The officials said that Naval Air Systems Command, which grounded the controversial tilt-rotor aircraft about three months ago, will lift it and allow the services to begin implementing their plans to get the Osprey back into the air. Austin met with the top service leaders, including for the Navy and Air Force, on Friday morning, according to the officials, who spoke on condition of anonymity to discuss plans not yet made public.

Air Force knows what failed in fatal Osprey crash but not why

The Osprey has been grounded for almost three months following a Nov. 29 Air Force Special Operations Command crash in Japan that killed eight service members. The Japan incident and an earlier August Osprey crash in Australia that killed three Marines are both still under investigation. The Air Force has said that it has identified what failed in the Japan crash, even though it does not know yet why it failed.

The decision to end the flight ban is up to Naval Air Systems Command, but Austin had asked for an informational briefing on the matter because of the significant safety concerns and the fact that three of the services and a critical ally are involved in the program. While Austin does not have approval authority in the return to flight process, U.S. officials said his endorsement of the services’ plan was considered a key step.

In the months since, the services have worked on plans to mitigate the known material failure by conducting additional safety checks and establishing a new, more conservative approach to how the Osprey is operated.

Five months into the fiscal year, which began Oct. 1, lawmakers have yet to pass a full FY24 budget. The uncertainty has raised concerns in the Pentagon that Congress may put the department on a one-year continuing resolution with a 1% sequester.

Without an FY24 defense budget, the Pentagon remains unable to implement new modernization programs and cannot take new steps to expand the defense-industrial base amid wars in Europe and the Middle East.

“The lack of full-year funding has put key government programs in purgatory, wasted taxpayer money on outdated budgets and hindered forward progress that will make the country more secure, push us to the next levels of technological advancement and support American competitiveness in key industries like aerospace,” Aerospace Industries Association chief executive Eric Fanning said in a statement.

The House voted 320-99 to pass its fourth temporary spending measure, and the Senate followed suit shortly thereafter in a 77-13 vote. Under the latest stopgap spending bill, funds appropriated for Veterans Affairs and military construction will expire on March 8, two weeks before Defense Department funding runs out.

Congress is expected to vote on the FY24 Veterans Affairs and military construction spending bill next week. But lawmakers have yet to finalize the FY24 Pentagon spending bill.

The right-wing House Freedom Caucus has insisted on several policy riders in the appropriations bill that Democrats have ruled out as poison pills, including bans on the Pentagon’s abortion travel leave policy and medical care for transgender troops.

Last year’s debt ceiling deal caps FY24 defense spending at $886 billion. If Congress does not pass a full FY24 federal budget by April 30, the debt ceiling agreement puts government funding on a one-year continuing resolution that would cut spending at the Pentagon and all other federal agencies by 1%.

Pentagon sounds the alarm

The undersecretaries of the Navy, Army and Air Force told reporters Wednesday a one-year stopgap funding measure at FY23 levels would result in billions of dollars in “misaligned” funds at the Defense Department.

To cope with a one-year stopgap measure, they said the Defense Department would first have to prioritize current operations in places like Europe and the Middle East, followed by personnel, then acquisition and modernization.

Navy Under Secretary Erik Raven noted this would result in the military submitting “unprecedented” reprogramming requests to Congress. The Navy, for instance, would need Congress to approve a $13 billion reprogramming request to address $26 billion in misaligned funds.

It would also result in a $2 billion shortfall for the Virginia-class attack submarine program and another $800 million shortfall for amphibious ship spending. Congress has provided a $2.2 billion carveout for the Navy to continue work on the Columbia-class ballistic submarine program, most at risk of falling behind schedule.

Other services would not be able to begin new initiatives either, including a highly prioritized munitions ramp-up following the influx of arms the U.S. has sent to Ukraine and Israel with more due for Taiwan.

“These are production rate increases, new starts — both in programs for acquisition as well as military construction projects — that we cannot start,” said Army Under Secretary Gabe Camarillo.

Congress has still not funded the multiyear munitions procurement plans it authorized for FY23 and FY24, and Camarillo noted those funds are needed “to give industry the incentive to be able to facilitize, invest in a workforce and be able to do those extra shifts that we know that we need in order to restore our munitions.”

The $95 billion foreign aid bill for Ukraine, Israel and Taiwan also includes considerable funding to ramp up the munitions-industrial base. But House Speaker Mike Johnson, R-La., has so far refused to put it on the floor for a vote after the Senate passed it 70-29 earlier this month.

For its part, the Air Force warned earlier this month a 1% sequester would reduce its buying power by $13 billion and put $2.8 billion in space modernization projects on hold.

A full-year continuing resolution that would keep fiscal 2023 spending levels through the rest of 2024 means the U.S. Army, for instance, would run out of operations and maintenance funding in the European theater as it trains Ukrainian soldiers to defend against Russia’s ongoing invasion of the country, which has entered its third year.

The financial strain is compounded by the lack of certainty over whether Congress will pass a supplemental funding package that would reimburse the Army for expenses incurred so far in bankrolling support to Ukraine.

The Army already spent $500 million in the European theater in operations and maintenance, and “we were counting on a supplemental to be able to sort of replenish us for that,” Army Secretary Christine Wormuth said at a Feb. 27 Defense Writers Group event. “What that means is probably by late spring, summer, we would have to make some difficult choices about other [NATO] exercises, for example, that our forces participate in.”

Additionally, the Army has been funding support to Israel to include deployments of units to the Middle East in the event they are needed, she added.

Army Under Secretary Gabe Camarillo told reporters Feb. 28 at the Pentagon that the service spent $100 million in U.S. Central Command’s area of operations as well as another $500 million to support the U.S. Southwest border security mission.

“I do worry. Our budget has been flat for the last couple years. We don’t have a lot of cash under the sofa cushions, and if we don’t get a budget and we don’t get a supplemental, we’re going to probably have to cancel some things,” Wormuth said.

The Army is prioritizing current operations, Camarillo said, which means it is “going to have to look to other areas of O&M spending where they “can potentially take some risk,” including “exercises and the degree to which we participate in some around the globe. We might have to scale some of that back in the absence of an appropriation this year.”

For the Air Force, Kristyn Jones, who is performing the duties of the service’s undersecretary, told reporters alongside Camarillo that in order to pay its personnel, training exercises would take the hit.

“Anything that’s already on a [Foreign Military Sales] case won’t have a dramatic impact, but all of the replenishment that we’re expecting in the supplemental is currently impacted. And even things like F-35 [fighter jet] training that we’re planning … with our allies and partners, that’s impacted by not having this appropriation as well.”

The Air Force is focused on trying to ensure flight hours are maintained, but it’s also important, Jones noted, that pilots receive training.

Despite the military’s experience in warfare, “we’re in a different strategic environment and we need to do the exercises, often joint and allied, to prepare for that environment. And the lack of our ability to do that doesn’t allow us to, again, to test the new techniques, the new military tactics that we’d like to have primarily for an Indo-Pacific fight,” Jones said. “That’s really where we need to stretch our muscles a little bit more.”

Learning from sequestration

With a possible extended or full-year continuing resolution, the service undersecretaries said the last time the military felt such a painful budget crunch was during the 2013 sequestration, where the services were required by law to make percentage cuts evenly across spending lines.

One of the fallouts of the 2013 sequestration was a rise in aviation mishaps because vital training flight hours were cut. Military Times and Defense News took a deep dive into aviation mishaps from FY11 through FY18 and uncovered the trend.

“Safety is always going to come first,” said Navy Under Secretary Erik Raven, “but we did look at the lessons of 2013 and sequestration, where we spread risk around the enterprise, and I think the concerns about maintaining ready and trained forces are part of the lessons that we’re using to inform if we get into this worst-case scenario where we don’t have our ’24 budget enacted and we are under a CR.”

“We’re not going to repeat that same peanut butter spread,” he added.

But trade-offs will be inevitable, he acknowledged, and “we’ll have to look across the board to see how to maintain the focus on current operations.”

One stopgap option would transfer additional weapons from U.S. stocks without funding to replenish that equipment. Another option uses the Excess Defense Articles program to send U.S. equipment to third-party countries that then send older weapons to Kyiv.

The European Union is also stepping up its assistance. It passed $54 billion in economic support for Ukraine after Hungary dropped its opposition.

But none of these stopgap measures to staunch the bleeding come close to the influx of arms for Kyiv that Congress could unlock if it passes the $95 billion foreign aid bill for Ukraine, Israel and Taiwan.

“The consequence of not doing so is likely Ukraine’s defeat,” Sen. Chris Murphy, D-Conn., told Defense News last week after returning from a congressional delegation to Europe. “There is not a plan B there. There’s certainly more that Europe could do, but there are certain weapons systems that only the United States can provide and maintain. And there is a hard limit to the amount of resources Europe can put in if the United States chooses to leave the coalition.”

