Inside the Headquarters

Friday evening — the night when the two candidates for president of the U.S. spouted in the broadest of concepts was also a surprise coming out of sorts for the Navy’s littoral combat ship (LCS).

On a night reserved for foreign policy matters, both men, resplendent in dark suits, varying versions of the red tie, and remembrance bracelets, discussed the economic woes of Wall Street and the yet-undecided plan for a hefty federal buyout of mortgage-backed securities. As the moderator, snoozeman Jim Lehrer, pressed both for specific cuts each foresaw in the aftermath of the looming, historic expenditure, Republican hopeful, Arizona senator, and former Navy flyboy John McCain said every agency of government would be examined. He singled out “… defense spending, which is the largest part of our appropriations. … We now have defense systems that the costs are completely out of control.” Maverick Man zeroed in on the LCS, long a personal fave here at “Inside the Headquarters.”

McCain correctly noted the LCS budget has swelled from $140 million to $400 million per ship. He stated, “… We have to do away with cost-plus contracts. … We need to have fixed-cost contracts, but we have to get a lot of the cost overruns under control.” Few would disagree, though his audience probably assumed the “problem” lay with Big Bad Business, though McCain never specified. Few watching could know the LCS budget buster (though, the Navy finally accepted delivery of LCS 1 from Lockheed Martin Corp. has been due in large part to Big Bad Defense. The Navy has yet to meet a contract it did not want to change. When asked about their penchant for change (real change, not rhetoric), officials at Program Executive Office Ships indicated they would continue to alter shipbuilding specifications to produce the best ships possible.

That’s great, but our contact at Lockheed says the sea service is slow to acknowledge that change costs money. (And judging from LCS, lots of it.) Contractors must bid their best price based on best-case scenarios to be competitive. They cannot afford to go fixed-price until DoD has its change agents under control.

“Jim, let me just make a point. I’ve got a bracelet, too …”

The debate continues over the fate of Salim Hamdan — Osama Bin Laden Bad boy, designated driver, and Guantanamo Bay detainee.

The prosecution has asked the judge in the case to reconsider sentencing, tossing out the allowance for time served.

We’re told prosecutors have petitioned Judge (Capt.) Keith J. Alfred, asking that the Hamdan jury’s verdict be set aside (our term) and that arguments be permitted for resentencing. Our guess is the judge will not appreciate the running of his court to be called into question. He will be less-than-thrilled with the challenge to his instructions regarding allowance for time served. That said, Alfred probably will grant the prosecution’s request for oral arguments, so everyone will shuffle off to Guantanamo Bay, Cuba, again.

In August, Hamden was sentenced to nearly six years, with credit for the five and a half, he has been a guest at the island facility, putting his release date around Dec. 30. His defense team was pretty darned pleased since the Man-Boy of Yemen faced 30 years behind bars for conspiracy. He was found guilty of the lesser charge of material support for terrorism.

One of Hamdan’s defense attorneys (he’s probably biased) says the prosecution needs to make its challenge, but does not see much point.

One former military commission prosecutor was surprised by the move, but sees the merits. He noted Hamdan’s incarceration was lawful detention and not punitive pretrial confinement, so the judge had been “wrong” in his instructions to the jury allowing for credit for lawful detention. He says the prosecution is probably acting on principle; they figure they will lose at Guantanamo Bay, but will be able to appeal the decision to get a definitive ruling on pretrial confinement/lawful detention credit — an issue that might impact all future trials.

According to one source, both DoD and the convening authority have been at odds over Hamdan’s future. It seems DoD would like to send the Man-Boy packin’ back to Yemen — and the sooner the better. The convening authority wants him to serve his entire sentence.

Hamdan: Let freedom ring.

According to defense industry experts, U.S. defense companies might be unscathed by the recent turmoil on Wall Street. These firms are flush with cash. Cash cows. Rolling in the dough. Top o’ the heap. (King of the Hill. A Number One.) Defense giants across the country are healthy, wealthy, and probably high-fiving it as they move forward with government-financed, mutlibillion dollar programs.

The question on defense industry minds is how long this party will last. At least one presidential candidate recently stated there are areas in defense that could be cut. It is unlikely this was political grandstanding; his revelation is no surprise to anyone in or around the large, unwieldy, and often (unintentionally) wasteful DoD. 

