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| Monday, July 14, 2025 • 67th Year • Volume 307 • No. 8 | |||||||||||||
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Defense Watch: IAM Contract Negotiations, Dutch V-Bats, B-2 Unit Costs, Starship Propulsion IAM Contract Negotiations. Union workers at Boeing’s defense facilities in the St. Louis region, and its new MQ-25 unmanned aircraft production plant across the Mississippi River in Mascoutah, Ill., have begun the “economic portion of high-stakes contract negotiations” with the company, International Association of Machinists District 837 said last week. “We’re here to fight for the wages, healthcare, retirement, and job security our members have earned,” Tom Boelling, directing business representative of IAM District 837, said in a statement. The current contract covering 3,100 machinists began in July 2022 and expires July 27. Boeing will be extending a contract offer soon. “We’re committed to reaching a new deal that recognizes the contributions of our employees and keeps us moving forward,” Dan Gillian, air dominance vice president for Boeing Defense and senior site executive for St. Louis, said in a statement. Drone Memo. In a staged production outside the Pentagon on July 10, Defense Secretary Pete Hegseth emphasized the importance of bolstering the “U.S. drone manufacturing base,” arming military forces with “low-cost American crafted drones,” and overcoming “bureaucratic risk aversion.” During his monologue, he reached up to grab a piece of paper–ostensibly the memo he then signed on “Unleashing U.S. Military Drone Dominance”–delivered by a Skydio X10D quadcopter drone. “This is the future,” Hegseth said after the X10D handed him the paper. “We’re in the fight to win it. I’m never gonna back down.” After the show, Skydio President Adam Bry posted on X, “Using an X10D to deliver new drone policy documents to SecDef was not one of the use cases we designed for. Luckily, it’s a versatile platform. LFG.” Dutch V-BATs. The Netherlands Ministry of Defense has acquired eight V-BAT unmanned aircraft systems from Shield AI for use in maritime intelligence, surveillance, and reconnaissance operations by the Royal Netherlands Navy and Marine Corps. Ten different countries and or international organizations now use V-BAT, the U.S.-based startup said last week. Shield AI said that the Netherlands selected the drone based on its success in the ongoing Russo-Ukraine War where it has been used for long-range ISR and targeting without Global Navigation Satellite System, and a month-long flight trial aboard a Dutch naval vessel during a NATO exercise. Counter-Drone Interest. The Coast Guard, which currently operates counter-drone systems, earlier this month issued an information request on the capabilities of existing systems on the market, the availability of counter-unmanned aircraft systems (C-UAS) as a service by contractors, and the availability of C-UAS equipment it could operate but would be owned and maintained by a vendor. The service envisions “rapidly deployable and adaptable C-UAS solutions for fixed, temporary, on-the-move and portable deployments to secure critical infrastructure and high-profiled events,” the July 3 request said. “Upon deployment, C-UAS must have the capability to detect, identify, monitor, track, warn, disrupt and seize threat UAVs.” Free AI Tool. Startup EdgeRunner AI is offering the public beta version of its domain specific generative artificial intelligence platform to Defense Department users, free of charge. The EdgeRunner AI platform is air-gapped and works on-device, providing specific military occupational specialty assistance tailored to operations, like logistics. Tyler Saltsman, a former Army logistician and the company’s co-founder and CEO, recently told Defense Daily that Army and Air Force logisticians require different AI tools, adding that EdgeRunner AI’s platform can be specialized for these different needs. The EdgeRunner AI assistant is “akin to a personalized JARVIS to Iron Man for every warfighter, across all devices and assets, helping them make faster, smarter decisions, increasing the probability of our troops winning the fight and bringing them home,” he said in a statement. Unit Costs. Bomber squadrons have the highest annual unit cost for U.S. Air Force platforms. The two B-2 bomber squadrons at Whiteman AFB, Mo.