October 24, 2014

Both the House and Senate were in recess this week.

House Republican Strategy Memo

On Wednesday, House Majority Leader Kevin McCarthy (R-CA) sent a memo to House Republicans in which he wrote that the party’s central policy goal of “restoring economic growth and job creation” will include a focus on “restoring competency in government.” Restoring competency requires both “shrinking government to its appropriate scope and mission and reforming how government operates in its core sphere.” So a portion of their legislative agenda for the 114th Congress will focus on reforming and streamlining federal agencies. McCarthy mentioned three examples of this type of legislation that passed the House in this Congress – pipeline permitting reforms, federal mining permit reforms, and FDA reforms – and asked his Republican members to think about areas of government reform they would like to focus on during the next Congress. McCarthy also wrote that their party “must legislate differently in order to restore trust in government.” He offered suggestions of sunsetting new agency reports and including basic regulatory reforms in any legislation that authorizes or requires new regulations. And he ends with asking members again for their suggestions, “if you have any legislative ideas or process reforms you would like considered as we formulate next year’s legislative agenda and revise on our internal protocols, please email or call me or have your staff reach out to mine.”

A copy of his memo can be found at:

https://www.vantagepointstrat.com/?attachment_id=288

DHS Science & Technology Directorate Visionary Goals

The Department of Homeland Security unveiled new visionary goals this week for its Science & Technology (S&T) Directorate. The long-term goals (20-30 years out) were finalized after collecting input from stakeholders in government, academia, and the private sector industrial base. The new visionary goals that will drive S&T’s strategic plan are:

• Screening at Speed: Security that Matches the Pace of Life.

Noninvasive, unobtrusive screening of people, baggage or cargo at speed while respecting privacy.

• A Trusted Cyber Future: Protecting Privacy, Commerce, and Community.

Underlying digital infrastructure that is self-detecting, self-protecting and self-healing protecting information is protected, ensuring privacy, and deterring illegal use.

• Enable the Decision Maker: Actionable Information at the Speed of Thought.

Predictive analytics, risk analysis and modeling-and-simulation systems to enable critical and proactive decisions made based on the most relevant information, transforming data into actionable information.

• Responder of the Future: Protected, Connected, and Fully Aware.

Responders of the future will be armed with comprehensive physical protection, interoperable tools, and networked threat detection and mitigation capabilities.

• Resilient Communities: Disaster-Proofing Society.

Critical infrastructure of the future will be designed, built and maintained to withstand naturally-occurring and man-made disasters. Rapidly-deployable countermeasures will shield communities from negative consequences.

Political Updates

Sanjeev “Sonny” Bhagowalia started as the new CIO of the Treasury Department and deputy assistant secretary of information systems this week. Bhagowalia was most recently Hawaii’s CIO and adviser to the governor. Prior to that he was deputy associate administrator in GSA’s Office of Citizen Services and Innovative Technologies, CIO of the Interior Department and Bureau of Indian Affairs, and a program management executive at the FBI. Prior to joining the federal government, he spent 14 years at Boeing as chief engineer of business development and systems integration. The Treasury CIO position has been vacant since the June retirement of Robyn East, with Deputy CIO Mike Parker filling in during the interim. As Treasury CIO, Bhagowalia will be in charge of a $3.5 billion IT/IRM portfolio and will be responsible for the department’s IT strategy, managing its IT investments and leading new technology initiatives.

Chris Chris Cummiskey, Under Secretary for Management (acting) at the Department of Homeland Security (DHS) announced last week that after six years at DHS and 24 years in public service that he would be leaving Oct 31 to pursue opportunities in the public sector.

Andrew Marshall, the 93-year old Director of the Department of Defense’s Office of Net Assessment (ONA) announced this week that he will retire in January. ONA was created in 1973 by President Richard Nixon to serve as the Pentagon’s internal think tank. Marshall has been at the helm of this internal think tank for 41 years, which was tasked with looking 20 to 30 years into the military’s future. During that time Marshall was seen as being able to keep the office independent of political or bureaucratic influence. Funding for ONA was sustained this year amid a restructuring of the Office of the Secretary of Defense when it was decided that it would begin reporting to the undersecretary of defense for policy. Prior to the restructuring the office was independent and reported directly to the Secretary of Defense. There is much speculation over the future of the office and who will run it.

