Proposed U.S. DoD Budget: $670.6B

The Pentagon has proposed a $670.6 billion operating budget for fiscal year 2012, which is more than $38 billion less than it asked Congress for last year, according to federal spending documents released this morning.

The DoD request includes a $553 billion base budget and a $117.6 billion overseas contingency operations portion that would go directly toward the war in Afghanistan. (U.S. Air Force)

The request includes a $553 billion base budget and a $117.6 billion overseas contingency operations portion that would go directly toward fighting in Afghanistan, according to an overview of the proposal posted Feb. 14 on the White House Office of Management and Budget website.

As Defense Secretary Robert Gates announced in January, the budget proposal shifts $100 billion of expected savings over the next five years to "high-priority areas such as the development or purchase of unmanned intelligence, surveillance, and reconnaissance assets; more ships; a new ground combat vehicle; the Advanced Extremely High Frequency satellite; and the stealthy F-35 Joint Strike Fighter," the document said.
The budget proposal includes $113 billion for procurement; $75.3 billion for research, development, test and evaluation (RDT&E); $204.4 billion for operations and maintenance' $13.1 billion for military construction' $142.8 billion for personnel; $1.7 billion for family housing; and $2.7 billion in revolving management funds.
DoD's 2010 budget, which included two war supplemental spending bills, totaled about $693 billion. For 2011, the Pentagon proposed a $708 billion budget, including war funding, but Congress has yet to pass an appropriations measure. Instead, DoD has been operating on a continuing resolution, which is set to expire the first week of March.
The Pentagon's 2012 RDT&E request is about $800 million less than the still-looming 2011 request. Procurements accounts rose slightly over 2011.
This documents released by the White House this morning did not include a service-by-service breakdown.
As previously announced in January, the 2012 request recommends terminating several programs that are "experiencing significant development problems, unsustainable cost growth, or are not suited for today's security challenges," according to the documents. The list includes the Marine Corps Expeditionary Fighting Vehicle, the procurement of the Army Surface Launched Medium Range Air-to-Air Missile air defense system and the Navy's SM-2 Block IIIB surface-to-air missile.
"The capabilities that were to be provided by these niche systems will be largely met through the modernization and upgrade of existing systems at a fraction of the cost," the document said. "The total cost savings that will be realized from these terminations will exceed $13 billion."

Thales Issues 2010 Profit Warning

PARIS - French systems company Thales issued Feb. 14 a profit warning on its 2010 preliminary financial results, which are expected to show an operating loss of nearly 100 million euros ($135 million), due to provisions of more than 700 million euros for program overruns.
"EBIT (earnings before interest and tax) should be close to -100 million euros, due to additional charges and provisions exceeding 700 million euros booked on the contracts and activities mentioned below," according to a company statement.