—each with an average of 7,970 personnel—have a unit cost of nearly $2.3 billion annually—the highest squadron unit cost for U.S. Air Force platforms, according to fiscal 2025 figures compiled by the Congressional Budget Office. Behind the B-2 are four B-1B squadrons—each with an average personnel number of 4,230 and an annual unit cost of nearly $1.3 billion. Next are the six B-52 squadrons—each having an average of 3,070 personnel and an average annual unit cost of $860 million. Behind the bombers in total cost are 26 F-35A squadrons—each with an average of 2,790 personnel and an average yearly unit cost of $740 million—and 10 F-22 Raptor squadrons—each having about 2,470 personnel and an annual unit cost of $730 million, according to CBO. A B-2 squadron’s annual unit cost of about $2.3 billion is below the nearly $2.7 billion annual average cost for each of 7 active duty U.S. Army Stryker brigade combat teams (BCT) with 12,890 personnel per BCT, but above the $1.9 billion annual unit cost for 11 U.S. Navy carriers with 6,900 personnel each and the $1.4 billion annual unit cost for 9 carrier air wings with 4,540 personnel each. Starship Propulsion. On a 3-1 vote, commissioners in Cameron County, Texas on July 8 approved SpaceX’s application to build a liquid oxygen and nitrogen production plant near Boca Chica Beach in South Texas to supply fuel for the company’s Starship launch vehicle. Commissioner Sofia Benavides voted “no.” Citizens expressed concern about damage to the Texas coastline, dunes and wildlife. “The state regulators have not given the community any opportunity to comment,” Bekah Hinojosa, a co-founder of the South Texas Environmental Justice Network, said during the commissioners’ meeting on July 8. “SpaceX and Elon Musk has already been scorching our Boca Chica Beach–displacing people from the beach and destroying wildlife habitat. SpaceX is conducting a hostile takeover of our beach and coastline. SpaceX cannot be allowed to continue to grow unchecked and industrialize the dunes and our beach. SpaceX is clearly not for the public good.” The company wants the new air separator plant in Boca Chica to reduce the need for truck deliveries of liquid oxygen and nitrogen. Ship-to-Shore Connectors. Textron Systems’ Corps won a $354 million modification on June 30, announced July 3, to exercise an option to produce three more Ship-to-Shore Connector Landing Craft air cushion 100 class craft. The work is expected to be finished by July 2031. BlueForge Philanthropy. BlueForge Alliance (BFA), the nonprofit that started as an offshoot of the Texas A&M Engineering Experiment Station to help grow the naval defense industrial base, on July 10 announced a new foundation as a philanthropic army on cultivating resources. It specifically said the new organization “will operate as the philanthropic arm of BFA, engaging and cultivating individuals, institutional investors, and corporations interested in furthering BFA’s mission.” The nonprofit argued this will complement their current efforts and ultimately grow a permanent endowment to advance initiative that build industrial base resilience, foster innovation and promote opportunity within the defense ecosystem. Trilateral Naval Logistics. High-level naval officers from the U.S., Australian and Japanese militaries signed the first trilateral agreement on logistics under a strategic dialogue framework. Vice Adm. Jeff Jablon (Deputy Chief of Naval Operations for Installations and Logistics, OPNAV N4), Rear Adm. Naoya Hoshi (Director General of Logistics Department, Maritime Staff Office, Japan Maritime Self Defense Force (JMSDF)), and Commodore Catherine Rhodes (Director General Logistics, Royal Australian Navy (RAN)) took part in the signing ceremony aboard USS America (LHA-6) during a port visit in Brisbane, Australia. The U.S. Navy noted the three parties have routinely collaborated on logistics on bilateral bases, but not together in a trilateral setup. Jablon said while the U.S. has “robust logistics partnerships” with both countries, this will strengthen the commitments and allow them to more easily share information, technologies and processes “for greater logistics resiliency.” …Reloading. The agreement specifically covers reloading missile systems and flexible refueling. The U.S. Navy statement noted the Australian and U.S. navies have supported mutual missile reloading since 2019 and the Navy’s prototype systems to reload weapons at sea are compatible with both countries’ existing MK-41 missile launchers and can transfer missile cannisters between ships at elevated sea state, in a reference to the Transferrable Reload At-sea Method (TRAM)..The Navy said the system will have further demonstrations in 2025 and 2026 “to showcase additional capability and interoperability.” Space Tech IPO. Firefly Aerospace last Friday said it plans to go public and has filed its registration statement with the Securities and Exchange Commission for a proposed initial public offering. The company will use “FLY” as its stock ticker symbol and will trade on the Nasdaq. The number of shares to be offered and the price range for the expected offering have not been determined, the Texas-based company said. Firefly designs and builds launch vehicles, spacecraft, and a lunar lander.
