next on "this week in defense news," how the u.s. army is using sophisticated field exercises to change how and what it buys.

welcome to "this week in defense news," i'm vago muradian. india picked a new fighter for its air force, the rafael built by france's d sioux but can france seal the $11 billion deal? we'll talk to a leading aviation expert. first the army's big overhaul to push the acquisition process. it began eight months bago with the first integration test at white sands missile range in new mexico and fort bliss, texas. the goal is to test it in a setting before the army commits to buying anything. they also aim to field equipment gradually so instead of equipping the entire army all at once, they want to buy small equipment, upgrade as they go. the effort begans with tactical

equipment like radios and intelligence gear but expanding. the next n. i.e. in april will send ground crews through paces as well. this is the land battle command which makes procurement recommendations gained during n. i.e.s. welcome to the show. >> thanks for having me. >> wh various network components together in one place. what we weren't doing previously was fielding an integrated network capability and that's really from a command post, to that commander on the move all the way down to the dismounted troop. so what we're doing at fort bliss is bringing all those components to one place. we're making sure where we've got those integrated appropriately and taking that integration burden off of operational formations. what do we really want out of it? we want to provide a mission command capability to our formations. we want to make sure that commander is connected no matter where he's at and he has

a situational awareness and the ability to communicate so he can command and control his forces. the other thing we want to make sure we do is connect the soldier to the network. we want situational awareness down to the individual trooper, so we know where they're at on the battlefield and we can push mission command truly to the tactical edge and that is our soldiers. >> one of things you mean is not only maps, for example, or moving map displays and things like that, but true tactical information they can use on the move. it is tactical information. whether it's pushing orders, pushing imagery, pushing graphics or whatever information a commander needs to make a smart decision and to command and control its formation, that's what we're really talking about. >> one of the -- it's a really great approach to obviously test a lot of gear before you field any of the equipment. but how is that going to be speeding the acquisition process? >> so it's an interesting dynamic that we've really put in place at fort bliss and white sands. so as part of the n. i.e.

construct, i have to sort of paint a picture for you. what we've done is brought together three communities all in one place, you have the acquisitions community, the requirements community and you have the testing community. >> which historically have been in separate places as things are going on with leads to a lot of disconnect. >> which has historically been in different places which leads to some disconnect because what we were doing previously is we weren't bringing the network all to one place, we were testing radio a here, radio b here, so, really, the first time we provided a network capability to a network formation is when the last unit got the last radio. we want to change that paradigm. we want to integrate on the front end. by bringing these three communities out to white sands and putting the soldier in the middle, and i can't emphasize that enough, soldier feedback early and often is guiding requirements, it's guiding how the acquisition community is building products for us and industry, i must add, because they are key to this approach, and it's guiding how our testers are evaluating and

given capability. but that soldier and those operational commanders in the second or first army division, the brigade combat team, we've allocated are central and they are now a key voice in the process. >> as we look to some of the criticisms from the industry, i mean, obviously there are a lot in the industry who are excited about this, they're making the investment and getting that product out into your hands in order to use it. one of the criticisms is whether or not you can really create those economies of scale now that you're going to be buying in much smaller quantities. how do you create those economies of scale when you're not going to be buying those things in vaster sort of quantities? 2p%g network capabilities differently. so we add a radio program that we literally will start procuring in about the 2014 time frame and we are going to procure based on those economies of scale all the way out to 2030. this is a network kaiblght we're talking about. who would imagine the iphone

eight years ago? >> and who could imagine that same iphone would be serving 30 years from now. >> exactly. so you know you're behind before you even start as you start getting halfway through the acquisition cycle or the procurement cycle. so that's one thing that we know we've got to change. it really is sort of leveraging what the industry does. so we've done a great job inside the army of establishing technical standards that are aligned with how industry does it. now we want to incrementally modernize the network over time, much like industry does. so they don't do a wholesale swapout and try to proliverrate it everywhere. they'll go out and use a simple analogy. if they want to change the router that does your network connectivity here, they don't necessarily replace the whole building, they just replace the one that needs replacing. >> one of the issues some folks in the industry have is we're providing all this equipment, but we still haven't seen some returns yet from that. how do you keep industry coming

back when sometimes you might have to take a couple of bites of this appl the brigade modernization command and trading and doctrine command to see what we want to do with the capabilities that were out there in the fall. what i would ask the industry for is a little bit of patience. as we mature this process and work our way through it. we didn't have any industry participation in the very first n. i.e., we have in the second, we're now reviewing those and i suspect sometime over the next 45 to 60 days we will make some formal army decisions on which capabilities we want to move into what we're calling capability sets which is really that integrated network capability we want to hand off to our operational formations. >> is one of the lessons -- another industry gripe was, you