US Nuclear Regulatory Commission Chair Allison Macfarlane announced this week that she plans to resign at the end of the year. The White House could appoint one of the four current commissioners as chairman, or it may appoint a new nominee as chairman. The nominee requires Senate confirmation, so Macfarlane’s departure could keep the agency evenly divided if Republican’s retake the Senate in the November elections. Macfarlane was appointed by President Obama after a period of tumult on the commission. She became chairman in July 2012 after the previous chairman, Gregory Jaczko, resigned after clashes with the agency’s four other commissioners over a variety of issues. Macfarlane is expected to join George Washington University as director of the school’s Center for International Science and Technology Policy.

Dr. Robert Griffin was appointed as the Department of Homeland Security Science and Technology (S&T) Directorate’s Deputy Under Secretary. Griffin has been serving in an acting capacity in the position since May 2014. Prior to this appointment, Griffin served as the Director of S&T’s First Responders Group. He has also served as the first director of the Arlington County Office of Emergency Management, the Director of Environmental Services for Arlington County, and the Assistant County Administrator and Chief of Fire and Rescue in Loudoun County. Griffin also is currently on the faculty of Georgetown University’s Public Policy Institute where he teaches graduate-level courses in state and local governance.

Deputy Secretary of State and “Diplomatic Legend” Bill Burns retired this week after a 32-year career as a Foreign Service officer. Burns is only the second career diplomat to rise to the deputy position. Burns also has served as under secretary of state for political affairs and as assistant secretary for the Middle East. In addition, he has been an ambassador to Russia and to Jordan and senior director for Near East and South Asian affairs at the National Security Council. There is speculation that he could be replaced by Wendy Sherman, undersecretary for political affairs or Tony Blinken, deputy national security advisor.

Next Week

The House and Senate are in recess until November 12.

October 17, 2014

Both the House and Senate were in recess this week. 

Consumer Financial Transaction Security

President Obama signed a new Executive Order today directing the federal government to adopt more secure financial transaction tools. The BuySecure Initiative will apply chip and PIN technology to newly issued and existing government credit cards, as well as Federal debit cards like SmartPay and Direct Express. The initiative will also upgrade retail payment card terminals at Federal agency facilities such as passport offices, VA canteens, and national parks so that they can accept chip and PIN-enabled cards.

Home Depot, Target, Walgreens, and Walmart were part of the President’s announcement today as all four retailers also agreed to upgrade all of their card terminals in their stores to chip and PIN-enabled. In addition, American Express will start a new program in January 2015 that will support small businesses upgrading their point of sale terminals and Visa will launch a public service campaign in 20 cities to educate consumers and merchants on chip and other secure technologies.

The Administration also announced a new effort to assist victims of identity theft. The Department of Justice, Department of Commerce, and Social Security Administration are working to make the fraud reporting process as easy as possible for Americans who have experienced credit card fraud. Their goal is to, within two years, reduce by half the amount of time it takes consumers to remediate the average case of identity theft. Today’s executive order will also support the Federal Trade Commission in their development of a new one-stop resource for victims of identity theft. IdentityTheft.gov. will streamline the reporting and remediation process with credit bureaus providing a portal that helps digitally submit reports of fraud to multiple credit bureaus.

The Consumer Financial Protection Bureau is working with leaders in the financial services industry to make credit scores more readily available to all Americans as shifts in credit scores can be a key first sign of identity theft. Beginning in January, Citi in partnership with FICO will make free credit scores available to their customers. This announcement builds on work done by institutions like Discover, Barclaycard, Pentagon Federal Credit Union, and First National Bank of Omaha who have implemented similar systems. And by the end of the year, MasterCard will offer all its card holders free, 24/7 identity theft resolution support and online identity theft monitoring services.

