All posts by : Shamima A

Six months into the fiscal year, the Pentagon still doesn’t have a full budget. Last week, service leaders warned of catastrophic effects were there to be a yearlong continuing resolution. And on March 11, the administration plans to introduce its FY25 budget request.

Welcome to budget season 2024, the government’s split-screen effort to secure spending deals for two fiscal years at once. For the Pentagon, the moment is one of almost unique uncertainty.

“We’re in this bizarro world where there’s no budget, but amendments are [being] submitted” for the 2025 defense policy bill, said Mackenzie Eaglen, a defense expert at the American Enterprise Institute.

Looming over the budgeting process for the Pentagon is the threat of a full-year continuing resolution, or CR.

In a briefing with reporters last week, the undersecretaries of the Army, Navy and Air Force warned that such a scenario would hamstring their efforts to upgrade weapons systems and ramp up production.

“There is no playbook” if that occurs, Eaglen said, noting the Pentagon has never before operated under a yearlong CR.

The second threat is possible sequestration. If Congress doesn’t pass all its spending bills by April 30, there will be automatic 1% across-the-board budget cuts, per the terms of the Fiscal Responsibility Act, a deal struck last year to avoid a government default.

The president can choose to exempt military personnel spending — about a quarter of the Pentagon budget — from those cuts, said Seamus Daniels, who studies defense spending at the Center for Strategic and International Studies. That would mean sequestration would actually trim more than 1% for the other areas of defense spending, such as procurement.

Last week, Congress passed its latest short-term spending bill, which extends the deadlines to fund the government to March 8 and 22, leaving little more than a month of cushion before the April 30 deadline. Over the weekend, members of Congress released the text of a deal for six of its annual spending bills, which could pass by the end of the week.

‘No building here’

Still, the issues surrounding the FY24 budget will cloud the White House’s FY25 request, multiple experts on the defense budget told Defense News.

“It makes it difficult for the Biden administration to plan, not knowing what the final appropriations levels are going to be for defense programs in 2024,” said Daniels.

A full spending bill for one fiscal year and the administration’s request for another are meant to be staggered six months apart. This allows the White House to factor in Congress’ preferences from one budget cycle into another.

“They need to be six months apart so that one can build on the other,” said Mark Montgomery, a fellow at the Foundation for Defense of Democracies and former Pentagon official. “We’re having no building here.”

The Fiscal Responsibility Act capped spending increases for the entire government, including the Defense Department. In last year’s budget request, the administration projected the Pentagon’s overall funding would rise to $860 billion in FY25. Instead, its cap will be $850 billion, a 1% year over year decrease in spending, when adjusted for inflation, said Daniels.

That topline will likely compound the pressure on the Pentagon’s procurement accounts created by the delay in this year’s funding, said Eaglen.

Assuming Congress passes a defense budget in March, the department would have about six months to spend new money that was meant to be spread over an entire year. Because the Pentagon won’t dock personnel pay or lower readiness, that means the procurement accounts will probably suffer disproportionately, she said.

In the meantime, that account has been a major concern of Congress. Since FY16, lawmakers have been adding more money to the Pentagon’s procurement budget than the administration requested.

They’ve been doing so, in large part, to prepare for competition with China, which has been conducting an enormous military buildup in the last 20 years and now surpasses America’s ability to manufacture many major weapons systems.

The Pentagon’s guiding strategies in the last three administrations have focused correctly on this challenge, said Mark Cancian, also of CSIS. But the department doesn’t have enough money to properly execute that strategy, he said — and the budget delays and uncertainty this year don’t help.

On March 11, Daniels said he’ll be watching the budget request’s forecast for future years. The caps instituted by the FRA only last this coming fiscal year, which means the administration could project funding increases more in line with the estimates from previous budgets.

There’s also the question of the White House’s massive national security supplemental request, which passed the Senate in February, but has since stalled in the House. Because of the size of that bill — $95 billion — the Pentagon’s budget is unusually connected to a separate piece of legislation, Montgomery said.

Cancian said he doubts any of that funding will make it into the FY24 Pentagon topline, but the Defense Department has outstanding bills for its surge of support after the wars in Ukraine and Israel in the last two years and those bills need paying.

It’s not yet clear Congress will be able to pass a full appropriation this year. Because all of its funding bills need to be passed in order to avoid a sequester, the Pentagon needs to plan for that possibility even if it gets an FY24 budget, said Daniels.

“You don’t know necessarily what the sequester is going to be, if there is one,” he said. “So you’re just injecting a lot of uncertainty into the planning.”

The Space Force’s acquisition shop has been bullish about its pursuit of fixed-price development contracts amid rising concern from defense companies that the approach puts too much risk on industry.

Space acquisition chief Frank Calvelli said today that while he stands by the fixed-price construct for much of the Space Force’s portfolio, there are some programs that require a more nuanced approach.