But for now, it is full speed ahead, even if on the taxpayer dime. It is predicted that 2010 might be the last big infusion of cash into defense spending. Since 2002, the services have become dependent upon “supplemental” budgets approved by Congress, essentially running two budgets and two sets of books (one “war” one “not war”). We say, “Enron!” They say, “GWOT!” Lipstick? Pigs? We digress.

Defense companies are so solid, finance experts say if they needed credit, they could get it. The reported state of the economy juxtaposed with the health of the defense industry make mergers and acquisitions within the industry more affordable. Such moves would not prove to be the shockers of the 1990s, when the fabulous-but-fading (and flat broke) painted ladies sold themselves in desperation.

Despite the good times, wise defense contractors might be looking at diversification, anticipating the inevitable cutbacks in government dollars. While commercial avenues do not present a good alternative, one look at the list of proposed foreign military sales shows a run toward foreign (and profitable) pastures.

Can defense denizens (large and small) avoid the misfortune of Wall Street’s epic purge? Can their front-line contractors? Magic Eight Ball says, “My Sources Say No.”

The U.S. Air Force has maintained for some time it needs a new aerial refueling tanker to replace its aging fleet. With some aircraft pushing 50 years of age (wow!), it seems all the more remarkable that a seven-year replacement effort has yielded little except controversy (daily), disgrace (much) and at least one prison sentence (Boeing).

On Sept. 10, Defense Secretary (and occasional superhero) Robert M. Gates, who not long ago had announced he had hoped to have a actual contract (for aircraft no less!) before year’s end, told Congress that DoD had made the process so complex in those years and it had become so charged with emotion, it was impossible to hold a competition that would be viewed as fair and objective.

Solution: Gates has punted the issue to next administration for it to devise “a new acquisition strategy for the KC-X.”

Our take: No gas, no go. It can be seen as a security issue.

Speculators, and the vultures they fly on, say procurement throughout DoD just might be that bad. Not that there has been any indication from the other services.

To recap: This Air Force tale of woe began in 2001 when it pushed for a replacement. In 2003, the junior service agreed to a sole-source deal in which it would lease a tanker fleet from Boeing (which sounds odd.) The deal turned scandal when some shady deals were revealed involving a former Air-Force-procurement-official-turned-Boeing-employee and Boeing. At least two people were sent packing to prison.

Fine. A contract to build the replacement aircraft went out for bid and was awarded to Northrop Grumman in partnership with Boeing archenemy, Darth Vader (really Airbus parent company, EADS.) Rebidding efforts became mired in controversy. Superhero Gates snatched the process from the Air Force and placed responsibility with DoD procurement officials. Boeing continued to hold DoD hostage when it threatened to walk if further demands were not met. (Who does this? What was DoD afraid of?) In the meantime, Superhero canned the Air Force leadership. Boeing cocked the hammer and held the gun to Superhero’s head. Game over. See everyone next season.

Gates may be a man who knows his limitations or DoD procurement (from top to bottom) is seriously flawed. How many contracting commands does the Army now have? The Navy shells out billions to defense behemoths without getting a ship launched. Have the fat cats of defense gotten even fatter off a dead-in-the-water process?

Sounds like a job for the new Dynamic Duo — Henry Paulson and Ben Bernanke.

Afghanistan and U.S. operations are the lynchpin to efforts to defeat al-Qaida. Historically, efforts by other nations there (say, Great Britain and the former Soviet Union) hint at the challenges and frustrations — some already encountered; others that might lie in wait — notably in the mountainous regions that are no-man’s or everyman’s land. (Depends on the man.)

Recently, the U.S. publicized efforts that they hope will help defeat al-Qaida elements, notably attacks across the fluid border that thinly divides Afghanistan from U.S. ally Pakistan.

U.S. Joint Chiefs Chair Adm. Mike Mullen visited Pakistan to help quell concerns over U.S. forays (OK, bombings) into Pakistan territory (or to reach some loose agreement that all parties can deny about what U.S. and Pakistani forces do in the area. We just won’t know until the next Bob Woodward book.) Taliban forces live and train in the vast region and step into Pakistan where it is believed villagers are supportive.

While that whole dropping-bombs-on-a-sovereign-nation-thing might give some pause, one source who served in the region (and was attacked by Taliban forces) says of U.S. actions, “Good idea. Great that we’re open about it.” He noted that this was one of the big problems in Vietnam, “There are no stop signs in war, but that’s how we often operated in Vietnam. We needed to go into Laos and other places more than we did, and that’s what we’re doing now. Openly.”

