Motley Fool: The Contractors that Will Thrive in the Era of Defense Cutbacks

The United States has ended its wars in Iraq and Afghanistan. And the government is now enacting major cuts in defense spending. As a result, some of the biggest defense contractors now have reasons to be worried. There is less money for contractors but more competition for a smaller pool of money.

Companies that draw a lot of revenue from government contracting such as Lockheed Martin (NYSE: LMT) must adjust. Lockheed currently gets over 80% of its revenue from defense contracts and its biggest contract is an $3.48 billion aircraft contract. However, defense spending is shifting away from traditional military hardware to cyber-security and drones. President Obama is boosting the Pentagon’s spending on cyber-security 21% this year, to $4.7 billion. The government plans to spend a total of $13 billion on cyber-security in 2013.

As a result, companies that are positioned to supply the government with cyber-warfare technology and consulting will do well. SAIC (NYSE: SAI), which is planning to spin its information technology services division off from its other businesses, is one example. Another is Booz Allen Hamilton (NYSE: BAH), one of the top firms for defense cyber-security contracting and the company that just got an $11 billion Homeland Security contract.

Unmanned drones are another field that is expanding as traditional warfare contracts dry up. Northrop Grumman (NYSE: NOC) can expect to benefit from this trend. Northrop continues to win contracts related to drones, including a $434 million support contract for its Global Hawk long-endurance drone and a $37 million engineering contract for the Hunter surveillance drone.

Others contractors aren’t holding their breath as the government focuses spending on protecting its computer networks and unmanned aerial vehicles. General Dynamics (NYSE: GD) gets almost two thirds of its revenue from U.S. government contracts. But it hopes to make up the expected gap in future defense earnings through its Gulfstream division which is performing well, especially in Asia.

All of these companies are now going to be fighting for government contracts that are smaller in size and focused on a different type of war. While Lockheed Martin is a necessity for supplying military hardware, it’s hard to see it growing in this new environment. Its business is too dependent on traditional warfare. They will need to start pivoting away from this in order to succeed.

SAIC could do well, especially when it completes its computer services spinoff — keep a very close eye on them. Booz Allen Hamilton is the company that probably has the best prospects of all the contractors here. Its focus on consulting has lower overhead and higher margins than other government-focused business. Plus, the cyber-security focus that it has is in very high demand right now.

Northrop Grumman will do well with its drone expertise, as its early development in this space will pay off enormously. General Dynamics, which is trying to compete in the drone space, has been touting its Gulfstream division, but its backlog for planes has been decreasing. The obvious truth is that it is going to win less government money than it did in the past and has not come up with a contingency plan yet.

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Click below for the full article.

http://beta.fool.com/dcawrey/2013/04/28/the-companies-that-will-thrive-in-the-era-of-defen/32154/?source=eogyholnk0000001

Reuters: Republicans, U.S. lawmakers press Obama to take action on Syria

U.S. Senator John McCain (R-AZ) answers questions during a news conference following their tour of the Arizona-Mexico border in Nogales, Arizona March 27, 2013. REUTERS/Samantha Sais

Republican senators on Sunday pressed U.S. President Barack Obama to intervene in Syria’s civil war, saying America could attack Syrian air bases with missiles but should not send in ground troops.

Pressure is mounting on the White House to do more to help Syrian rebels fighting against the government of President Bashar al-Assad, which the Obama administration last week said had probably used chemical arms in the conflict.

Neutralizing the government forces’ air advantage over the rebels “could turn the tide of battle pretty quickly,” Republican Senator Lindsey Graham told CBS’s “Face the Nation.”

“One way you can stop the Syrian air force from flying is to bomb the Syrian air bases with cruise missiles,” the South Carolina senator said.

Graham said international action was needed to bring the conflict to a close but “You don’t need boots on the ground from the U.S. point of view.”

More than 70,000 people have died in Syria’s two-year-old civil war. So far, the United States has limited its involvement to providing non-lethal aid to rebels.

Obama said on Friday the use of chemical weapons in Syria would be a “game changer” for the United States, but made clear he was in no rush to intervene on the basis of evidence he said was still preliminary.

The U.S. fears anti-Assad Islamist rebels affiliated to al Qaeda could seize the chemical weapons, and Washington and its allies have discussed scenarios where tens of thousands of ground troops go into Syria if Assad’s government falls.

INTERNATIONAL FORCE

Senator John McCain, the Republican presidential candidate in 2008, said the United States should step up its support for Syrian rebels even if it turns out that Assad’s forces have not used poison gas in the conflict.

“We could use Patriot (missile) batteries and cruise missiles,” the Arizona lawmaker, an influential voice on military issues in the U.S. Senate, told NBC’s Meet The Press.

McCain said an “international force” should also be readied to go into Syria to secure stocks of chemical weapons.

“There are number of caches of these chemical weapons. They cannot fall into the hands of the jihadists,” he said.