The Administration is also requiring all federal government agencies to ensure that personal data released by the government to citizens goes through multiple tests for authentication before being released.

In addition, the White House will host a Summit on Cybersecurity and Consumer Protection later this year to promote partnership and innovation. The Summit will bring together major stakeholders on consumer financial protection issues to discuss how all members of the financial system can work together to further protect American consumers and their financial data, now and in the future.

Finally, the President called on Congress to enact cybersecurity legislation and data breach legislation.

The White House announcement can be found at:

http://www.whitehouse.gov/the-press-office/2014/10/17/fact-sheet-safeguarding-consumers-financial-security

And a copy of the Executive Order can be found at:

http://www.whitehouse.gov/the-press-office/2014/10/17/executive-order-improving-security-consumer-financial-transactions

Border Security

Last week House Homeland Security Committee Chairman Michael McCaul (R-TX) released a proposal to secure the border entitled “Blueprint for Southern Border Security.” The proposal maps out sector-by-sector recommendations on resource allocation and capability improvements to achieve full situational awareness of the border. In addition to gaining situational awareness, the proposal also calls for:

• Developing outcome-based means to measure border security,
• Bolstering interior enforcement by enforcing strong penalties,
• Increasing coordination between federal, state and local law enforcement efforts,
• Creating a new command and control structure, and
• Engaging with international partners to strengthen partnerships for mutual security.

House Speaker Boehner (R-OH) recently said that he believes that immigration reform would help the economy, but that we’ve got to secure the border first, which is the focus of McCaul’s blueprint. The White House had said it would move on its own on immigration reform by the end of the year (but after the elections) and may provide undocumented immigrants with a legal way to earn citizenship. Speaker Boehner and House Judiciary Chairman Bob Goodlatte (R-VA) warned that any unilateral moves from President Obama will “inject serious constitutional questions” into the broader immigration debate.

A copy of the blueprint can be found at:

http://homeland.house.gov/sites/homeland.house.gov/files/documents/100614-Blueprint-Southern-Border-Security.pdf

Department of Defense Climate Change Adaptation Roadmap

Defense Secretary Chuck Hagel outlined the effects of climate change on the world’s security environment at the Conference of Defense Ministers in Peru this week. Hagel also unveiled the Department’s Climate Change Adaptation Roadmap and Strategic Sustainability Performance Plan to meet those challenges. Hagel said that, “Rising global temperatures, changing precipitation patterns, climbing sea levels and more extreme weather events will intensify the challenges of global instability, hunger, poverty, and conflict,” and that “they will likely lead to food and water shortages, pandemic disease, disputes over refugees and resources, and destruction by natural disasters in regions across the globe.” The military could be called upon to provide humanitarian and disaster relief for these potentially more frequent and more intense natural disasters. The Department has established three broad adaptation goals:

Goal 1: Identify and assess the effects of climate change on the Department.

Goal 2: Integrate climate change considerations across the Department and manage associated risks.

Goal 3: Collaborate with internal and external stakeholders on climate change challenges.

These goals are supported by four lines of effort:

1. Plans and Operations include the activities dedicated to preparing for and carrying out the full range of military operations. Also included are the operating environments in the air, on land, and at sea, at home and abroad, that shape the development of plans and execution of operations.
2. Training and Testing are critical to maintaining a capable and ready Force in the face of a rapidly changing strategic setting. Access to land, air, and sea space that replicate the operational environment for training and testing is essential to readiness.
3. Built and Natural Infrastructure are both necessary for successful mission preparedness and readiness. While built infrastructure serves as the staging platform for the Department’s national defense and humanitarian missions, natural infrastructure also supports military combat readiness by providing realistic combat conditions and vital resources to personnel.
4. Acquisition and Supply Chain include the full range of developing, acquiring, fielding, and sustaining equipment and services and leveraging technologies and capabilities to meet the Department’s current and future needs, including requirements analysis.

