In a letter Monday to lawmakers, Adm. Chas Richard, U.S. Strategic Command’s chief, said he was otherwise satisfied with Biden’s fiscal 2023 defense budget proposal, but made the point about the SLCM-N. On Tuesday, it became fodder in an unfolding fight over plans to defund the submarine-launched low-yield missile.

“While I am satisfied USSTRATCOM priorities are adequately addressed, the current situation in Ukraine and China’s nuclear trajectory convinces me a deterrence and assurance gap exists,” Richard wrote.

“To address this gap, a low-yield, non-ballistic capability to deter and respond without visible generation is necessary to provide a persistent, survivable, regional capability to deter adversaries, assure allies, provide flexible options, as well as complement existing capabilities. I believe a capability with these attributes should be re-examined in the near future,” the letter continued.

Though military leaders are required by law to provide Congress with their wish lists or unfunded priorities, Richard’s letter did not make any requests for a particular program or funding amount. Biden’s $813.4 billion national defense budget includes $50.9 billon in nuclear weapons spending, up $7.7 billion from the 2022 request.

A House Armed Services Committee hearing Tuesday offered a stage for the debate over the composition of that budget.

Defense Secretary Lloyd Austin defended DoD’s $34.4 billion budget for nuclear weapons modernization as “very significant.” He acknowledged Russia has a nuclear-capable ballistic missile submarines, but downplayed the utility of the SLCM-N.

“The marginal capability that this provides is far outweighed by the cost,” he said.

Marking a break between civilian and uniformed leaders, the chief of U.S. European Command, Gen. Tod Wolters, told lawmakers last week he backs SLCM-N.

Then on Tuesday, the chairman of the Joint Chiefs of Staff, Gen. Mark Milley, said his past support for SLCM-N hasn’t changed. The Strategic Forces Subcommittee’s top Republican, Rep. Doug Lamborn, who elicited the answer, quoted Richard’s letter at the hearing.

But House Seapower Subcommittee Chairman Joe Courtney, D-Conn., defended the administration, arguing that installing low-yield nuclear warheads on Virginia-class attack subs would mean less space for conventional weaponry.

“I think the administration made the right choice in terms of keeping the attack subs focused on their main mission,” Courtney said. “Putting tactical [nuclear] weapons on there changes it in a clunky way.”

House Armed Services Committee Chairman Adam Smith, D-Wash., acknowledged the likelihood of a fight in the committee and echoed Courtney’s view that adding nuclear weapons would complicate the mission of attack submarines. He pointed to ongoing plans to develop a similarly capable air leg of the nuclear triad: the long-range standoff weapon.

Pressed by Smith to explain his views further, Milley said that with roughly 50 attack submarines in the fleet, there was room for some to get the SLCM-N and others to continue their usual missions.

“Some of those would have a mission change, others would not,” Milley said before pivoting to argue that America’s nuclear arsenal is sufficient.

“No foe should underestimate our capability because of … a decision to produce or not produce a SLCM-N. Our nuclear capability is much, much bigger than that,” he said.

That is up from the total at the end of March, when the unit claimed 25 projects for a total of $48.4 million — a significant increase that a DIUx official admitted means the group is “further along than we ever imagined.”

DIUx was formed in early 2015 by then-Secretary of Defense Ash Carter, but after a year of stagnation, relaunched in late May 2016 under the leadership of Raj Shah, a former U.S. Air Force F-16 pilot and special assistant in the Office of the Secretary of Defense who worked for a variety of Silicon Valley tech firms.

Shah has managed the office to greater success, to the point where DIUx has won support from both the Hill and leaders of the military services.

That doesn’t mean there haven’t been roadbumps along the way. For instance, Shah said in March that he expected to transition programs to military service earlier this year, a timeline that has now shifted. But overall, the group has managed to deliver to a level most had not expected, especially when it lost the patronage of Carter.

Or as Chris Kirchhoff, a managing partner with the group, put it to Defense News: “I think that we’ve all been surprised at how much progress we’ve made.”