Afghanistan, which many consider more complex than Iraq, is a nation of provinces and warlords. (We won’t even toss Afghan President Hamid Karzi’s boys in the mix.) It is known that al Qaeda moves with relative ease. According to one former provincial reconstruction team commander, it will take a generation or two (or three) to educate the population needed to push out the bad actors and keep them out.

Until then, the U.S., with its mishmash of unenthusiastic allies engages otherwise. U.S. Special Operations forces are busy fighting the enemy when not fighting among themselves. Marine Corps Commandant Gen. James T. Conway has been pushing to move his Marines into Afghanistan. Provincial reconstruction team numbers are surprisingly small. Cross-border attacks have been a matter of discussion for some time. How long can they be sustained or justified?

The Magic Eight Ball is on hiatus. 

Word has it that Northrop Grumman, the defense giant contracted to build the Navy’s next generation of destroyer has worked to get the project canceled.

A source in the shipbuilding industry tells us Northrop, in a move to protect profits, pushed hard to get DDG-1000, the Zumwalt-class all-things-to-all-people, guided-missile destroyer gutted before the over-budget (and unstable) platform went further into production.

The company has the contract for DDG-1000, which has not proved to be the dream vessel Navy backers touted it to be. As reported in July and discussed here recently, Navy officials cut the class from seven to two ships, with the fate of a third hanging in the 2009 appropriations balance.

The two Zumwalts currently under construction reportedly are cost-plus contracts. Over budget? No problem! Northrop Grumman gets its money. It seems there had been rumblings the Navy wanted to renegotiate the contract for future ships, placing the vessel on a fixed-price contract — a la the deal that wasn’t that stalled the littoral combat ship program (for now) with Lockheed Martin and General Dynamics. (Navy: We must control costs! Lockheed: Then you need to stop making changes! Impasse.)

Northrop thought it prudent to avoid a similar mess. Hey, kill the Zumwalt (a controversial chief of naval operations (whom no one liked anyway) and push forward with, oh, an additional eight Arleigh Burkes (everyone liked him)! Yeah. The DDG-51 program has been successful (and has lacked the drama we’ve come to expect), and Northrop Grumman reportedly has production down to where it can make money on those babies.

Northrop Grumman has become the defense contractor about town. It was they and partner European defense giant EADS that took top prize in the competition for the Air Force aerial refueling tanker contract. (That deal is on hold for now following a Boeing Corporation protest of the award and an exasperated defense secretary.) Aside from the Arleigh Burke cash cow, the Zumwalt was pushing a cool $29 billion.

So, Congress has forced the issue to get a third Zumwalt budgeted. Northrop Grumman probably has gotten the overall program killed. One question: Is the Navy making any decisions? Could the Navy be stuck back in the 1990s looking for its compass heading? Is it dead in the water (for now) with no clear threat to confront (other than itself)?

Billions on the path to self-discovery.

Our boys in Navy Blue have been saying little about programs they once touted as revolutionary — or at least pretty gosh-darn important to the sea service’s future. They are mum about vessels that were supposed to help pave the way to that coveted 300-plus ship Navy that has been all the rage.

The Navy has enlisted the services of (accidental?) surrogates: Members of Congress.

In July, the Navy all but abandoned the Second Coming of the Surface Fleet, slashing the number of DDG-1000 Zumwalt-class guided-missile destroyers from seven to two, leaving a third kinda-sorta still in play in the 2009 budget. The move apparently was a shocker to longtime congressional backers, many whose districts stood to benefit from Zumwalt contracts. Navy officials claimed the Zumwalt was not the missile platform needed in light of new threats and looked instead to the proven Arleigh Burke class (DDG-51). Unimpressed and unsympathetic, lawmakers demanded a better explanation from the Navy (and probably could smell the indecision and fear from the Navy’s leadership). After the smoke cleared, Republican Sen. Susan Collins of Maine, where DDG-1000 is being built at the Bath Iron Works, announced the Navy’s “decision” to move forward with a third ship. We figure, because Collins is on the Senate Armed Services Committee, she and her colleagues made an offer the Navy couldn’t refuse, like a “threat to block funds for all surface warships.” (We cannot confirm rumors that Chief of Naval Operations (CNO) Adm. Gary Roughead found a severed goat’s head in his bed.) But that third ship remains in troubled waters: The funding is programmed into the Senate version of the 2009 appropriations bill but apparently is not in the House version.

