Boeing originally expected to start delivering its latest batch of F-15EX Eagle II fighters to the Air Force in December 2022, the federal watchdog wrote in its annual assessment of weapon systems, released Thursday.

Several production problems delayed the delivery of those six fighters in lot 1B, GAO said. Those delays were mainly caused by what office referred to as “supplier quality problems related to a critical component in the forward fuselage assembly that ensures safety of flight.” The report did not provide further details on that component, but said quality problems were fixed by the time Boeing built the seventh and eighth F-15EXs.

Boeing also mis-drilled windscreen installation holes on four F-15EXs in this lot because the company used tooling with a design error, GAO said. Program officials told auditors the problem was caught before more planes were mis-drilled, and that Boeing will redrill the holes on affected aircraft before starting production on the second lot of fighters.

Boeing declined to comment to Defense News on the quality issues highlighted in GAO’s report, and referred questions to the Air Force. Defense News has reached out to the service for comment.

Boeing spokeswoman Deborah VanNierop confirmed Friday that the only F-15EXs so far delivered to the Air Force are the two test aircraft that were delivered in spring 2021, which were considered lot 1A.

More than two years later, the service is still waiting for the next batch of fighters.

The F-15EX is an upgraded version of the fourth-generation Eagle fighter, with advanced avionics such as fly-by-wire controls and improved electronic warfare capabilities.

But those problems are having ripple effects on the F-15EX program, GAO said. Each lot 2 fighter is now delayed by two months as a result of the earlier lot’s problems, the report read, and delivery schedules are in danger of slipping further.

The report noted that program officials thought Boeing could deliver the six F-15EXs in that lot between May and July, with two delivered per month. But Boeing and the federal Defense Contract Management Agency warned that more delays could occur, GAO said.

Boeing’s analysis predicted it would be unable to deliver the first fighter in this batch until July, and the second in August.

The Defense Contract Management Agency concluded the last deliveries in the lot would probably not happen until September because of the problems that cropped up so far.

GAO said that if delivery of these planes is delayed beyond July, it will be tough to meet planned deadlines in 2023, including the declaration of initial operational capability in July and full-rate production in October.

Boeing referred Defense News’ questions on the fighters’ schedule to the Air Force.

GAO also warned that cybersecurity vulnerabilities remain the F-15EX’s primary vulnerability. The fighter’s design was derived from versions of the F-15 that were sold to foreign militaries, GAO said, and weren’t designed to meet the Air Force’s own cybersecurity requirements.

Program officials told GAO that it is working through the Defense Department’s six-phase process for assessing cybersecurity vulnerabilities on the F-15EX, with the first four either already done or expected to be finished in early 2023. The program expected to finish the final two phases on the aircraft delivered in lot 1B.

The Air Force is now planning to buy 104 F-15EXs, and requested money to buy 24 of the fighters in the proposed fiscal 2024 budget.

The Air Force last year moved to scale back its F-15EX procurement in the FY23 budget, from the original 144 to 80. This was intended to free up funds for higher priority programs, GAO said.

The watchdog warned that a lack of enough procurement funding for the F-15EX could cause the program to be curtailed slightly below that already reduced 80. A June 2022 cost estimate showed the Air Force wouldn’t have enough money for 80 fighters, and only be able to buy 78, GAO noted.

Air Force Secretary Frank Kendall said in a March budget briefing that the service had decided to partially reverse its decision to cut the F-15EX procurement to 80, bringing it back up to 104.

Increments 2 and 3 of the Next-Generation Operational Control System, dubbed OCX, were supposed to be delivered in January, but technical discoveries during testing delayed the effort and caused the program to re-evaluate its schedule.

According to a June 8 Government Accountability Office report, prime contractor Raytheon’s delivery delay will push the initial capability date to next spring. A spokeswoman for Space Systems Command, the Space Force’s acquisition arm, told C4ISRNET in a June 8 email the service is awaiting approval of the new schedule.

Raytheon has incurred $123 million in additional costs as a result of the delays, SSC said, citing a Materiel Inspection and Receiving Report the company filed with the Defense Department.

The program is at risk of further delays due to “funding challenges,” GAO said. In fiscal 2023 Congress cut $75 million from OCX that was meant to be used to pay for more contractor support for Blocks 1 and 2. The service’s fiscal 2024 budget includes $200 million for the effort.

The Space Force’s constellation of GPS satellites provides navigation support to military and civilian users. It features older spacecraft as well as newer ones, and the most recent version, GPS III, is more accurate and resistant to adversary jamming attempts.

OCX was designed to operate the entire GPS fleet — old and new. The first capability increment was delivered in 2017, and brought some hardware, software and cybersecurity improvements. The system, dubbed Block 0, can support GPS III launches, but doesn’t have the ability to operate the in-orbit satellites. Blocks 2 and 3 will bring that ability along with better performance and protections against cyber threats.

Schedule uncertainty

Schedule uncertainty has been a persistent challenge for OCX, which was supposed to be fielded in 2016.

The program’s 2012 cost estimate of $3.7 billion has been revised several times, growing to $4.3 billion in 2015 and $6.2 billion in 2018. The first cost increase triggered what’s known as a Nunn-McCurdy unit cost breach, requiring the Defense Department to develop a new cost and schedule baseline in 2016.

Speaking earlier this year, Space Force acquisition executive Frank Calvelli called it one of the service’s “long-standing troubled programs.”

GAO’s report sheds some light on its most recent challenges, caused largely by “overlapping efforts” to test various satellite capabilities and integrate software.

“Because of the risk that not all requirements would be complete by delivery, the program modified the schedule to allow more time for software testing and addressing deficiencies, as well as developing technical manuals and training operators,” the report states.

To mitigate that risk, the program is honing in on critical software deficiencies and plans to award Raytheon a contract modification to address continued deficiencies, according to GAO.

Beyond testing, SSC is concerned about the strain on GPS operators during the period between system delivery later this year and initial operations next spring.

“During this time, the operators need to complete training and assist with transition activities, while controlling the GPS constellation using the existing system,” GAO said. “Space Force officials stated that they are training operators on the current system and are working with the program office to schedule events. But, they told us that they remain concerned about the ability of trained operators to support the OCX events as scheduled.”

Common European acquisition processes often move very slowly, even by U.S. standards. Procurement issues are compounded by inconsistent demand signals from governments across Europe. Once defense equipment is procured, the interoperability of that equipment is sometimes questionable.

Limitations in national defense budgets mean that governments are constrained in their ability to throw money at any of these problems.

Beyond the borders of Europe, industrial base readiness is also an increasingly salient issue. Refilling the stocks of munitions and other systems supplied to Ukraine in its self-defense against Russia’s invasion has taken on new urgency as stocks across the world dwindle and the West works to meet Ukraine’s demand.

In the United States, challenges in increasing the levels of defense production link to an industrial base that has been incentivized over the decades to prioritize efficiency over maintaining slack, difficulties in recruiting new factory workers in an economy with a low rate of unemployment, and supply chain limitations compounded by a lack of transparency into the lower tiers.

The idea of “ally-shoring” or “friendshoring” has frequently been offered as a solution. Under this model, the industrial base of the U.S. and its allies may be understood as a joint asset to supply capability as needed and to backfill what has been provided to Ukraine, or to build capability for other potential contingencies.

Building out unused capacity in manufacturing plants for new production is significantly cheaper and easier than building new factories, meaning that output could be available faster. During World War II, the “arsenal of democracy” took five years to engage — and defense manufacturing has only become more complicated since those days.

European nations make up many of the United States’ closest and longest-standing allies, so the European defense-industrial base is a natural place for the U.S. to look for refilling stocks if any excess capacity exists. However, even if it does, the lack of coherence in the European defense-industrial base creates a challenge for a cooperation strategy that extends beyond the standard intellectual property concerns and export control policies.

National interests continuing to prevail when it comes to defense production will limit the opportunities for increased cooperation useful for defense-industrial resilience, both on the European continent and across the Atlantic. And given that this cooperation may be necessary to develop and produce the capabilities needed for any future warfighting success, this represents a strategic risk.

Rather than waiting until the need is urgent — when there is a conflict underway — working together now can build the process expertise and communication pathways that support successful cooperation. The proverb “the best time to plant a tree was 20 years ago, and the second best time is now” applies to defense-industrial collaboration as well.

There are certainly examples of defense-industrial cooperation in Europe today. The question is whether these are seen as individual projects or part of a pathway toward something new.