The fresh provisions come on top of the 500 million euros of charges booked for 2009, making a total of 1.2 billion euros over the two years.
Thales set a target of 5 percent operating profit margin for 2011, rising to 6 percent in 2012. That compared to a net loss of 128 million euros in 2009, and a sharply lower operating profit of 151 million euros from 877 million euros in the previous year.
From 2005 to 2008, Thales's operating profit margin was between 5 and 7 percent, which included a capitalization of a significant amount of its research and development (R&D) spending, senior vice president Patrice Durand.
The present financial reporting excludes R&D from the profit line.
The 700 million euros of provisions included Thales' work on the Meltem Turkish maritime patrol aircraft program, the flight management system (FMS) for the A400M military airlifter, a ticketing contract for Denmark, and the Lorads III air traffic management contract for Singapore, Thales executive chairman Luc Vigneron told journalists.
The provisions were in part made possible by an agreement in principle with the Turkish government reached in September on the Meltem program, which gave Thales a "clear vision of the remaining costs," Vigneron said.
Thales is also in contract negotiations with Airbus in which the systems company hopes to get extra funding for its work on the flight management system for the A400M, Vigneron said. If Thales succeeds in the commercial negotiations, that might allow a claw back of some of the provisions on the A400M. Thales also supplies avionics and cockpit equipment on the A400M.
Vigneron declined to break down the provisions allotted to each of the programs. "This is commercially sensitive information," he said.
Thales engineers had worked intensively last year to clarify the work that needed to be done to deliver the Airbus A400M FMS to specification, he said.
"These recent developments significantly enhance the visibility on the execution conditions of these contracts and allow to remove the main operational uncertainties and better assess the estimates of their cost at completion and associated risks," the company said.
The detailed program analyses led Thales to take a "more prudent vision than we had before," Vigneron said. The programs were ones which dated before 2009 when Vigneron was made executive chairman of the company.
Thales has cut jobs in Australia, Britain and Spain as part of its reorganization, Vigneron said. The figures on the job losses were undisclosed for the time being, and come on top of an announced plan to cut 1,500 posts in France.
Sales for 2010 were forecast to rise two percent to 13.1 billion euros, due mainly to favorable foreign exchange effects, while orders worth 13.1 billion euros were booked, slightly down from 13.93 billion in 2009. Restructuring charges for 2011 were estimated at 1.5 percent of sales, while those for 2012 were forecast at 1 percent.
Net cash for 2010 stood at 191 million euros, up from a negative figure of 91 million a year ago. Free cash flow totaled 271 million euros in 2010.
Vigneron maintain the target for the Probasis restructuring program which was expected to yield 1.3 billion euros of cost cuts by 2014. Cuts in general overheads were ahead of target but the savings from tighter program management, dubbed "non-quality costs," were slower in coming, he said.

U.S. Will Not Field MEADS

The United States can no longer afford to purchase and field the trinational Medium Extended Air Defense System (MEADS), according to the Pentagon.

The United States cannot afford to increase funding for the design and development phase as requested by the NATO MEADS Management Agency, according to a Pentagon fact sheet on the program. (Lockheed Martin)

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DoD has decided to continue the design and development (D&D) phase of the program under the current memorandum of understanding, but after schedule and cost overruns, the United States can no longer afford to fund production of the system, according to a Feb. 11 Pentagon fact sheet on the program.

Managed by NATO, MEADS is being developed for the United States, Italy and Germany. Lockheed Martin leads MEADS International, the industry team developing the system for the three countries.
The United States cannot afford to increase funding for the D&D phase as requested by the NATO MEADS Management Agency, the fact sheet said. Instead, it will provide up to the cost ceiling established in the current memorandum of understanding ($4 billion in 2004 dollars).
Since its conception in the mid-1990s, MEADS has suffered from a number of technical and management problems that have led to delays and cost growth.
MEADS was originally slated for production in 2007. When the countries signed an agreement for the D&D phase in 2004, production was moved to 2014.
This fall, the three countries had to consider whether to approve a restructuring proposal by the NATO MEADS Management Agency, which called for extending design and development by 30 months from the original 110-month program established in 2004. This extension would require at least $974 million of additional U.S. funding. The Pentagon's Cost Assessment and Program Evaluation Office put the figure at $1.16 billion, according to the Pentagon.
Currently, the U.S. funds 58 percent of MEADS, Germany 25 percent and Italy 17 percent.
Under this new plan, U.S. production would not begin until 2018.

Three Options Considered

Due to these changes, the Pentagon considered three options: terminating the program immediately, continuing development within the 2004 funding limits, or adopting the NATO MEADS Management Agency's plan and providing the additional funding.
The Pentagon has selected option two, saying "terminating the program now, just after successful completion of the MEADS Critical Design Review, would force the nations to devote significant funding to contractor termination costs instead of using this funding to bring MEADS development to a viable level of maturity."
With the remaining funding, the Pentagon proposes focusing the remaining activities on a "proof of concept" effort "that will provide a meaningful capability for Germany and Italy and a possible future option for the United States."
MEADS was designed to replace the Patriot systems in the United States and Germany and the Nike Hercules system in Italy. The proof-of-concept D&D program would end by 2014, when the current memorandum of understanding expires.
The Pentagon says this is the best option because it allows the countries to harvest the technologies.
To complete the D&D phase of the program under the 2004 cost limits, the United States will pay roughly $804 million between 2011 and 2013.
"This work would place the D&D program on stable footing should Germany and Italy wish to continue a MEADS development and production effort after the current funding is expended," the Pentagon says. "The same options would be available to the U.S. if its air defense plans should change."
However, the United States cannot afford to both purchase MEADS and make "required" upgrades to Patriot over the next two decades, the Pentagon says.
The Pentagon has already spent $1.5 billion on MEADS. In addition to the $974 million required by the NATO MEADS Management Agency, the Pentagon estimates another $800 million would be needed for U.S.-unique test and evaluation activities.