Kirchhoff says DIUx was set up to prove a theory — that the Pentagon could develop closer ties with the tech sector by being located in technological hubs like Silicon Valley; Boston; and Austin, Texas. And now, “we’ve proven the theory.”

According to the most recent quarterly report for the group, DIUx has been able to award pilot contracts roughly three months after receiving responses to solicits. For each dollar that DIUx puts in, the “customer” — aka the service interested in the program — kicks in four or five dollars.

And because the Pentagon is not going to be able to fund these companies on their own, DIUx has focused on scouting out firms that have serious investors behind them. The group claims the private sector has invested roughly $1.8 billion in the 37 companies supported by DIUx. Notably, DIUx says seven of those companies “have been able to raise roughly $720 million in subsequent rounds of funding, partially due to their work with DoD.”

While it seems assured the group will continue to exist and be supported in the future, there are some questions about where it will live. Currently, DIUx directly reports to Secretary of Defense Jim Mattis, a holdover from the Carter days.

But under a new reorganization plan submitted by the Pentagon Aug. 1, DIUx will be folded into the new office of the undersecretary of research and engineering — a move that will see its reporting fall roughly four levels from where it is now.

Kirchhoff downplayed the shift, saying, “What we’re focused on is making sure we can accomplish our mission. As long as we can accomplish our mission, we’re excited.” But analysts have raised the concern that DIUx may find itself dragged away from innovative ways of doing business and into the more traditional defense acquisition system.

Speaking to reporters Aug. 2, Shanahan downplayed any potential issues: Shah is “just dynamite,” and that the goal is not for DIUx to be ”subsumed” in the new system but rather, to spread their capabilities and processes to the rest of the Under Secretary of Defense, Research and Engineering team.

The authorities for the Defense Innovation Unit Experimental (DIUx) and Strategic Capabilities Office (SCO) were approved by former Deputy Secretary of Defense Bob Work on July 14, just weeks before he retired from service.

The needs of those two organizations “can only be met by being able to hire the most technologically advanced and experience individuals who can work and communicate with their counterparts in industry and build new relationships with technology companies where the Department has experience challenges,” Work wrote in his memo announcing the changes.

The two offices are critical parts of a broader effort, spearheaded by former Defense Secretary Ash Carter, to have greater outreach to the commercial technology sector. DIUx is specifically charged with talking and working with the tech sector in Silicon Valley, Boston and Austin, while SCO is charged with taking existing technologies and developing new capabilities for their use.

Secretary of Defense Jim Mattis, who is visiting DIUx as part of a west coast swing, certainly appears to be supportive of the office, telling reporters Wednesday that “I enthusiastically embrace it, and I’m grateful that Secretary Carter had the foresight to put something in place to anchor the Department of Defense out there.”

The personnel authorities come in two forms. The first is Work renewing, for another 18 month term, language in Section 1105(b) of the FY17 National Defense Authorization Act (NDAA) which allows DIUx and SCO to hire staff for up to 18 months in a noncompetitive manner. The idea is that the government organizations will not be able to compete with the commercial tech sector for talent if they have to go through the usual process.

Second, Work ordered the department to draft a legislative proposal for inclusion in the 2018 NDAA that would give both groups the ability to rapidly hire for long-term positions. This was based on positions granted to DARPA, the Pentagon’s long-running future technology hub, in what Chris Kirchhoff, one of DIUx’s coordinating partners, said was a conscious effort to mirror the group’s success.

Kirchhoff notes that DARPA can hire people in as little time as one day, a “heck of an advantage” for DIUx to mirror given its competition with the commercial technology sector for talent. And while it may take “a couple months” before DIUx has its HR team staffed up and ready to hire at that rate, when that happens, it will be able to compete directly with the tech sector for talent.