HASC, SASC NDAAs Differ On Topline By Billions, Agree On Pursuing Major Acquisition Reforms
The House and Senate Armed Services Committees have proposed conflicting toplines in their respective versions of the next defense policy bill, with the latter adopting a $32.1 billion boost, while both panels have made major acquisition reforms a focal point of their legislation. “We are very optimistic that the conditions are ripe to do some real acquisition reform,” a senior congressional official told reporters. “So we’re very hopeful that [the House’s] effort, combined with what the Senate’s doing and what the administration is doing, we’ll be able to break through the cultural impasse that’s been at the department for the last 30 or so years and really make some lasting reforms to what is a broken acquisition process.” Both panels released details of their fiscal year 2026 National Defense Authorization Act markups on Friday, which follows SASC advancing its version out of committee with a 26-1 vote on Wednesday and as HASC is set to mark up its legislation on July 15. While HASC’s $848 billion topline largely adheres to the Trump administration’s FY ‘26 discretionary spending request for the Pentagon, SASC adopted a $32.1 billion increase to support an $878.7 billion topline for DoD in its NDAA. SASC’s topline boost included adding about $8.5 billion for shipbuilding, $6 billion more for munitions, about “a couple billion dollars” to each of the service’s unfunded priorities lists, adding 10 additional F-35As above the administration’s request and $2 billion more for military construction, according to a senior congressional official. While SASC has only released an executive summary so far with high-level details of its defense policy bill, a senior congressional official told Defense Daily the full bill is expected to be filed early next week. Details on the NDAA proposals arrive after Congress last week passed the massive reconciliation bill that included $150 billion for defense, with the Trump administration including $113 billion of those funds to achieve its proposed $1 trillion FY ‘26 defense request (Defense Daily, July 3). “We had a very late budget submission. We didn’t have a lot of details. We were writing reconciliation in the dark. And there was massive misalignment in certain places with what the administration was expecting and what we did in reconciliation. So we’re trying to backfill that and make sure that we’re filling those gaps,” a senior congressional official said of the SASC NDAA. Sen. Roger Wicker (R-Miss.), the SASC chair, has previously pushed back on the administration’s use of reconciliation funds to reach the $1 trillion defense request, calling it a “sleight of hand” (Defense Daily, June 4). “There are some members of the administration who thought we would be delighted with the $1 trillion [defense topline request]. That’s not the way we viewed it. We need a steady increase in terms of the baseline [budget] year after year after year to get where we need to get,” Wicker has said. Senior congressional officials in a briefing on SASC’s NDAA markup pointed to Wicker’s Fostering Reform and Government Efficiency in Defense (FORGED) Act, which was unveiled in December and laid out a series of sweeping acquisitions reforms, as a centerpiece of the panel’s legislation (Defense Daily, Jan. 6). “My colleagues and I have prioritized reindustrialization and the structural rebuilding of the arsenal of democracy. Accordingly, we have set forth historic reforms to modernize the Pentagon’s budgeting and acquisition operations,” Wicker said in a statement on Friday. SASC’s summary of its NDAA notes “significant reforms” in the bill include repealing or amending more than 100 provisions “to streamline the defense acquisition process, reduce administrative complexity and remove outdated requirements, limitations and other matters” and amending the Joint Requirements Oversight Council to “refocus its mission on evaluating global trends, prioritizing