'Accept Some Risk'

Because of the schedule delays, the United States would not be able to replace Patriot with MEADS when originally envisioned. This means funds would have to be spent on Patriot modernization and MEADS purchases simultaneously, something the Pentagon cannot afford in the "current DoD budget environment," the fact sheet says.
"The U.S. is willing to accept some risk in our air defense portfolio in the near term, not just in MEADS, but in other major acquisition programs (for example, the [Joint Land Attack Cruise Missile Defense Elevated Netted Sensor], which has been scaled back, and [the Surface-Launched Advanced Medium-Range Air-to-Air Missile], which has been canceled) in order to increase investments in new capabilities that our soldiers can use today to counter threats in Forward Operating Bases in Afghanistan, such as capabilities to Counter Rockets, Artillery and Mortars (C-RAM)," the Pentagon fact sheet says.
The Pentagon maintains that the United States can achieve some of MEADS' promised capabilities through its existing missile defense systems.
Until now, the Pentagon's main reason for continuing with the program has been its unique opportunity for trans-Atlantic joint development.
In the DoD fact sheet, the Pentagon says that international cooperative programs are just one way that Europe and the United States can interact in the defense industry arena. They are becoming "increasingly less statistically relevant as trade continues to open on both sides of the Atlantic and global supply chains become more robust," it said.

Iran names attacked scientist nuclear chief-report

Iranian President Mahmoud Ahmadinejad (2nd R) and Defense Minister Ahmad Vahidi (R) applaud as they look at a Safir-Fajr rocket engine, which is designed and made by an Iranian scientist, during a ceremony at a conference centre in northern Tehran February 7, 2011. – Reuters Photo

TEHRAN: An Iranian nuclear scientist who survived an assassination attempt last November has been appointed Iran’s new nuclear chief, the semi-official Fars news agency reported on Sunday.
Fereydoun Abbasi-Davani was slightly wounded by one of two bomb attacks on Nov. 29. The other attack killed another nuclear scientist. Tehran said the double-bombing was an Israeli operation aimed at harming its nuclear programme.
Abbasi-Davani, head of physics at Imam Hossein University, has been personally subjected to UN sanctions because of what western officials said was his involvement in suspected nuclear weapons research.
“President Mahmoud Ahmadinejad, in a decree issued on Sunday, appointed Fereydoun Abbasi-Davani as vice-president and head of the Atomic Energy Organisation,” Fars said.
The position as one of Ahmadinejad’s deputies comes as part of the job and reflects the importance of the role in the Islamic Republic where the pursuit of nuclear technology is seen as a totem of resistance against the United States and Israel.
Tehran denies it is seeking nuclear weapons and asserts it has a right to peaceful atomic power. But international concerns about its activities have led to four rounds of UN sanctions and tougher unilateral measures from Washington and Europe.
Abbasi-Davani replaces Ali Akbar Salehi who was made foreign minister in December.
The last talks between Iran and the United States, France, Germany, China, Russia and Britain stalled, leaving the possibility of fresh sanctions.