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So the Republicans, or specifically the GOP Establishment, still believe that it is the obligation of the United States to police the world.  What do you think?  Click below for the full article.

http://in.reuters.com/article/2013/04/28/usa-syria-idINDEE93R05220130428

 

Michael Scheuer: The Idea That They’re Attacking Us Because Of Our Culture And Freedom Is Insane

Quote:
“We should have went to Afghanistan and won the war. We went to Afghanistan, spent 13 years and got chased out by guys with weapons from the Korean War. The Islamists started this war, they explained to us as clearly as General Giap and Ho Chi Minh explained to us why they were fighting us and we have ignored it. Mrs. Clinton has ignored it, Bill Clinton, George Bush, Barack Obama. The idea that they’re attacking us because of our culture is insane. We are now waging a war against them culturally. We’re trying to impose democracy, women’s rights, parliamentary systems on a people who don’t want it. They’re going to fight that. They don’t care if we vote, why should they care about that?”

Well said Michael.  Click below for the direct link to the youtube clip:

http://www.youtube.com/watch?v=ieCCQNoiOaE&feature=youtu.be

Upworthy: What People Who Get Bombed All The Time Have To Say To Boston

Boston filmmaker Beth Murphy is in Afghanistan working on a documentary. Usually her family sends her anxious messages every time there’s a bombing in Kabul. That was until the Boston Marathon attack, and then the roles were reversed. Beth’s Afghan friends were so upset by the news that they helped her make some picture postcards to send back to Boston… from Kabul, with love.

Boston filmmaker Beth Murphy is in Afghanistan working on a documentary. Usually her family sends her anxious messages every time there’s a bombing in Kabul. That was until the Boston Marathon attack, and then the roles were reversed. Beth’s Afghan friends were so upset by the news that they helped her make some picture postcards to send back to Boston… from Kabul, with love.

National Consitution Center: Six things you may not know about the killer drone controversy

The Obama administration’s use of weaponized drones to kill suspected terrorists overseas was under a Senate microscope this week, as six different witnesses revealed some interesting facts about the controversial policy.

Predator_droneSenator Richard Durbin, an Obama supporter (on issues other than drones), chaired the subcommittee hearing on Tuesday.

Durbin was openly disappointed that the Obama administration didn’t send a witness to talk about the secretive program.

“I do want to note for the record, my disappointment that the administration declined to provide a witness to testify at today’s hearings. I hope that in future hearings we’ll have an opportunity to work with the administration more closely,” he said.

Durbin also said he hoped the administration understood its newfound technological killing power “is still grounded in words written more than 200 years ago.”

Political opponents Ted Cruz and Al Franken agreed with Durbin that the scope of the executive branch’s power was under question.

The administration says it has the power to undertake the drone tactics per a 2001 congressional resolution in the wake of the 9/11 attacks.

The Subcommittee on the Constitution, Civil Rights and Human Rights has released the official testimony of the six witnesses, which show a cross-section of concerns and justifications about the program. here’s a brief look at what they said.

General James Cartwright

The retired general, a former vice chairman of the Joint Chiefs of Staff, explained that drones are cheap, at an average cost of $4 million to $5 million, compared with a conventional jet fighter, at $150 million. They are also cheap to fly and have advanced optics.

“[They’re] not hard to see why military operations are significantly improved by this technology. Drones offer many advantages over other conventional forces in counterterrorism,” he said.

“Legitimate questions remain about the use, authorities, and oversight of armed drone activities outside an area of declared hostility,” he acknowledged. “While I believe based on my experience all parties involved in this activity have acted in the best interests of the country, as with other new technologies, adaptation of policy and law tends to lag implementation of the capability.”

Farea Al-Muslimi

Al-Muslimi, a Yemini activist who was partly educated in the United States,  told the committee how drone attacks hurt the reputation of the United States in his country.

“Just six days ago, my village was struck by a drone, in an attack that terrified thousands of simple poor farmers. The drone strike and its impact tore my heart much as the tragic bombings in Boston last week tore your hearts and also mine,” he said.

Al-Muslimi said the drone attacks, especially those that killed innocent civilians, made his job as an advocate for America in Yemen “almost impossible.”

Click below for the full article.

http://blog.constitutioncenter.org/2013/04/six-things-you-may-not-know-about-killer-drone-controversy/

Christian Science Monitor: Could chemical weapons in Syria force Obama’s hand?

President Obama may soon have to come to grips with what it means to issue a “red line” to a foreign government.

On Tuesday, Israeli military officials said they have evidence and are “nearly 100 percent certain” that forces of Syria‘s Bashar al-Assad regime have used chemical weapons – a step Mr. Obama said would be a game changer for the US in its policies toward Syria and the civil war raging there. Last August, Obama declared that any use or even “moving around” of Syria’s substantial chemical weapons stockpile would constitute a “red line” for the US – any crossing of which “would change my calculus … change my equation.”

With the closest US ally in the region now asserting that chemical weapons have been used, Obama will come under more pressure to demonstrate – possibly through the use of American force – that his “red line” was not a hollow threat, US foreign policy analysts say.

