In announcing the Administration’s defense budget (expected to be much changed after going through the congressional sausage-making process), the Pentagon made a plaintive comment that if it doesn’t get a budget of this magnitude, it will have to change its strategic requirements and expectations. Vice Chair of the Joint Chiefs told the press that “any decrease below the (president’s fiscal 2016 budget) … will require adjustments to our defense strategy.” Those comments and that angle were then placed as the lead story on the Pentagon’s news portal.
The Administration’s first salvo in what is expected to be a long budget battle is to plus up Pentagon spending to $534 Billion as a baseline budget, with another $51 billion in spending earmarked to ongoing foreign wars. This is as has been telegraphed over the past couple of weeks. For its part, the congressional majority has telegraphed a lack of interest in shedding the shackles of sequestration if it also means allowing social and entitlement spending to go up commensurately.
- Pakistan and India exchanged chest beating tests of nuclear delivery devices. Pakistan conducted an air launch of its Ra’ad missile, reported to have more than 200 mile range and some stealth capacity. To the west, India launched a new version of its Agni series missiles, the Agni-V ICBM. The launch was conducted from a ground based mobile launcher. The missile has a range of 3,100 miles, demonstrating that it is not designed solely to deter long-time antagonist Pakistan, but also greater powers. The test could be construed as a message to Pakistan to steal its cruise missile thunder, as the Agni-V has been launch testing successfully for more than a year.
- Not to be left behind, Russia announced it would test a new ICBM, the RS-26 (also known as Avangard or Rubezh), an RS-24 reputedly upgraded with a new solid propellant. Russia’s Tass news agency noted that the test was supposed to have happened in the past two months, but financial constraints had pushed it out to spring. The missiles are to first be deployed to Irkutsk.
- Nato’s head of transformation, French general Jean-Paul Palomeros, told a Brussels conference that the Alliance would be looking to replace the capability of its 17 AWACs in a multi-billion-dollar procurement. Interestingly, the effort might not put new planes in the air, but rather may involve a “system of systems” approach, placing sensors on many existing platforms that could provide a net of early warning data of greater range and greater resilience to attack.
- Raytheon’s kill vehicle used in the ground based missile defense system has been deemed inadequate, and will be replaced in a procurement to be led not by a different prime contractor, but by the U.S. military, using proposals from Raytheon and two of its competitors. $279 million has been procured for the effort. The contract for producing the government-led design will likely amount to more than $1 billion.
- Special Inspector General for Afghan Reconstruction James Sopko announced that from now on progress on helping the Afghan security forces will be classified. For six years the data showing the effectiveness of the U.S.’s $65 billion in aid has been a matter of public record. Sopko said that some of the data is sensitive and could expose weaknesses. [By late yesterday, this decision had been partially reversed, as it applies to readiness figures.]
- In addition to a new GPS III satellite procurement, the new Air Force budget would pay for five launches, two of which would be “set aside” for competition. This follows the very public recent settlement of a SpaceX protest that the Air Force had deliberately prevented competition when it awarded United Launch Alliance a bevy of launches over many years not long before SpaceX was expected to gain certification to compete. ULA uses Russian engines to loft satellites into orbit, and the new Air Force budget also has a line item to reduce reliance on Russian hardware, although the mechanism for doing so isn’t yet clear.
- The Carlyle Group, which purchased the majority of Booz Allen Hamilton’s government consulting business back in 2008, is unwinding that position, selling shares to reduce its exposure to BAH down to 29 percent of the firm. This follows earlier sales reducing its stake to 37 percent. BAH has given FY 2015 guidance that it expects revenues to be down slightly with earnings roughly flat. The shares sale, managed by Morgan Stanley, is expected to close Friday.
- Turkey’s defense exports were up 17.7 percent in 2014, a relatively consistent year-over-year performance, as the country has seen its exports more than double over the past six years. Turkey now claims to produce 60 percent of its own armaments, up from 20 percent dozen years ago.
- Iran launched a domestically-built Parmida 6 94-meter vessel, the first of its kind, geared to military transport and area denial activities. It is now plying the Persian Gulf.
- The Army, Navy and Air Force each had their respective Administration budget briefings yesterday afternoon. Each are about 25 minutes long with 10-15 minutes of questions afterwards.