While NATO or the European Union working to enhance defense-industrial cooperation as an alliance may yield the greatest results, even bilateral agreements can help build bridges. Nations dissatisfied with existing defense-industrial policy approaches can work to bridge national boundaries and embrace an evolution toward a more integrated strategy, with a specific focus on building on success over time.

A “crawl, walk, run” approach focused on developing cooperation will yield better results than one starting with the most complex problems, even if they are urgent.

Initially, nations could cooperate to fill specific and pressing gaps, such as munitions for legacy systems, including 155mm howitzer shells. These systems have a high degree of standardization and are not subject to some of the most stringent export controls.

An intermediate and more complicated step could be designing the manufacturing enterprise for a weapon system that spans national boundaries and is tuned to provide manufacturing surge capacity, to enhance resilience. This will require industry and governments to work together — for governments to understand that surge capacity is something that they have to invest in as a distinct capability.

A larger vision of integration would be the international procurement of interchangeable defense systems across a network of allies and partners. This may prove to be a generational political and economic challenge, but building that capability and capacity to cooperate will make Europe and the United States more responsive and resilient to existing and future threats.

Cynthia Cook is director of the Defense-Industrial Initiatives Group and a senior fellow with the International Security Program at the Center for Strategic and International Studies think tank.

The memorandum of understanding, signed in Mumbai where Mazagon is based, happened as German Defence Minister Boris Pistorius made a stop there at the end of his weeklong visit of allied nations in the region.

His presence in official photos from the event suggests Germany’s candidacy for an eventual award of six new submarines, reported by Reuters to be worth $5.2 billion, is far along, according to analysts.

Wednesday’s agreement between the German and Indian businesses is said to cover activities worth €7 billion (U.S. $7.5 billion), according to German newspaper Frankfurter Allgemeine Zeitung.

On the table is the “intended construction of conventional, air-independent propulsion submarines,” TKMS said in a statement.

Executives were keen to stress that the German vendor’s role would lie in providing engineering, design and consultant services, with manufacturing and delivery falling entirely to Mazagon. The approach is meant to comply with India’s policy of mandating that military goods be domestically produced.

The division of labor also befits TKMS, whose German-based shipyards are busy making submarines for the sea services of Germany, Norway, Israel and Singapore, said Johannes Peters, who heads the Center for Maritime Strategy and Security at the Institute for Security Policy of Kiel University.

A prospective multibillion-dollar deal for submarines in India makes the German shipbuilder more attractive for investors, as the ThyssenKrupp conglomerate seeks to sell the business in an effort to consolidate and focus on more predictable operations, Peters said. The shipbuilding business is famously fickle because of its intensive capital needs, financial guarantees and long lead times, he added.

The nine-month study will allow Naval Group to examine principal use cases and develop system architectures for an Unmanned Combat Underwater Vehicle, or UCUV. Its missions would include intelligence, surveillance, and reconnaissance (ISR), with the idea of helping the French military “master” the seabed, according to Naval Group.

The Armed Forces Ministry’s procurement office, the Direction Générale de l’Armement, awarded the contract on May 4, per a company statement.

The study comes as Naval Group prepares its extra-large unmanned underwater vehicle (XL-UUV) demonstrator for sea qualification this summer. The company began developing the system in 2016 and first unveiled it in 2021.

Once qualified, Naval Group will use the XL-UUV to test various “technological bricks” in a short cycle, the company said. One such brick could be the Controlled Decision-Making Autonomy (ADC) capability, developed with France’s national aerospace research center ONERA to be an “onboard brain for drones.”

“This first UCUV project paves the way for additional work to quickly develop the key technological bricks of such a drone, in relation to the development of the first demonstrator,” Naval Group said in the release.

The company did not respond to questions regarding the cost of the study before this article’s publication.

Seabed warfare has become a dominant topic of conversation in Europe, especially for the French military. Paris was the first government to issue a dedicated military strategy for the ocean floor domain in early 2022, and a portion of the nation’s €10 billion ($10.7 billion) dedicated to innovation in the proposed 2024-2030 Military Program Law will focus on the topic. A key goal for Paris is to develop an underwater drone that can reach depths of 6,000 meters.

The lower house of parliament, the National Assembly, voted on Wednesday to approve the six-year programming law, known as the Loi de Programmation Militaire (LPM) in French, by a vote of 408-87. The bill now goes to the Senate as the upper chamber for a vote.

Two ways the Pentagon can provide that steadier business include multiyear procurements for weapons and greater use of predictive maintenance, Brown said during a discussion with the Mitchell Institute for Aerospace Studies.

Brown said the military has focused too little keeping a steady flow of munitions production and procurement. “In some cases, because you don’t have a threat on your doorstep, munitions aren’t maybe high on our priority list,” he said.

But with the threat now posed by China and Russia, “that’s different now,” he added.

“This is an area that we’ve got to continue to pay attention to, to ensure that we bring [munitions] along as well,” said Brown, who President Joe Biden last month nominated to be the next chairman of the Joint Chiefs of Staff.

He cited the Korea readiness review, which the military conducted during his tenure as Pacific Air Forces commander, examining what would be necessary to counter a threat from North Korea as an example of the kind of advance munitions planning that must take place. Part of that review, Brown said, was to “look really hard at munitions.”

Brown reiterated the Air Force’s call in its proposed fiscal 2024 budget for multiyear procurements for three key weapons: the Raytheon Technologies-made AIM-120 Advanced Medium Range Air-to-Air Missile, and the Lockheed Martin-made Joint Air-to-Surface Standoff Missile-Extended Range as well as the Long-Range Anti-Ship Missile.

Air Force officials said in March during the budget’s unveiling that the service wanted to use about $1 billion so industry could procure long-lead items for those weapons, as well as other steps that would send a longer-term demand signal to industry. The FY23 National Defense Authorization Act granted the Air Force the authority to make those multiyear purchases.

The Air Force’s proposed FY24 budget would roughly double its overall spending on missiles, from $2.3 billion in FY23 to $4.7 billion.

The Pentagon is also seeking lawmakers’ approval to conduct multiyear buys of Raytheon’s Patriot surface-to-air guided missile system and Lockheed’s Guided Multiple Launch Rocket System, fired from the M142 High Mobility Artillery Rocket System. The U.S. government has provided those weapons to Ukraine as it fights off a Russian invasion.

And if the military wants industry to be able to surge munitions production capacity in an emergency, Brown said, it must make such multiyear buys a regular part of how it does business. That way, industry will have a more reliable demand signal and can keep its production lines flowing.

“I believe that’s just a start,” Brown said, referring to the multiyear buys in the FY24 budget request. “We’ve got to look at multiyear procurements so that it helps give a predictable demand signal to industry. And it’s not just the prime [contractors], it’s all the subs below them so they actually have supply chains laid in, they’re [set up with the proper facilities], they have the workforce, and it’s not a little bit up and down and unpredictability.”

Brown also said it will be important to ensure allies and partners have access to these munitions — and that industry can build enough to keep both them and the United States armed.

“It’s great for them to have the airplanes, but they’ve also got to have the munitions that are capable,” Brown said. “How do we make sure that we have enough munitions on the shelf to support us and our allies and partners? This is something that we need to focus on.”

Brown said the digital engineering of munitions will make it easier to take a more modular approach to building some weapons, similar to the way new aircraft, such as the B-21 Raider, use a modular architecture.

Brown also said the Air Force’s desire to conduct more predictive, conditions-based maintenance on aircraft — where maintainers track how long parts have been on an airplane and try to replace them before they wear out and break — could also help provide a steadier demand signal for industry.

“With data, you know based on the service life of this part how long before it’s going to break,” Brown said. “You don’t wait until it breaks. You’re able to replace it a little bit sooner, which also can help create the demand signal for the supply chain.”

Brown said the Air Force’s Rapid Sustainment Office has been looking closely at ways to use maintenance data to not just decide when maintainers should replace parts, but also to help industry predict how it needs to manage its supply chains.

Lockheed picked GE’s CF6-80E1 engine for its planned LMXT strategic tanker, which would be a variation of Airbus’s A330 Multi Role Tanker Transport.

Over the next decade, the Air Force plans to buy about 75 tankers to tide it over between the Boeing-made KC-46 Pegasus — of which the service plans to buy 179 units — and a next-generation design that could be fielded in the latter half of the 2030s.

Lockheed hopes its proposed LMXT can fill that interim role, which in the past has been referred to as a “bridge” tanker.

