What's Ahead? As the defense industry sets to close another strong financial year for its sector, what lies ahead? Merrill Lynch analyst Byron Callan on Friday in a note to clients on "Surprises for 2005," expects "defense budget reductions from prior DoD plans mainly in naval ship, major transformation programs and tactical combat aircraft." While industry executives frequently tout how their company's programs are core to DoD's future mission needs, Callan says, "Every company cannot be correct in its views." As far as the industry's growth expectations are concerned, Callan doesn't offer any predictions but is concerned that "some companies have held on doggedly to defense sales growth predictions." Are these expectations "wishful thinking or a true reflection of the competitiveness, execution and position of each firm?" he asks.

Transformation Amok? GAO last week criticized the Defense Department's lack of metrics and accountability for its ongoing transformation. The Dec. 17 report also said the Pentagon lacks leadership for transformation. The Pentagon's Office of Force Transformation disagreed with GAO's findings. DoD has established an informal crosscutting group on transformation, but that group lacks a formal charter or authority, GAO said. Defense Secretary Donald Rumsfeld said during his first post-election press conference at the Pentagon that he plans to continue with his transformation agenda, although he declined to say whether he'd be realigning specific programs.

SATCOM Heartache. Air Force Maj. Gen. Craig Cooning, Air Force space acquisition director, acknowledges that there are questions "whether or not we will get there" with the proposed Transformational Communications System (TCS). TCS was one of the Air Force's proposed space programs that took a healthy hit in the FY '05 budget, and officials are now proceeding with a way ahead for the FY '06 budget. Cooning notes that technology concerns could at least be partially allayed with the Air Force's technology offramps in the program, whereby officials make use of available technology if new equipment is not mature. Among the challenges for the entire system, he says, would be to build a 10 gigabit crosslink for the satellites, although an offramp is set to take on a 2.5 gigabit crosslink if needed. His remarks were during a Dec. 15 Shephard's Unmanned Vehicle North America conference

Hellfire, Please! Gen. John Jumper, the Air Force's chief of staff, says the once bizarre occurrence of firing a Hellfire missile from the Predator unmanned aerial vehicle has become "routine." Jumper championed the expansion of the General Atomics Aeronautical Systems Predator's mission expansion from an intelligence collector to a "hunter killer." Jumper says the Predator's Hellfire has been used against, for example, snipers pinning down U.S. troops in Iraq. He says the missile has been launched from the UAV "dozens" of times.

New Trials. The Coast Guard's Island-class cutter Matagorda, which earlier this year completed a service life extension that included lengthening the vessel and replacing portions of its hull, was expected to return to service this week after completing a new set of fixes at Bollinger Shipyard related to hull damage and a cracked main deck plate discovered in September, the service says. The recent hull damage, a hull plate that had "stoved-in," occurred while the cutter was going from Key West to Miami, Fla., to evade Hurricane Ivan, the service says. The incident caused the service to put operational restrictions on all four of the Island-class vessels that had been converted from 110 feet to 123 feet and put on hold planned additional conversions. Whether the conversion program continues or not depends on the outcome testing done on the Matagorda and what the Coast Guard and industry team managing the service's Deepwater modernization program decide, the service says.

Berlusconi's Push. At a recent press availability at the White House between Italian Prime Minister Silvio Berlusconi and President Bush, Italian media asked Bush whether they spoke about the Navy's decision next month on the VXX presidential competition. The Navy is weighing either the H-92 offered by Sikorsky or the US101 offered by Lockheed Martin, AgustaWestland and Bell Helicopter Textron. Berlusconi notes that the "Italian helicopters" would be "almost completely made, manufactured in the United States."

...Bush's Response. Bush notes hearing the pitch that the US101 would have American parts. "I've got the message, yes," he says, eliciting laughter from the press corps. Berlusconi adds, "I can only say that I've been flying these helicopters for 30 years, and I'm still here."