DoD’s first step in planning is to identify the effects of climate change on DoD with tangible and specific metrics. DoD has almost completed a baseline survey assessing the vulnerability of their more than 7000 bases, installations, and other facilities. Drawing on these assessments, officials are integrating climate change considerations into plans, operations and training across the Defense Department to enable managing associated risks. They are also working with other nations to share tools for assessing and managing climate change impacts. The Deputy Under Secretary of Defense (Installations and Environment) is the Department’s Climate Change Adaptation Planning Officer and is responsible for overseeing the implementation of this plan.

A copy of the roadmap can be found at:

http://www.acq.osd.mil/ie/download/CCARprint.pdf

Political Updates

DHS Secretary Jeh Johnson announced this week the panelists who will serve on DHS’ independent review of the US Secret Service. The panelists are former Associate Attorney General Tom Perrelli, former Deputy Attorney General Mark Filip, former Cabinet Secretary and Assistant to the President Danielle Gray, and former White House Deputy Chief of Staff for Operations Joseph Hagin. The panel is tasked with submitting an assessment and recommendations concerning security of the White House and recommendations for potential new directors of the Secret Service by December 15. Sec. Johnson also asked the panel to advise him on whether there should be a broader review of issues concerning the Secret Service.

TSA Administrator John Pistole will retire at the end of this year after more than 31 years in the federal government. Pistole was the Deputy Director of the FBI before joining TSA four years ago. He has been nominated to become the president of Anderson University in Anderson, Indiana.

President Barack Obama has chosen Ron Klain to serve as the administration’s Ebola “czar,” responsible for the “whole of government Ebola response.” Klain will report directly to Obama’s Homeland Security Advisor Lisa Monaco and National Security Advisor Susan Rice. Klain was chief of staff to Vice President Joe Biden from 2009 to 2011 and also served in the same position under Vice President Al Gore. He was also a key member of the team that helped Obama prepare for presidential debates. He is currently president of Case Holdings, former AOL chairman Steve Case’s holding company, and general counsel of investment firm Revolution.

Deputy Attorney General James Cole announced this week that he will resign his position as soon as a replacement is confirmed. With Attorney General Eric Holder also on the way out, the top two positions at the Department of Justice will be vacant. Holder is also remaining on board until his replacement is confirmed. Senate Democrats may feel some pressure to confirm both jobs in the lame duck session if they lose control of the Senate in the elections.

Next Week

The House and Senate are in recess until November 12.

October 10, 2014 

Both the House and Senate were in recess this week.

Federal Contractor Minimum Wage Final Rule

The Department of Labor released a final rule today on raising the minimum wage for employees of federal contractors to at least $10.10/hour starting January 1, 2015. The regulation follows the Executive Order President Obama released back in February. The minimum wage will apply to most construction, service, concession, and federal property contracts signed on or after Jan 1, 2015. Workers who spend less than 20% of their time on a contract in a given work week are excluded from the new minimum wage as are students, apprentices, and employees paid with grants. Those who work more than 20 percent are only required to receive at least $10.10 per hour for the time they spend working on the contract. Contractors are required to apply the executive order to their subcontractors, and are responsible for notifying all of their employees of the minimum wage to which they are entitled. The Secretary of Labor can reset the minimum wage for contractors every year, but must publish the new wage 90 days before it takes effect. A copy of the final rule can be found at:

https://www.vantagepointstrat.com/?attachment_id=276

Defense Reprogramming Request

The Department of Defense submitted a $1 billion reprogramming proposal to Congress to pay for sending up to 4,000 troops to Africa in a mission to help fight Africa’s deadly Ebola outbreak. The House Appropriations and Armed Services Committee chairmen signed off on an additional $700 million this week permitting a total of $750 million in funds leftover for fighting in Afghanistan to be used for this mission. The first $50 million was released last month. The $750 million is expected to cover a six-month mission that includes airlifting personnel, medical supplies, protective suits and equipment such as tents to house Ebola victims and isolate people exposed to the virus. Sen. James Inhofe (R-OK), the Ranking Republican on the Senate Armed Services Committee, initially put a hold on the reprogramming request demanding more details about the military’s plans to keep US soldiers from contracting Ebola. Today he lifted that hold after receiving specifics from the Pentagon on the protocol to protect troops in the region. Senate Democrats and Sen. Thad Cochran (R-MI) the ranking Republican on the Appropriations Committee agreed to the request earlier.