But the Air Force has downgraded its procurement plans for the interim tanker, announcing in March that it had decided to cut in half the original plans to buy 150 of them and speed up the procurement of the next-generation tanker. And Air Force Secretary Frank Kendall has suggested the service could forgo a competition for the interim tanker, and instead buy another series of modified KC-46s from Boeing.

The Air Force’s surprise announcement upended the state of play on its future tanker vision, and made Lockheed’s path to success on LMXT tougher.

In a briefing with reporters Tuesday, Larry Gallogly, head of Lockheed’s campaign, said the company wants its engine decision to show the Air Force that its LMXT tanker could be a viable choice for the service if it decides to launch a competition.

“We want the Air Force to be very confident that we are the low-risk solution,” he said. “We do want to convince the Air Force that we are ready to go ahead, but we also need to show the Air Force exactly what they would be getting if they entered this competition — what is the real alternative?”

Gallogly said Lockheed hopes the positive 50-year track record of GE’s CF6 series of engines on other planes such as the C-5M Super Galaxy and the current Air Force One presidential planes will make it easier for the Air Force to opt for a competition.

“This aircraft has the space, it has the electrical power requirements,” he said. This engine would provide “a lot of electrical power on the aircraft to grow with the mission. … When we look at the Pacific theater in particular … there will be this insatiable need for gas. And if the Air Force chooses to sole-source this interim block of tankers, we set ourselves up for a single point of failure for bulk delivery of fuel in-theater.”

Abdoulaye Ndiaye, the general manager for GE Aerospace’s mobility engines program, said the Royal Australian Air Force now flies MRTT aircraft with GE’s CF6-80E1 engines, and the Spanish Air Force plans to use those engines on its future MRTT fleet.

Lockheed chose this version of GE’s CF6 engine over other unspecified engines because it would deliver greater thrust — almost 70,000 pounds — and better fuel efficiency than previous models, Gallogly said.

If the Air Force goes with LMXT, Lockheed Martin plans to build it in Mobile, Alabama, and Marietta, Georgia.

Lawmakers such as Rep. Jerry Carl, R-Alabama, have criticized the Air Force for considering skipping a competition. In May 2022, Carl made an unsuccessful attempt to add an amendment to the National Defense Authorization Act that would have forced a tanker competition, saying lawmakers could not allow the Air Force to “run away with our checkbook and do what they want to do.”

The Air Force has not yet released its requirements for the next tanker purchase, but Gallogly said the process of setting requirements will likely be finished in late June or early July.

Lockheed expects the Air Force to release a request for information after the requirements are done, he said, and by the end of the year, it will be clearer if the service plans to hold a competition.

“When we see those final requirements, that will give us a much better idea of how well the LMXT is aligned with the priorities of the Air Force,” Gallogly said. “We think we’ve got a pretty good idea of what those requirements are going to be, but we’re looking forward to actually seeing those requirements in writing.”

Anduril is a defense technology company that specializes in artificial intelligence, machine learning and automation.

The company said retired Lt. Gen. L. Neil Thurgood will lead Anduril’s expansion into Huntsville, Alabama. Huntsville is near Redstone Arsenal, home to the Army’s program executive offices for missiles and space and aviation, the service’s Space and Missile Defense Command and the RCCTO. Thurgood retired from the Army last year after 38 years of service.

In his new role, he will shape Anduril’s business strategy to help deliver “critical company priorities, such as counter-unmanned air systems, air and missile defense, tactical weapons and mission systems, and command and control capabilities,” according to a company statement.

“Thurgood will also play a leading role in Anduril’s continued growth and maturation for large-scale production, program management and capability delivery in support of government partners,” it added.

As the former RCCTO director, Thurgood’s portfolio included rapid development and delivery of the service’s most critical technologies, including hypersonic and laser weapons, counter-UAS capabilities, and even hybrid-electric combat vehicle prototypes.

During his tenure, he oversaw the creation of a new industrial base to build hypersonic glide bodies for the Army and Navy, the establishment of the first Army unit with hypersonic weapons and the building of 50-kilowatt laser prototypes on Stryker combat vehicles.

Thurgood told Defense News he sees a match between Anduril’s technologies and the program offices at Redstone Arsenal, such as aviation and missiles and space.

Christian Brose, Anduril’s chief strategy officer, told Defense News Thurgood is “a critical addition” to the company as it becomes “a bigger company, focused on production, manufacturing, all the things that we are now tasked with doing at real scale.”

Anduril has won contracts with the Army, Air Force, Marine Corps and U.S. Special Operations Command and has supplied equipment to Ukraine, including its Ghost loitering munition. The company is preparing to send its Altius UAS to the country.

Anduril has acquired Dive Technologies, Area-I, and Copious Imaging. While originally focused on force protection such as counter-UAS and base defense solutions, the company has expanded to offer air vehicles and underwater vehicles linked by command and control and collaborative autonomy.

“There are some clear areas that are opportunities for us,” Thurgood said. “Counter-UAS is the future.”

Millennium Space Systems and Raytheon Technologies are already on contract to develop sensor prototypes for the satellites, which will reside in medium Earth orbit — between 1,200 miles and 22,000 miles above the planet. According to the program’s senior materiel leader, selecting L3Harris to design a third sensor as part of the program’s first phase, or “Epoch,” broadens the Space Force’s industry team, giving the service more options as the constellation grows.

“Adding a third vendor reduces risk and non-recurring engineering not only for Epoch 1, but for future Epochs as well,” Col. Heather Bogstie said in a June 5 statement. “Having another payload option opens the trade space and allows us to take advantage of all industry has to offer as we deliver high-quality capability to the warfighter.”

The program is one component of the Space Force’s plan to strengthen its missile-warning and -tracking capabilities against growing threats from China and Russia by launching satellites to medium and low Earth orbit, or up to 1,200 miles above the planet.

Today, missile warning spacecraft mostly reside in geosynchronous orbit, about 22,000 miles away. Satellites located at medium Earth orbit — between the low and geosynchronous Earth orbits — can observe large areas without requiring the same level of complexity from sensors positioned farther from the planet.

The first spacecraft are slated to launch in 2026, and the Space Force expects to have four medium-Earth orbit satellites on orbit by 2028 with a goal of fielding technology upgrades on a three-year cycle.

The service requested $538 million for medium-Earth orbit tracking satellites in fiscal 2024 to support Epoch 1. According to budget documents, the Space Force expects it will need $3.5 billion for the effort from FY24 through FY28.

The budget documents indicate the service plans to buy six satellites from Millennium, a Boeing subsidiary, and three from Raytheon for the program’s first phase. According to the June 5 news release, the service may buy up to three L3Harris satellites in Epoch 1.

Col. Brian Denaro, Space Systems Command’s program executive officer for space sensing, told C4ISRNET in April the service will review each company’s final designs this fall, and at that point will determine whether to add a third sensor to the mix for Epoch 1.

He noted the Space Force hasn’t solidified how many satellites it will include in Epoch 1, partly because it’s still evaluating options.

“It really depends on what altitude they’re at, what technology you have, the size of their sensor,” he said. “I would say that each vendor comes in with a different way to solve the problem, which creates an interesting opportunity for us to look at all the trades that go across those various solutions.”

Talk about missing the forest for the trees.

The report’s finding should have instead been that America’s defense-industrial base is failing our warfighters and taxpayers, as the Pentagon has willfully and with foresight created today’s monopolistic, overregulated and costly defense marketplace. That marketplace has left the DoD without the ability to procure at scale the goods and services it needs to fight a major war, demonstrated by munitions shortfalls from the conflict in Ukraine. It’s also left the Pentagon in need of a change to its profit policy as CBS’ “60 Minutes” segment on price gouging in the defense-industrial base recently showed.

The origins of today’s defense marketplace are as follows: First, the leadership of major defense primes are mostly compensated with stock awards, which, while substantial, are expected within our capitalistic system. Wall Street then rewards these companies with higher share prices based upon their ability to provide profits for dividends and stock buybacks. But thanks to the Pentagon, these returns are less a result of competitive market forces and more a result of industry consolidation.

In the 1950s and in the 1980s, the Pentagon’s spending power created a healthy, competitive marketplace where defense firms competed on both price and innovative capabilities. This marketplace fostered free and open competition, equipping the United States with the best military in history. Despite this success, the Pentagon killed the proverbial golden goose by consolidating the defense-industrial base in the 1990s, leaving fewer suppliers and, therefore, little competition.