joint operational problems, assessing military capabilities and integrating innovative solutions,” to include removing the JROC’s “validate” and “approve” authorities for service-level requirements. The bill also directs a study on potentially establishing a a Joint Capabilities and Programming Board within DoD to bolster joint capability prioritization and budgeting, elevating the role of program executive officers to “portfolio acquisition executives” and granting them more authorities and directing the creation of “capstone requirements” to more flexibly move funds around for priority capability areas and create “continuous competition.” Following the FORGED Act’s proposals to improve non-traditional defense contractors’ ability to work with the Pentagon, SASC’s NDAA includes provisions exempting some new entrants from certain defense business requirements “and requires that they be treated commercially unless a waiver is approved” (Defense Daily, Jan. 9). On the HASC side, a senior congressional official told reporters that the NDAA incorporates the entire Streamlining Procurement for Effective Execution and Delivery (SPEED) Act proposed by Reps. Mike Rogers (R-Ala.) and Adam Smith (D-Wash.), the panel’s chair and ranking member. Rogers and Smith have said the proposal is aimed at “blowing up the [acquisition] system” rather than making adjustments, with the official noting that the SPEED Act is “the shell” for bill “because it is the priority of the NDAA this year” (Defense Daily, June 24). “To ensure the military services can innovate and field capabilities faster, we need to fundamentally reform the Defense Acquisition System to cut red tape and deliver capabilities to U.S. service members as quickly as possible. Acquisition programs take too long to develop, produce, and become operational,” HASC Democrats wrote in a summary of the NDAA. “[The NDAA] reduces the complexity, cost and risk of doing business with the Department of Defense by establishing a new acquisition architecture based on five key pillars of reform: aligning acquisition to service members’ priorities and operational outcomes; accelerating the requirements process; finding a balance between the need for regulation and efficiency; strengthening the American industrial base and leveraging commercial innovation and developing a mission-oriented acquisition workforce,” the lawmakers added. Sweeping acquisition reform proposals for the SPEED Act in the NDAA include overhauling the Joint Requirements Oversight Council, providing the military services more ability to flexibly budget around portfolio areas and establishing new offices to support more rapid decision making. A senior Congressional official said the SPEED Act provisions in the bill aim to reform the requirements process, to include establishing a Requirements, Acquisition and Programming Integration Directorate (RAPID), so decisions can be made in about 90 days down from many months to years. The HASC NDAA also supports the establishment of the Bridging Operational Objectives & Support for Transition (BOOST) program, which seeks to attract new entrants to work with the Pentagon by helping promising technologies “survive the Valley of Death, creating a data-as-a-service model so that the U.S. military can access the data it needs to maintain its systems and creating an Industrial Resilience Consortium to address supply chain gaps and speed up the adoption of advanced manufacturing.” “[The NDAA] calls for the overhaul of burdensome acquisition regulations that drive up costs and cause delays by exempting smaller programs from excessive regulatory burdens and seeks to eliminate the dual layer of complex cost reporting requirements to streamline regulatory compliance while preserving financial transparency,” according to the bill summary. A senior congressional official noted both HASC and SASC’s slight differences in acquisition reforms adopted from the two separate proposals, adding “that’s a conference issue for later.”
