.”

Is the $80 million goal achievable? “It’s all within the art of the possible,” said Babione. But he stressed that it’s mostly predicated on the number of airplanes ordered. “This allows us to plan better. I can buy 300 airplanes worth of stuff upfront. It’s like going to Costco. You get economies of scale.”

The details of the second phase of the Blueprint for Affordability are still being hashed out, said Babione. “We have a lot of great ideas. It will be about the same level of investment, $170 million, and we’ll be able to get billions out of the program.”

http://www.nationaldefensemagazine.org/blog/Lists/Posts/Post.aspx?ID=2463

Veteran Employment Bill Passes Senate

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“MILITARY .COM”

“Through the U.S. Department of Labor, the HIRE Vets Act would allow businesses to display “HIRE Vets Medallions” on products and marketing materials.

These medallions would be awarded as part of a two-tiered system — Gold and Platinum — associated with specific hiring and retention goals each year.

Rep. Paul Cook, R-Apple Valley, announced Monday that the U.S. Senate has passed his bill, HR 244, the Hire Vets Act of 2017.

The bill already passed the House of Representatives in February. Cook had reintroduced this bipartisan bill earlier this year. It was introduced last Congress and passed the House with unanimous support, but was unable to pass the Senate before the end of the year. The bill now heads back to the House for final passage as the Senate made minor technical changes to it.

This legislation would promote private sector recruiting, hiring and retaining of men and women who served honorably in the U.S. military through a voluntary and effective program, according to Cook’s office.

Specifically, it would create an awards program recognizing the meaningful and verifiable efforts undertaken by employers to hire and retain veterans. The program is designed to be self-funded.

“The HIRE Vets Act is an opportunity for Americans to see which companies truly live up to the employment promises they make to veterans,” Cook said. “Veterans who serve this country honorably shouldn’t struggle to find employment, and this bill creates an innovative system to encourage and recognize employers who make veterans a priority in their hiring practices.

“I’m grateful this bipartisan bill has passed so resoundingly in both the House and the Senate. I expect it to quickly receive final approval from the House and look forward to it being signed into law soon.”

The program also establishes similar tiered awards for small and mid-sized businesses with less than 500 employees. To ensure proper oversight, the Secretary of Labor would be required to provide Congress with annual reports on the success of the program with regard to veteran employment and retention results.

A member of the House Natural Resources, Armed Services, and Foreign Affairs Committees, Cook served as an infantry officer and retired as a colonel after 26 years in the U.S. Marine Corps. During his time in combat, he was awarded the Bronze Star and two Purple Hearts. He represents the 8th District, which includes all of the High Desert, in the House of Representatives.”

http://www.military.com/daily-news/2017/03/28/veteran-employment-bill-passes-senate.html

Veterans Administration Wants Veteran-Owned Businesses Offering Cyber Security Services

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“FIFTH DOMAIN CYBER”

“The Department of Veterans Affairs is exploring the availability of verified service-disabled veteran-owned small businesses and veteran-owned small businesses that are capable of providing enterprise network defense support

The VA Technology Acquisition Center seeks interested parties that could perform key functions to support overall VA information security and privacy.

In a request for information posted to FedBizOpps on March 22, the VA Technology Acquisition Center seeks interested parties that could perform key functions to support overall VA information security and privacy postures; align VA security and privacy policies with federal guidelines and best practices; enable VA business processes through security integration; and promote a secure environment for employees and contractors.

Services expected would include project management, reporting and data calls, threat intelligence, security analysis, deep dive analysis, forensic analysis, security configuration services and research and development. 

Responses are due to George Govich at George.govich@va.gov no later than 12 p.m. EST on Friday, March 31.

The entire RFI (and the required summaries and performance of work statement for interested contractors) can be found on FBO.gov.”

http://fifthdomain.com/2017/03/27/va-wants-info-on-vets-offering-cybersecurity-services/

 

How Russian Hackers Will Attack the US Next

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Russia Hack the hackers

RZOZE19/SHUTTERSTOCK.COM

DEFENSE ONE”

“The U.S. needs to be planning now how it will respond.

The question is not if Russia will conduct another major cyberattack on the U.S., but when.

Russia has been the subject of much American press speculation this spring, as questions and suspicions swirl regarding its involvement in alleged hacks during the U.S. presidential election. While the details of these specific attacks remain unclear, what is clear is the danger posed by the superpower’s well-established hacking prowess.