Defense Acquisition Reform

The New Democrat Coalition this week released a set of recommendations for overhauling the Department of Defense’s acquisition system. The Coalition submitted a list of acquisition reform proposals to House Armed Services Vice Chairman Mac Thornberry (R-TX) and ranking Democrat Adam Smith (D-WA), who are leading a long-term acquisition reform project. The Coalition’s task force was led by Reps. Derek Kilmer (D-WA), Ron Barber (D-AZ), and Colleen Hanabusa (D-HI). Their recommendations include cutting down on audits, streamlining regulations, and exploring the possibility of expanding the acquisition workforce and increasing its pay.

A copy of the Coalition’s recommendations can be found at:

http://newdemocratcoalition-kind.house.gov/sites/newdemocratcoalition.house.gov/files/New%20Democrat%20Coalition%20National%20Security%20Task%20Force%20Acquisition%20Recommen….pdf

And a copy of their letter to Reps. Thornberry and Smith can be found at:

http://newdemocratcoalition-kind.house.gov/sites/newdemocratcoalition.house.gov/files/New%20Democrat%20Coalition%20National%20Security%20Task%20Force%20Acquisition%20Letter%200….pdf

Political Updates

Deputy Veterans Affairs Secretary Sloan Gibson announced this week his recommendation for removing Susan Taylor, the Deputy Chief Procurement Officer (DCPO) in the Veterans Health Administration Procurement & Logistics Office. Sloan’s recommendation follows an investigation by the VA Office of Inspector General in which allegations of multiple ethics violations related to her work with the private reverse auction firm FedBid were substantiated. Taylor was given five days to respond to the recommendation for her removal. In the meantime, Ricky Lemmon, Director, Service Area Office Central, has been designated Acting Deputy Procurement and Logistics Officer.

President Obama renominated Michael O’Rielly as a Commissioner on the Federal Communications Commission. O’Rielly is currently a Commissioner, a position he has held since November 2013. Prior to this, he was a Policy Advisor in the Office of the Senate Republican Whip led by Senator John Cornyn (R-TX) in 2013 and by Senator Jon Kyl (R-AZ) from 2010 to 2012. He has also worked for the Republican Policy Committee, Senator John Sununu (R-NH), the Committee on Energy and Commerce in the US House of Representatives, and Representative Tom Bliley (R-VA).

Elizabeth Sherwood-Randall was formally sworn in by Vice President Joe Biden as Deputy Secretary of the Department of Energy today. Sherwood-Randall replaces Dan Poneman.

The US District Court for the Eastern District of Virginia released a decision this week declaring Virginia’s congressional maps unconstitutional because they concentrate African American voters into a single district. The 3rd Congressional District in Virginia is currently represented by Rep. Bobby Scott (D-VA). The existing map will remain in effect for the 2014 elections, but the state legislature must redraw the map by April 1, 2015. Currently Democrats control only three of the state’s 11 districts, and just one seat is truly competitive – only as a result of the retirement of GOP Rep. Frank Wolf. If the decision is not appealed and the districts are redrawn, the new map could have an impact on several Republican districts in the state making them competitive for Democrats, especially the district currently represented by Rep. Randy Forbes (R-VA).

Next Week

The House and Senate are in recess until November 12.

October 4, 2014

While both the House and Senate were in recess this week, the House Oversight and Government Reform Committee held a special hearing this week on the perimeter breach at the White House and new security concerns about the Secret Service.