know, this process is so new that sometimes the soldiers don't have enough time to practice with the new hardware that they're furnished. the issue for them is that these soldiers are the ones who are grading them at the end of the day and may not have enough experience to know that actually their system is better. are you doing stuff that's different in terms of how the guys train with the equipment so that everybody feels like at the end of the day they're getting a fair shake and it doesn't come out to, oh, wow, if we only knew that menu setting could do that, we would have used it. >> there's two things we're doing. first off, the first two n. i.e.s were done very, very quickly. the first one we did was really just to shock the system, get the army moving in a common direction. we were really hoping just to get a single, we ended up doing much better than that on that first one. but we knew we had to get ourselves onto a battle rhythm. so we had a very short amount of time between the first n. i.e. and second n. i.e. we acknowledge it was a trump gated planning and execution

piece. but it was the first time we started laying in that integrated network baseline i was talking to you about. now what you'll see as we move into april, we're on to a six- month battle rhythm for the first time, and that's really where we want to end up is a fall/spring cycle of network integrations. we think that extra time is going to allow us to make sure we have our soldiers trained on the new capabilities the industry brings to us as we're moving this forward >> stay tuned for more with colonel

i'm back with colonel john morrison, the director of the army's land war net battle command. sir, let's go to the n. i.e.s. you obviously have a couple of them under your belt now. what are some of the lessons lear paying huge dividends. i'd be remiss if i didn't give you an example. we write requirements, they're written in some schoolhouse somewhere and the acquisition community goes off and they buy them. sometimes we don't go back in and check those requirements to make sure they're right. that's what the n. i.e. allows us to do. in an operational setting, soldiers are taking a look at our requirements and making sure they're right. we have a program called the net warrior program, multibillion dollar program that was for light infantrymen,

basically a computer on your back so you can have situational awareness and it costs a lot and it weighed 14 pounds. that's a lot for an infantryman to be carrying around when he's carrying around a bunch of other stuff. we put a commercial capability in the hands of our soldiers, connected to a data radio essentially doing the same thing and we found it wasn't that the acquisition program manager was building something bad, we had just given them the wrong requirements to build off of. within 60 days we've completely revamped that program. we've revamped the requirements, we've revamped the acquisition strategy and we're going to deliver capability to eight infantry brigade combat teams in fy '13 almost three years ahead of where we'd have that capability before. when you look at the n. i.e. construct and the model we're trying to put in place, that's what we're after. >> but what's some of the -- what is -- how is april going to be different from the other ones? >> april will be the first time

that we have the an early look ground combat vehicle program. the other nonnetwork capabilities that are out there because over time what we see the network integration evaluation becoming is is not centrally the focus of the network, but army capabilities and integrating them appropriately from across the force. >> from soldier systems all the way towards the highest vehicles? >> all the way up. >> what are some of the obstacles of changing this. it's intuitively a brilliant idea. >> change is always hard. one of the 'd=y

the n. i.e. construct down at fort bliss. we also need to be very, very transparent. there's some folks that want to make sure that we don't go too far to the right and we lose some of the quantity at a timive evawtions we need to be doing. >> it's based on soldier feedback as opposed to real data. >> right. we need to within the army strike that balance to make sure we have a quantity at a timive and very good quality at a timive assessment so we can make decisions. >> a true plug and play architecture, it doesn't matter what the subordinate system is, everything can plug in relatively easily. you don't have that now. how long is it going to be before you have the kind of architecture you feel you need that is seamlessly integratable to whatever mission you need to accomplish? >> in the fall was the first time we had our initial integrated network baseline out at fort bliss. we only had it in two of the battalions inside the brigade formation. in the spring what we plan to field as part of capability set 13, we'll have the entire brigade kidded out. after we get through that portion of it and we establish

what that integrated network baseline should be, now we have something we start adjusting fire from. i really think you'll start to see us do some open field running as we work into the fall integration evaluation and into the latter part of '13. >> in the 30 or so seconds we have left, how are you communicating what you want to industries so they do what you want? >> we are really trying to target industries, research and development efforts. we're doing that to a source that comes out through our acquisition community but it's based off of operational gaps in opportunities that come from the training and dock strin command through up next, a look at india's decision to buying france's rafael as its new fighter plane.

after years of intense

competition that disqualified both american competitors, india earlier this month picked the refall by francis over typhoon built by the multinational fighter consoreium as the new combat jet. officials will spend the next six to nine months negotiating the terms of a complex contract before the french firm officially gets the $11 billion award for 126 airplanes. that's no sure think as the so has had similar deals in the past only to see them dashed as they failed to turn their preferred bidder statist into hard contracts. india's dmappeds for cutting technology, a role in developing new systems for the plane and domestic assembly will make for challenging negotiations. new dehli wants the purchase to

richard vag. what are some of the broader stakes involved and will they be able to seal the deal at this time? >> dr. johnson, nothing focuses the mind like the sight of the gallows. given what's going on with european defense budget trends, it was pretty clear it was coming down to crunch time for the national fighter programs and the roughel is 20 years of extremely low production rates, one per month, 11 per year, as you point out, absolutely no export wins after a lot of tries. here bwas coming down to crunch time with the biggest fighter competition in the world. they had to win this one and obviously they came with their a game. >> and what they did is offer a lot of technology apparently, but also had the lowest price between the two aircraft. if they manage to seal a deal here, does this open the door in more immediate contests including m brazil, uae and qata are r? >> most of all it implies an upgraded road map by versions which all customers want to see. they don't want to be part of an orphan aircraft that's owned by one or two customers. >> which was only owned by