“If you make a flat statement like that and you don’t follow it up, then you undermine your credibility,” says Lawrence Korb, a former Pentagon official who is now a national security analyst at the Center for American Progress (CAP) in Washington.

Obama has been reluctant to deepen US involvement in the Syria war, limiting US assistance to food and supplies for refugees and internally displaced Syrian civilians, and to nonlethal material for the rebel fighters the US supports. But use of chemical weapons by Mr. Assad’s forces could prompt a more interventionist approach, some analysts say: for example, direct measures by US forces to destroy or safeguard Assad’s chemical weapons. Obama could also cite a crossed red line as justification for arming the rebels or taking other, more robust measures to protect Syrian civilians.

Click below for the full article.  What do you think about foreign aid to other nations or aiding them in wars?  Do you think it is constitutional or ethical for the United States to police the world?

http://www.csmonitor.com/USA/2013/0423/Could-chemical-weapons-in-Syria-force-Obama-s-hand

Medals for Drones??? Say it ain’t So!!! Reuters: Pentagon scraps medal for drone pilots after uproar

 

Defense Secretary Chuck Hagel rolled back a decision by his predecessor, Leon Panetta, who two months ago unveiled a “Distinguished Warfare Medal” outranking the Bronze Star and the Purple Heart, awarded to wounded troops.

Hagel, a Vietnam veteran with two Purple Hearts, said instead the Pentagon would create a “distinguishing device” that can be affixed to existing medals.

Opponents had decried Panetta’s high placement of the medal, which was meant to be a nod to the changing nature of warfare and represented the most substantial shakeup in the hierarchy of military medals since World War Two.

Brian Jopek, whose 20-year-old son, Ryan, earned a Bronze Star when he was killed by a roadside bomb in Iraq in 2006, had branded Panetta’s decision a “slap in the face.

Click below for the full article.

http://www.reuters.com/article/2013/04/15/us-usa-pentagon-medal-idUSBRE93E12V20130415

 

Business Insider: Pentagon to take over CIA’s drone program?

Drone Operator

Recently divulged plans to shift the drone program away from the CIA and solely  into the hands of the Defense Department (DoD) highlights a huge issue  about targeted killings by CIA drone pilots.

 

Daniel Klaidman of the Daily Beast reports (emphasis  ours):

“CIA and DoD operators would begin to  work more closely together to ensure a smooth hand-off. The CIA would remain  involved in lethal targeting, at least on the intelligence side, but would not actually control the unmanned aerial vehicles.”

“Since the inception of the drone  program, targeting decisions have been made inside the CIA with  little or no input from other agencies, though the White House sometimes  weighs in[but Obama] does not … sign  off on all CIA strikes.”

The disclosure may explain how U.S. drones kill people whose  identities aren’t confirmed.

Read more:  http://www.businessinsider.com/pentagon-taking-over-drone-strikes-2013-3#ixzz2Qs63gKh9

Click below for the full article.

http://www.businessinsider.com/pentagon-taking-over-drone-strikes-2013-3

AP: Al-Qaida’s No. 2 in Yemen slams US drone strikes

The deputy leader of al-Qaida in Yemen is calling on Saudis to revolt against the king, slamming the use of bases in Saudi Arabia to launch lethal U.S. drone strikes.

Saeed al-Shihri’s audio recording appeared to back up al-Qaida denials that he was killed in a drone attack. Al-Shihri calls the Saudi royal family “the greatest agent of America.”

The 14-minute audio recording was made public on Wednesday. It was not known when it was recorded.

Click below for the full article.

http://www.actionnewsjax.com/news/world/story/Al-Qaidas-No-2-in-Yemen-slams-US-drone-strikes/8Ss4_J2FF0KzgmNWcVvFfA.cspx

News Daily: Iran condemns Boston blast, criticizes US policy

Iran condemns Boston but criticizes US policy

Iran’s top leader on Wednesday condemned the twin bombing attacks in Boston, yet chided the U.S. for employing a double standard when it comes to drone attacks that kill innocent civilians.

“The Islamic Republic of Iran, which follows the logic of Islam, is opposed to any bombings and killings of innocent people no matter if it is in Boston, Pakistan, Afghanistan, Iraq or Syria and condemns it,” Ayatollah Ali Khamenei told Iranian military leaders he was addressing in Tehran.

Khamenei criticized the U.S. for killing people with drones in Pakistan and Afghanistan and backing forces that kill others in Iraq and Syria.

“What kind of logic is this that if children and women are killed by Americans in Afghanistan and Pakistan and by U.S.-backed terrorists in Iraq and Syria is not a problem, but if a bombing happens in the U.S. or another Western country, the whole world should pay the cost?” he asked in his comments, which were posted on his website.

What do you think?  Do you think that United States Foreign Policy conflicts with its goal of spreading peace, prosperty, liberty, freedom, and democracy?

http://www.newsdaily.com/article/5605e8c7ed7059672cf5d0f464e3b85f/iran-condemns-boston-blast-criticizes-us-policy