Ukrainian officials also attributed Russia’s recent conquest of Avdiivka to the lack of available weaponry when Senate Majority Leader Chuck Schumer, D-N.Y., led a congressional delegation to the war-torn country last week.

House Speaker Mike Johnson, R-La., has refused to hold a vote on the foreign aid bill, which includes $48.3 billion in additional military assistance for Ukraine. The Senate passed the bill 70-29 earlier this month over objections from former President Donald Trump, the likely Republican presidential nominee.

Congress passed a cumulative $113 billion in military and economic aid for Ukraine after Russia’s full-scale invasion in February 2022, but has not provided additional funding since December 2022.

Biden hosted congressional leaders at the White House on Tuesday, where he joined Democrats and outgoing Senate Minority Leader Mitch McConnell, R-Ky., in pushing Johnson to pass the bill.

In the meantime, the Pentagon is weighing whether it should use roughly $4 billion left of drawdown authority to continue arming Ukraine from U.S. weapons stockpiles, even though it does not have the money to replenish those inventories without the foreign aid bill, CNN reported Wednesday.

The Pentagon did not directly address deliberations about transferring additional weapons without replenishment funding.

“The [Defense Department] continues to urge Congress to pass a supplemental to support Ukraine in its time of need and to replenish our stocks,” Pentagon spokesman Lt. Col. Garron Garn told Defense News in a statement.

The Pentagon used its last $1 billion in Ukraine replenishment funding to backfill U.S. stockpiles in December, with the White House noting that would be the last remaining assistance, absent congressional action.

“At issue here again is the question of impacting our own readiness, as a nation, and the responsibilities that we have,” Pentagon press secretary Gen. Patrick Ryder said last month. “While we do have that $4.2 billion in authority, we don’t have the funds available to replenish those stocks, should we expend that. And with no timeline in sight, we have to make those hard decisions.”

The remaining $4.2 billion in Ukraine transfer authority stems from an accounting error the Pentagon made last year. The error prompted Pentagon Inspector General Robert Storch to announce an audit of the valuation of weapons sent to Ukraine.

Excess Defense Articles

Another, more limited option involves third-party countries transferring Soviet-era equipment to Ukraine in exchange for more U.S. weapons through the Pentagon’s Excess Defense Articles program. The program also allows the U.S. to send equipment that helps countries transition away from Russian arms.

“The United States is providing security assistance to partners such as Ecuador and Zambia to help them transition off Russian equipment, but there’s more we can and must do,” the assistant secretary of state for political-military affairs, Jessica Lewis, said in December.

Ecuadorian President Daniel Noboa said in January that the U.S. would send $200 million in refurbished weapons to help fight cartels in exchange for “scrap” equipment. But Noboa backtracked last week after Russia imposed a ban on Ecuadorian banana and clove imports.

“To our surprise, the United States has publicly stated that this equipment will be used in the armed conflict in Ukraine, and we do not want to be part of it,” Noboa said.

The Greek newspaper Kathimerini reported in January that the U.S. is providing Greece with equipment through the Excess Defense Articles program, including two C-130H aircraft, three Protector-class ships and 60 Bradley armored fighting vehicles.

“Greece has provided substantial military assistance to Ukraine, including Soviet-era BMP infantry fighting vehicles, artillery and small arms,” the U.S. State Department told Defense News. “We thank the government of Greece for its generosity and encourage additional donations, in the future.”

The Defense Security Cooperation Agency, which oversees the Excess Defense Articles program, has not updated the public list of transfers since 2020, despite a congressional requirement that it do so. As such, it’s unclear what other countries are receiving U.S. weapons through the program.

The agency told Defense News it expects to update the list within “several weeks” but did not explain why updates stopped in 2020.

Noah Robertson contributed to this report.

At risk are a set of agreements dubbed Compacts of Free Association, or COFA, under which the U.S. provides aid and other services to three island states: Palau, Micronesia and the Marshall Islands. In return, those countries allow America exclusive military access to their territory, which in total is larger than the continental United States when including their surrounding waters.

Last year, after months of negotiation, the three states signed an updated agreement for $7 billion in U.S. support over 20 years. But that funding has not yet passed in Congress. In the meantime two of the three islands’ current pacts have expired and are now tied to the temporary spending bills that have kept the U.S. government open since late last year.

Palau’s agreement lapses at the end of this fiscal year, but the government there is facing budget shortfalls.

“We’re already late in getting this done,” Jedidiah Royal, the Pentagon’s deputy for Indo-Pacific policy, said in an interview with Defense News.

At stake for the Pentagon are three core security concerns.

The first is competition with China. The islands — collectively referred to as the Freely Associated States — sit near the U.S. territories of Guam and the Northern Mariana Islands and American partners such as Papau New Guinea and Australia. Defense officials consider it indispensable territory.

“They’ve been able to rely on that assumption of presence and access for all of their planning,” said Kathryn Paik, who until last year led the National Security Council’s portfolio for the region. “Every contingency you can imagine in the Pacific — Korea, Taiwan — everything depends on [those] assumptions of defense access.”

Right now, the U.S. has exclusive access to the three islands’ territory, meaning American ships can enter their waters and American planes can fly through their airspace. At the same time, America can also deny the same access to U.S. adversaries, in particular China.

That is crucial to maintaining deterrence in an increasingly competitive region, Siddharth Mohandas, then-deputy assistant secretary of defense for East Asia, said in testimony before Congress last year.

Another security concern involves the United States’ existing defense sites on the islands. The Marshall Islands are home to the Ronald Reagan Ballistic Missile Defense Test Site, and the U.S. is building a radar installation on Palau.

Royal said his office hasn’t studied how much it would cost to relocate these assets and therefore decline to attach a dollar figure to it. But he said that endeavor wouldn’t be cheap, and outside experts have estimated it could cost hundreds of billions of dollars.

Lastly, officials across the government are concerned about credibility. The hallmark of the Biden administration’s approach to the Indo-Pacific has been its work with allies and partners. In the last few years, the government has helped widen and deepen security ties with countries across the region, including the neighborhood affected by COFA.

In recent years, China has bolstered its influence with nearby island nations. The Solomon Islands flipped its diplomatic recognition from Taiwan to China in 2019, a win for Beijing, which considers Taiwan a renegade province and has threatened to take it back by force. Days after Taiwan’s presidential elections this year, in which a pro-independence candidate won, the island nation of Nauru also restored diplomatic relations with Beijing over Taipei.

The Freely Associated States have reminded the U.S. of their value, Royal said, but “they’re also telling us that we’re not the only game in town.”

Paik also emphasized concerns from the regional partners.

“We have been fighting against this skepticism that we’re hearing from leaders across the region: ‘Are you really here to stay this time?’” she said.

‘Working around the clock’

A bipartisan group of almost 50 House members this week wrote to the chamber’s speaker urging him to pass the agreements. And Royal’s office has increased its tempo of briefings before Congress on the issue in the last two months. He said his team hasn’t received pushback.

But the hitch involves funding trade-offs. House leadership has demanded $2.3 billion of the agreements be met with other spending cuts — against the administration’s position that the pacts shouldn’t require offsets.

COFA funding was included in the first draft of the fiscal 2024 National Defense Authorization Act, but didn’t make the final text when negotiators couldn’t agree to offsets in time. Neither did it make the most recent text of the $95 billion security supplemental that passed the Senate in February.

A congressional aide familiar with the discussions said the issue has the attention of leadership, and that representatives are asking to attach funding to the supplemental. But that bill itself has stalled.

“We’re just working around the clock to find the offset and then put it in the legislative vehicle that’s readily available,” the aide said.

In the meantime, U.S. access to the territories is up to the discretion of the countries party to COFA. Those nations can revoke that access at their discretion, and the longer it takes to fund the pacts in Congress, the more pressure their leaders will face to hedge against American dysfunction, said Arnold Palacios, governor of the Northern Mariana Islands.

“Patience is a virtue, but it also has its limits,” he told Defense News.

“We have to cannibalize some things in order to be able to keep other things alive,” Craig Martell, the Defense Department’s chief digital and AI officer, or CDAO, told reporters Feb. 22.

Congress has yet to pass a full defense budget for fiscal year 2024, which began Oct. 1, even as the Biden administration readies its fiscal 2025 spending blueprint. At least 40 continuing resolutions, or stopgap funding bills, have been enacted since 2010.

That record of funding uncertainty hurts talent and training initiatives as well as what’s known as the AI scaffolding, or the virtual infrastructure that makes models usable, accurate and relevant to the military, Martell said.

“That kind of behavior, of being agile, sitting next to the operator, building and growing and building and changing and building and iterating, is very difficult, if not impossible, to do under the conditions of a continuing resolution,” he said on the sidelines of the Defense Data and AI Symposium in Washington.

When does the continuing resolution expire, and how does it work?

The Defense Department sought $1.8 billion for AI in fiscal 2024. The department is juggling hundreds of AI-related projects, including some associated with major weapons systems such as the Joint Light Tactical Vehicle and the MQ-9 Unmanned Aerial Vehicle, the Government Accountability Office reported.