Cybersecurity

The National Institute for Standards and Technology (NIST) published its NIST Framework and Roadmap for Smart Grid Interoperability Standards (v3.0) this week. The 3.0 framework updates the plan for transforming the nation’s aging electric power system into an interoperable smart grid—a network that will integrate information and communication technologies with the power-delivery infrastructure, enabling two-way flows of energy and communications. The Energy Independence and Security Act of 2007 established a goal to modernize the nation’s electricity system and assigned to NIST the primary responsibility to coordinate development of a framework to achieve interoperability of smart grid devices and systems.

This document first appeared in January 2010 and was last updated in February 2012 (v2.0). The new 3.0 version was needed because of recent progress in grid modernization, such as wide deployment of smart electric meters, NIST’s 74 new standards and protocols that support interoperability of the grid, updates to the reference architecture model of the smart grid, new developments and publications in smart grid cybersecurity, and the increased urgency of testing and certification. This final 3.0 version also incorporates public responses to the draft version that was released earlier this year.

A copy of the framework can be found at:

http://www.nist.gov/el/smartgrid-100114.cfm

NIST also published a revision to its Guidelines for Smart Grid Cybersecurity. The original version was released in 2010. The updated version includes new sections describing the relationship of smart grid cybersecurity to the NIST Cybersecurity Framework, cyber-physical attacks, cybersecurity testing and certification, and addresses regulatory changes involving privacy.

A copy of the guidelines can be found at:

http://nvlpubs.nist.gov/nistpubs/ir/2014/NIST.IR.7628r1.pdf

The White House this week announced more than $450 million in grants for nearly 270 community colleges partnered with over 400 employers nationwide to promote job training in high demand fields, including in cybersecurity and IT. There are 25 grants for developing new training programs for information technology and cybersecurity jobs, which are fields with a great need for trained employees. Employers partnering on the information security and technology programs include Lockheed Martin, Raytheon, Booz Allen, and SpaceX. The full list of grants can be found at:

http://www.whitehouse.gov/the-press-office/2014/09/28/white-house-announces-recipients-450-million-job-driven-training-grants

Homeland Security

On Tuesday, the General Services Administration (GSA) awarded a $139 million contract to Grunley Construction Company and Shalom Baranes Associates to renovate the 270,000-square foot historic center building on the campus of the former St. Elizabeth’s hospital for use as the new DHS headquarters. This facility is expected to be completed by fall 2017, but the overall renovation of the campus isn’t expected to be completed until 2022 at the earliest. The Coast Guard headquarters was completed in 2013 and houses 4,000 employees. This facility will initially house the DHS Secretary and ~700 employees, and the whole campus will eventually house 14,000 employees from across the Washington DC area. While GSA is committed to completing the project, it has been plagued with numerous delays and cost increases resulting in budget cuts from Congressional appropriators.

Defense Acquisition Reform

Senate Armed Services Committee Chairman Carl Levin (D-MI), Sen. John McCain (R-AZ) and the staff of the Permanent Subcommittee on Investigations released a report on defense acquisition reform this week. The report solicited opinions from more than 30 experts from a broad range of backgrounds seeking their views on a number of subjects relating to the Department of Defense’s (DOD) acquisition process and how the DOD’s procurement of major weapon systems can be improved. Four common themes emerged from the input:

1. Enhancing Incentives for the acquisition workforce
2. Bolstering programs for attracting and training a qualified acquisition workforce
3. Setting more realistic program requirements and budgets at the start of a program
4. Increasing the role of the service chiefs in the acquisition process

While the Subcommittee offered no recommendations of its own and endorsed no particular expert prescription, they did make two observations. The first is that cultural change is one of the most important factors identified as contributing to dysfunction in the defense acquisition system, but it is a function of leadership and an incentive structure and is the least amenable to legislation and policy changes. Second, continued “sequestration” of the DOD’s budgets will undermine any savings that could be achieved through even the most successful acquisition reform.