Congressionally Established DoD Progress Payment Pilot Program On Hold
Section 874 of the fiscal 2024 National Defense Authorization Act authorized the DoD acquisition chief to “establish and implement a pilot program to incentivize contractor performance by paying covered contractors a progress payment rate that is up to 10 percent higher than the customary progress payment rate on a contract-by-contract basis.” Yet, the pilot is on hold, as the Biden administration did not finalize the program, and as the office of Pentagon acquisition boss Michael Duffy attends to other business, such as contract reviews, final rulemaking on Cybersecurity Maturity Model Certification, and the so-called Revolutionary FAR (Federal Acquisition Regulation) Overhaul–the result of the April 15 Executive Order 14275. In March 2020, to help large contractors keep their smaller suppliers healthy amid challenges related to the onset of the COVID-19 pandemic, DoD increased the progress payment rate to 90 percent. The Pentagon reverted to the 80 percent rate for new contracts in July 2023, while keeping the 90 percent rate for existing contracts and task orders through the life of the contract (Defense Daily, May 8, 2023). DoD also increased its payment rate for small businesses to 95 percent from 90 percent in March 2020. Report language on the establishment of the pilot program in the Senate’s version of the fiscal 2024 authorization bill said that the Senate Armed Services Committee (SASC) “recognizes the importance of cash flow to businesses large and small participating in the defense industrial base” and that SASC “believes an opportunity exists to provide additional cash flow to businesses contingent on favorable past performance on contracting goals.” “Once Department of Defense officials implement this program, we hope to see eligibility and incentive criteria–i.e., which companies can participate, which contracts can be subject to this program, how large companies can accelerate progress payments to their small business partners–that reflect Congress’ stated intent and that don’t unnecessarily constrain program participation,” Stephanie Kostro, the president of the Professional Services Council, wrote in a Friday email.
SASC Wants The Joint Back In Joint C-sUAS Office With Transfer To OSD
The Senate Armed Services Committee (SASC) is recommending that leadership of a Defense Department office charged with assessing counter-drone technologies and developing related requirements and training be transferred from the Army to the Office of the Secretary of Defense (OSD) because the effort lacks multi-service jointness. The recommendation, which would have to be agreed to by the House Armed Services Committee, is mentioned in an executive summary of the SASC version of the fiscal year 2026 National Defense Authorization Act. “Transfers the responsibility for Countering small Unmanned Aircraft Systems (C-sUAS) from the Department of the Army to the Under Secretary of Defense for Acquisition and Sustainment,” reads a bullet point in the summary. The Joint C-sUAS Office (JCO) was stood up in 2020 with the Army as the executive agent. However, the Senate panel is concerned that the JCO has only been staffed by Army personnel. “Frankly, there’s been no joint services,” a senior congressional official told reporters last Friday. “It’s been an Army-only organization for the last five or six years. So, trying to raise the emphasis with everything that’s going on in the world, we though it was important to raise it back up to the secretary of defense level to put that joint flavor back.” The JCO performs annual assessments of counter-drone systems on land. The Navy has been doing its own testing for sea-based solutions.” During the media briefing, the official was asked about the Army’s recent announcement that it plans to stand up a new joint interagency task force (JITF) to quickly assess requirements and have the funds to acquire drones and counter-drone systems (Defense Daily, July 2). The official replied that Congress and DoD will “have a conversation” in the coming months about the structure of the JITF. “The reason why [the Army] is going after a JITF is to give an executive agent actual authority to coordinate procurement across the services, for starters,” the senior congressional official said.