While the CDAO is relatively new — having been announced in 2021 and hitting its first full strides in 2022 — making the case for its existence and expenditures isn’t difficult, according to Martell, who previously worked on machine learning at Lyft and served as an associate chairman of computer science at the Naval Postgraduate School.

The public and private sectors are increasingly interested in AI and other pattern-recognition capabilities, and digital competition with China is steaming ahead. The Defense Department’s connectivity campaign known as Combined Joint All-Domain Command and Control hinges on data-and-analytics advancements made by the CDAO, as well.

Martell said he considers the budget struggles a normal part of the give and take in Washington.

“I don’t take the continuing resolution to be a slight against us,” he said.

The Defense Department this week announced it secured a so-called minimum viable capability for CJADC2, tying together some existing software applications and data feeds to connect troops across land, air, sea, space and cyber.

While officials did not disclose exactly where it is in use, they did say it’s now being applied by combatant commands.

Such real-world application “should show that the department is making paradigm-shifting changes at a scale and at a speed that is rivaling any potential competitor that we could have. This is just one example,” Air Force Col. Matthew Strohmeyer told reporters on the sidelines of the Defense Data and AI Symposium in Washington.

Strohmeyer leads the Global Information Dominance experiments, or GIDEs, that help shape CJADC2. The exercises were rebooted by the Chief Digital and Artificial Intelligence Office last year. The next GIDE is scheduled to begin in a few days.

West 2024: A roundup of news and military tech in San Diego

“We went from the deputy secretary telling us six months prior, ‘I want a minimum viable capability for CJADC2,’ and the department was able to deliver on that at scale, across combatant commands and the joint staff,” Strohmeyer said. “It’s showing that we are making very tangible, rapid progress with actual capabilities in the hands of warfighters.”

The Defense Department wants to digitally link Army, Air Force and Navy units to improve information-sharing and response to foreign aggression.

By more quickly receiving, parsing and disseminating information, defense officials hope to outwit and outshoot tech-savvy adversaries of the future. Lawmakers have pushed the Defense Department to prioritize long-range networking and intelligence-relaying needs in the Indo-Pacific, where the U.S. may clash with China.

“When you begin to aggregate the data, AI aside, you can start to discover the forest from the trees a little bit in things that competitors might be doing,” Strohmeyer said. “As we bring those data sets together, we’re starting to really gain insights that we didn’t know that were there originally, without having to create any new programs, without having to invest in new things.”

The Defense Department’s multibillion-dollar connectivity campaign comes as China pursues its own version — or a countermeasure — known as Multi-Domain Precision Warfare.

The MDPW construct relies on interlinked command and control, communications, computers, intelligence, surveillance and reconnaissance to quickly coordinate firepower and expose foreign weaknesses, according to the China Military Power Report, which the Defense Department delivers to Congress. Officials in Beijing have long pursued an information-fluent force capable of dominating networks and bombarding targets from a sprawl of locations with a cocktail of weaponry.

Craig Martell, the Defense Department’s chief digital and artificial intelligence officer, told reporters Thursday he took the job in part to solve complicated problems like CJADC2 and provide U.S. troops the tools they need to succeed. Martell was named CDAO in April 2022. He previously worked on machine learning at Lyft and served as an associate chairman of computer science at the Naval Postgraduate School.

“What is command and control in Napolean’s day? You’re a general standing on a hill, watching your troops, and you send messages to your generals. That was command and control,” he told reporters. “Now, command and control is highly digital with fast-flowing data, so commanders can make strategic decisions and get the results down to folks who can act on the decisions quickly.”

“That’s what we want to create,” he added. “We want to be able to help.”

The Defense Department’s fiscal 2024 budget blueprint allocated $1.4 billion for CJADC2. Budget documents described the endeavor as transformative to the way fights are fought, especially alongside other militaries.

Thwarting China’s increasingly global ambitions requires collaborating with other nations, including Australia, Japan and South Korea. A key component of CJADC2 is the mission-partner environment, where data from a range of foreign sources can be collected, secured and distributed.

“We are not going to be successful without our partners and allies,” Martell said. “Anything we’ve been building, we’ve been thinking about how our partners and allies will play with us, will fight with us, will train with us, from the beginning.”

“The minimum viable capability for CJADC2 is real and ready now,” she said Feb. 21 at the Defense Data and AI Symposium in Washington. “It’s low latency and extremely reliable.”

There is still more work to do, but recent progress on implementing advanced communication and information-sharing processes has made the concept a reality, at least in a limited capacity, Hicks said.

“For security reasons, I can’t say where or what that capability is for, but I can tell you it was no easy task,” she said.

The achievement is an outgrowth of the Global Information Dominance experiments, or GIDEs, led by the Defense Department’s Chief Digital and Artificial Intelligence Office, or CDAO. The office revived the GIDE series in 2023 with the intent of advancing coordination across the military, as well as to get a better understanding of AI’s role. Northern Command and North American Aerospace Defense Command previously led them.

Scale AI to evaluate large language models for Pentagon

“CDAO and its partners have used a series of Global Information Dominance experiments to set a blisteringly fast pace for this work,” Hicks said. “Every 90 days we’re iterating on capability development and delivery, and we’ll be keeping it up in 2024.”

Future GIDEs will tie into the Army’s Project Convergence as well as exercises with Indo-Pacific Command, whose remit includes China and North Korea. U.S. lawmakers have pushed the Defense Department to prioritize INDOPACOM’s long-range networking and intelligence-relaying needs.

Defense officials want to digitally tether forces across land, air, sea, space and cyber in order to outwit and outmaneuver tech-savvy adversaries of the future. The quicker battlefield information can be collected, analyzed and disseminated, the quicker and more precisely targets can be taken down. Folding in AI and other pattern-recognizing programs to tackle tides of data will be critical.

“That’s the beauty of what software can do for hard power,” Hicks said. “Delivery doesn’t take years or decades. Our investments in data, AI and compute are empowering warfighters today.”

The Defense Department’s fiscal 2024 budget blueprint allocated $1.4 billion for CJADC2. Budget documents described the connectivity campaign as transformative to the way the military operates, especially alongside foreign partners.

The U.S. Department of Defense selected Scale AI to help it test and evaluate generative artificial intelligence for military applications.

The California-based company announced the work with the Chief Digital and AI Office on Feb. 20, the same day the CDAO was scheduled to kick off its conference in Washington, D.C., featuring discussions on the topic.

Generative AI is capable of generating text, images or other data outputs using algorithmic models in response to user prompts. Large language models are a type of generative AI that uses statistical relationships among text documents or other inputs, either by itself or through a supervised training process, to pump out essays, computer code, human-like conversation and more. Scale AI will produce benchmarks for such systems under the contract.

The Defense Department has expressed increasing interest in generative AI, but its uses remain debated. While a smart assistant or chatbot could efficiently find files, answer frequently asked questions or dig up contact information, such tools can also fuel disinformation campaigns, spoofing attempts and cyberattacks. The CDAO in August launched Task Force Lima to study and guide generative AI for national security purposes.

Boeing expands drone exams to Lockheed C-5 with eye on broader fleet

“Testing and evaluating generative AI will help the DOD understand the strengths and limitations of the technology, so it can be deployed responsibly,” Alexandr Wang, the founder and chief executive of Scale, said in a statement. “Scale is honored to partner with the DOD on this framework.”

The Tuesday announcement did not include a dollar value for the work.

Wang in July told Congress outdated data-retention and -management policies were hamstringing the Defense Department. What is needed, he said at the time, is “doubling down on some of these fast procurement methods and ensuring that we continue to innovate.”

“AI systems are only as good as the data that they are trained on,” he added.

Scale in 2022 won a nearly $250 million contract to provide federal agencies access to its technologies. The blanket purchasing agreement was issued by the Joint AI Center, which was subsumed by the CDAO.

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.”

Military operations in Ukraine have cost Russia up to $211 billion and the country has lost $10 billion in canceled or paused arms sales. At least 20 medium to large Russian naval vessels have been sunk in the Black Sea and 315,000 Russian soldiers have either been killed or wounded, according to U.S. Department of Defense data.

These figures, shared by a senior defense official speaking with reporters on the condition of anonymity, are in part an attempt for the Pentagon to show its work on the effect of Ukraine aid. U.S. support for Kyiv helps a democratic partner defend itself, while at the same time degrading America’s second-leading adversary in Russia. The Pentagon’s estimates show how deep those costs have been.

And yet, the official described the current state of the war as precarious for Ukraine, not Russia.

After months of defending the eastern city of Avdiivka, Ukrainian forces there are on the brink of collapse. Taking the city would mark Russia’s largest advance since it seized Bakhmut last year. The flagging front lines are in large part a product of ammunition shortages, which have grown more acute since the Pentagon ran out of money for Ukraine aid late last year, the official said — warning that the problems in Avdiivka may not stop there.