“I haven’t said I’m going to build the next-generation Battlestar Galactica, that’s never been built before, fixed-price,” Calvelli said at a Feb. 23 Center for Strategic and International Studies event. “We look at each acquisition individually and then we try to marry up the best strategy. When we’re doing smaller footprint systems using existing technology, fixed price works fine.”

Under fixed-price contracts, companies are responsible to cover any unexpected costs incurred during a development program. The deals are designed to reduce risk to the government, but can cause problems for industry when challenges arise.

One well-known example of this is Boeing’s development of the KC-46 tanker. The Air Force awarded the company a $4.9 billion fixed-price contract for the effort in 2011, but the company has racked up $7 billion in cost overages due to design and production issues.

In a series of earnings calls in late January, several large defense firms said they were concerned about the Defense Department’s use of fixed-price contracts. Lockheed Martin CEO Jim Taiclet said the deals lead companies to “take tremendous risk on cost and pricing.”

Northrop Grumman’s top executive, Kathy Warden, said the company has passed on high-profile defense programs due to that risk, and Chris Calio — chief operating officer at RTX and the company’s soon-to-be CEO — expressed similar sentiments.

Since Calvelli took the lead of the Space Force acquisition office in 2022, he has issued multiple memos highlighting acquisition practices that can drive speed into development programs. His vision is for the service to buy smaller systems that rely on existing technology under fixed-price contracts that push for a program to be fielded within three years of an initial award.

“When you’re using fixed price, you’re not doing the first-of-its-kind or inventing something new,” he said. “And so, I’m a little bit confused by some of the bigger primes who say they’re against that. They should not be against that.”

Calvelli acknowledged that not all programs fit that mold. He offered as an example the Space Force’s Evolved Strategic Satellite Communications program, which will provide secure, survivable communications capabilities for strategic missions. The satellites carry complex requirements and are designed to withstand a nuclear attack.

Boeing and Northrop Grumman have been developing prototype satellites since 2020 and the service expects to choose a single provider and begin production in 2025. Calvelli said that because the program was conducting early design and prototype work, the service considered a fixed-price contract as part of its acquisition strategy. However, it appears a cost-plus deal, which covers a company’s expenses as well as some profit, may be a better fit.

“Had we built a real payload or actually built the prototype of a satellite, then maybe it’s time to go off and do something fixed price,” he said. “As we revise the [acquisition strategy,] we are looking at going more towards the traditional cost-plus model.”

WASHINGTON — About two dozen leaders from the defense industry joined the secretary of defense for dinner in fall 1993. After the meal, later known as “the Last Supper,” came a half-hour briefing.

The topic was consolidation. The Cold War was over, which meant America would spend less on defense. That also meant less money for the companies in the room. Officials flashed a black-and-white graph onto the wall, showing a plunge in how many contractors the Pentagon could afford. Companies would likely need to merge if they wanted to survive.

Norm Augustine — then-chief executive of Martin Marietta, which itself merged in 1995 to become Lockheed Martin — had been there, sitting beside the defense secretary. A day later, he returned to the Pentagon and grabbed a copy of that chart, expecting it to be a historic document. He still has it today.

Within a decade, the number of large prime contractors plummeted from 51 to five, creating the modern defense industry. Lockheed merged with Martin. Boeing merged with McDonnell Douglas.

“Sitting there at the Last Supper, I felt like I was sitting in a historical pivot point,” Augustine told Defense News. “They did the best [with] a bad hand, and we’re now paying the price for the bad hand.”

That price is a defense sector that can’t move as quickly as the Pentagon wants it to. America is now supplying materiel for the wars in Ukraine and Israel, which started a year and a half apart. The high demand has strained an industry that often struggled to meet needs long before Russia’s full-scale invasion of Ukraine in February 2022.

And these wars aren’t even the Defense Department’s top priority; that’s China, whose massive military buildup over the last 20 years is the pace America’s leaders say they must match. Nowhere is this clearer than in the Pentagon’s new defense-industrial strategy, which says China’s industrial might in many areas “vastly exceeds” that of the U.S. and its allies.

In response, the plan calls for “generational” investment in the industrial base. To do so, the Pentagon is now showing a new set of graphs.

Bill LaPlante, the department’s top weapons buyer, has a wall in his office covered with images plotting how long it would take to build more missiles and other munitions. His deputies are sharing these with company after company, he said — though the Pentagon isn’t making them public.

Call it a tale of two charts: In 30 years, the Pentagon went from a defense industry it considered too large to sustain, to one now too small to surge. To understand that path, Defense News spoke with analysts and industry executives as well as top industrial base policy officials dating back to the Clinton administration. They likened the sector to something of a spring-loaded door — where capacity slammed shut due to smaller budgets, changing preferences and a thinning workforce.

That door is now creaking open again as America retools its defense industry, workforce and suppliers to compete with an advanced adversary.

“It’s dusting off a lot of skills that we’ve had in this country that we haven’t used in a while,” LaPlante told reporters in December at the Reagan National Defense Forum.

Industrial base 101

Experts on America’s defense industry tend to speak about it like an intro economics course. They often note the sector doesn’t move like other markets.