Industry consolidation is but one piece of the puzzle when it comes to how the Pentagon has elevated prices for taxpayers. Another is the Pentagon’s misguided divest-to-invest strategy, which devotes an ever-greater share of the department’s investment dollars to research and development rather than adequately funding procurement. R&D has thinner profit margins, meaning that for every dollar the government spends on R&D, few are able to become profit for contractors.

As the prices for weapons and components increase, the Pentagon orders less of each. With less purchased, the primes are poised to negotiate harder for higher prices so that they can maintain or increase their total profits, further raising the price of their products and leading to even fewer purchases. This means that, in effect, the divest-to-invest strategy is a pricing-to-procurement death spiral, threatening readiness and fair prices.

Elevated prices are also a consequence of the interactions between prime contractors and their array of subcontractors. Not subject to the same payment terms or timely cash flow from the government as the primes, the subcontractors receive less cash themselves. This squeezes the suppliers, already often sole- or single-source, leading to less redundancy and less capacity. The suppliers left standing then become economically powerful, as “60 Minutes” correctly noted.

But what’s most important here is that this results in a lack of surge production.

An inability to surge production is also a product of rosy planning assumptions where the Pentagon’s leaders essentially assume away the problem. The defense-industrial base is healthy if you assume only one very quick war. If this assumption isn’t correct, the Pentagon then believes that allies will pick up the slack, but their weapons’ cupboards are barer than ours.

In short, forced consolidation, faulty Pentagon planning assumptions, a focus on R&D at the expense of procurement, and the cash flow structure of the major defense primes have led us to the situation that we find ourselves in today: We’re in need of warfighting capabilities — a lot of them — but cannot produce them at scale and at prices that a functioning capitalistic market would allow.

Thankfully, the Pentagon can start to turn this around. First, when starting the acquisition of new weapons systems, it should err on the side of not developing them as joint programs, which are essentially a synonym for “contract-to-monopoly.” Consolidation of buying power into the purchase of one system kills off competitors and creates a monopoly; the market for fighter jets shows this to be true.

Secondly, the Pentagon should procure much more, and it should do so by making multiyear procurement contracts and block buys the rule rather than the exception.

Lastly, the federal government can break open the doors to competition by eliminating unnecessary regulations that make it difficult and costly for emerging startups to do business with the DoD.

Failing to take these actions will mean that we’ll be stuck with a defense-industrial base that’s unhealthy, not meeting the needs of the warfighters and, on the most basic level, not providing the American taxpayer with a fair deal. And that’s an industrial base that we shouldn’t accept.

Retired U.S. Army Maj. Gen. John Ferrari is a senior nonresident fellow at the American Enterprise Institute think tank. Ferrari previously served as a director of program analysis and evaluation for the service. Charles Rahr is a research assistant at AEI.

The images and other readings gathered from afar were critical to grasping the situation in Eastern Europe at the time, and their continued dissemination, including through the press, aids public understanding of the war.

Among those involved in the capture and distribution of such information is Maxar Technologies, which provides satellite imagery to the Defense Department and intelligence community, among other national security pursuits.

In February 2023, for example, the Colorado-based company won an additional round of work on the U.S. Army’s One World Terrain, which compiles extremely accurate virtual maps of territory across the globe for military purposes. It’s considered a key piece of the service’s Synthetic Training Environment, an immersive training-and-rehearsal tool. The company is also involved with Project Maven, launched by the Pentagon in 2017 to detect targets of interest in footage captured by uncrewed systems.

C4ISRNET reporters interviewed two Maxar executives — Tony Frazier, executive vice president and general manager of public sector earth intelligence, and Jennifer Krischer, vice president and general manager of intelligence programs — on the sidelines of the GEOINT Symposium in St. Louis.

Portions of the interview below, conducted May 23, have been edited for length and clarity.

Q: Where do you see the future of One World Terrain and, by extension, the Synthetic Training Environment going? What does that look like?

Frazier: We started with a focus of helping the Army modernize its training with geospecific data, with a goal of being able to provide soldiers as realistic an experience as possible.

Lt. Gen. Maria Gervais, she was the first cross-functional team lead for the Synthetic Training Environment. Her vision at the time was: If we can have reps and sets with hundreds of experiences in the virtual environment, then we can help soldiers be safe when they actually deploy.

That has continued to be the core focus of the program. That being said, as we exposed the data to different parts of the community, there was insatiable demand from the operational users to apply it to current missions. Whether it was in support of the Afghan drawdown, there was data that we provided over Ukraine — using it for operational mission-planning was very prominent.

Even the fiscal 2023 National Defense Authorization Act, there was a reference to One World Terrain, and I think it did a nice job of highlighting the variety of use cases that had been proven out.

So what we’re seeing is, as we build out more complete, global coverage of that capability, being able to use it as a reference layer to integrate other data sources against it, and have all those data sources inherit the same accuracy, that foundation really enables a form of sensor fusion that we haven’t been able to see at scale.

One example that we are demonstrating is how we can apply 3D geo-registration software that uses that reference as a way to take — whether it’s space-based, or airborne, or even an unmanned surface vehicle — a sensor feed and use the terrain as a source of registration to tie that down, both in terms of the right location and the right orientation, so that you’re able to inherit the same accuracy as that base.

Think about a realtime feed from a drone. That would then allow you to be able to know exactly within this type of radius where that pixel is. That, I think, is probably one of the more breakthrough opportunities, in terms of taking it fully operational.

Q: How has the conflict in Ukraine shaped or factored into Maxar’s business? What is that consumption like — is there an increased need for satellite imagery or your other products?

Frazier: We support a global mission, and we’ve been providing these capabilities for decades. And you can look at every major event, and Maxar has played a role in that, in some capacity.

I think what’s unique about Ukraine was that at all phases, the crisis leading to conflict, we were able to, through different channels, expose our capability in a way that was helpful to the mission.

The focus of the Defense Department now is integrated deterrence — the role that commercial was able to play to bring transparency to what was happening, with troop buildup and, as it pivoted to conflict, what was happening on the ground.

The combination of what was exposed through the media, through our partnerships there, along with the fact that the intelligence community, Defense Department, allies and partners were all able to access current imagery over those areas, just allowed a level of interoperability and mission planning that, I think, has helped support the mission, but also helped a lot of decision makers think through ways that can be applied, more broadly.

NATO hunger for info driving deals for commercial satellite imagery

I know you recently covered the Global Information Dominance Experiments series.

One of the things that’s helped us do is have conversations with different stakeholders across the community, who have been looking at how do I take the increased commercial collection, some of the innovation that’s happening with applied machine learning, so computer vision, to be able to interpret imagery quickly, the types of technology I referenced earlier with our 3D, where we can georeference that data on quick timelines, and then how can that support different forms of experimentation. That is demonstrating how new use cases for how commercial can be applied to the here-and-now missions.

We’ve supported Project Convergence and Scarlet Dragon; those were examples of exercises and experimentation that we supported with commercial capabilities. I think we’re seeing that there’s a lot of interest.

Q: The big news at GEOINT yesterday was Project Maven, with Vice Adm. Frank Whitworth talking about its transition to a program of record. How do you envision Maxar taking part in Project Maven, and what do you hope to contribute?

Krischer: We’re already contributing to Project Maven.

We are generating algorithms around both electro-optical and our synthetic aperture radar imaging capabilities. So object detection, using those different modalities.

We also have been working with Project Maven for years now on providing low-latency imagery so that we can run the algorithms against the imagery in a sensor-to-shooter methodology that really resonates with the warfighter. So we’ve already been doing these things.

We envision the future of Maven as being: How do you bring the vast computer-vision algorithms sets to bear on the different missions, whether it be the intel analyst or the warfighter in the field, and how do you enable the warfighter to do these things?

We’re working kind of hand-in-hand to understand what it needs to be and helping shape the future, so that it’s not vendor-locked, it’s really meeting the users where they need the information.

Frazier: In our conversations, the intent is to enable geospatial AI at scale. And, as a result, as these capabilities get more mature, you want to be able to take advantage of all the collection that’s happening across the constellation.

For the U.S. government, the constellation includes commercial as a part of that. That’s why EOCL is electro-optical commercial layer. With the contracts that were awarded to us, and Planet and BlackSky, and then what’s being done now to add other modalities, like radar and radio-frequency sensing and the like, the goal is to create an architecture where you can quickly run the algorithms against that source to then get the information out to those users.