“We see this as something that could be the harbinger of what is to come if we do not get this supplemental funding,” the official said, referencing $60 billion in further aid the White House requested last year.

A version of that deal passed the Senate on bipartisan lines this week but has little chance of success in the House, where Republican Speaker Mike Johnson has said he won’t put it up for a vote.

In the interim, the official said, Ukrainian forces are running out of ammunition and air defense interceptors, which help defend the country’s critical infrastructure from Russian attacks.

The U.S. is not the only country sending military support to Ukraine. This week marked the 19th meeting of the Ukraine Defense Contact Group, a set of countries that have helped bolster Kyiv’s self defense over the last two years. Canada pledged $60 million to support Ukraine’s air force and Germany announced a $1.2 billion air defense and artillery package.

Still, it was notably the second straight meeting in which the U.S. provided no aid of its own, a streak that will continue if the supplemental does not pass in Congress.

“Our military is always working to be as prepared as possible, but we do absolutely need this supplemental funding,” the official said. “There is no substitute for it.”

But before the U.S. issues that exemption, it wants Australia to adopt export control laws similar to its own. And several Australian defense companies are unhappy about legislation pending in Australia’s parliament that would replicate a U.S.-style export control regime.

They say importing the stringent U.S. export control laws could hinder their ability to effectively collaborate and do business with non-AUKUS countries.

Australia and Britain have long sought a carveout within Washington’s International Traffic in Arms Regulation, or ITAR, export control regime. Defense companies in all three countries have argued ITAR’s rigorous restrictions on sensitive defense exports stymies a key AUKUS goal of jointly developing disruptive technology such as quantum computing, artificial intelligence and hypersonic weapons.

The U.S. Congress passed legislation in December to give Australia and Britain an ITAR exemption for AUKUS, on the condition that both countries implement similarly tough export control laws. Canada is currently the only country to enjoy a special ITAR exemption.

Before Australia and Britain receive their exemptions, Secretary of State Antony Blinken must certify they have each implemented comparable export control regimes.

Michael Biercuk, the chief executive of Q-CTRL, an Australian firm specializing in quantum technology that has offices in Sydney, Los Angeles and London, said the company is “supportive of the idea of making a control-free zone, if you will, between Australia, the U.S. and the U.K. in support of AUKUS.

However, “we don’t think the right way to do it is to bring in the totality of the system that everybody in the world says doesn’t work,” he added, noting the policy would “fundamentally limit exports outside of that AUKUS bubble, and this is not something that is helpful to the local community of vendors who are heavily reliant on export markets.”

Andreas Schwer, the chief executive of EOS, an Australian company specializing in high-tech remote weapons stations, directed energy and counter-unmanned aircraft systems, told Defense News stricter, more ITAR-like regulations in the country “will make life extremely difficult for us to export into any non-AUKUS country.” He said it can sometimes take six months to a year to get simple upgrades formally approved for NATO allies under ITAR.

“This is something which is hated by most of the western European procurement agencies,” said Schwer. “That’s the reason why they always prefer non-ITAR offers. I expect that the same will happen with Australian products. As soon as we have similar regulations in place, they will also say we don’t want to have Australian ITAR components.”

But proponents of ITAR argue it’s a crucial tool for keeping U.S. technology out of the hands of rivals such as China and Russia. Mike Burgess, director general of the Australian Security Intelligence Organisation, warned last year of an uptick in online espionage attempts aimed at the country’s defense industry since AUKUS was announced in September 2021.

U.S. Under Secretary of State for Arms Control Bonnie Jenkins told lawmakers this week the U.S. must “make sure that we protect our intellectual property.

“We know there’s countries like China who want to steal information,” she added.

Jenkins noted Britain updated its espionage laws in July 2023 as part of the National Security Act and pointed to Australia’s proposed export control overhaul pending a review in parliament.

Biercuk said the Australian proposal was “rushed” and called it “a catastrophically bad piece of legislation.”

Still, NIOA Group chief executive Rob Nioa, noted “really what the U.S. wants to do is protect U.S. [intellectual property. “If it was technology that originated in America, it was always subject to those controls,” Nioa told Defense News. “Our concern will be if that captures Australian uniquely produced intellectual property and prohibits it from going to other places.”

NIOA Group is an Australian munitions company which also owns U.S.-headquartered Barrett Firearms and has a joint venture company with Rheinmetall.

Yet, he added, a comparable Australian export control regime “might streamline” some export approval processes by allowing Canberra to administer them “instead of having to go back to the U.S. for approval.”

“Until we see how it’s implemented, I’m not going to automatically panic,” he said. “People are nervous about it though in Australia because people are nervous about the unknown.”

Capt. Alex Campbell, director of the Defense Innovation Unit’s naval portfolio, said the second tranche of Replicator systems will emphasize the software needed to connect the sensors and drones it wants to field over the next 18 months.

“In tranche two . . . the direction from senior leadership is to also focus on the software that enables all those platforms to function and to exist and to work together and to do things that, frankly, we’ve never seen on the battlefield before,” Campbell said during a Feb. 14 panel at the West naval conference in San Diego.

Those capabilities include connecting multiple platforms to provide kinetic effects in complex threat environments, he said.

“We’re really excited to be tackling both the platform side and the software side and, ideally, finding the route to production for a lot of that work,” Campbell said.

Deputy Defense Secretary Kathleen Hicks unveiled Replicator in August, pledging to field thousands of uncrewed systems to defend Taiwan against aggression from China.

Hicks has since been working with DIU and leaders within the military services to formalize a mechanism for quickly fielding high-need commercial systems in large quantities. The goal is for Replicator to be a repeatable process the Pentagon can use to push a range of capabilities to military users.

DIU Director Doug Beck said during a Feb. 15 House Armed Services Committee hearing the department has chosen the first tranche of systems it will field through Replicator. Along with its initial selections, the Defense Department has sent a reprogramming request to Congress that would allow DoD to shift funding appropriated for other projects into the efforts it wants to field through Replicator.

“That’s the department getting after sorting through how we can best help make these things happen as fast as possible,” Beck said at the hearing.

Officials have refused to publicly discuss the specifics of those capabilities. Aditi Kumar, DIU’s deputy director for strategy, policy and national security partnerships, said the department is working on a plan for how it will share information on the effort going forward.

“We want to be very careful about how we communicate with the broader public, and by proxy our adversary, on what we have selected and what quantity, etc.,” she said during a Feb. 13 DIU Innovation Summit in Mountain View, Calif.

The latest National Security Scorecard from data analytics firm Govini revealed countless China-based firms remain deeply embedded in Defense Department supply chains across 12 critical technologies. Consider as well as that the draft version of the Pentagon’s National Defense Industrial Strategy noted that “today’s [defense-industrial base] would be challenged to provide the required capabilities at the speed and scale necessary for the U.S. military and our allies and partners to engage and prevail in a major conflict.”

This is what happens when just-in-time defense manufacturing meets dependence on Chinese companies, not to mention firms in Taiwan that Beijing could blockade during a crisis on which many, if not all, precision weapons and modern platforms depend.

The recently passed fiscal 2024 National Defense Authorization Act barely affects the timeline for eliminating the Pentagon’s dependence on selected Chinese companies and materials. The narrow scope and lengthy time frames of current government efforts to alleviate our supply chain dependencies send an unspoken message to Beijing: The DoD does not have, nor will it soon have, the supply base required to prosecute a long war against China. The message to Taiwan is that we can’t build the weapons and platforms needed to defend you in a protracted war without access to these at-risk supply chains.

Thankfully, there are solutions that the Pentagon and the administration can take to armor the Achilles’ heel of our defense supply chains.

First, they can focus on resiliency rather than independence, entailing the pursuit of multiple solutions to ensure the DoD has sufficient stocks — or access to the production — of the products, materials and services required for a long conflict. To build resiliency, the Pentagon can focus on increasing the size of its inventories, cultivating new second and near-shore sources, and redesigning munitions and platforms that are especially critical for an Indo-Pacific fight.

Resiliency requires assessing the true extent of China- and Taiwan-based dependencies, and remediating them.

Second, the Pentagon should ask Congress to invert its approach to how it defines, analyzes and addresses Pentagon supply chain vulnerabilities. To date, the government’s efforts have largely focused on inputs, as well as suppliers based in so-called covered countries like China. But if the government inverts its approach from inputs (e.g., rare earths) to outputs (e.g., an F-35 jet), it will address dependencies in a more holistic manner, forcing a review of the full supply chain.

Requiring the defense-industrial base to quickly conduct a bottom-up analysis by critical munition and platform that identifies each node in its supply chains — something it could readily by law do with commercial software — would establish a baseline for modeling different platform and munition inputs under different scenarios. These models would rapidly identify potential and growing risks as well as assist the DoD in proactively addressing them. They would also help avert a scenario where the DoD has to reactively scramble to address the collapse of a critical node far down in its supply chains.