Authorizers Support New LSM Plan, Impose Vessel Construction Manager Strategy
The newly released House and Senate Armed Services Committee’s FY 2026 defense authorization bills both support the Navy’s latest strategy to move forward with a non-developmental design for the Medium Landing Ship (LSM) and also impose a different acquisition strategy. Both versions of the authorization bill authorize procurement of different numbers of LSMs but agree the Navy should utilize a Vessel Construction Manager acquisition strategy for vessels two and beyond. A Vessel Construction Manager acquisition strategy entails having the Navy select a manager to then make the decisions on who will be the vendor to build the vessel. This strategy has had significant success for Maritime Administration (MARAD) in its National Security Multi-Mission Vessels (NSMV). In that case, MARAD used TOTE Services, which selected the Philly Shipyard to build the NSMVs. Now lawmakers are set to push the Navy to use this acquisition strategy for the LSM after its previous rocky start. While the Navy previously planned to use a new vessel that included a blend of military and commercial shipbuilding specifications, it is now pushing to start with what it calls LSM Block 1 as a non-developmental design based on the Israeli Logistics Support Vessel (ILSV) design, itself based on the U.S. Army’s Frank S. Besson-class of logistics support vessels. In April, Lt. Gen. Eric Austin, Deputy Commandant, Combat Development and Integration, confirmed requirement creep made the original LSM concept unaffordable and, following LSM Block 1, the Navy seeks to decide on the subsequent design that multiple shipyards could build, dubbed LSM Block Next (Defense Daily, April 30). At the time, Austin said the services think it will take about four to five years from contract award to being in the water for delivery. The House Armed Services Seapower subcommittee’s mark of the bill would direct the Secretary of the Navy to “seek to enter into an agreement with an appropriate vessel construction manager,” who shall then seek to enter into one or more contracts for no more than eight LSMs past this initial design. Moreover, the draft bill says the additional LSMs can only be additional non-developmental items either using the same design as the lead ship or “derived from such design.” Similarly, the Senate Armed Services’ Committee’s FY ‘26 defense authorization bill approves a similar provision, according to the executive summary of the chairman’s mark released on July 11. The Senate version requires using the Navy’s LSM program to use the Vessel Construction Manager acquisition strategy. The summary said the Navy must “use commercial design standards, construction practices and an external entity to contract for construction.” The Senate side also authorizes a bloc buy for up to 15 LSMs “to support testing and experimentation of the Marine Littoral Regiment formation.” The Marine Corps previously said it wants 35 LSM-type vessels to transport the Marine Littoral Regiment, but it earlier settled on an initial 18 vessels, with the remainder to be other vessels with at least similar capabilities, like the leased Stern Landing Vessel or Spearhead-class expeditionary fast transport ships used to test LSM concepts. A 2024 Congressional Budget Office report argued the previous LSM design standard would likely cause it to be two to three times more expensive than the Navy’s initial estimate of $150 million per hull, which was later proven correct when the solicitation was canceled due to expensive bids (Defense Daily, April 12, 2024). The new Navy strategy, now backed up by authorizers in Congress, is to procure a vessel with similar capability faster and for cheaper but not letting expensive military specifications cause costs to balloon.
Coast Guard Seeks Sources For Interim Long-Range C2 Plane That Also Serves DHS Chief
The Coast Guard last Thursday issued a source sought notice to help it survey the market for a potential lease of a Gulfstream jet that could be used as one of its Long-Range Command and Control Aircraft (LRCCA) to support the service’s senior leadership and the secretary of homeland security. The interim aircraft would serve until a new aircraft is purchased and delivered, a Coast Guard spokesperson told Defense Daily last Friday. The issue of a new LRCCA came up in May when Rep. Lauren Underwood (D-Ill.), the ranking member of the House Appropriations Homeland Security Subcommittee, said that the Department of Homeland Security at the “last-minute” put $50 million into its fiscal year 2025 budget for a “new Gulfstream 5 jet for DHS Secretary Kristi Noem’s personal use.” Underwood tweeted on the social media platform “X” that Noem already has a Gulfstream 5 but “wants a new one paid for with your taxpayer dollars.” In a May 15 hearing hosted by the subcommittee, acting Coast Guard Commandant Adm. Kevin Lunday responded to a question from Underwood, saying the service has two LRCCAs that provide secure command and control forward. He also said one is nearing the end of its service life. The DHS press office on May 16 countered media reports of the LRCCA replacement, saying the aircraft that will be replaced is “22 years old and faces significant avionics and communications obsolescence issues,” and that maintenance is hindering the availability of the aircraft. The office also said that most of the users of the aircraft are Coast Guard leadership. The current LRCCA fleet consists of a Gulfstream GV and a G550. In addition to the DHS secretary and Coast Guard commandant, there are “four other principal users” of the jets, the July 10 sources sought notice said. For lease options, the Coast Guard wants to assess Gulfstream G500, G550, G600, and G650s as potential options. General Dynamics [GD] owns Gulfstream. The sources sought notice says the lease would be for one-year with a potential additional one-year option.
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