As such, America needs to be planning now how it will respond. In 2015, cyberthreat firm FireEye alleged Russian nexus-hackers had caused power and energy outages across Ukraine, impacting thousands of citizens. No other country has been so publicly accused of conducting a cyber-to-conventional attack (a cyberattack with visible, physical consequences). Russia leadership has also publicly prioritized its information warfare and cyberweapons. “Information is now a species of weapon,” wrote Russian major general Ivan Vorobvev in 2013.

As proven by the alleged hacking activities this U.S. presidential election, the fear of information warfare is very real. However, the US must also remain vigilant about cyber-to-conventional attacks; many of our critical infrastructure networks are littered with vulnerabilities, and consumer technology is moving more and more citizens into the line of battle.

Because cybertools have become so accessible, it’s unlikely even a limitless defense budget could stop every attack. With this in mind, response must be the key priority. Based on my qualitative analysis of Russia’s previous military motives, strategies and tools, any Russian attempt to exploit US cybervulnerabilities will most likely target the US’s communications and IT critical infrastructure.

Intensifying the Fog of War

Russia is unlikely to target other industries for a number of reasons. Historically, it has avoided attacks that could trigger a full-scale military response, preferring to intensify the fog of war and cause maximum confusion. Within this strategy, Russia is unlikely to target such important U.S. sectors as chemical, nuclear, public health, energy, or defense industries. Russia is also unlikely to seriously attack the U.S. financial, agriculture, or manufacturing industries, which could anger U.S. allies and damage Russia’s growing role in the global economy.

But attacks on communications and IT infrastructure could take several forms.

Targeting alert systems would prevent U.S. monitoring systems from catching intrusions fast enough. This could in turn precede tactics with more immediate conventional consequences. As an example, conducting denial-of-service attacks against central IT networks could cripple government operations, disrupting service for thousands of phone customers or severing internet access for millions of consumers. If timed well, a communications attack during wartime could disrupt national emergency alert services. This includes 911 networks and emergency broadcast stations. During a national disaster, this would have devastating consequences.

Russia could also target physical parts of national infrastructure managed (and defended) by private companies, including fuel centers, power sources, and trucks that transport IT components. These industries also rely heavily on the internet of things, with vulnerabilities in cloud and mobile computing.

The U.S. is certainly aware of these risks. Following the 2013 National Infrastructure Protection Plan, national leaders assessed all critical infrastructure for vulnerabilities, and proposed defensive plans. As a result, industry departments have started performing a number of routine checks, including information sharing, monitoring, and backing up essential information.

However, budgetary gaps remain a huge problem. The Obama administration asked for only $19 billion (yet to be received) for its 2017 Cyber Security Budget. While the Trump administration has included huge proposed increases for cybersecurity investment in its 2017 budget (including $61 million for the FBI to combat criminal encryption tools), the private sector spent approximately $80 billion on cybersecurity five years ago. Of note, none of these federal government cybersecurity budgets were, or have been, approved.

Hacking the Hackers

As a result of these budget constraints and realities, it’s crucial the U.S. focus its efforts strategically. As a minimal option, the U.S. could respond to a Russian cyberattack by conducting simple cyberintrusions against Russian internet networks, government websites, and communications services, causing disruptions and damaging Russia’s security credibility. For example, using National Security Agency’s TreasureMap tool, which tracks all global connections to the internet, the U.S. could also place malware in these networks for future intelligence gathering.

A more aggressive response would involve conducting operations against Russia’s own critical infrastructure networks. By inserting logic bombs into Russian networks (tools that self-destruct once within systems), the U.S. could potentially damage the Russian economy. These same tools can be leveraged to cause even more damage if used to target dams, air traffic control towers or other infrastructure. Such actions would send a grave message, but the risk of escalation would be higher as well.

The most aggressive response would involve directly attacking Russian military targets by shutting off power at a nuclear facility or an airfield. Many Russian industrial networks run on Windows XP, a very old system, while remaining connected to the internet. Not only are these systems extremely vulnerable to attack, the U.S. has already shown it has the ability to do so. In November 2016, the U.S. reportedly penetrated Russian military systems and left behind malware, to be activated in the case of Russian interference of U.S. elections.

The problem with these cyberattacks is that the potential for counter attacks is infinite. Russia attacks the U.S. communications grid. The U.S. does the same. And on it would go, potentially until a physical war was started.