Geospatial-intelligence agency making strides on Project Maven AI

We’ve had a lot of use of our existing systems to apply computer vision against the imagery that we’re hosting and disseminating now, across the community, and now it’s about how do we actually do this at scale, have more machine-to-machine exploitation at scale. The last couple of decades have been focused on how humans visualize imagery.

Q: With Project Maven, and with a lot of these things like Joint All-Domain Command and Control, there’s just an incredible amount of collection and data that has to be sorted through. So you can’t ignore the AI or ML portion on your side, right? That has to be baked in, basically?

Krischer: Absolutely.

Frazier: Correct.

Q: Is there a need for a One Space Terrain? Maybe with a more artful name?

Frazier: I can see that happening.

You heard the director of the National Geospatial-Intelligence Agency, his comments, about how they’re supporting the lunar mission. And I think, yeah, we need to have an accurate representation of all domains, where we expect to safely navigate, to be able to mitigate threats, et cetera.

An initial contract for the digital conduit is expected to be inked in March or April 2024, according to Col. Chris Anderson, a project manager at the Army’s Program Executive Office Intelligence, Electronic Warfare and Sensors, or PEO IEW&S. More contracts should follow.

“I envision it’s going to end up being a series of contracts for various aspects of the pipeline,” Anderson told C4ISRNET on the sidelines of Technical Exchange Meeting X, a defense industry conference held last week in Philadelphia. “Building a team of teams, both within the government, with industry, academia and everybody else — it’s going to take a village to make this happen.”

The Pentagon has for years recognized the value of AI, both on and off the battlefield, and has subsequently invested billions of dollars to advance and adopt the capability. The technology can help vehicles navigate, predict when maintenance is required, assist with the identification and classification of targets, and aid analysts poring over mountains of information.

Through Project Linchpin, the Army intends to deliver AI capabilities across the closely related intel, cyber and electronic warfare worlds, documents show, while also addressing hang-ups associated with the field, such as the consumption and incorporation of real-world data.

Lockheed paces JADC2 information-sharing at Northern Edge

“There’s a data-labelling component, the actual model training that happens,” Anderson said. “Then there’s verification and validation on the back end, and then just, kind of, running the infrastructure. So that’s four or five different focus areas that will probably require different industry partners.”

Included in the PEO IEW&S portfolio are the Tactical Intelligence Targeting Access Node meant to centralize and automate the collection, parsing and distribution of data; the High Accuracy Detection and Exploitation System, an intelligence, surveillance and reconnaissance jet outfitted with advanced sensors; and the Terrestrial Layer Systems designed to provide soldiers with cyber and electronic warfare assistance.

Each will play a specific role on the battlefield of the future, and each will tie back to Project Linchpin.

“Any sensor-related program within the PEO, this will be their machine-learning pipeline,” Anderson said. “We want to take it from a science fair experiment into a program of record.”

An industry day for Project Linchpin is planned for August or September. PEO IEW&S conducted market research at a previous technical exchange meeting in Nashville, Tennessee.

The nascent AI “bill of materials” effort would be similar to existing software bill of materials practices, or SBOMs, the comprehensive lists of ingredients and dependencies that make up software, according to Young Bang, the principal deputy assistant secretary of the Army for acquisition, logistics and technology.

Such disclosures are championed by the National Telecommunications and Information Administration, Cybersecurity and Infrastructure Security Agency and other organizations.

“We’re toying with the notion of an AI BOM. And that’s because, really, we’re looking at things from a risk perspective,” Bang told reporters on the sidelines of Technical Exchange Meeting X, a defense industry conference held May 24-25 in Philadelphia. “Just like we’re securing our supply chain — semiconductors, components, subcomponents — we’re also thinking about that from a digital perspective. So we’re looking at software, data and AI.”

Bang and others met with AI companies during the conference to gather feedback on the potential requirements. He did not share insights from the private get-together.

The Pentagon is investing in AI, machine learning and autonomy as leaders demand quicker decision-making, longer and more-remote intelligence collection and a reduction of human risk on increasingly high-tech battlefields. The Defense Department in 2021 established its Chief Digital and AI Office, whose executives have since said high-quality data is foundational to all its pursuits.

More than 685 AI-related projects are underway at the department, according to the Government Accountability Office, a federal watchdog, with at least 232 being handled by the Army. A peek under the algorithm hood, Bang said, is more about ruling out “risk like Trojans, triggers, poison data sets, or prompting of unintentional outcomes,” and less about reverse engineering and exposing sensitive intellectual property.

“I just want to make sure we’re explicit about this: It’s not to get at vendor IP. It’s really about, how do we manage the cyber risks and the vulnerabilities?” he said. “We’re thinking about how do we work with industry.”

The government announced the move during the Langkawi International Maritime and Aerospace Exhibition last week, signing its sixth supplementary contract with shipbuilder Boustead Naval Shipyard on May 26.

This latest contract will see Malaysia pay an additional $430 million for the ships, which are based on the Gowind-class frigate by France’s Naval Group. Malaysia will also reduce the number of ships it will receive under the revised contract from six to five, and accept an additional delay to the ships’ deliveries.

Under the new delivery schedule, Boustead Naval Shipyard will deliver the lead ship — KD Maharaja Lela — in 2026, seven years after the originally planned date. The company will deliver the final ship, KD Tok Janggut, in 2029, five years later than initially planned.

Malaysia’s Finance Ministry will take over the shipbuilder by setting up of a special-purpose vehicle to acquire Boustead Naval Shipyard from its parent company, Boustead Heavy Industries Corp.

Malaysia selected the Gowind design for its second-generation patrol vessel program in 2011, awarding a $1.96 billion contract to Boustead Heavy Industries for the six ships, with construction to take place in Lumut, Malaysia. The government subsequently renamed the effort as the Littoral Combat Ship program.

The lead ship, KD Maharaja Lela, launched in August 2017, but the program was soon plagued by construction delays and cost overruns. A parliamentary public accounts committee launched an investigation into the program, during which members visited the shipyard and interviewed a former defense minister, among other defense and company officials.

The committee revealed in August 2022 that work on the ships had completely halted by then. It also alleged that $300 million was misappropriated from the program, which led to fraud charges leveled against Boustead Heavy Industries’ former managing director, Ahmad Ramli Mohammad Nor.

The Army published a request for information regarding the as-a-service tack, a potential pivot away from the traditional means of buying and maintaining radios, and received 15 responses by March.

Input ranged from “folks wanting to be the the manager of the process, all the way to folks providing us everything that a lower tactical network needs,” Col. Shermoan Daiyaan, the project manager for tactical radios at the Program Executive Office for Command, Control and Communications-Tactical, or PEO C3T, said May 24 at an industry conference in Philadelphia.

At the same time, other vendors came “back and said, ‘Nope, we’re not going to play,’” Daiyaan said. “That was a response, and that’s data. We’ll appreciate that and take that to heart.”

The Army has hundreds of thousands of radios — too many to quickly and cost-effectively modernize given security deadlines and constant competition with China and Russia, which have sophisticated signals intelligence that can cue onto communications. Service leaders have said the as-a-service method, while experimental, could drive down costs and boost adaptability.

National Geospatial-Intelligence Agency to demo data processing node

As initially teased in December by Army Under Secretary Gabe Camarillo, radio as a service would be more akin to a subscription offered by some makers of consumer products. It could mirror other deals in which companies furnish goods and services on a rolling basis, keep them up to date and handle quality control.

“We left that RFI very open, very generic. We approached it from: We don’t want to shape your response,” Daiyaan said. “It’s such a novel idea that we didn’t want to take things off the table.”

The colonel expects to speak with senior leaders about the effort in the coming weeks. PEO C3T is tasked with overhauling the Army’s battlefield connectivity tools.

“What we’re trying to figure out is if there’s something in there to explore,” Daiyaan said. “I believe there’s something there to explore.”

Biden announced that he would seek legislation to designate Australia as a “domestic source” under Title III of the Defense Production Act – a privilege currently only enjoyed by Canada – when he met with Australian Prime Minister Anthony Albanese at the G7 summit in Japan on Saturday.

His remarks came after the Pentagon submitted an April 28 legislative proposal to Congress that would amend the law to add both Australia and the U.K. to Title III, which would allow the president to direct grants and loans to companies in each country as if they were U.S. companies.

“Doing so would streamline technological and industrial base collaboration, accelerate and strengthen AUKUS implementation and build new opportunities for United States investment in the production and purchase of Australian critical minerals, critical technologies and other strategic sectors,” noted a joint U.S.-Australia statement released after Biden’s meeting with Albanese.