Defense companies build what governments want, but rarely any more or anything different. The Pentagon’s orders, hence, have an unusual amount of sway over the shape of the companies fulfilling them.

“The defense industry is hypersensitive to and responsive to its customers,” said Steve Grundman, a senior fellow at the Atlantic Council think tank.

Grundman worked in the Pentagon in the 1990s, in the wake of the peace dividend. Military spending had surged under the Reagan administration as the U.S. competed with the Soviet Union. But when the USSR dissolved in 1991, ending the Cold War, America had no opponents left to outcompete. Defense spending fell each fiscal year from 1985 to 1998, according to the Center for Strategic and Budgetary Assessments think tank.

Specifically, the Pentagon’s spending on procurement, research, development and construction dropped 44% during that time period, CSBA found.

America needed a defense industry built for peacetime. So arrived the Last Supper, a name Augustine himself gave the 1993 dinner. Even at the time, he said, it appeared to be sound policy. Defense spending was bound to fall, leaving the Pentagon with two choices: a sprawling industry versus a smaller, more efficient one.

Defense officials encouraged the latter. Alongside the plummet of prime contractors, the number of mid-tier and small suppliers also cratered as companies merged in order to lower costs.

Eventually the government said enough was enough. In the late 1990s, it blocked Lockheed Martin’s plan to buy Northrop Grumman. The era of major consolidation was over.

Its effects were twofold: less competition and less ability to surge. The first, in many cases, has meant the Pentagon’s orders take longer, cost more and are vulnerable to brittle supply chains. The second — caused both by consolidation and more efficient manufacturing techniques — makes it harder to respond to sudden conflicts.

Heading into the 2000s, leaders in large part began to favor weapons that were more advanced but would be fewer in number. Defense Secretary Donald Rumsfeld labeled it a “transformation” that would vault the Pentagon’s arsenal a whole generation ahead.

Some of these advanced weapons — such as the Army’s Future Combat System and the Navy’s Littoral Combat Ship — did not work out as intended. And the shift toward fewer, more capable systems further encouraged companies to consolidate.

In 1998, five companies built surface ships and two made tracked combat vehicles. By 2020, those numbers had fallen to two and one respectively.

“As dumb as it sounds, given how much we spend on defense, oftentimes the volume for any single supplier isn’t enough,” said Dave Bassett, a retired Army lieutenant general, who until December ran the Defense Contract Management Agency.

‘A wake-up call’

The peace dividend did not survive America’s wars in Iraq and Afghanistan.

The 9/11 attacks followed by the two conflicts swelled the Defense Department’s budget. When adjusted for inflation and including supplemental funding, Pentagon spending rose an average of 7% from fiscal 1999 to fiscal 2008, according to CSBA.

This spending went toward a new set of threats.

As an example, Bassett and other experts interviewed by Defense News singled out a class of heavily armored vehicles developed for the wars. The mine-resistant, ambush-protected vehicle program was Defense Secretary Bob Gates’ top priority. With heavy investment, the Pentagon fielded more than 13,000 MRAP vehicles in three years.

The program has since become a talisman for some who argue the defense industry can move nimbly if given the proper resources. But it’s also a reminder of where those resources went for more than 15 years. From 2001 onward, the Pentagon needed weapons for counterinsurgencies.

Those are far from what Ukraine needs to defend itself against Russia — an industrial-age war defined by the use of artillery and small drones. Even further are the needs of defending Taiwan, an island nation threatened by a leading manufacturing powerhouse.

“If what you’re facing is an Iraqi threat, you’re probably not going to have the same capacity as when you face a Russian and the Chinese threat,” said Bill Lynn, deputy defense secretary during the Obama administration and now chief executive of Leonardo DRS.

And the change in capacity had become clear to defense officials.

Brett Lambert, who ran industrial base policy for the Pentagon while Lynn was deputy secretary, remembers a tornado in 2011 that struck Joplin, Missouri — nearly hitting a major battery supplier.

“We realized that even though the plant itself was not hit, we didn’t have a backup,” Lambert said. “That was a wake-up call to me.”

Another warning came in the form of a four-year study of major weapons programs Lambert helped lead. He found, in large part, that prime contractors didn’t understand their own supply chains.

But while the alarm went off, no one woke up, said Robert Lusardi, a former Pentagon industry official. The study’s data, he noted, largely faded into the ether.

“Nobody used it,” he said.

‘There’s never just one problem’

Eric Chewning was vacationing with his family at the Outer Banks in summer 2017.

Sitting on the North Carolina beach with his kids, Chewning — then a partner at the consulting firm McKinsey and Co. — scrolled through his phone and saw a news release about an executive order. President Donald Trump was instructing the Pentagon’s first top-down review of its defense-industrial base since the Eisenhower administration.

“I say to myself: ‘Who are they going to get to do that?’ ” Chewning told Defense News in an interview.

Later that day, he was walking back from the beach when he got a call from the Pentagon asking if he would interview for the top industrial base policy role. In October, he took the job, which meant he would be the one running the study.