Lastly, like the U.S. had during World War II with the War Production Board, someone or some organization should be in charge of these efforts. The Federal Acquisition Security Council may be the best organization to fill that role, as it would be well placed to roll up our supply chain dependencies, place them against requirements to create demand signals and determine how best to fill them.

These actions could be included by the Pentagon in its budget for the coming fiscal year — or given their urgency, a single, focused bill, an executive order, or a future emergency supplemental.

No one knows if or when tensions with China could spiral into armed conflict. But there’s no doubt that the world is becoming more dangerous. The U.S. must send a message to Beijing that we are prepared to prosecute a long war if needed. And the U.S. must also send a message to Taiwan that it will be able to support the island in a time of need. Without ending China’s chokehold on our defense supply chains, we will be hard-pressed to send either.

Retired U.S. Army Maj. Gen. John G. Ferrari is a senior nonresident fellow at the American Enterprise Institute think tank. Ferrari previously served as a director of program analysis and evaluation for the service. Mark Rosenblatt runs Rationalwave Capital Partners, which invests in public and private technology companies.

The legislation, which passed in the chamber 70-29, faces an uphill battle in the House amid opposition from former President Donald Trump, the leading candidate in the Republican presidential primary. House Republicans are increasingly resistant to additional assistance for Ukraine — and foreign aid more generally.

“Today we make [Russian President] Vladimir Putin regret the day he questioned America’s resolve, and we make clear to others like China’s President Xi [Jinping] not to test our determination,” Senate Majority Leader Chuck Schumer, D-N.Y., said on the floor after the vote. “And we send a clear, bipartisan message of resolve to our allies in NATO.”

But House Speaker Mike Johnson, R-La., reiterated his opposition in a statement on Monday mere hours before the Senate moved forward with its final vote.

“The mandate of national security supplemental legislation was to secure America’s own border before sending additional foreign aid around the world,” Johnson wrote in a statement. “In the absence of having received any single border policy change in the Senate, the House will have to continue to work its own will on these important matters.”

President Joe Biden’s foreign aid request stalled for two months in the Senate after Republicans held up a procedural vote in December, demanding immigration policy changes in exchange for their support. This led to two months of negotiations, only for Trump to disparage the deal after Senate Democrats agreed to immigration restrictions. Senate Republicans then backtracked on the deal and moved forward with a bill solely focused on foreign aid.

Trump also demanded Saturday on his social media network, Truth Social, that the foreign aid bill be “done as loan, not just a give away.” He said at a South Carolina rally that same day he “would encourage [Russia] to do whatever the hell they want” to NATO members who do not spend enough on defense.

The European Union earlier this month passed $54 billion in economic support for Ukraine after Hungary dropped its opposition.

The Senate bill includes another $60 billion in security and economic aid for Ukraine, $48.4 billion of which is for military support through the Pentagon.

The military support includes $19.9 billion for the Pentagon to backfill weapons sent to Ukraine through U.S. stockpiles and $13.7 billion for the Ukraine Security Assistance Initiative, allowing the Defense Department to ink longer-term contracts to send weapons to Kyiv. There’s also $1.6 billion in foreign military financing, allowing Ukraine and European countries impacted by Russia’s invasion to use the money to buy weapons from U.S. defense contractors.

Sen. Lindsey Graham, R-S.C., called on the House to implement Trump’s idea of turning “the supplemental aid package into a loan instead of a grant,” though it’s unclear how that would work for the majority of military aid in the bill, which is allocated for Pentagon contracts. Graham adamantly called for a defense spending supplemental last year to circumvent the $886 billion national security spending cap in the debt ceiling deal.

The House failed to pass a stand-alone Israel aid bill last week amid opposition from Biden and Democrats unhappy with the lack of Ukraine assistance in the package.

Meanwhile, three members of the Senate Democratic caucus voted against the foreign aid package Tuesday over concerns about the humanitarian crisis in Gaza and the high civilian death toll amid Israel’s monthslong offensive against Hamas.

“One the one hand, I strongly support aid to Ukraine,” Sen. Jeff Merkley, D-Ore., said in a statement before voting against the bill. “On the other hand, I strongly oppose sending more offensive military aid to Israel at a time when they are using American weapons in what President Biden has called an ‘indiscriminate’ campaign of bombing.”

Sens. Bernie Sanders, I-Vt., and Peter Welch, D-Vt., also voted against the Senate bill.

The bill includes $10.6 billion for the Defense Department to continue providing munitions and other weapons to Israel. That amount includes $4 billion for the Iron Dome and David’s Sling air defense systems as well as $1.2 billion to procure the Iron Beam laser system to counter short-range rocket threats. There’s also another $3.5 billion in foreign military financing for Israel to buy more military equipment with cash grants.

Another $2 billion in foreign military financing from the bill would go to Taiwan and other Indo-Pacific security partners. Additionally, the bill has $1.9 billion for the Defense Department to backfill weapons sent to Taiwan from U.S. stockpiles, providing the Pentagon’s long-requested funding that will allow it to use presidential drawdown authority to quickly transfer weapons to Taipei.

The U.S. hopes to deter a possible Chinese invasion of Taiwan in the coming years by positioning as much materiel on the island as possible.

U.S. Indo-Pacific Command would get another $542 million to respond to its fiscal 2024 unfunded priorities list. Another $2.4 billion in the bill would go to U.S. Central Command to resupply munitions it used in response to the ongoing attacks from Iran-backed proxies in the Middle East since the Israel-Hamas war began in October 2023.

The bill also includes $3.3 billion to get the submarine-industrial base on course for the AUKUS agreement with Australia and Britain.

But the White House said Friday it does not expect Biden’s executive action to result in the suspension of military aid to Israel. The executive action reiterates existing U.S. human rights laws governing arms transfers.

“There are no new standards in this memo,” White House press secretary Karine Jean-Pierre said at a Friday press conference. “Instead, we are spelling out publicly the existing standards by the international law, including the law of armed conflict.”

The executive memorandum requires any military aid recipient, including Israel and Ukraine, to submit written assurances it will comply with human rights laws or lose U.S. assistance.

All countries that receive U.S. military aid are already required to adhere to these standards under existing human rights laws. These include the Foreign Assistance Act and the Leahy laws, named after their author, former Sen. Patrick Leahy, D-Vt.

The Leahy laws cut off security aid to specific units of foreign militaries if the Pentagon and the State Department determine a country has committed a gross violation of human rights, such as shooting civilians or summarily executing prisoners.

“We did brief the Israelis on this,” said Jean-Pierre. “They reiterated their willingness to provide these types of assurances.”

Leahy, former administration officials and some lawmakers and congressional staffers say the arms transfers laws referenced in the memorandum have not been applied to Israel across multiple administrations, despite credible reports of human rights abuses.

A spokesperson for the White House National Security Council told Defense News “we have not seen any violations of the standards so have no plans to restrict assistance at this time.”

Sarah Harrison, who was the Pentagon’s lead attorney for Leahy law human rights vetting between 2017 and 2021 and now is a senior analyst at the International Crisis Group think tank, said the memorandum appears to be “another performative measure by the Biden administration to kind of stave off critics because they were getting a lot of heat from the Senate on this.”

Israel and Ukraine signed similar agreements in December 2021 pursuant to the Leahy laws stating they will not transfer U.S.-provided security assistance to an ineligible military unit if the State Department determines it’s responsible for a gross human rights violation. The State Department has given Kyiv a list of Ukrainian units that have committed human rights violations, rendering them ineligible for U.S. security assistance, but has not done the same for Israel.

Jean-Pierre noted the White House memorandum “emerged in part with our discussions with members of Congress” as lawmakers struggle to pass Biden’s $95 billion foreign aid request that includes $14 billion in additional military aid to Israel and $60 billion in more support for Ukraine.

Sens. Chris Van Hollen, D-Md., and 18 members of the Democratic caucus have introduced an amendment to the spending bill that would reinforce existing law under the Foreign Assistance Act. The provision bans military aid to countries that obstruct the delivery of U.S. humanitarian assistance. A December Human Rights Watch report found Israel is using starvation as a weapon of war in Gaza, amounting to a war crime.

Biden’s executive memorandum largely mirrors language in Van Hollen’s amendment. Van Hollen and his allies first started discussing the language with the White House in December.

The Senate is expected to vote on final passage of the $95 billion foreign aid bill over the next few days, but senators may not have opportunities to offer amendments. The bill’s fate in the House is also unclear amid substantial Republican opposition to additional Ukraine aid.

Hesai Technology’s core product is LiDAR road sensing equipment, used in passenger and commercial vehicles, autonomous driving vehicles, delivery robots, and other applications. It was among 17 companies the U.S. Defense Department recently added to its list of organizations it considers “Chinese military companies.”

The revised list also includes Megvii, a Beijing-based artificial intelligence company; IDG Capital, a major private equity investment firm with holdings in many Chinese technology businesses; and major Chinese energy, telecoms and aviation companies. Its investors include U.S. pension funds and foundations.