Assistant Secretary of Defense for Strategies, Plans and Capabilities Mara Karlin told the House Foreign Affairs Committee on Wednesday that using Defense Production Act grants for the Australian and British industry would help implement the technology-sharing components of AUKUS, known as Pillar II. These capabilities stand apart from the plan to help Australia develop its own nuclear-powered submarine fleet. They include joint development on hypersonic weapons, quantum technologies and artificial intelligence.

“Pillar II – the scope, the scale, the complexity of it – it’s really unlike anything that we have ever done,” said Karlin. “We’re still looking, of course, at what it would mean for specific AUKUS projects.”

“This is a two-way street,” added Karlin. “Given of course the security environment, given the rapidly evolving technological environment, we need to be able to work with one another as much as possible.”

When the House passed its version of the National Defense Authorization Act last year, it included an amendment from Rep. Joe Courtney, D-Conn., that would have put Australia and the U.K within the purview of the Defense Production Act. However, Congress dropped the provision in the final bill after negotiations with the Senate.

Courtney said he hopes that Biden’s endorsement at the G7 would spur Congress to pass his legislation into law this year.

Defense Production Act

“Under current law, the [Defense Production Act] allows the president to stimulate investments in technology in both U.S. and Canadian companies to allow our nations to tackle pressing national priorities in partnership with private companies, as we saw during the COVID-19 pandemic,” Courtney told Defense News in a statement. “By expanding the definition of a ‘domestic source’ to include both Australia and the United Kingdom, we can accelerate innovation in critical technologies to fulfill the goals of the AUKUS security agreement.”

Both Biden and former president Donald Trump used the Defense Production Act to procure vital medical supplies amid significant supply chain disruptions during the pandemic. The White House also invoked the Defense Production Act in March in the hopes of speeding up hypersonic weapons development. Adding Australia and the U.K. to Title III could allow defense contractors in both countries to take advantage of U.S. grants and loans for their own hypersonics programs.

Biden also used the Defense Production Act last year to unlock $43 million in funding to address critical mineral shortfalls in large-capacity batteries. China largely controls the global supply chain for critical minerals like cobalt needed to produce these batteries.

Putting Canberra within the purview of the Defense Production Act could stimulate U.S. investment in Australian mines. The Australian government’s geoscience agency notes that Australia remained the world’s largest lithium producer in 2021, controlling 53% of the global market. It is also among the world’s top five producers of cobalt and antimony, an alloy largely controlled by China that is needed to make bullets and ammunition.

Congress allocated $600 million in Defense Production Act funding as part of a Ukraine aid package last year, in part to shore up critical mineral supply chains that were further disrupted after Russia’s invasion. The State Department also developed a minerals security partnership to bolster these supply chains with 10 other allies, including Australia.

The Program Executive Office for Intelligence, Electronic Warfare and Sensors, or PEO IEW&S, headed by Mark Kitz, will by Oct. 1 absorb defensive cyber operations, cyber analytics and detection, cyber platforms and systems, and the technology applications office. Those efforts are now associated with the Program Executive Office for Enterprise Information Systems, or PEO EIS, run by Ross Guckert.

The move coincides with the start of the government’s fiscal 2024, as well as a separate consolidation of network portfolios involving the Program Executive Office for Command, Control and Communications-Tactical, or PEO C3T, overseen by Maj. Gen. Anthony Potts.

The portfolio changes across all three PEOs were discussed May 24 at a conference with industry known as Technical Exchange Meeting X, in Philadelphia. No jobs are expected to be cut, and contracts should flow as normal.

“Synergy, our optimization of the organization here, is really important for us as a cyber enterprise,” Kitz said.

The next Army recruiting tool amid a slump? It could be the metaverse.

Using the Pentagon’s acquisition budget management tool, PEOs engage with external stakeholders to track the full lifecycle of budget data for procurement. Offices were established by the Defense Department in the 1980s as a means to control costs and improve delivery performance, and oversight of specific initiatives are reassigned from time to time as missions and priorities change.

PEO IEW&S is already home to several Army cyber efforts. In August, the office unveiled a cell dedicated to offensive cyber and space capabilities called Program Manager Cyber and Space.

The Army is always looking at how it can get upgraded hardware and software into soldier hands. That, among other factors, is motivating the office reorganization, or optimization, according to Young Bang, the principal deputy assistant secretary of the Army, or ASA, for acquisition, logistics and technology, or ALT.

“As the Army is modernizing, and we’re transforming, we looked at the structure and said, ‘Hey, are things really linked together to be more efficient, to support things like the unified network?’” Bang said at the conference. “We had a lot of discussions across the ASA(ALT) community and the PEOs. We talked about those types of things.”

Additional shuffles may be on the horizon, he said.

The testing during Northern Edge, a biennial experiment put on by U.S. Indo-Pacific Command, marked the first time “true” synchronization was demonstrated at such scale, the company said, hinting at its implications for the Defense Department’s connect-everything-everywhere campaign known as Joint All-Domain Command and Control.

The department is pursuing JADC2 — to the tune of billions of dollars — to maintain an edge on China and Russia, seen as the most significant national security threats. Among Lockheed’s offerings is the Diamondshield battle management software, which incorporates automation for planning, battlefield assessment and tasking at a far quicker clip.

Defense officials say the ability to share timely and accurate information, regardless of source, location or file size, is critical to besting tech-savvy forces. Right now, data and databases are walled off, with communication between camps at risk of mistranslation or fumbled delivery.

Booz Allen says acquisition aimed at Lockheed, Raytheon, ‘billions’ in contracts

Lockheed products are folded into a preliminary version of what’s known as a joint fires network, an INDOPACOM initiative designed to improve coordination between commanders. Navy Adm. John Aquilino, the INDOPACOM boss, in March 2022 described the network as enabling “any sensor from any platform,” including cyber, to feed targeting guidance to “any weapon.”

Amr Hussein, a C4ISR vice president at Lockheed, in a statement May 23 said his company is “responding to priority national defense demands for integrating JADC2 infrastructure with” already-proven tech. Doing so, he added, means the military could secure “JADC2 capability years sooner than” otherwise expected.

Northern Edge this year involved thousands of U.S. troops, at least five ships and more than 150 aircraft. The U.K. and Australia also participated.

Lockheed next plans to participate in the Talisman Sabre exercise, which also involves Australia. The country is thought indispensable in the vast Indo-Pacific region, where China is increasingly exerting influence.

SI Analytics CEO Taegyun Jeon on May 22 briefed reporters on the North Korea Dynamic Ballistic Missile Operation Area Search Project at the GEOINT Symposium in St. Louis, Missouri. The company previously competed in U.S. Defense Innovation Unit challenges, including building-damage assessments and the detection of so-called dark vessels that don’t broadcast their locations nor appear in public monitoring systems.

The latest project fuses Earth-observation data from multiple commercial satellite operators with in-house artificial intelligence-augmented image analysis to detect and classify anomalies — North Korean ballistic missile operations, for example. The findings, once verified by experts, can then be shared, facilitating a government response.

“We will contribute our private sector capability and effort for a safer world,” Taegyun said. “As can be seen in the media, the news, there is increasing global stress from North Korea.”

North Korean missile tests rattle neighbors and far-flung nations alike. They also draw widespread condemnation. A joint statement issued this week by South Korea and the European Union described North Korean developments as “reckless” and as a “serious threat” to “international and regional peace and security.”

A meaningful dialogue is needed, it continued, as is a suspension of “all actions that raise military tensions.”

SI Analytics was established in 2018. It is based in Daejeon, with offices in Seoul and Gwangju.

“We expect a tender to be announced by the end of May and the signature of a contract by late July for the procurement of air defense missile systems. We are ready to provide more than 600 Mistral 3 to the Spanish air, naval and land forces,” Durán told Defense News at the exhibition.

She added that deliveries could begin as early as 2025 and span out to 2032. It’s unclear how the systems would be divided among the military services.

MBDA showcased three different models of missiles at the FEINDEF defense conference in Madrid, running May 17-19: the Meteor, the Brimstone and the Mistral 3. The latter is in service with French forces.

Spain is reportedly allocating €330 million (U.S. $358 million) for the launch of a program to buy anti-aircraft missiles.

The Spanish Army did not return a request for comment from Defense News by press time.

For MBDA, this is a long time coming. Durán said discussions around the country wanting to acquire the Mistral 3 have taken place since at least 2015, but efforts were put aside due to a lack of money.