“The mindset was: How do we holistically now transition ourselves from the post-9/11 wars, where there really wasn’t ever a question around our ability to generate enough material capability, to one focused on competition with an economic peer?” Chewning said.

What he found is that doing so wouldn’t be easy — in large part because of what was happening with the American workforce. By the time the defense industry consolidated in the 1990s, the U.S. was decades into a deep manufacturing slide.

From the late 1970s to 2017, the country lost 7.1 million manufacturing jobs, or 36% of the sector’s workforce, according to the study Chewning led. Such declines serve as a challenge to any attempt to quickly bulk up America’s defense industry. Even with more advanced factories that now heavily rely on robotics, weapons still need people who know how to build them.

This is part of why capacity is so difficult to add once it’s gone, said Bassett, the retired Army general. It takes years to find and train skilled workers, as companies across the country have seen in the recently tight labor market.

While leading the Defense Contract Management Agency, Bassett studied business traits that would help predict manufacturing problems. A significant one he found was the share of blue-collar employees who had been on the job for less than a year; once it reached a certain threshold, he said, quality issues were almost guaranteed.

While the 2018 study led to some reforms, it did not reverse the trend in manufacturing, which only got worse as older workers retired en masse during the COVID-19 pandemic. Like many reports in Washington, it pointed to major issues that existed alongside other difficulties, all competing for time and money.

“There’s never just one problem,” said Chewning, now a vice president at the shipbuilder HII. “The immediate problems get the most attention.”

By 2022, the problem had become immediate. Russia launched a full-scale invasion of Ukraine, and Washington continued sending weapons to aid Kyiv.

The U.S. has given Ukraine a staggering amount of security aid — more than $44 billion since February 2022. Despite that sum, one of the lessons for many in the Pentagon has been that industry was unprepared for a crisis.

Arguably, nowhere is this more obvious than in America’s supply of 155mm artillery shells.

The 155mm round — next to small drones – has defined fighting in Ukraine. For self-defense, Kyiv needs 60,000-80,000 shells per month, Michael Kofman, an analyst at the Carnegie Endowment for International Peace, told Defense News.

That rate well surpasses the pace at which Ukraine’s Western allies could resupply them. Even with an extra $1.5 billion from Congress in 2023 to increase production, America was making 28,000-30,000 shells in December, said LaPlante, who is in charge of acquisition and sustainment at the Pentagon.

The Defense Department’s goal is to reach 100,000 rounds per month by the middle of 2025. But that pace likely won’t be possible without more funding from Congress, which has stalled a security spending bill requested by the White House.

But funding hasn’t slowed down production in recent years; from FY16 to FY23, Congress added 7.3%, or $79.3 billion, to the White House’s requested Pentagon procurement fund, according to CSBA. The problem is inconsistent demand, which LaPlante illustrated with another chart last fall.

Starting with the Gulf War 30 years ago, munition orders have gone up and down in a series of peaks and valleys: A crisis breaks out, the Pentagon surges supply, it reaches the number a couple years later, then the crisis wanes and supply falls.

“That’s one of the challenges that we have now — that inability to make adjustments because of the lack of investment that we’ve made to the industrial base historically,” Justin McFarlin, who leads industrial base development for the Pentagon, told Defense News.

Munitions are often at high risk for such whiplash. Eric Fanning noticed this pattern after years of holding senior positions with the Navy, the Air Force and the Army. Much of each service’s spending power was sewed up in large systems, such as aircraft carriers and fighter jets. More inexpensive items ended up tapered to make the budget fit. And because the Pentagon’s demand affects supply, the companies fulfilling those orders trimmed capacity over time.

Now orders are up again — this time for 155mm shells and a bevy of other munitions. For some, Congress has allowed the Pentagon to issue long-term contracts that keep demand stable for years. But for others, companies are left worrying government demand won’t last, according to Fanning, now head of the Aerospace Industries Association.

“That sense of long-term commitment is still not quite there,” he said.

‘First contact with the enemy’

The Pentagon says it’s signaling future commitments in its new industrial base strategy. The document focuses on four areas: creating resilient supply chains, ensuring workforce readiness, creating business-friendly acquisition policies and bolstering the national security marketplace.

“These are not new ideas,” Halimah Najieb-Locke, acting deputy for industrial base policy, told Defense News. “But they haven’t been said with the [needed] authority.”

In a separate briefing with reporters in January, Najieb-Locke previewed the Pentagon’s goals for its defense-industrial base over the next three to five years. One is to speed up long-lead items, such as ball bearings or solid-rocket motors that slow down the production of important weapons. Others include retooling obsolete parts of the supply chain and using more funding from the Defense Production Act, which allows the Pentagon to issue national security-related grants.

“We no longer can afford to ignore [issues in the industrial base] and hope for better,” Najieb-Locke told Defense News. “We have to take decisive action.”

But there are problems outside of the Pentagon’s control.