Another authority Kirchhoff highlighted is the right to execute on contracts up to $5 million, particularly for operations and maintenance, without needing to go through the usual wringer of Pentagon procurement. In comparison, he notes, DIUx spent its first few months dealing with a $3,000 limit on its purchasing cards, with anything more needing to go through the main department’s purchasing system.

Like the new hiring capabilities, this authority comes with setting up a new contracting officer who will be located with the main DIUx office. The same is true for SCO, according to Work’s memo.

“We can let contracts much quicker. We often need to buy supplies in a hurry on the test range and you can’t wait six weeks for [the usual procurement process] to put in place to buy supplies, so we’re really excited,” Kirchhoff said.

Other authorities for the offices include the ability to publish advertisements, notices and proposals on their own, as well as authority to approve conference expenses for up to $500,000 without needing to go through traditional channels to get approved. Again, both of those are particularly vital for organizations that are outreaching to the tech sector, where new ideas and companies often pop up, develop and disappear in the time it might take the Pentagon to investigate them.

While much of the activity is focused on making it easier to attract outside talent, DIUx is also looking at ways to improve how it attracts internal talent — specifically from the uniformed military. As a result, DIUx is pushing to have permanently funded military positions count for the Joint Duty Assignment List, a key factor for military officers looking to advance in their careers.

“We’re a new organization; we often receive incredibly talented members from services who are on a particular career track with milestones they must hit,” Kirchhoff explained. “We’re delighted that we’re in the process of having our military billets be declared joint; … we are, of course, a deeply joint organization working on a deeply joint mission set, so it’s very logical.”

All of the authorities, minus the one that requires support in the FY18 NDAA, are now in place. Given the vocal support from the Hill for both DIUx and SCO, it is likely such language will be included in the final version of the defense bill.

Among the big changes:

Changing the undersecretary of acquisition, logistics and

technology:

McCain first took aim at changing AT&L in the 2016 NDAA, a move that caught observes by surprise, and he continued that push with the 2017 NDAA.

At the time of the announcement, the language would have split AT&L into two offices: a new undersecretary of defense for research and engineering, or USD(R&E), and the renamed undersecretary of management and support, or USD(M&S).

However, the final language somewhat tweaks that, instead creating an undersecretary for acquisition and sustainment (AT&S), and create a new undersecretary for research and engineering (R&E), essentially a chief technology officer. Those new offices meet the goal of SASC staffers in creating a more focused position for developing new technology that is not, as they see it, bogged down in the day-to-day acquisition requirements that are currently balanced by AT&L head Frank Kendall.

Kendall has opposed such a splitting of his role, citing success in cost reductions during his tenure. Secretary of Defense Ash Carter has also opposed such a move, opposition that Pentagon Press Secretary Peter Cook said Tuesday still exists.

Andrew Hunter, a former acquisition official now with the Center for Strategic and International Studies, said the House staffers should be happy with how they tweaked the initial SASC suggestion.

“I would say whereas the Senate had focused on putting ‘acquisition’ and ‘technology’ together and shifting the ‘logistics’ to the undersecretary for management, it was the House that pushed to say: ‘Let’s push the “T” out and have the “A” and “L” together,’ ” Hunter said. “It’s a bit of a win-win but would say the House folks feel really good about the final answer.”

He notes that the new setup means the R&E role is now the chief focus for innovation in the department — something that could line up with Carter’s call for a chief innovation officer at the Pentagon.

Like the SASC, Punaro believes the role of AT&L had become too cluttered and gotten away from the vision of the Packard Commission in the late 1980s. He said he was “extremely positive and enthusiastic” about the changes, However, he expressed hope that the management and support role wold not be fully abandoned, given the wide portfolio, including energy and installations, that the current AT&L role controls.

Speaking to reporters on Tuesday, a senate staffer said what the two sides “continue to look at and consider for future legislation would be a role for management of the defense agencies and whether there is a possible third position — and how that would take shape, and whether the defense business enterprise would be better run now. That’s something we’ve asked the department for its input on, to really work with us on that. That would be a future project.”