Hesai’s inclusion on the list came without any explanation, and the company plans to file a lawsuit, Hesai CEO Yifan “David” Li said in a statement that described the move as “unjust, capricious and meritless.”

“Hesai is not a military company. Hesai products are for civilian use only and have never been designed or validated for military use,” he said.

Li did not give any details on the company’s plans for legal action. The statement accused Hesai’s critics of conducting a smear campaign against it for unfair commercial advantage.

In a statement issued last week, the company said its LiDARs were not designed to conform to military specifications. The U.S. Department of Commerce has designated them as not being suitable for any military application, it said.

Hesai’s stock price has fallen to about $4 from about $22 a year ago.

President Joe Biden’s administration has kept in place tariffs imposed by his predecessor Donald Trump after he launched a trade war against Beijing in 2018. Under Biden, the U.S. has further limited China’s access to advanced U.S. technology, limited U.S. investments in strategically sensitive Chinese industries and expanded sanctions on leading Chinese companies like Huawei.

The Defense Department periodically updates its list of now nearly four dozen Chinese military companies to counter links between Chinese military and companies and other entities that it says appear to be civilian.

China’s foreign and commerce ministries protested the move after the list was expanded last week.

In 2021, Chinese smartphone maker Xiaomi Corp., which overtook Apple as the world’s No. 3 smartphone maker by sales for a time, was removed from the blacklist after it sued the U.S. government, demanding to be removed and denying it has any links with the Chinese People’s Liberation Army.

Senators voted 67-32 to clear the first procedural hurdle needed to advance the bill, which also includes additional funding for the submarine-industrial base, U.S. Central Command and U.S. Indo-Pacific Command.

“If we abandon our friends in Ukraine to [Russian President] Vladimir Putin, history will cast a shameful and permanent shadow on senators who block funding,” Senate Majority Leader Chuck Schumer, D-N.Y., said on Wednesday ahead of the vote. “It is a matter of the highest national urgency that we get this right.”

The vote came after Democrats dropped immigration policy changes from the legislation after two months of negotiations, which Senate Republicans had initially demanded as the price for unlocking the foreign aid funding. But Republicans backtracked on the deal this week as former President Donald Trump, the front-runner in the party’s presidential primary, came out against coupling foreign aid with an immigration deal.

It’s possible the Senate may vote on amendments as the foreign aid bill proceeds, providing a potential opening to alter the legislation for Republicans opposed to Ukraine assistance and Democrats who seek human rights conditions on Israel aid amid the humanitarian crisis in Gaza.

Although Ukraine aid initially enjoyed strong bipartisan support, Republican opposition to additional assistance has grown over the last several months. The Biden administration in December used its last tranche of Ukraine aid funds from previous assistance packages, while Kyiv faces artillery and ammunition shortages.

Congress has passed a cumulative $113 billion in economic and security aid for Ukraine since Russia’s full-scale invasion in February 2022. Israel receives an annual $3.8 billion per year in U.S. military aid.

The Senate bill includes another $60 billion in security and economic aid for Ukraine, $48.4 billion of which is for military support. It also includes an additional $14 billion in Israel aid.

On top of that, there’s nearly $4 billion in military aid for Taiwan and other Indo-Pacific security partners, plus $2 billion to get the submarine-industrial base on course for the AUKUS agreement with Australia and Britain. U.S. Indo-Pacific Command would get another $542 million to respond to its fiscal 2024 unfunded priorities list.

The bill also adds $2.4 billion for U.S. Central Command to resupply munitions it used in response to the ongoing attacks from Iran-backed proxies in the Middle East since the Israel-Hamas war began in October 2023.

The Republican-held House failed to pass a stand-alone Israel aid bill on Tuesday amid both opposition from most Democrats concerned about the lack of Ukraine assistance, and Republicans with the conservative Freedom Caucus unhappy with the legislation’s lack of budgetary offsets.

House Speaker Mike Johnson, R-La., previously said the key to unlocking Ukraine aid is immigration restrictions, but he also declared the Senate’s deal on the U.S southern border “dead on arrival” as soon as the text came out Sunday.

House Armed Services Chairman Mike Rogers, R-Ala., who supports Ukraine aid, told reporters Wednesday that the lower chamber may split off individual pieces of the Senate bill into separate votes — though Johnson has yet to commit to a path forward.

Rep. Rosa DeLauro of Connecticut, the top Democrat on the House Appropriations Committee, said Congress must move “with alacrity on the supplemental.”

“Whatever may be the fastest way to do it, we need to do it,” DeLauro said. “We can’t leave Israel hanging, Ukraine hanging, humanitarian assistance hanging, Indo-Pacific. That is irresponsible and frankly immoral.”

The award comes after DIU selected the Dive-LD platform to perform in a “swim-off” last year that put commercially available large unmanned underwater vehicles through an obstacle course to assess their maturity and applicability to conduct “distributed, long-range, persistent underwater sensing and payload delivery in contested environment,” according to a Feb. 8 Anduril news release.

DIU is the Pentagon’s commercial innovation hub.

Anduril said the U.S. Navy selected it for a follow-on contract that allows operational units to borrow the unmanned vehicles for experiments or buy them as a routine tool for their missions. The company could not disclose information about the value or duration of the contract, which was awarded through DIU’s Commercial Solutions Opening process.

Anduril’s chief strategy officer, Chris Brose, told Defense News the company had worked on maturing and demonstrating the Dive-LD vehicle for the last two years, but the contract now provides a mechanism to get the drone into the hands of sailors across varied geographies and unit types so they can “start solving a lot of different problems across the seabed and undersea domain.”

The contract creates direct access between Anduril and operators. A unit that has never worked with an autonomous underwater vehicle may want to experiment with one for a couple weeks or months, while another unit with a more refined concept for how they’d use the Dive-LD vehicle may want to buy several right off the bat.

Brose said the contract allows for whatever the operators prefer, as well as payload integration and other engineering to get the units a tailor-made system to meet their specific needs.

The Navy has struggled to bring large unmanned underwater vehicles to the fleet.

It kicked off a Snakehead large-diameter unmanned underwater vehicle program in 2017, though the original research program dates to before 2015. The first Snakehead prototype wasn’t christened until 2022, and the Navy and Congress agreed to cancel the program later that year. However, it’s been somewhat resurrected as a market research effort to identify commercially available technology that could be useful to the fleet.

The Navy also pursued an Orca extra-large UUV program, first selecting Boeing as one of two companies for a 2017 design contract and then selecting the firm as the sole winner of a 2019 contract to build four prototypes. The program has seen developmental and manufacturing delays. The company in December delivered a pre-prototype test asset but has not yet completed and delivered any of the prototypes on contract.

Brose said the Dive-LD — which Anduril acquired in early 2022 when it bought Dive Technologies ­— was designed for manufacturability, payload integration and artificial intelligence-powered smart operations.

The vehicle is made using advanced manufacturing processes, and the outer shell is 3D printed. Brose said this means the company can scale up production to meet demand under this DIU contract and others that may follow.

He referred to this DIU effort as a “breakthrough opportunity” that’s led to Anduril “really beginning to invest and facilitize for larger-scale production, which is something we’re doing in other parts of the business.”

He could not speculate how many Dive-LD vehicles the company might build for Defense Department customers under this DIU contract, but he called it “a really significant next step” for the company.

Because of the advanced manufacturing processes, Anduril can easily redesign pieces of the modular unmanned vehicle to accommodate a payload, reshape or resize the whole vehicle to fit a certain need, and more, based on what customers want.

“I think the excitement for us is the ability to really start doing the things at scale that the vehicle was designed to do,” he said.

In addition to this contract with DIU, Anduril signed a three-year agreement with Australia in 2022 to create something akin to an Orca XLUUV. The company, the Royal Australian Navy, and the Australian government’s Defence Science and Technology Group — in a $100 million co-funding effort — will design, develop and manufacture the extra-large autonomous undersea vehicles.

The 10-page document, released Feb. 7, outlines DIU’s expanding role and lays out steps the organization is taking to ensure that the department is taking full advantage of commercially derived capabilities to counter threats from China and Russia.

“Against a backdrop of international challenges and with the world’s most capable technology sector, we can and must do more to identify and adopt impactful commercial technologies at speed and scale,” DIU states in the strategy. “With recent changes from [Department of Defense] leadership and Congress, we are now poised to help our partners across the department, interagency, commercial tech sector and allied and partner nations meet these goals.”

The strategy comes as the organization transitions into a new phase of operation, dubbed DIU 3.0. Founded in 2015 to help create a bridge between Silicon Valley startups and the Pentagon, the DIU’s early work focused on building partnerships and proving the value of commercial technology for military needs.

As of 2022, due in part to its contracting speed, DIU had transitioned 52 projects to the battlefield backed by multiyear production contracts from the military services worth up to $4.9 billion. Those projects include maneuverable drones, AI systems and satellite remote sensing technologies.