The first is politics. As of publication, Congress had yet to pass a full defense spending bill — the latest entry in more than a decade of continuing resolutions. Defense remains a largely bipartisan issue, but there is a widening gap within the Republican Party — one reason Congress hasn’t passed additional aid for Ukraine, Israel and Taiwan.

Today’s security environment “demands a substantial, long-term increase in resources for our national defense,” Sen. Roger Wicker, R-Miss., the ranking member of the Senate Armed Services Committee, told Defense News in a statement.

Some of his colleagues in the House are more skeptical. “The American people work diligently to earn every dollar, but it seems the [Defense Department] has become a master of squandering those funds without batting an eye,” Rep. Glenn Grothman, R-Wis., told Defense News in December.

The second external problem is innovation. In decades past, the Pentagon used to be upstream of new technology — think GPS or the internet. It’s since found itself downstream, said Lynn, the former deputy defense secretary, and much of the current advances in artificial intelligence and drones are coming from the commercial sector.

Learning how to better work with these companies is one of the strategy’s goals. Doing so, said Najieb-Locke, will involve updating the Pentagon’s buying policies to better align with the commercial sector — a market that the Pentagon has less influence over.

“Because of that rapid change [in technology], a lot of our assumptions of what will be there in time of need have [proved] to be in some cases overblown,” said Najieb-Locke.

A third challenge is America’s adversaries. The Russia-Ukraine and Israel-Hamas wars are a reminder that competitors ultimately help decide how fast America’s defense industry must work, and when.

Chris Michienzi learned this lesson from her time working on the Pentagon’s industrial base policy. For about eight years she helped steer the department’s approach to industry and saw challenges evolve. When the war in Ukraine began in 2022, she was one of a few officials working on aid to Kyiv.

Many of the problems of the last 30 years were on display. A worker shortage hampered attempts to surge key munitions, she cited as an example.

“The department gets the industrial base that it pays for,” she said.

Michienzi left her post last summer. In January, when Defense News spoke with McFarlin, who leads industrial base development for the Pentagon, the interview took place in Michienzi’s old office — a small, windowless cube.

No one had filled the space, and it was instead turned into a conference room — helpful for McFarlin as he briefed companies on the government’s new strategy.

“The saying I grew up [with] was: No plan survives first contact with the enemy,” McFarlin said. “We can plan, but we also have to be able to pivot and adjust.”

It has been almost two years since the U.S. government joined 60 global partners to call for a single global internet and technology ecosystem that is truly open and fosters competition. And yet, a single vendor controls 85% of the market for the government’s most commonly used technology. In an increasingly interconnected world facing a growing number of sophisticated threat actors, overreliance on any one technology vendor creates significant risks.

A bold vision requires bold action, and the most effective way for the U.S. government to take the lead in realizing the change it and its partners seek in the digital world is to get its own house in order. To do so, it must prioritize ensuring that its marketplace reflects the values it promotes by addressing the risks that persist from its IT monoculture.

The federal government is the largest consumer of goods and services in the world, spending roughly $600 billion each year—including more than $100 billion on IT and cyber investments. A large majority of these investments are directed toward Microsoft. Relying so heavily on a single IT provider not only increases the target profile of that provider, but also limits the ability of the government to defend itself against future cyberattacks. As Sen. Eric Schmitt, R-Mo.,recently stated, “only meaningfully employing one vendor” creates a single point of failure that adversaries can exploit.”

These concerns have been echoed across government agencies, including the U.S. Departments of Veterans Affairs and Defense. Current and former officials tied the VA’s move to go “all-in” on a single vendor to the accidental disclosure of 1,500 U.S. veterans’ personal data. Similarly, former DoD senior officials questioned the department’s decision to replace its long-running cybersecurity program with off-the-shelf tools from the same vendor providing the DoD’s software and cloud services, calling the move an “unacceptable level of risk” for the department.

In December, with the passage of the 2024 National Defense Authorization Act came lawmakers’ agreement to a key insert to the act by Sen. Schmitt (section 1553) compelling the Department of Defense (DoD) to assess the cybersecurity capabilities of the technologies it uses so as to ensure competition and interoperability—the concern being that both competition and interoperability are hindered by the DoD’s overreliance on legacy vendors. Cybersecurity experts know that an impartial analysis will likely find the DoD’s overreliance on a single vendor is severely limiting competition and interoperability, and is as a result a threat to U.S. national security.

The DoD represents the largest portion of the U.S. government marketplace, but the need to diversify IT and cybersecurity vendors extends across the government and aligns with the Biden Administration’s National Cybersecurity Strategy. The strategy is rooted in two central themes: rebalancing the responsibility to defend cyberspace and realigning incentives to favor long-term investments. As part of this, the U.S. government and major technology providers are called on to protect data, assure the reliability of critical systems, and make cyberspace more resilient and defensible over the long term.

The best place to start is in its own marketplace—where the U.S. government has the most control. For the government to best protect its systems and invest in a secure digital ecosystem, it must foster greater competition and diversify the vendors it relies on to provide and secure its digital ecosystem. Doing so would drive the values the administration seeks to realize in the broader digital world and enhance our national security posture. Additionally, such a move in the largest marketplace in the world would be a major incentive to drive change and almost certainly reduce the need for extensive regulation to enforce an open, free, interoperable market.