The decade-plus-old DDG-1000 class had been billed by the Navy as the next generation of destroyer. But multimission might not be a good thing: costs have pushed past $4 billion a ship, according to some estimates. Was concern heightened when the Zumwalt flipped in the tank during testing, as confirmed by the Navy following our queries? We’re no naval architects, but it seems reasonable that the Navy can only bolt so much onto that superstructure before the former CNO’s name sake sinks at the pier or goes belly-up.

In what new and exciting ways will the Navy continue to sabotage its own efforts to achieve the magic “313?” Alienating lawmakers is worthy of a Darwin Award.

Defense behemoth Boeing Corporation has had more than its share of very public highs and lows of late. Losing its multibillion dollar bid for the next generation of the Air Force tankers was a blow; it went on to win its protest (a rarity in the contract world) only to  threaten to walk away from the process if government officials fail to grant an extension for submitting new bids.* A similar scenario might tank a lesser entity.

Now add lawsuit and strike to the list. (We have not confirmed rumors that Boeing has moved its headquarters to the Alamo.)

In an interesting move, the Feds are suing Big Bad Boeing, alleging the aviation giant inflated B-1 bomber equipment prices. The suit says Boeing bilked its doe-eyed client, the U.S. Air Force, for a paltry $7.5 million (probably more than the daily cost overrun on some naval programs). Deceit? Cost of doing business? Do we not now assume that either side would sell an aging female relative to make or save a buck? This is the same Air Force that chose Northrop Grumman over Boeing in the $35 billion tanker competition. Dog-eat-dog? (The contract negotiations named in the suit date back to 1990. Under the False Claims Act, the government can recover three times the amount in dispute plus penalties.)

If it’s not embarrassing enough to be sued by Big Brother, whose business remains crucial to Boeing’s bottom line, the company is facing a strike of 28,000 machinists costing the giant $100 million each day, though reports note Boeing has the war chest to weather this storm. It has been reported the two sides are nowhere close to a deal, with 87 percent of the union voting for the walk out. The strike could delay the Boeing bird, the new 787. According to The Wall Street Journal, the controversy centers around outsourcing for the 787, a plan that ultimately backfired on Boeing suits.

What impact can a law suit and strike have on the defense daddy’s shot at other contracts in the near term, say, the tanker deal or any other government-Boeing agreement? Neither Boeing’s overcharge nor its labor woes are unique, but do these companies win $35 billion deals? Not that DoD hasn’t made questionable awards in the past. (Have we mentioned those $50 million Air Force Jumbotrons lately?)

Earning the title of “Beltway Bandito” one contract at a time.

*In a move that could be seen as a Boeing victory, Defense Secretary (and occasional superhero) Robert M. Gates has scrapped the tanker contract for now, pushing further decisions to the next administration.

They are called Nigerian scams, it is said after the con games that originated in Nigeria when the bottom fell out of the oil market in the 1980s. These pleas for help — and ultimately money — have proliferated beyond Nigeria to other parts of Africa, Eastern Europe, and Asia and have multiplied further with the Internet. People still fall for them. If you’ve seen enough of this spam, the stilted language and predictable formula can provide a few minutes of cyber entertainment. The FBI has posted warnings about this tactic. 

A reader forwarded a new military twist on the scam he recently received in which the “perps” (We were big “NYPD Blue” fans.) are pfishing for unsuspecting do-gooders, who would not mind turning an easy profit at the same time. This example with its unintentionally joint flavor, asks the recipient for nothing more than a response, so it seemed either this was a scam of a scam or the perps would make their move after gaining some trust with the targeted patsy. The latter was true, and we patsies did some pfishing of our own and got what we were looking for — and more .

This supposed plea from Iraq has been made under the name of Lt. Col. William Russell. The above photos came in the second e-mail. Recognize the man in the picture? Well, we didn’t, but Google worked its magic. He is, in fact, Lt. Col William Russell of the U.S. Army — not the U.S. Marine Corps, as the letter and bizarre rendering of an “ID” say. Russell left active service to take on Pennsylvania Bad Boy and retired Marine Rep. John Blurtha, in the upcoming election. (Is nothing sacred?)