Implementation of the new offices are ordered for February 2018, though the Department of Defense isn’t precluded from implementing it sooner — a move that Hunter notes leaves time for tweaks and changes to continue to happen.

“Notable is that it doesn’t go into effect for another year,” Hunter said. “I’m concerned there will be a struggle for power between these two secretaries that could be unproductive, so it is possible it could get tweaked once again with the new administration coming in to take on a character that appeals to the next secretary.

Capping general officer levels:

According to a Congressional Research Servicereport, in February of 2016 there were 411 one-stars, 299 two-stars, 138 three-stars and 37 four-stars spread across the Pentagon — 885 total general officers. The original SASC language sought to chop that down by 25 percent, or roughly 221 spots.

However, the compromise language reduces those cuts to only 110 spots — about an eighth of the total, still a significant chop — by Dec. 31, 2022. It specifically reduces the four-star total by five and requires that the grade of an officer serving as commander of a service or functional component command be capped at the three-star level.

The language also comes with the threat of further officer reductions down the line, with the language saying an additional 10 percent reduction may be appropriate after the 110-strong reduction occurs. And yes, Congress is aware the Pentagon may look to throw a wrench into these reduction plans.

“In the context of the Department of Defense’s continued requests to reduce military end strength, especially in the Army and the Marine Corps, reductions that Congress has cautiously considered and authorized, the time has come for the Department to rigorously evaluate and validate every general and flag officer position,” the report reads.

“The conferees expect that the Department of Defense and the military departments will improve efficiency by eliminating bloated headquarters and staffs while preserving the necessary number and grades of positions for general and flag officers who are responsible to train and lead our Nation’s forces in battle and to bring them safely home again. The conferees expect that the leadership of the Department of Defense and the military departments will approach this effort with the seriousness of conviction that our that our men and women in uniform, and the American people deserve.”

Extending the chairman and vice chairman of the Joint Chiefs of

Staff:

Currently, both the chairman and vice chairman operate under two-year terms, with the president required to reup those positions for a second two-year term if it is desired. However, the NDAA language now sets those jobs to four-year terms and specifies that the appointments should be staggered to avoid situations, as often occur, where both positions are rotating out at the same time.

Punaro, who helped draft the language that created the two-term system, believes it is time for those jobs to become four-year appointments.

“We made a mistake in ’86 when we shortened the term,” he said. “It hurt the independence of the chairman because they are having to look over their shoulder a little bit … so as one of the people at the staff level recommending that, I now recommend we go back to the four-year terms and acknowledge that we’ve had unintended consequences of what we thought was a good idea at the time.”

Capping National Security Council staff at 200:

The initial SASC language from May capped the NSC size at 150, so this appears to be a bit of a compromise. But the NSC under the Obama administration has been a target for supporters of both the State Department and the Pentagon, with complaints about micromanagement abundant.

Loren DeJonge Schulman, a former senior adviser to National Security Advisor Susan Rice now with the Center for a New American Security, warns that simply reducing the staff may not solve the perceived issues.

“A cap of 200 substantive staff, excluding administrative and support personnel, seems very reasonable,” she said. “However, no one should assume that cutting the size of the NSC will do anything to improve its effectiveness or minimize micromanagement. The new administration, starting with the president and the national security adviser, need to have serious discussions with fellow NSC members (Defense, State, Joint Staff, etc.) about their roles, execution of the president’s priorities, transparency and accountability.”

“That sort of clarity up front, and follow through after, is what is necessary to reform the NSC process,” she added. “Without it, a smaller NSC staff will just be an overworked, micromanag[ed] NSC staff.”

And the 200 number may still shrink, following media reports that the Trump administration wants to cap the NSC staff in the 40-60 range. Schulman called that “a nice thought, but a fantasy” that would make it “impossible to execute the coordinating, advocacy and oversight roles of the NSC.”

The language also caps the total number of Senior Executive Service positions at the Pentagon at 1,260, again with a requirement that number be met by the end of 2022.