However, the situation is different than eight years ago, with the Spanish government pledging considerable defense investments to meet the goal of spending at least 2% of gross domestic product on defense by 2029. NATO, of which Spain is a signatory, encourages its members to spend that amount annually.

The Mistral 3 short-range surface-to-air missile is equipped with an infrared imaging seeker and advanced image-processing abilities, allowing it to engage low-thermal signature targets such as drones and turbojet-powered missiles. In March, the company’s chief executive said MBDA is accelerating the production of the Mistral 3 from 20 to 30 per month as a result of the European-wide pressure to supply more weapons.

European countries are on a shopping spree as they look to both continue arming Ukraine, which is under invasion by Russia, and fill gaps in their inventories left over by donations to Kyiv.

Mistral missiles have been in production for more than three decades and are operated by dozens of militaries in different configurations around the world. The latest variant has demonstrated the ability to intercept a moving target at ranges of 8 kilometers (5 miles).

The Navy requires at least 10 of these submarines are available for operations at any given time. These ballistic missile submarines lurk in waters around the globe with nuclear missiles onboard, their sole mission being to remain hidden and ready if called upon in a doomsday scenario.

As a hedge against shortfalls in the 2030s as the Ohio class reaches the end of its life and the Columbia class enters service, the Navy has considered extending select Ohio boats by a few years. In November, submarine community leaders said a decision would be made by FY26 so work could start in FY29.

While speaking at a May 5 defense innovation roundtable in Newburgh, New York, Navy Secretary Carlos Del Toro said the service has “now determined five where we can actually extend those service lives, and in the ’25 budget we’re [planning on] putting in money to make that investment so we can extend those lives.”

Del Toro told Defense News in a May 18 statement that this new timeline is his intention but remains subject to the 2025 budgeting process.

The Navy has already extended the life of the entire Ohio class, from 30 years to 42 years. In 2020, submarine community leaders acknowledged that while the Navy couldn’t extend the entire class again, it could look at each individual hull and determine if any were in good enough physical condition to continue operations for a few more years.

The replacements for the Ohio boast, the Columbia class of ballistic missile submarines, is on schedule; Navy leadership said it fell a few months behind a more aggressive goal but is still on track to meet its contractual construction schedule.

Prime contractor General Dynamics Electric Boat and its suppliers have been able to devote significant attention to the lead ship, bought in FY21, due to a three-year gap between the first and second boats. There’s a two-year gap between the second and third boats, and beginning in FY26 the Navy will buy the remaining 10 at a pace of one per year.

“There is still the mountain to climb: When we go to one Columbia a year, starting in 2026 for 10 straight years, there’s hiring that’s required” at Electric Boat and at its suppliers, the acting assistant secretary of the Navy for research, development and acquisition, Jay Stefany, told Defense News in September 2021 when discussing the potential life extensions.

“So if you were to ask me, I’d say Columbia No. 1, pretty high confidence. Columbia No. 2, yeah, pretty high as well. But when we start going three, four, five, six, seven, all in a row ... that’s the risk,” he said.

The exact effects of a breach are hard to predict because it is “such uncharted territory,” Andrew Hunter said at a discussion in Arlington, Virginia, hosted by George Mason University’s Greg and Camille Baroni Center for Government Contracting.

But Hunter said it would have “profound implications for the [defense] industrial base.”

President Joe Biden and House Republicans are now engaged in a standoff over the nation’s debt ceiling, which limits how much the United States can borrow to cover its debts and has been nearly reached. Biden and Democrats are pushing Republicans to raise the debt ceiling without preconditions by passing a “clean” bill, which happened under President Donald Trump’s administration.

In April, Republican lawmakers, who hold the majority in the House of Representatives, passed a bill to raise the debt ceiling while cutting non-defense discretionary spending by $130 billion, along with other concessions.

If the debt limit is breached, the Treasury Department’s ability to pay the government’s bills would be severely limited, if not curtailed entirely. This would mean the Pentagon might not be able to pay its contractors on schedule.

With the United States’ ability to pay its debts suddenly thrown into question, he said, credit markets could seize up.

And with credit frozen, Hunter said, the Defense Department’s suppliers might not be able to get financing they need to stay afloat while waiting for the government’s payments — perhaps forcing them to suspend operations and not pay their own workforce.

“They can’t get the short-term financing needed to make payroll, while they’re waiting for the reimbursements from the government — which also, by the way, may be delayed,” Hunter said. “So they’re going to need that short-term financing even more to cover their expenses.”

Under a debt ceiling breach, Hunter said, appropriations would still be in place, meaning the department would not have to shut down and employees would not be furloughed. But because the Treasury Department would not have the money to fund the government’s payments, Hunter said, service members and civilian employees might not be paid on time.

This could ripple through the military’s entire force structure, Hunter said. Since many service members don’t earn high salaries and may be living paycheck to paycheck, a missed payday — or several — could deal a severe blow to their personal finances.

“For a lot of service members, that’s a huge issue, because that can then reflect on your eligibility for [a] security clearance — really everything it takes to do your job,” Hunter said. Such a breach would have “huge impacts on families, huge impacts on the workforce, and a lot of consequences that could ripple for quite a long time.”

Hunter also warned of the national security consequences of a theoretical deal to raise the debt ceiling that rolls back all federal spending to fiscal 2022 levels — particularly for the still-young Space Force.

Pentagon Comptroller Mike McCord said in a March 17 letter to Capitol Hill that lowering defense spending to 2022 levels would amount to a $100 billion, or nearly 12%, budget cut from the Biden administration’s $842 billion request for fiscal 2024.

Republicans want to exempt the Defense Department from spending caps, and even further raise military spending.

Hunter said Thursday a budget rollback to 2022 levels “would come upon us with absolutely no warning, no notice,” and compared such a deal to the “painful” sequestration caps that occurred during the Obama administration.

Sequestration led to furloughs and a sudden scale back of defense spending, Hunter said — particularly in vital research and development efforts.

“You would see a huge hit to our research and development, which is right now one of [the Department of the Air Force’s] priority areas of pursuit,” Hunter said.

Congress approved $18 billion for the Space Force in 2022 and $26.3 billion in 2023. The Biden administration requested $30 billion in 2024 funding for the Space Force, which was formally stood up as its own service in December 2019.

“Because the Space Force is relatively new … much of its budget is growing to reflect the fact that they’re doing things that have just never been done before, because they hadn’t previously been budgeted,” Hunter said. “The Space Force would be absolutely devastated by a rollback to FY22 [funding], but for the Air Force, it would be devastating as well.”

The service said in a Thursday release that it sent industry a classified solicitation for an engineering and manufacturing development contract for the secretive and highly classified NGAD program.

The release of this solicitation formally begins the process of selecting a contractor to build the Air Force’s next advanced fighter system, which will replace the F-22 Raptor. The solicitation came with requirements the Air Force expects companies to include in their NGAD designs.

However, this solicitation and source-selection process does not include the drone wingmen the Air Force refers to as collaborative combat aircraft, the service said.

“The NGAD platform is a vital element of the air dominance family of systems, which represents a generational leap in technology over the F-22, which it will replace,” Air Force Secretary Frank Kendall said in the release. “NGAD will include attributes such as enhanced lethality and the abilities to survive, persist, interoperate and adapt in the air domain, all within highly contested operational environments.”

“No one does this better than the U.S. Air Force, but we will lose that edge if we don’t move forward now,” Kendall added.

The Air Force has repeatedly said its concept for an NGAD platform will not exactly mirror a traditional crewed fighter such as the F-22 or F-35, but will instead be a “family of systems” that incorporates a crewed aircraft component as well as collaborative combat aircraft. Increased sensor capabilities as well as advanced abilities to connect with satellites, other aircraft or other assets could also be part of NGAD’s family of systems.

The Air Force on Thursday said its acquisition strategy for NGAD “will invigorate and broaden the industrial base to deliver rapid and innovative warfighting capabilities.”

As the service develops NGAD, the statement said, it will use lessons learned from other recent acquisition programs, and will use open-architecture standards. The service said this will allow it to take advantage of as much competition as possible throughout NGAD’s life cycle, create a larger and more responsive industrial base, and cut down on maintenance and sustainment costs.

The Air Force said other technical and programmatic details on NGAD are classified “to protect operational and technological advantages.”

Kendall and other service officials said last year they hope to start fielding the crewed component of NGAD by the end of the decade, with collaborative combat aircraft possibly arriving first.