Pakistan Army turns to war movies to counter jihad

''The basic purpose is to highlight the true stories of those valiant heroes of Pakistan,'' said Brigadier Azmat Ali. - Photo by AFP (File Photo)

ISLAMABAD: After a night of fighting off a Taliban attack on his remote outpost, the Pakistani soldier lies wounded, with one of the attackers crawling on top of him. He grabs the assailant by the neck, but cannot prevent him from firing seven shots into his chest.
The death of the soldier is the climax of ”Glorious Resolve,” one of several slickly produced, action-packed films produced by the army to rally Pakistanis against extremists and counter their propaganda videos.
Aired on private and public TV stations, the films are described as re-enactments of real clashes in the military campaign in northwest Pakistan, which began in earnest in 2009.
”The basic purpose is to highlight the true stories of those valiant heroes of Pakistan,” said Brigadier Azmat Ali, executive producer of the series. ”And also to let the people know what kind of atrocities they had come across and ultimately how we are guarding against further extremism that is coming on to us.”
Although more than 2,000 soldiers have been killed in the fighting in the South Waziristan tribal region, some critics say the army is still not doing enough. However, that campaign and others has been praised by the United States, which is fighting a related insurgency just across the frontier in Afghanistan.
The 20-minute film begins with an insurgent giving a pep talk to his men around a campfire as they prepare to attack the outpost.
He speaks in Urdu, using phrases similar to those on the militants’ videos: ”This unholy army has taken over our land, has made checkpoints on our roads and is frisking our women. It fights for the white man, it fights for dollars. We don’t want peace, we need the blessing of Allah.”
The attack is then shown in blistering close-up.
The insurgents fire rockets, then slowly advance. Blood from a slain insurgent splatters the camera lens.
”We are extremely outnumbered,” a Pakistani officer shouts into a radio. ”God willing we will not let anybody get away. We will make you proud, sir.”
The film attempts to subtly undercut the appeal to religion by suggesting the insurgent chief is in it for money. As his men die under a hail of army bullets, he is shown on the phone demanding ”more dollars” from his paymaster.
The battle ends with the army killing some insurgents and repelling the rest.
Another film reinforces the mercenary element and suggests the insurgency is a foreign import. It features a militant speaking to someone apparently outside Pakistan who is paying him to produce suicide bombers.
Officers and politicians often hint at an ”Indian hand” in the insurgency, though no evidence has ever been produced that India, Pakistan’s arch-foe, is funding violence.
Most independent analysts think it unlikely, especially given the militants’ history of attacks on Indian targets.
Opinion polls by the US-based Pew Research Center suggest about two-thirds of the populace disapproves of the Taliban and other extremist groups, but only about half support the army action against militants in the northwest.
It is harder for the Pakistani government to sell a war on insurgents who, while extreme, are still fellow Muslim Pakistanis. Islamist politicians who share much of the anti-American rhetoric and conservative beliefs rarely criticise the Taliban and other extremists, saying peace deals are the answer, not military offensives. They insist the militancy roiling the country would end if the American army would leave Afghanistan.
The army has ruled Pakistan directly or indirectly for much of the country’s existence, and the media rarely criticise it or expose alleged corruption or brutality. A civilian-led government is now in power, but the generals still control defense and foreign policy.
The army’s image is in competition with the militants’ own propaganda on the internet and DVDs sold in markets in the northwest. These feature real footage of attacks on army patrols, destruction inflicted by military operations and exhortations to jihad.
Last year, footage emerged of men in Pakistani army uniforms gunning down unarmed prisoners in Swat, a northwest region where the army staged a widely praised offensive against the Taliban. The footage was largely ignored by local media but is viewable on the internet. The army has said it is investigating the incident.
Ratings for ”Glorious Resolve” and the other re-enactments shown so far have not been tallied yet. Amjad Bukhari, director of programming for Pakistan Television, said earlier army productions, which included films on its peacekeeping role with the UN in Bosnia, were highly popular.
”It is a good attempt by the army,” said Tauseef Ahmed, professor of journalism at the Federal Urdu University Karachi. ”On the one hand, it is a good PR exercise, and on the other it is an attempt to tell people how religious extremism is badly affecting their lives and future.”

Nato seizes 'pirate mother ship' off Somalia

A Nato warship has captured a suspected pirate mother ship off Somalia, Nato's counter-piracy mission has said.