Now, with backing from leaders in the Pentagon and in Congress, DIU is making a deliberate shift toward helping the Defense Department field the most military-relevant commercial technologies at a larger scale.

Last April, Defense Secretary Lloyd Austin elevated the organization to report directly to his office and DIU Director Doug Beck is now a member of the influential Deputy’s Innovation Steering Group. The group oversees DoD efforts to quickly get high-need technology into the field, including the Replicator initiative — which aims to field thousands of autonomous systems on an 18-to-24-month time frame.

Beck also chairs the Defense Innovation Working Group, which directly supports the steering group by vetting capabilities for it to consider.

The strategy notes that these elevated roles will help DIU establish stronger partnerships with Pentagon leadership and service acquisition officials that ensure it is focusing on the right technology projects and scaling in the right areas.

DIU will also help coordinate among DoD’s many innovation entities, which largely reside within the military services. The strategy notes that while these organizations are delivering results, they lack synergy.

“Uncoordinated outreach has sometimes resulted in overlapping, unprioritized and competing demand signals that can make it hard for tech companies to engage, particularly small companies and startups,” DIU states. “Confused communication about the different pathways for working with DoD as a vendor leaders to mismatched expectations.”

To help address these problems, DIU will lead an organization called the Defense Innovation Community of Entities, or DICE. The group includes innovation hubs from across the department and DIU will work to find solutions for shared challenges.

DIU will also offer more direct, embedded support to combatant commands around the world. The organization is playing a key role in U.S. Indo-Pacific Command’s new Joint Mission Accelerator Directorate, which is designed to ensure the command’s top priority technology projects have a network of support within DoD and industry.

The organization has similar embedded partnerships with U.S. European Command and plans to replicate those efforts to other combatant commands.

“Those embeds will both help shape demand for technology and ensure that innovation efforts are unwaveringly focused on meeting it,” DIU states.

To support these expanded partnerships, the strategy notes that DIU needs more resources, including a larger staff. The Pentagon has approved some staffing increases, including the recent hire of two senior executive service-level deputies, a civilian level role that is equivalent to a military general or flag officer rank.

“DIU’s mission rests on the ability to attract, develop, deploy and retain that talent, both for the direct application to DIU’s own mission and for the development of a cadre of technology talent available to deploy throughout the department,” it said.

The main point of contention in the Tiger Act, introduced by task force leader Rep. Mike Waltz, R-Fla., is a provision raising the dollar threshold at which the president can approve an arms transfer without notifying Congress from $14 million to $23 million. It also raises the threshold for the sale of defense articles, upgrades, related training or other services without congressional notification from $50 million to $83 million. Additionally, it paves the way for the State Department to make use of the Pentagon’s Special Defense Acquisition Fund, a revolving account used to procure weapons for foreign military sales.

“We should arm our allies and simplify the bureaucracy so they can do the fighting for our interests and less involve the United States,” Waltz said before the vote. “This is about jobs. This is about empowering our allies to fight for themselves.”

The bill is backed by the National Defense Industrial Association and the Aerospace Industries Association. Its proponents note the new numbers simply reflect inflation since 2003, when Congress last adjusted the thresholds.

But a coalition of 17 arms control and human rights groups, led by the Center for Civilians in Conflict and the Middle East Democracy Center, sent a letter to lawmakers last week arguing the bill cedes congressional oversight authority by hindering lawmakers’ ability to place holds on sales over human rights concerns.

Opponents of raising congressional notification requirements point to a 2020 State Department Inspector General report, which found the Trump administration approved 4,221 below-threshold arms transfers to Saudi Arabia and the United Arab Emirates amounting to $11.2 billion between Jan. 2017 and Aug. 2020.

The House established the foreign military sales task force last year to spearhead legislative efforts meant to expedite the unwieldy arms sale process amid a multibillion-dollar arms sale backlog across the world, from Taiwan to Saudi Arabia. The backlogs are caused by a confluence of U.S. industrial base constraints, contracting delays and lengthy review processes.

“Many of the most significant hurdles lie within the defense industry’s production constraints and inefficiencies within the executive branch,” Rep. Kathy Manning, D-N.C., said ahead of the vote. “The congressional review process is not the problem.”

Waltz noted the bill is only the task force’s first stab at expediting the arms sale process. The House is expected to consider additional foreign military sales legislation when it takes up the fiscal 2025 defense policy bill.

The arms sale task force included two Democrats, Reps. Seth Moulton of Massachusetts and Jason Crow of Colorado.

After an agreement with Moulton, the latest version of the Waltz bill includes a provision that would require a congressional notification for sales to a country once they exceed a cumulative threshold of $1 billion over three years. That threshold increases to $5 billion over three years for NATO countries and other close U.S. allies. It is unclear what other changes lawmakers made at the markup because the Foreign Affairs Committee did not publicly release the latest text of the bill before the vote.

Still, the agreement with Moulton, who sits on the Armed Services but not the Foreign Affairs Committee, was not enough to win the support of most Democrats. Crow issued a dissenting opinion to the Republican-dominated task force.

“While the task force received input from a limited number of stakeholders, the process was non-inclusive,” Crow wrote in his dissent, obtained by Defense News. “The task force did not receive needed input from leaders in civil society, arms control experts or the human rights community.”

Rep. Dina Titus, D-Nev., accused Waltz’s legislation of “parroting” the defense industry, noting that 95% of foreign military sale cases are approved within 48 hours.

“That’s not very slow,” Titus said before the vote. “It just focused its efforts on undermining congressional oversight mechanisms simply for the sake of expediency.”

But it’s unclear whether the roughly $118 billion legislation can pass Congress with Speaker Mike Johnson, R-La., immediately declaring it “dead on arrival” in the House and vowing to move forward with a separate Israel aid bill that would leave Ukraine without additional U.S. assistance.

“As Ukraine runs low on ammunition to fend off [Russian President Vladimir] Putin’s brutal invasion, it is imperative we finally extend our support,” Senate Appropriations Chairwoman Patty Murray said in a statement. “Ukraine’s fate and so much more hangs in the balance — it’s time for Congress to act.”

Senate Republicans in December stalled votes on an earlier aid package, leading to two months of negotiations on unrelated immigration policy changes. Senate Majority Leader Chuck Schumer, D-N.Y., has said he will tee up a procedural vote on the new aid package as soon as Wednesday, but it’s unclear whether it will even have the 60 votes needed to pass the upper chamber.

The bill includes $60 billion in security and economic aid for Ukraine, $48.4 billion of which is for military support. That includes $13.7 billion for the Ukraine Security Assistance Initiative and $19.9 billion for the Pentagon to backfill weapons sent to Ukraine through U.S. stockpiles. There’s also $1.6 billion in Foreign Military Financing, allowing Ukraine and European countries impacted by Russia’s invasion to use the money to buy weapons from U.S. defense contractors.

The Biden administration in December used its last tranche of Ukraine aid funds from previous assistance packages.

A growing number of Republicans have become increasingly opposed to Ukraine aid, and many, including Johnson, claim the new bill’s immigration agreement “won’t come close to ending the border catastrophe.” The new aid bill is likely to lose Democratic support as well, with Sen. Alex Padilla, D-Calif., accusing it of “dismantling our asylum system” and Sen. Bernie Sanders, I-Vt., opposed to additional Israel aid.

“If we continue to fund [Prime Minister Benjamin] Netanyahu’s indiscriminate war, how can we, with a straight face, criticize Putin’s targeting of civilians and civilian infrastructure in Ukraine as a war crime?” Sanders wrote in a statement.

The bill includes $10.6 billion for the Defense Department to continue providing munitions and other weapons to Israel after a four-month bombardment of Gaza that has displaced roughly 85% of the population and killed thousands of civilians. That amount includes $4 billion for the Iron Dome and David’s Sling air defense systems and $1.2 billion to procure the Iron Beam laser system to counter short-range rocket threats.

There’s also another $3.5 billion in Foreign Military Financing for Israel and another $2 billion in the same account for Indo-Pacific security partners, including Taiwan.

Unlike the December bill, the new legislation adds another $1.9 billion specifically to backfill weapons sent to Taiwan from U.S. stockpiles, providing the Pentagon’s long-requested appropriation that will allow it to use presidential drawdown authority to quickly transfer weapons to Taipei.

The new bill adds another $2.4 billion for U.S. Central Command to continue countering a deluge of attacks from Iran-backed proxies amid the Israel-Hamas war in Gaza. The use of expensive missile systems like Tomahawks to counter Houthi attacks on commercial ships with less expensive drones and missiles has placed additional demands on U.S. munitions stockpiles.

Additionally, the bill adds $542 million for Indo-Pacific Command’s FY24 unfunded priorities list. It also retains $2.1 billion in funding for the submarine-industrial base aimed at helping the Navy meet its submarine production goals while preparing to transfer as many as five Virginia-class submarines to Australia in the 2030s as part of the AUKUS agreement.