In June 2022, Kendall raised eyebrows when he said at a Heritage Foundation event that the service had “now started on the EMD program to do the development aircraft that we’re going to take into production” — a remark that some took to mean NGAD was already in the engineering and manufacturing development stage.

Kendall later walked back those comments, explaining that he was using the term EMD in a colloquial sense. He said NGAD was still being designed and had not yet gone through the Milestone B review process.

Milestone B marks the point where a program’s technology maturation phase finishes and an acquisition program formally starts in which the service takes its preliminary design and focuses on system integration, manufacturing processes and other details ahead of production.

Air Force spokeswoman Ann Stefanek said in an email to Defense News that when the source-selection process finishes, NGAD will go to the service’s top acquisition official — who is now Andrew Hunter — for the Milestone B decision to award the EMD contract to the winning company.

Boeing, Northrop Grumman and Lockheed Martin have expressed interest in pursuing the Air Force’s NGAD contract.

It’s unclear how much the contact would be worth, but Kendall told lawmakers in an April 2022 hearing that each aircraft could cost “multiple” hundreds of millions of dollars, though he did not get specific about the potential price tag.

Three legislative proposals, submitted on May 2 and first posted online Tuesday, would greenlight the sale of two Virginia-class submarines to Australia, permit the training of Australian nationals for submarine work and allow Canberra to invest in the U.S. submarine industrial base.

Rep. Joe Courtney of Connecticut, the top Democrat on the Armed Services Committee’s sea power panel, praised the proposals in a statement to Defense News, saying “I look forward to working with all my colleagues in Congress to fulfill these goals.”

“The Department of Defense’s legislative proposals are the latest example of President [Joe] Biden’s commitment to fulfilling the AUKUS agreement,” said Courtney. “Importantly, the proposals spell out a clear path forward to facilitate the transfer of Virginia-class submarines to Australia while ensuring we have the necessary authorities to accept the Australian Government’s investments to enhance our submarine industrial base capacity and provide training for Australian personnel.”

AUKUS stipulates that Australia will buy at least three and as many as five Virginia-class submarines in the 2030s as part of phase two of the agreement, giving Congress more than a decade to authorize the sale. This year’s proposal, which the Pentagon hopes will become part of the fiscal 2024 National Defense Authorization Act, asks that Congress approve just two of those submarines “without a deadline to consummate the transfers and without specifying the specific vessels to be transferred.”

The proposal argues that this “small amount of flexibility is necessary” since the transfers depend on Australian readiness to operate the submarines, which will involve developing Australia’s submarine industrial base through training and appropriate shipyard infrastructure.

To that end, a second legislative proposal would authorize U.S. defense service exports directly to Australia’s private sector in order to train its own submarine workers.

“This development must begin as soon as possible for Australia to become ready to own and safely operate these submarines in a manner that both maintains the highest non-proliferation standards and strengthens the global non-proliferation regime,” the Pentagon argues in the proposal.

Finally, the Pentagon is also asking Congress for permission to accept Australian payments to bolster the U.S. submarine industrial base. Australia has offered to make an undisclosed sum of investments in the U.S. submarine industrial base as part of AUKUS.

The Pentagon states in the legislative proposal that those funds would be used to “add a significant number of trade workers” that will help address “the significant overhaul backlog” for the Virginia-class submarine. Australian monies would also be used for “advance purchasing of components and materials that are known to be replacement items for submarine overhauls” and “outsourcing less complex sustainment work to local contractors.”

Congress is also making its own investments to expand the U.S. submarine industrial base as the Navy ultimately aims to build two Virginia-class and one Columbia-class submarines per year. Courtney helped secure $541 million in submarine supplier development and $207 million in workforce development initiatives as part of the FY 23 government funding bill.

Austal USA, the American subsidiary of Australia-based Austal, plans to open a new facility at its shipyard in Mobile, Alabama to begin construction on nuclear submarine modules for General Dynamics’ Electric Boat shipyard in Connecticut, which produces both Virginia and Columbia-class submarines. Austal expects it will need 1,000 new hires in Mobile to staff that facility.

At Electric Boat, the prime contractor for the Virginia- and Columbia-class submarine programs, the hiring need will be even greater. The company currently employs more than 19,000 people, after hiring 3,700 new workers in 2022, according to local newspaper The Day. But the company needs to hire 5,750 new workers this year, to manage attrition and to help grow the workforce to about 22,000 to handle the increased workload.

The legislative proposal notes that Australian funds “would be applied to recruitment, training, incentivizing, and retention of key skilled trades, engineering and planning personnel in both nuclear and non-nuclear disciplines that are required by the additional AUKUS workload.”

The competitively awarded Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, signed into law by President Ronald Reagan in 1982 and recently reauthorized by Congress, can play a greater role in bridging that gap.

As the Pentagon’s recently published Small Business Strategy makes clear, small companies are key to helping the U.S. ensure its technological superiority over China and other potential adversaries.

“Despite their significance to the defense mission, the Department of Defense has yet to utilize the full potential of small businesses,” Defense Secretary Lloyd Austin wrote. The document singles out the SBIR and STTR programs as key entry points for small businesses into the broader defense-industrial base.

The DoD’s own review of the economic impacts of the SBIR program reported a 22-to-1 return on its investment and $28 billion in sales of new technology to the military. In her testimony to Congress in support of reauthorization of the program, the undersecretary for research and engineering, Heidi Shyu, said the “SBIR/STTR programs play a vital role in enabling the U.S. to maintain technological dominance and provide the innovation to allow the U.S. to remain ahead of our adversaries.”

At our company, Physical Sciences, SBIR-funded research and development has enabled us to provide advanced technology to a range of DoD programs. Key SBIR-developed technology, for instance, has allowed us to domestically produce specialized battery systems meant to improve the safety and performance of unmanned underwater vehicles.

This is one example of technology needed for national defense, but so focused it has very limited markets. These kinds of technologies take a long time to mature and face multiple barriers to entry in the cumbersome DoD acquisition processes — what Austin called “a complex web of entry points and intricate regulations.”

Earlier reauthorizations of the SBIR/STTR programs have increased technology transition success by creating pathways to provide the additional funding necessary to successful mature technologies, including the Commercialization Readiness Program and the Rapid Innovation Fund. Acquisition authorities are becoming more adept at recognizing and applying additional SBIR funds to technologies with merit. Congress in September reauthorized the programs for three years, including with some welcome reforms to ensure oversight.

Now, they can be strengthened even further by the Biden administration and Congress.

One of the most persistent questions we get from prime contractors is about our ability to scale production to become a reliable supplier of our own technology. The production of many of these items is capital-intensive, and subject to extensive and expensive qualification requirements without parallel in the commercial world.

The Pentagon has sought a variety of novel ways to encourage sufficient investment to make the leap from prototype to production and supply chain viability — most recently setting up the Office of Strategic Capital to help small businesses secure venture capital and loans. But the lack of venture interest in many of these markets limits the impact of that approach. Any small business contemplating borrowing to fund expansion, at levels approaching its entity value, would be very reluctant to do so considering the high degree of uncertainty in the budgets of its sole customer.

There are some immediate ways the Biden administration and Congress can double down on success. In Executive Order 14017, the president directed the DoD to deploy incentives through the Defense Production Act “to support sustainably-produced strategic and critical materials, including scaling proven research and development (R&D) concepts and emerging technologies from other programs such as the Small Business Innovation Research awardees.”

Congress can provide more effective pathways to implement that policy. It can appropriate additional funding for the Defense Production Act as well as for the Industrial Base Analysis and Sustainment Program, intended in part to cultivate emerging defense sectors and invest in greater partnerships across the industrial base. As it considers these programs, Congress should directly fund and improve access to these funds for SBIR-developed technologies.

Finally, Congress needs to provide additional stability to the SBIR/STTR programs. Its recent reauthorization came down to the wire, delayed key awards, had the potential to exclude many successful performers from the program, and in the end was only for three years. Few would risk making investment decisions supporting acquisition cycles that last over a decade in that climate. It is time to permanently authorize the program.

The Department of Defense is rightly pursuing a host of investment strategies and incentives to help ensure next-generation technologies reach our troops. But while building new bridges, it should also strengthen those that exist. The alternative is squandering investments across the entire defense R&D spectrum and relinquishing technology leadership to our adversaries.

Bill Marinelli is chief executive of Physical Sciences, a U.S.-based company that develops electro-optical/infrared sensing systems and technologies for the defense, homeland security, medical and energy sectors.