It said Denmark's warship fired warning shots on Saturday, forcing the vessel to stop and its crew to surrender.
Sixteen suspected pirates on board were then held and a weapons cache seized. Two Yemeni hostages were also freed.
"These ships provide the pirates with a floating base. They pose a great threat to the merchant shipping," the chief officer of the Danish warship said.
"We have now eliminated one of these threats," Commander Haumann of HDMS Esbern Snare warship said.
The Nato mission said the incident happened on Saturday morning, when the warship came across a suspicious vessel with two skiffs on deck.
It said it believed the fishing vessel had been hijacked.
The Nato mission - alongside with the EU's naval force - has been escorting merchant ships in the Gulf of Aden since 2008.
Earlier this week, the International Association of Independent Tanker Owners (Intertanko) said Somali pirates were now using at least 20 seized vessels as mother ships to launch attacks in the region.
Somali pirates have made millions of dollars in recent years by capturing cargo vessels in the shipping lanes around the Horn of Africa and holding the ships and crew for ransom.
Somalia has had no functioning central government since 1991, allowing piracy to flourish off its coast.

Pirates have greatly expanded the areas where they operate in recent years

New Israeli army head must pacify warring generals

The process of finding a successor to the outgoing chief, Lieutenant General Gabi Ashkenazi, was marred by a “battle of the generals,” in which an allegedly forged document aimed at discrediting Galant was circulated. - AP Photo

JERUSALEM: One of the first battles for Major General Benny Gantz, tapped as the next chief of Israel’s armed forces, will be to calm a high command unsettled by months of messy infighting over the post.
Gantz, 51, a former deputy chief of staff, was only named to the position after the man designated for the job was disqualified on February 1 over allegations that he had illegally grabbed land around a luxury villa he built.
The discarded candidate, Major General Yoav Galant, who was nominated for the post last year, told local media he was the victim of a conspiracy by his rivals.
The process of finding a successor to the outgoing chief, Lieutenant General Gabi Ashkenazi, was marred by a “battle of the generals,” in which an allegedly forged document aimed at discrediting Galant was circulated.
At a February 6 cabinet meeting, Prime Minister Benjamin Netanyahu said that the political turmoil in Egypt and elsewhere in the Middle East made it more vital than ever that the Israel Defence Forces had a steady hand at the helm.
“The stability of the IDF is always important, but it is much more important now given the deep shocks in our region,” he said.
“In the circumstances that have been created, my duty as prime minister is to make clear decisions in order to lift the cloud of uncertainty from the IDF senior command,” Netanyahu added, in a reference to the succession row.
Israeli newspapers describe Gantz as a decent and straightforward man, well-prepared for the complexities of overseeing the Israeli army, navy and air force.
“He definitely fits the immediate requirement of being able to restore the spirit of the army, which took a bad beating in the past few months,” Maariv daily wrote.
“He is honest, what you see is what you get. From talking to him and others who we interviewed about him I understand that Benny Gantz is someone who spreads an atmosphere of harmony wherever he goes,” said Gila Finkelstein, a member of a committee on senior public appointments which unanimously approved his candidacy on Thursday.
“One mustn’t underrate the quality of spreading harmony,” she told public radio.
“We know that when he goes back to his office in the defence ministry, he will have a hard job restoring a pleasant and harmonious atmosphere and that is very important.”
Born on June 9, 1959 in the southern village of Kfar Achim, Gantz joined the army as a conscript in 1977, completing the tough selection course for the paratroops.
In 1979, he graduated officers’ school, and went on to serve as a paratroop company commander and platoon commander.
In 1989, he became head of Shaldag, the air force’s special commando unit, and in 1994 he returned to the army to command a brigade and later a division in the Israeli-occupied West Bank.
He has also served as the head of the army liaison unit dealing with UN forces in Lebanon and the Lebanese army, as commander of the northern Israel region, covering the Lebanon and Syria borders, and as head of ground forces.
In 2007, he became military attache to the United States, returning to Israel and in September 2009 becoming Ashkenazi’s deputy.
Gantz has a BA in history from Tel Aviv University, a masters degree in Political Science from Haifa University and a masters in national resource management from the National Defence University in the United States. He is married and a father of four.