Until the U.S. government’s marketplace exemplifies its vision for the broader digital world, it can’t expect to lead others in realizing such a vision—at home or abroad. The U.S. government should prioritize leading by example and ensure its IT marketplace fosters competition, privacy, and security, and ultimately by selecting a more diverse set of cybersecurity and IT vendors. In this way, the U.S. government will lead by example, not exception, in bringing about the global internet and technology ecosystem that it envisions at home and abroad.

Cory Simpson is the founder and CEO of Gray Space Strategies, Inc., a professional services and strategic advisory firm based in Washington, D.C., and serves as CEO of the Institute for Critical Infrastructure and as a Senior Advisor to the Cyberspace Solarium Commission.

SAN DIEGO — U.S. Navy Secretary Carlos Del Toro has a message for government contractors: Ask not what you can do for your shareholders, ask what you can do for your country.

Speaking at the West naval conference in San Diego on Feb. 15, Del Toro, a former businessman, said that in a time of war abroad and political uncertainty at home, the U.S. needs companies to deliver weapons, warships, aircraft and more on time, on budget and without excuses.

“You can’t be asking the American taxpayer to make even greater public investments while you continue, in some cases, to goose your stock prices through stock buybacks, deferring promised capital investments, and other accounting maneuvers that, to some, seem to prioritize stock prices that drive executive compensation rather than making the needed, fundamental investments in the industrial base, in your own companies, at a time when our nation needs us to be at all-ahead flank,” he said.

“Through initiatives like the Taxpayer Advocacy Project, I have directed our contract community and the Office of General Counsel to ensure that we will leverage all legal means at our disposal to ensure that the American people are also getting what they paid for,” he added.

The message was delivered to a standing-room-only crowd teeming with some of the world’s largest defense contractors. Del Toro did not single out any one company.

The defense industry in the aggregate is financially healthy, and that status has improved over time, according to a Pentagon contracting study published in April. Traditional defense firms outperform commercial counterparts in many key financial metrics, it found.

Shipbuilder HII this month reported revenue rose 13 percent to $3.2 billon in the fourth quarter of 2023 from the same period a year earlier, as operating income almost tripled to $312 million. General Dynamics said it earned $1 billion, or $3.64 per diluted share, on revenue of $11.7 billion, the highest quarterly EPS and revenue in company history.

Del Toro said the Navy would hold accountable contractors with poor performance, including through a “deep dive” investigation of the most chronic offenders.

“We must endeavor to ensure that contracts with the Navy are delivered on time and on budget,” he said. “The global strategic situation demands it.”

As the election season heats up, candidates at all levels, from every party, are proposing a vision for improving well-being in their communities and across the country. They often turn to quick fixes to address immediate needs. Though necessary, a heavy or exclusive focus on urgent services leads us to miss the opportunity to rethink systems that would produce enduring health and well-being that all Americans desperately need, particularly those who are struggling and suffering.

Fortunately, there is already a well-designed, whole-of-government effort to build resilience and equitably improve health and well-being. This is an initiative that has been advanced by administrations from both parties. I led the development of this effort while working for the U.S. Department of Health and Human Services from 2020 through Fall 2021.

The Federal Plan for Equitable Long-Term Recovery and Resilience, ELTRR, unveiled just over a year ago, stands in contrast to previous government plans to address health inequities thanks to collaboration among 45 historically siloed agencies at the federal level. The plan also supports communities to engage in self-driven discussions of needs and solutions, and it focuses on advancing the vital conditions for health and well-being we all need to thrive, like basic needs for health and safety, humane housing, a thriving natural world, meaningful work and wealth, and more.

The ELTRR specifies 78 well-organized recommendations for interagency action, detailing how different federal entities could connect through mutual interests and existing authorities. Most recommendations are tied to a specific vital condition, along with 10 that address cross-cutting infrastructure and governance.

Recently, ADM Rachel L. Levine, Assistant Secretary for Health at HHS, said of the plan, “We are now describing what it takes to build equity and transformational resilience into federal mindsets, federal skill sets, and federal work systems.”

Interagency collaboration

At a time when gridlock in government seems to dominate the headlines, this plan demonstrates that interagency collaboration at the highest levels of government is possible and that agency actors can devise tangible solutions to America’s most pressing problems.

The vital conditions have also gained real traction with many multi-sector coalitions, accountable communities of health, health systems, and national organizations as a viable path toward addressing health inequities and making meaningful progress on the social determinants of health. I hear from them often with questions about when the federal government is going to catch up with their needs and support the flow of federal resources to state and local entities as outlined in the ELTRR.