After more than five years atop the country’s premier intelligence agency and cyber-fighting organization, Army Gen. Paul Nakasone was scheduled Feb. 2 to pass the torch to Air Force Gen. Timothy Haugh.

The change-of-command ceremony at Fort Meade, Maryland, was not livestreamed, and a request for comment made to CYBERCOM was not immediately answered. Deputy Secretary of Defense Kathleen Hicks was scheduled to attend and speak at the event, according to a Pentagon travel advisory.

Haugh previously served as the deputy at CYBERCOM, tasked with guarding sensitive Defense Department information and coordinating digital operations. He also served as the commander of the Cyber National Mission Force, which has deployed more than 55 times to 27 countries — including Ukraine, ahead of Russia’s invasion, and Albania, in the wake of Iranian hacks — to identify network weakness.

President Joe Biden tapped Haugh for the post in May. The process, though, was paralyzed by a hold on all senior military nominations enacted by Sen. Tommy Tuberville, an Alabama Republican.

Biden’s NSA, CYBERCOM nominee backs foreign spy law as ‘irreplaceable’

CYBERCOM stands at a pivotal point as Haugh takes over. Now more than a decade old, the command is undergoing what officials have described as a holistic review.

The U.S. is increasingly focused on countering Russia and China while also juggling extremist groups in the Greater Middle East and Africa. Each poses unique challenges to offense and defense in the virtual world.

“In the cyber domain, we’re undergoing several efforts to shape the future of our cyber forces, including how we generate, train and organize for maximum effect, what some of us have started calling ‘Cyber Command 2.0,’” Assistant Secretary of Defense for Space Policy John Plumb told reporters in January.

“We’re starting to think this could be a really great opportunity for us to go to that next level of evolution for Cyber Command,” he added.

The bill raises the dollar threshold at which the president can approve an arms transfer without notifying Congress, while requiring the drawdown of weapons from U.S. stockpiles to compensate for delayed foreign military sales. It has generated pushback among some arms control advocates who fear the legislation would chip away at a key congressional oversight mechanism used to track weapons deals with other countries.

As head of the task force established last year, Rep. Mike Waltz, R-Fla., introduced the Tiger Act in December.

“The tempo of conventional high-intensity war that we’re seeing means that countries are burning through their defense equipment much faster,” a Waltz staffer told Defense News, speaking on the condition of anonymity to discuss the bill. “That is something that we on the Hill were taken by surprise [by] in places like Ukraine: the shortage of precision munitions, the shortage of 155mm shells.”

In addition to Ukraine, the Biden administration has transferred thousands of munitions to Israel since Hamas’ Oct. 7 attacks even as it seeks to rush arms to Taiwan to deter a potential Chinese invasion.

The bill raises the threshold for which the executive branch can approve an arms sale of major defense equipment without congressional notification from $14 million to $23 million. It also raises the threshold for the sale of defense articles, upgrades, related training or other services without congressional notification from $50 million to $83 million. The staffer said the numbers were selected to reflect inflation since 2003, when Congress last adjusted the thresholds.

“Ensuring that countries have the ability to purchase some of these weapons without, as years go on, being increasingly penalized by rising inflation rates seems to be common sense,” the staffer said.

But arms control advocates argue the bill would cede congressional oversight authority.

“Notification thresholds are really at the core of Congress’ arms sale oversight regime,” John Chappell, an advocacy and legal fellow at the Washington-based Center for Civilians in Conflict, told Defense News.

“Raising the threshold would undercut Congress’ ability to be aware of the proposed arms transfer. That would mean Congress wouldn’t be able to conduct oversight, and they would lose the opportunity to ask questions about specific arms sales, to put informal holds on them and to raise concerns about issues related to civilian harm, human rights, armed conflict and other issues,” he said.

Chappell noted many U.S. arms sales to Israel since Oct. 7 have fallen below the existing notification thresholds. He also highlighted a 2020 State Department Inspector General report, which found the Trump administration approved 4,221 below-threshold arms transfers to Saudi Arabia and the United Arab Emirates amounting to $11.2 billion between Jan. 2017 and Aug. 2020.

Waltz’s legislation emerged from a bipartisan taskforce of three Republicans and two Democrats who sit on the Foreign Affairs, Armed Services and defense appropriations committees. But Rep. Gregory Meeks of New York, the top Democrat on the Foreign Affairs Committee, declined to comment on the legislation.

Drawdown authority

The Waltz bill also requires the secretary of state to use drawdown authority from U.S. stockpiles to transfer weapons to a security partner or ally if a sale has been delayed for three years or more. However, the secretary of state may waive this provision so long as he or she explains why to Congress.

“What this is saying is if there’s a long-running [foreign military sale], the secretary must explain why it can’t be prioritized,” said the Waltz staffer. “Let’s say you have the sale of Harpoons to Taiwan that have been outstanding for three years, and we have Harpoons in our arsenal.”

The staffer noted the drawdown language is still under negotiation and the legislation may change via amendments in the Foreign Affairs Committee markup next week.

Harpoon anti-ship missiles comprise part of the roughly $19 billion foreign military sale backlog to Taiwan, caused in part by contracting delays and U.S. industrial base constraints. Several other U.S. partners, including in the Middle East, have been hit with arms sales delays.

But Chappell argued the provision would make “presidential drawdown authority specifically a routine occurrence” and could be used to circumvent congressional holds on an arms transfers that top lawmakers on the foreign affairs committees sometimes place over human rights concerns.

Additionally, the bill seeks to beef up the Special Defense Acquisition Fund, a revolving account used for foreign military sale procurement that the Pentagon hopes to lean on more as it works to expedite the process. The Pentagon released the results of its own Tiger team task force to speed up arms sales last year and has a separate task force focused on Taiwan. It’s also recently established another Tiger team task force to speed up arms transfers to Israel, according to The Intercept.

The Foreign Affairs Committee will debate and vote on the legislation next week, potentially referring it to the House floor for consideration.

The Waltz staffer noted the task force seeks to make additional legislative adjustments to the foreign military sales process later this year as Congress drafts the fiscal 2025 defense policy bill.

The FY24 defense policy bill, which Congress passed in December, includes a provision authorizing each combatant commander to hire up to two acquisition specialists as part of a bid to speed Pentagon contracting of foreign military sales.

The teams competing to replace the Ground Based Midcourse Defense (GMD) interceptors with a Next-Generation Interceptor, or NGI, have been working on staggered schedules. The Lockheed Martin and Aerojet Rocketdyne team completed its PDR at the end of September 2023.

Northrop and its Raytheon partner passed through the same gauntlet on Jan. 26, Lisa Brown, who is in charge of the company’s NGI program, told Defense News in a Jan. 30 interview.

The teams are now one year ahead of the original contract date for PDR completion and Brown said its PDR wrapped up successfully one month ahead of an established accelerated plan.

Critical Design Review is now expected to take roughly a year. Brown said the team is expecting to reach that milestone in the spring of 2025 and is looking for ways to accelerate the schedule.

Because the program has completed milestones earlier than originally planned and due to an emphasis on digital design methods, both teams remain hopeful they can deliver an interceptor that could make it into underground silos by fiscal 2027, a year faster than the Missile Defense Agency is projecting.

There are 44 GBIs in the ground with the majority in silos at Fort Greely, Alaska, and the rest at Vandenberg Space Force Base, California. The current interceptors aren’t equipped to counter a missile that could contain multiple kill vehicles or decoys that make the defeat process more complicated, defense officials have said.

NGI is the result of the Pentagon canceling in August 2019 its Redesigned Kill Vehicle program – which would have upgraded the GBI to be able to pursue more complex threats. That program struggled with insurmountable technical issues resulting in delayed schedules and cost increases. Raytheon, as a subcontractor for Boeing, was the developer for the RKV program.

Roughly eight months after the cancellation of the RKV program, MDA launched the new interceptor push.

The companies are designing the new interceptor using digital methods meant to speed up the design process. As a result, Northrop’s engineers were able to build hardware earlier and begin testing sooner.

“In my 30 years at the company, I would say this is probably the most mature PDR level design I’ve ever seen. Frankly, a lot of the components are already at or past the CDR level,” Brown said in the Jan. 30 interview.

As part of the PDR process, Northrop held a “science fair” where attendees could cycle through a large conference room and look at hardware and see actual models running or waveforms being generated, Brown described. This way “they could get a good understanding, hands-on, of a lot of the technology that we employ in the interceptor,” she said. The company showed its working NGI digital twin.

Northrop even used virtual reality to evaluate how a maintainer might access certain parts of the interceptor with a wrench to ensure good ergonomics and optimal access for repairs and maintenance, Brown added.

“We want to demonstrate to MDA that we are a low-risk approach,” Brown said.

Northrop is also in the midst of static fire testing its rocket motors. The stage three rocket motor arrived at MDA testing facilities in December and its stage one and two motors should complete static fire testing by the end of the first quarter this year, Brown said.