Slip Sliding Away. Stryker vehicles prove they can take the heat in Iraq, now they're taking the cold, as the 172 Stryker Brigade Team at Ft. Wainwright, Alaska, works through a warfighting exercise where the weather's been running between 17 and 30 degrees below zero. Commander Col. Michael Shields says he's impressed with the vehicle's mobility and survivability in the arctic environment. It's slippery, so the vehicles have chains on four of their eight wheels, he says at a recent Army roundtable. But other vehicles aren't doing so well, he says. In a collision, a "large vehicle" slid into a Stryker vehicle, which sustained no damage. However, the collision was "almost catastrophic" to the other vehicle, he says.

Real Zeal. New Zealand is adding $3.8 million in extra assistance for improved security, local government support and infrastructure rebuilding in Afghanistan, Aid Minister Marian Hobbs says. Since 2001, New Zealand has contributed just under $10 million to such work. Also hard at work is the Provincial Reconstruction team, deployed by the New Zealand Defense Force.

Beans, Bullets, And Aussies. Starting in February, Australian Defence Force personnel will provide logistics training for the Iraqi Armed Forces, Defence Minister Robert Hill says. "Once fully deployed the team will comprise approximately 50 logistics specialists who will train the Iraqis in areas such as supply operations and transport, including planning and the development of sustainable distribution methods," Hill says.

...Top Spy. Maj. Gen. Maurie McNarn has been appointed Australia's Director of the Defence Intelligence Organization, Defense Minister Robert Hill says. McNarn now commands army training, and was the commander of Australian national forces in the Middle East. DIO is a key defense intelligence analysis agency that is also a center for defense-related scientific and technical expertise supporting capability development and national counter-proliferation goals.

Cold Comfort. Canada is divided on missile defense, says James Ferguson, senior research fellow at the Canadian Defence and Foreign Affairs Institute. "Many people associate missile defense with George Bush and that's part of the problem. Canada doesn't like him," Ferguson tells American Foreign Policy Council (AFPC)'s 2004 Conference on Missile Defenses in Washington. Canada's difficulty with the proposed U.S. missile defense shield is that defense issues become political issues of sovereignty, independence and identify, he says.

...Polish Shrugs. Central Europeans feel comfortable with U.S. leadership and see missiles as a threat, but not particularly to themselves, says Radek Sikorski, resident fellow at the American Enterprise Institute at the AFPC's missile defense conference. Many were in favor of getting involved in the operation to rid Iraq of Saddam Hussein, but now there's a growing feeling in the region that they won't do it again. The price was too high, politically and economically. The feeling is best captured in a joke Sikorski heard in Parliament: "We buy F-16s and in return we can send troops to Iraq." Any effort to put a missile defense interceptor base in Poland will be a hard sell, he says.

Try, Try, Again. "A minor glitch" was the way Air Force Lt. Gen. Trey Obering, the head of the Missile Defense Agency (MDA), describes last week's failure of Ground-based Midcourse Defense (GMD) system. The test, estimated to cost $85 million, was aborted due to an unknown anomaly, according to MDA. Integrated Flight Test 13-C, which was delayed by several months, was the first flight test in over two years and was expected to be the last test prior to placing the GMD system on alert. Since the test, Obering and other administration officials have not commented on whether the "glitch" would delay the decision to announce initial defense capabilities for the system.

Bring Back the Gavin! Rep. Ike Skelton (D-Mo.) is asking the Pentagon to consider using the Vietnam War-era M-113 armored personnel carrier as an option to more up-armored Humvees. "I understand that the M-113 may not provide the same level of protection as some other armored vehicles currently in use, but they certainly provide better protection than soft-skinned vehicles," Skelton wrote in a letter to the Chairman of the Joint Chiefs of Staff.  "Moreover, I believe that the M-113 chassis is robust enough to easily accommodate the additional weight of supplemental armor kits, whereas the HMMWV struggles under the burden and it is causing significant maintenance issues."