Last year, the first recommendation in a consensus study report from the National Academies Federal Policy to Advance Racial, Ethnic, and Tribal Health Equity called for “a senior leader within the Office of Management and Budget (OMB) [to] be appointed to serve as the co-chair of the Equitable Long-Term Recovery and Resilience Steering Committee.” Several other recommendations in the report align with and amplify the recommendations found within the ELTRR. There is continued consensus about the plan’s value, but steps to ensure successful implementation have fallen short.

The federal government must take the next step: formalize the work by creating the Executive Steering Committee and solicit an external Federal Advisory Committee so that the hard work of implementation can get underway with transparency and accountability, as intended.

There’s no time to waste. Recent reporting from the New York Times and the Washington Post leaves very little room for debate: America’s health care system is in need of a major intervention. America spends more and gets less out of its health care system than any other comparable nation. Despite efforts from civil society and government alike, trends are heading in the wrong direction on nearly every indicator.

Business-as-usual practices—and politics–are impediments to the kind of change we need. To ensure the ELTRR recommendations are put into practice, the federal government must organize an advisory group that will oversee the execution of the plan. The ELTRR isn’t just the right plan to meet the moment; it also has the added distinction of NOT calling for new funding initiatives or agency authorities. It is an elegant roadmap to make government work better for the people it most needs to serve. The time is now: leaders within government who are failing to adequately empower the interagency workgroup need to get out of the way and allow the value of this work to unfold.

True progress can be achieved only by transforming the systems that hold the country’s problems in place, as is the intention with the ELTRR plan. The very nature of transformation resists being boiled down to a sound bite in an election cycle. These reforms aren’t going to win debate points but will win progress on the things that matter to improve Americans’ lives.

Becky Payne is the President and CEO of The Rippel Foundation, which is committed to fostering equitable health and well-being. From 2002-2021 she served in a variety of leadership roles within the U.S. Centers for Disease Control and Prevention (CDC) and HHS, where she was responsible for designing and launching new, large-scale initiatives, including the ELTRR.

ORLANDO, Fla. — Since its establishment last spring, the U.S. Space Force’s Commercial Space Office has been busy making connections with industry and creating pathways to deliver off-the-shelf capabilities and services to users.

The office is the service’s hub for commercial engagement, partnering with several other programs and initiatives, including SpaceWERX — the Space Force’s innovation arm — and Space Systems Command’s Front Door, an online portal companies can use to connect with the acquisition community. It’s also leading the establishment of a Commercial Augmentation Space Reserve, an effort to scale up its use of commercial capabilities during a conflict.

The Commercial Space Office’s creation came amid a push within the Space Force to strengthen its partnership with commercial industry. Officials have called for the acquisition workforce to consider opportunities to buy services and systems from industry — rather than build a bespoke government satellite — wherever possible.

Col. Richard Kniseley, who leads the office, recently sat down with C4ISRNET at the Space Mobility Conference in Orlando, Florida. He talked about the office’s accomplishments over the last year and its priorities for 2024.

This interview was edited for length and clarity.

What has your office done since its creation last year?

We marched forward with the Commercial Augmentation Space Reserve, and stood up that task force with many Department of Defense subject matter experts to really flesh out that framework. That all culminated in a successful briefing to Air Force Secretary Frank Kendall around September where he said: “Go forth and prosper.” He considered this good news and a step in the right direction, especially as we’re looking at great power competition.

The SSC Front Door has been meeting with many different industry members every day. This past August, we onboarded a new website and share tool. Since then, we’ve met with over 200 industry members. The goal of that website was to have faster response time, to make sure that we were assessing industry, understanding their maturity levels, and then understanding the mission areas they can play in so that we can get them to the right mission area owner.

Our alignment with SpaceWERX has proved very successful. We aligned a SpaceWERX challenge with one of our first reverse industry days out of the gate, which was alternative positioning, navigation and timing. The goal of that was to seed industry, but also to keep a lot of the conversations going and mature capabilities.

We also awarded, out of the Commercial Satellite Communications Office, the Proliferated Low Earth Orbit contract, which was a $900 million [indefinite delivery, indefinite quantity contract]. It went out to 20 different vendors and covered many different mission areas. We didn’t want to hone in just on commercial SATCOM, so we opened it up to alternative position, navigation and timing, as well as space domain awareness, to name a few. The goal out of that was to capitalize on dual-use capabilities.

So we are not slowing down in 2024; it is going to be a very busy year, and we’ve already got a number of different things on the horizon.

How do you expect the Proliferated Low Earth Orbit contractor pool to grow? What value will that bring to the Space Force?

While it was awarded to 20 providers, we are onboarding new providers. In fact, we have an onboarding period right now, which ends in May, where new providers can reach out to the Commercial SATCOM Office and be evaluated as a provider on that contract.

It allows the contractors to propose areas where they can benefit the Department of Defense. It’s a very open contract, and it allows us to work and reach out with a lot of those providers. But that contract also allows us to combine a lot of different requirements across the Department of Defense into one award, so that we’re not doing one award, one award, one award. The first task order that got awarded to SpaceX combined requirements from over 70 different agencies.