In 2016, Christopher Painter, the U.S. State Department’s coordinator for cyber issues, said “cyber activities may in certain circumstances constitute an armed attack that triggers our inherent right to self-defense as recognized by Article 51 of the UN Charter.” This means the U.S. could legally respond to a Russian cyberattack with conventional military forces, in an effort to deter Russia from escalating further.

But ultimately, there’s a reason the Obama administration referred to the plethora of powerful U.S. and Russian cybercapabilities as a digital arms race. The cycle is perhaps best described as an endless series of advantages, with Russia and the U.S. continuing to make each other more and more uncomfortable. And now Trump’s administration will need to figure out just how uncomfortable he is willing to get.”

http://www.defenseone.com/threats/2017/03/how-russian-hackers-will-attack-us-next/136469/?oref=d-river&&&utm_term=Editorial%20-%20Early%20Bird%20Brief

Congress Seeks Pentagon Watchdog Probe of Aircraft Parts Supplier

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“THE PROJECT ON GOVERNMENT OVERSIGHT”

“This week, a House member called on the Department of Defense Inspector General (DoD IG) to investigate an aircraft parts supplier suspected of gouging the Pentagon for many years.

TransDigm, through the dozens of US and European aircraft part manufacturers it has bought up over the years, provides parts used on nearly every commercial and military aircraft in service today.

Representative Ro Khanna (D-CA), a member of the House Armed Services Committee, sent a letter to Acting DoD IG Glenn Fine requesting a probe into “potential waste, fraud, and abuse” by TransDigm Group, a Cleveland, Ohio-based conglomerate with a massive footprint in the aviation industry.

Most of those parts are proprietary products for which TransDigm owns the design or is the sole supplier.

Khanna is concerned that TransDigm is using its market dominance to take advantage of its customers, including DoD. Recent stories in the financial press have highlighted the company’s tendency to dramatically raise the price of parts after acquiring the manufacturer. For example, Business Insider reported that TransDigm raised the price of Harco Laboratories’ cable assembly 352 percent (from $1,737 to $7,864) after it bought the company in 2011, and two years later raised the price of Aerosonic Corporation’s vibration panel 300 percent after acquiring the company. Khanna’s letter contains other examples of similar post-acquisition price hikes.

TransDigm’s pricing practices have a direct impact on taxpayers. DoD, which accounts for roughly 30 percent of TransDigm’s sales, once paid about $5.3 million more than the fair and reasonable price for some of the company’s parts, according to a 2006 DoDIG audit.

In addition, Khanna asked the IG to look into whether TransDigm “has been operating as a hidden monopolist” by using various methods to conceal from DoD contracting officers that it is a sole-source supplier. For example, TransDigm will sometimes falsely create the appearance of a competitive bid by selling parts through other companies, known as exclusive distributors. The DoD has long known about the perils of buying parts through exclusive distributors. A 2008 IG audit advised the government to avoid this type of purchasing arrangement, warning that it “adds a duplicate layer of administration and shipments to the traditional procurement process” and prevents the government from being able to negotiate fair prices and obtain best value.

Khanna also noted that 12 TransDigm subsidiaries failed to disclose the identity of their corporate parent in the System for Award Management (SAM) contractor registration database. He reminded the IG that posting misleading or inaccurate information in SAM carries serious criminal, civil, and administrative penalties. He further noted that following publication of the inaccurate disclosure, the company amended the SAM data.

Khanna’s letter should resonate with a new president who is not shy about expressing his displeasure with wasteful defense spending. In December, then President-elect Trump took to Twitter to blast the spiraling costs of Boeing’s 747 Air Force One upgrade and Lockheed Martin’s F-35 stealth fighter, both of which use TransDigm parts.

We hope the letter puts pressure on DoD to probe TransDigm’s practices and spurs DoD and Congress to make reforms to the acquisition system. Over the years, the Project On Government Oversight (POGO) has repeatedly documented the problems in that system, which mainly boil down to rules and practices that hamstring the government’s ability to negotiate fair and reasonable prices and get the best deals for taxpayers.

POGO received the following comment from TransDigm:

TransDigm has been and remains committed to conducting business within the framework of the applicable laws and regulations across all areas and geographies in which we operate and we strongly disagree with recent allegations to the contrary. We remain steadfast in our commitment to supplying products that support the critical functions of our armed forces as well as commercial airplanes in use around the world.”

http://www.pogo.org/blog/2017/03/congress-seeks-pentagon-watchdog-probe-aircraft-parts-supplier-transdigm.html