Joe Gould in Washington contributed to this report.

Those comments seem long ago, with today’s team announcement unlikely to change the belief among investors that the spigot of military dollars is about to reopen.

The transition team, which is expected in the Pentagon Friday morning, is made up of:

Retired Army Lt. Gen. Keith Kellogg

, who served as the chief operating officer of the Coalition Provisional Authority in Iraq for about six months in 2003 and 2004, joined Cubic in 2009, handling the companies ground combat systems. He was promoted to vice president of Strategic Initiatives in 2014. A company representative said Kellogg left the company in early 2015.

Mira Ricardel

spent the first two years of the George W. Bush administration as the deputy assistant secretary of defense for Eurasia before spending two more years as acting assistant secretary of defense for international security policy. She then left for industry, primarily for a nine-year stint at Boeing, including seven years as vice president of business development for strategic missile and defense systems and two as vice president for international business development related to network and space systems; her Linkedin profile says she left Boeing in 2015 for consulting firm Federal Budget IQ, although the Trump team says she was most recently self employed. Interestingly, the first name listed on the website is that of Ricardel, with Kellogg listed second. On a draft organizational chat obtained by Defense News last Friday, Kellogg was listed above Ricardel. It is unclear if that has shifted or if the list is simply unsorted on the Trump website.

Thomas Carter

held a number of defense-related roles throughout his career in government service, including time as deputy assistant secretary of defense for legislative affairs and senior counselor to the Coalition Provisional Authority for legislative affairs, Baghdad, Iraq. He joined Elbit Systems in 2009 as vice president, government relations. A company spokesperson did not immediately return requests for comment on Carter’s employment status, but his last appearance in Elbit lobbying disclosure documents came in the third quarter of 2015.

William Hartzog

, a retired four-star Army general who led United States Army Training and Doctrine Command before retiring in 1998, is the CEO of Burdeshaw Associates, Ltd. Burdeshaw is a government contracting group that does not appear to have lobbied Congress directly since 2005, but a presentation on its website claims Hartzog’s team helped build support for systems such as the B-1 and B-2 bombers, the Stryker land vehicle, and the C-17 transport, among others.

Sergio de la Peña

has led the de la Peña Consulting, LLC, for five years. Before that, he spent two years at one of L3’s branches, according to LinkedIn. He served as a Trump surrogate during the campaign, reaching out to the Latino community.

Other names on the transition team include

Bert Mizusawa

, a retired Army major general and Silver Star recipient who was an early adviser to Trump during the election;

Earl Matthews

, whose most recent occupation is listed as “US Army”; and

Michael Duffey

, an executive with the Republican Party of Wisconsin who has held several jobs in the Pentagon, primarily in the field of systems engineering and analysis.

The sole representative from the think-tank world is

Justin Johnson

, a well-known defense analyst with the Heritage Foundation. Aside from Heritage, the defense think-tank community in DC has found itself on the outside looking in at the Trump administration, due to the large number of individuals who were part of the “never Trump” movement.

Johnson is seen as having a deep understanding of defense budgetary issues, and hours after the election sat down with Defense News to discuss his views on what a Trump administration means for defense spending.

Kendall did not elaborate on the next location, but Austin, Texas, is a likelihood. The city was one of two innovation hubs that Secretary of Defense Ash Carter visited during a spring trip. The other hub visited on that trip was Boston, Massachusetts, which since became home to the second DIUx office.

REGISTER NOW: CyberCon is coming November 16.Announced in April 2015, DIUx was originally conceived as an office in Silicon Valley that would be able to bring outside technical expertise back to the Pentagon. However, the group was slow to deliver results, and in May of this year Carter announced “DIUx 2.0,” which included bringing in new leadership and launching the Boston office.

If DIUx were to expand to a fourth location before the end of the year, another likely move would be to base the office near Washington, D.C. Northern Virginia has become a tech hub in its own right, and having an office close to the Pentagon could pay off politically as the office attempts to survive under a new administration.