Here is an excerpt from the initial e-mail:

From: LT. COL. WILLIAM S. RUSSELL 
Subject: FROM LT. COL. WILLIAM RUSSELL
To:
Date: Tuesday, August 5, 2008, 12:16 PM

Hello,

I hope this e-mail message meets you well? I am in need of your assistance. My
name is Lt. Col. William Russell of the Engineering Unit of US Military (MARINE)
here in Ba’qubah in Iraq, and a citizen of the United States of America.

We have about $20 Million US dollars that we want to move out of this country
(Iraq). My partners and I need a good partner out there, someone we can trust to
receive the funds on our behalf. It is an oil money and legal,there is no room
for fear here. …

Below is an excerpt from the very lengthy response we received back. (We were flattered he was happy to hear from us.)

Thanks so much for your respond. Please note that these transaction is a deal and must be kept strickly [sic] confidential for us to succeed.

Further enquiries I made as regards to these deal shows that we have got two options to pull the funds out. …

Then BAM: 

“Let me know your desired choice to receive the funds and also send to me the underlisted details;
1. Your direct contact details (mobile phone and fax, residential/official addresses) 
2. The details of the nearest airport to your destination 
3. A scanned copy of your International Passport/ driver’s licence [sic] for trust. 
Soon I receive all needed, I shall commence with full TRUST.  
You can reach me vie my satalite [sic] phone only permitted for use; +88 216 4444 7729 
Waiting.

Lt.Col. William Russell

Who can resist a closing of “Waiting” and Russell’s come-hither look? Scams and the people who fall for them will continue. The creative, albeit absurd, addition of a military theme might catch even more pfish in this potentially devastating net. 

Surge: The final frontier. Its mission: to send “mass” forces in Iraq to … win. To explore strange worlds, to save lives and ancient civilizations, to boldly go where no 30,000 has gone before. (Cue music.)

Questions have simmered amid whispered speculation on the value of the surge, the addition of 30,000 troops to the 130,000 already on the ground in Iraq. Was this increase of less than 25 percent just what commanders ordered to tip the scales? An accurate answer might lie many years down the road (that is, if some Ph.D. candidate stumbles upon some obscure references to the current operations in Iraq).

The Washington Post associate editor and prolific author Bob “Watergate” Woodward, author of “The War Within: A Secret White House History, 2006-2008″ (Simon & Schuster, 2005), reports that “groundbreaking” new covert techniques enabled U.S. military and intelligence officials to locate and kill insurgent leaders and key individuals in extremist groups such as al-Qaeda in Iraq.” He sites four factors in reducing violence there: “covert operations, the influx of troops [surge], the decision by militant cleric Muqtada al-Sadr to rein in his powerful Mahdi Army, and the so-called Anbar Awakening, in which tens of thousands of Sunnis turned against al-Qaeda.” Our guess has long been Sadr’s cooperation and the Take Back the Streets movement (of sorts) in Anbar have been da’ bombs (no pun) and might prove deciding factors long after the combat Yanks go home. 

The covert techniques Woodward mentions might have included Great Britain’s elite special forces, the Special Air Services, eradicating 3,500 or so thugs/freedom fighters in the past year, according to a U.S. intel source. (This info is in the public domain, he says.) Did the surge help create an environment in which the silent and deadly could do their work? Did it set the political stage for Iraqi v. Iraqi? Were people more willing to give up the bad guys and take to the streets again? Chicken-egg?

The reality of the surge might be most important to U.S. strategic types. Woodward’s account shows both a military and civilian leadership in disagreement. Though the current political administration has come under intense criticism over operations in Iraq, if reports on the book are any indication, the current commander in chief might come out on top, though others, like former Iraq commander and current Army Chief of Staff Gen. George W. Casey Jr., do not fare so well. (Reports say the White House is protesting POTUS’ portrayal.)

It seems the book makes compelling reading for political and military wonks alike. One of the juicier tidbits is the role Woodward recounts of retired Army Vice Chief of Staff Gen. Jack Keane. It seems the president; Gen. “King David” Petraeus,the current man of the hour in Iraq; and Uncle Jack had an elaborate system of “back channeling” information, using the vice president, for example, it seems without his knowledge. Wonk heaven!

King David himself is not yet doing the victory jig in the end zone. Woodward, the consummate D.C. insider, might have written quite the little gem. Surge, the final frontier.