The full report can be found here:

http://www.mccain.senate.gov/public/_cache/files/7f54fe2e-9c26-4f66-b940-ebf8a9e9ef9c/psi-report—defense-acquisition-reform—a-compendium-of-views-10-2-14.pdf

Political Updates

Secret Service Director Julia Pierson resigned under pressure this week after a series of White House security breaches. On Wednesday, DHS Secretary Jeh Johnson appointed Joseph Clancy to be the interim acting director of the agency. Clancy is taking a leave of absence from his position as director of corporate security for Comcast to fill this vacancy. He retired from the Secret Service in 2011 where he was a special agent in charge of the Presidential Protective Division. Sec. Johnson also announced that he would appoint a “distinguished panel of independent experts” to conduct an outside inquiry into the security breaches and report recommendations by December 15.

Vice President Biden named Dr. Colin Kahl as his new national security adviser, succeeding Jake Sullivan, who left to teach at Yale Law School. Kahl was most recently an associate professor in the Security Studies Program in the Edmund A. Walsh School of Foreign Service at Georgetown University. He also was until recently a senior fellow and director of the Middle East Security Program at the Center for a New American Security.

Anne Neuberger was appointed chief risk officer of the National Security Agency (NSA) on September 17, a newly created position at the agency. NSA/CSS Director ADM Michael Rogers selected Neuberger who assumed the position at the beginning of October. In her first year, Neuberger will focus on creating and maturing a methodology and processes to assess the various risks across different missions and work toward meeting specific objectives assigned by ADM Rogers.

The President appointed Michèle Flournoy and Kevin Nealer to the President’s Intelligence Advisory Board. Flournoy is CEO of the Center for a New American Security, the non-profit research organization she co-founded in 2007.  She is also a Senior Advisor to the Boston Consulting Group, and served as Under Secretary of Defense for Policy at the Department of Defense (DOD. Nealer is a Principal and Partner at the Scowcroft Group, which he joined in 1993.

Next Week

The House and Senate are in recess until November 12.

September 26, 2014

Both the House and Senate were in recess this week.

National Intelligence Strategy

The Director of National intelligence James Clapper unveiled the 2014 National Intelligence Strategy (NIS) this week. The NIS is a blueprint to drive the priorities for the 17 US Intelligence Community (IC) components over the next four years. It identifies and explains the IC’s objectives – what the IC intends to accomplish (mission objectives) and how the IC will accomplish them (enterprise objectives). The seven mission objectives are: 1) strategic intelligence; 2) anticipatory intelligence; 3) current operations; 4) cyber intelligence; 5) counterterrorism; 6) counterproliferation; and 7) counterintelligence. The six enterprise objectives are: 1) integrated mission management; 2) integrated enterprise management; 3) information sharing and safeguarding; 4) innovation; 5) people; and 6) partners.

A copy of the NIS can be found at:

http://www.dni.gov/files/documents/2014_NIS_Publication.pdf

Tax Inversions

The Treasury Department released a notice on Monday stating that it will use regulatory authority to crack down on tax inversions. The notice eliminates certain techniques inverted companies currently use that make the practice profitable and makes it more difficult for US entities to invert. Specifically, Monday’s notice prevents inverted companies from accessing a foreign subsidiary’s earnings while deferring US tax through the use of “hopscotch” loans, prevents inverted companies from restructuring a foreign subsidiary in order to access the subsidiary’s earnings tax-free, closes a loophole to prevent inverted companies from transferring cash or property from a controlled foreign corporation to the new parent to completely avoid US tax, and makes it more difficult for US entities to invert by strengthening the requirement that the former owners of the US entity own less than 80% of the new combined entity. The new rules are only applicable to deals completed on or after Monday. And the department stated that they will continue to review a broad range of authorities for further anti-inversion measures as part of their continued work to close the inversion tax loopholes.

While the proposed rules did have a negative impact this week on the share prices of several publicly-traded companies involved in potential deals, some critics claimed that most companies considering inversion won’t change course even if the costs of inversion rise. Others think that the tighter rules will make US companies better acquisition targets with foreign firms initiating the transactions.