So it’s the ability to get better pricing and economic order quantity by combining a lot of those requirements. It allows us to get more providers on, understand their capabilities, and get those commercial capabilities out to the warfighter and better integrated across the space enterprise.

The Space Mobility Conference saw a heavy focus on space servicing. What is your office doing in this area? How are you engaging with the companies developing these capabilities?

A great deal of the companies that have been coming through the Front Door that we have been meeting with have been companies aligning themselves with servicing, mobility and logistics. So whether we have companies that are looking at the refueling aspect of it, companies that are looking at the repair aspect of it or even the maneuverability aspect of it — there is a great deal of innovation and expertise in those different areas.

What we’ve been doing is assessing these companies for their maturity level, but also one of the functions of the Front Door is to take a look at the investments in those companies — venture capital and also any potential nefarious capital. We do want to be investing in companies that are on the up and up. But at the same time, we’re also looking at companies where the government can be one of many customers and not just be a crutch to lean on.

We’ve been bridging that gap between the companies and the mission areas. We’ve been introducing a lot of great companies to the Assured Access to Space team — so looking for investment opportunities there as well as working with the Space Systems Integration Office. They are looking at the overall enterprise and where does servicing, mobility and logistics fit into that overall architecture.

You can only imagine what those capabilities will do for the mission because you will be able to refuel some of our [high-value] space vehicles, which allows them to stay on orbit longer and do more mission passes.

Some of the technologies that are coming into play have a lot more size, weight and power so that while they can be carrying space vehicles to many different orbits, these things can also carry gas cans on them. They have more abilities to stay on orbit longer. You can even deploy them, and you don’t even need to use the space vehicles right away; they could just sit there in a loiter state, which kind of lends itself a little bit more to the logistics side of the house. You could save the gas on those space vehicles and have them ready, which also lends itself more to a tactically responsive space standpoint.

What are the most important parts of the Space Force’s upcoming commercial space strategy?

It’s going to do two things. One, it’s going to be a very clear message to the government that because of the threats, we need to change how we do things. Resting on building everything in house is just not palatable anymore. We need to integrate with commercial [sectors] at better scale. It recognizes how the commercial industry is innovating every single day. A lot of the expertise is out there.

What the strategy is also going to do is be a signal to industry of areas of importance to us. We’re not going to prioritize areas, but it will be very clear some of the areas that are very important to the government. Throughout the strategy, there will be kind of a mixture of strategy, but also some implementation. So there’ll be some actions that will be in that strategy, and then it will also be further fleshed out with implementation plans that will be released after the strategy is released.

The Commercial Augmentation Space Reserve, or CASR, framework received approval last fall. How is your office implementing that?

My No. 1 focus is working with [the Office of the Secretary of Defense] and the National Space Council on a threat-sharing model. The Department of Defense has a few of them that we are exploring.

We are working to develop a surveillance plan for CASR membership. That’s really going to lend itself into the reliability construct, ensuring they stay in good standing as a member. Are they still investing in their cyber capabilities? Are they able to surge or adhere to the contract as planned? And even looking at some of their manufacturing capabilities. Once we get you to that membership, we need to make sure you’re ready for what that potential bad day might be.

We’re also integrating right now with tactically responsive space [team]. We want to inject CASR fundamentals and exercises into one of their next capability exercises. I could easily see a scenario of a surging of capability, or even potentially taking space vehicles off a production line for a CASR need. That’s really going to help us exercise the contract and the concept of operations.

We are starting to develop the concept of operations, partnered with U.S. Space Command, primarily looking at commercial satellite communications as the first one. Putting that to paper is going to help us work toward exercises as well. But then after that, it’s really working on securing funding.

When will you start putting companies on contract for CASR?

We’re going to start fleshing out the contract pieces a little bit more this year.

I promised this to industry: We will still have a couple more industry offerings so that I can be completely transparent with them before they start seeing this in contracts. I almost want to get a litmus test from them and make sure that I’m going down the right path, especially as we’re starting to develop our incentive plan.

I’m going to potentially have something this year, but probably 2025.

You previously said it’s important to have a sustained budget line, or program element, for commercial space capabilities, including CASR. Where does that effort stand?

I’m anxiously waiting on the appropriations bill. If all goes well, the appropriations bill could be the mechanism that starts the commercial space program element. There was some language in the Senate Appropriations Committee markup that pretty much allows for the creation of it, and I just want to see if that language makes its way through. Those dollars were specifically targeted at commercial surveillance, reconnaissance and tracking, so that would be a budget activity created under the commercial space piece. We’re waiting to see the outcome of that one.

What other efforts would receive funding under that new budget line?

We’re definitely looking at the funding of some enterprise capabilities, like funding for exercises, funding for threat sharing — all of that.

There will need to be an enduring CASR line in there to keep that overall enterprise together. Some of the biggest feedback we got from industry was that we need to understand what’s going on with the threat. And I totally resonated with that because that’s going to help them be more responsive to our needs. It’s going to help inform their business area. If they’re a CASR member, then that’ll help them indicate when a call-up might be OK.