france at that point. >> you never know where your next upgrade is coming from. >> exactly. it really is a meal ticket in many respects. we'll get to that in a second. both were seen as aircraft that really fit the requirement. why were they disqualified from the program last year? >> i think a lot of it was the political dimension of not giving enough technology transfer promptly enough and to a certain extent there's not a lot you can do with the fighters. they're excellent as they are. the rafael has a lot of things that need to be matured to develop it into an army platform. the f-16 world class, f-18 world class, they come out of the box with anything you want, much tougher to actually try to work with the contractor in improving them and similarly the contractor and the government behind them aren't really incentivized to give away this tour because it is what it is and they've done a good job with it. >> the companies have invested huge amounts of money in these systems and didn't want to stand up with another competitor.

india, however, has very, very tough requirements. they not only want to build the aircraft themselves in india, but they also want the indian industry to build all the subsystems to go into that. with that kind of requirement, how does making money on this deal? >> that's really tough. that's what we will be addressing in the next six to nine months. at the end of the day, even if this was necessary to save the program, at least on an export sense and possibly a domestic sense too, even if it was necessary, yeah, they have to have a nickel by the end of the day. this is a tough contract as you point out. they're asking for everything that's extremely expensive then there's this bizarre jux ta pose ition and here is the lowest cost bidder. it's like arguing over a lamborghini and a ferrari. >> one of the things is the euro fighter guys are hoping they'll have another shot at this, especially if the indians pass or the so can't strike a deal with them. but the last couple of months have been very tough for your fighter. they lost in japan, they lost

to the joint strike fighter. they lost in switzerland to the gripan and now they've lost to india. what's next for the airplane and does this in some respects sort of doom them a bit. >> it's not good news and it's going to pull out all stops to disrupt this contract and try to get back in there. european heafweight fighters typically go to one place on the export front, that's saudi arabia. they went there, they haven't had any luck of breaking out of that traditional niche. that would be fine but defensive procurement has essentially collapsed. sometime after 2015, 16 that winds down fast, they too will be motivated by the sight of the gallows. >> how large is the global fighter market right now and where are sort of the remaining big and interesting competitions. >> well, next 10 years or so, it'll be good for about 3,000 aircraft worldwide worth in terms of just new build something on the order of 180 billion or something like that, close to it, plus a lot more in

after-market upgrades, support and things like that. probably close to 250, 300 on top of that. the big competitions right now south korea is certainly looking 40 to 60 under the fx3 program. you've got smaller competitions -- >> which is more likely to be dominated by the united states in part because of our relationships. >> it's strategic relationships. it would be just like in japan, x)yxscbrg: on top of that you've got smaller competitions in brazil, qatar, malaysia, kuwait. you've got an important one in the uae which you know was picked for rafael before things went wrong and now it's theoretically open again. >> the joint strike fighter really has been very, very dominant on world markets. has it really delivered a death blow in some respects or is there still enough work out there for the european guys?

>> it's obviously been on the market for over a decade. the extraordinary thing is that despite the delays, despite the cost overruns, no one has defected from the list of international partnerships which is a pretty impressive achievement. but, however, it hasn't killed anybody yet. >> right. >> it's still on the market. it hasn't really gone out of its partner nation niche. well, it's recruited japan, but that was always somewhat inevitable. >> let me take you to one last, very quick question, if you look at the lockheed calendar for 2010, it's got a picture of a sixth generation fighter aircraft. are we going to see a new fighter aircraft developed by any western nation anytime in the next decade? >> i think it's going to be a long time. you look for bang for the buck in terms of technology spending, a lot is in the subsystems whether it's electronic warfare or radar or engines. so if you come up with an ekumin cal, the f35 being a fantastic example and you spend for inserts that off 80s the need for a platform.

the navy doesn't still seem to be completely to the f35 model. >> richard, thanks for joining us. we always appreciate it. coming up in my notebook, why u.s. companies

when times get tough, publicly-traded companies tend to dial back future investments to deliver more near-term profits. as u.s. defense spending tightens, american defense contractors accustomed to letting their customer bear most of the risk of developing new technologies and systems are asking themselves whether to invest without a guaranteed return. while defense secretary leon panetta has said innovation is key to preserving future capabilities with less money and people, d.o.d. has been vague about better

more, intelligence, recognizance and unmanned technologies. hopefully the budget released on february '13 will help. what's clear is d.o.d. is hungry for good ideas even if it can't articulate them and as any time of transition will welcome innovation wherever it comes from. hungrier commercial contractors and foreign firms firms willing to take risks and develop technologies with little or no government support. d.o.d. owes it to its contractors to be clear as possible where they want investment and what problems they need solved. but u.s. defense firms cut investment at their peril. they should heed pentagon industrial policy chief brad lambert who says all firms are hungry in this lean environment, but the smart ones plant their seed corn rather than eat it. thanks for joining us for "this week in defense news." i'm vago muradian. you can watch this program online at defensenewstv.com or e-mail me at vago@defensenewstv.com. i'll be back next week at the same time