Defense Reprogramming Request

Earlier this month the Department of Defense Department submitted a reprogramming request to up to $1.54 billion in war spending to buy eight new Lockheed Martin F-35 fighter jets (including six for the Marines, to replace aircraft lost in battle) ($1.136B) and 21 additional AH-64 Apache helicopters built by Boeing ($404M). The request was included in a Sept 8 letter requesting permission to reprogram $1.9 billion in the Overseas Contingency Operations (OCO) account to pay for expanded operations against Islamic State extremists in Iraq and Syria. This week, House Defense Appropriations Subcommittee Chairman Rodney Frelinghuysen denied the Pentagon’s request to transfer money. Frelinghuysen’s subcommittee is one of the four spending and authorization panels in the House and Senate that must approve each item in reprogramming requests. In a letter to Pentagon Comptroller Michael McCord, Frelinghuysen responded that he was concerned that OCO funds are being used to “backfill budgetary shortfalls in acquisition programs that have only tenuous links to the fight in Afghanistan and other current operations.”

Cybersecurity

The National Institute for Standards and Technology (NIST) released a public notice this week stating that they had selected the MITRE Corporation to run their Federally Funded Research and Development Center (FFRDC) for cybersecurity. The IDIQ contract is worth up to $5 billion over 25 years. NIST announced plans for its first FFRDC in April 2013. The FFRDC will provide scientific and engineering support needed to carry out the research and engineering agenda set by NIST including engaging in, assisting, and contributing to the support of scientific activities and projects for developing practical cybersecurity solutions composed from commercial components; and performing and engaging in research, engineering, and technology transfer/integration services for trustworthy information systems to the U.S. Government. The new organization will also support the National Cybersecurity Center of Excellence, a public-private partnership closely associated with NIST. MITRE runs similar FFRDCs for the Defense Department and other agencies, and also manages the Common Vulnerabilities and Exposures database and developed specifications for the Structured Threat Information Expression (STIX) and Trusted Automated Exchange of Indicator Information (TAXII) under contract with DHS.

Political Updates

Eric Holder, the first African-American Attorney General, announced on Thursday that he will leave his post at the Department of Justice once a successor is nominated and confirmed. Holder has been in the job for nearly six years and is one of three of President Obama’s original cabinet members still serving in his post. Potential candidates to replace Holder include former White House counsel Kathryn Ruemmler, Massachusetts Governor Deval Patrick, Solicitor General Donald Verrilli Jr., former Michigan Governor Jennifer Granholm, Senator Sheldon Whitehouse (D-RI), Senator Amy Klobuchar (D-MN), Senator Richard Blumenthal (D-CT), California attorney general Kamela Harris, United States attorney for the Southern District of New York Preet Bharara, former Homeland Security Secretary Janet Napolitano, US Attorney for the Western District of Washington State Jenny Durkan, Labor Secretary Thomas Perez, Deputy Homeland Security Secretary Alejandro Mayorkas, former Associate Attorney General Tony West, US Attorney for Washington DC Ron Machen, former Joe Biden aide Neil MacBride, and United States attorney in Brooklyn Loretta Lynch. Gov. Patrick on Thursday said that it was not the right time for him to take such a job, and Sen. Whitehouse responded that his “heart’s desire is representing Rhode Island in the Senate” and he has no interest in other positions.

Defense Secretary Chuck Hagel nominated Navy Adm. Harry Harris this week to become the next commander of the US Pacific Command. If approved, Harris would replace Adm. Samuel Locklear, who took over the role in March 2012. The Pentagon has not yet announced the next move for Locklear. Harris is the US Pacific Fleet commander and is based in Pearl Harbor, Hawaii. He assumed command there in October 2013.

Jeffrey Johnson has been named chief of defense nuclear security and associate administrator for the National Nuclear Security Administration’s Office of Defense Nuclear Security. In his new role, Johnson will oversee the development and implementation of programs at the NNSA. He previously led the US Marine Corps Civilian Law Enforcement.

Next Week

The House and Senate are in recess until November 12.