Third and last in a series of year-end updates to previously reported stories, this time covering two previous topics—

Leaky UAV Video Feeds

We first wrote about unencrypted video feeds allowing Iraqi insurgents to steal the video signals by use of commercially available software (that costs less than $30.00) just a few weeks ago.  Prior to that article, we noted ever-increasing reliance on intelligence, surveillance, and reconnaissance (ISR) assets in the Southwest Asia theater of operations.  We also posted on the impact of cyber-warfare on 21^st century military operations.  We included a Pentagon statement that alluded to the difficulties inherent in adding encryption to a network that is more than a decade old.

Just a few days after our article was posted (on 12/18/2009), DefenseNews.com reported that “the U.S. Air Force has known for more than a decade that the live video feeds from its unmanned aerial vehicles can be intercepted by the enemy but opted not to do anything about it until this year.”  Sources cite “various reasons” for the delay in encrypting the signals.  The article quotes one military source as saying – “It's not just monetary, but technology readiness.  We've taken certain risks and mitigated those risks with our tactics, techniques and procedures."  The article reports that the Air Force now has established 2014 as the date by which video feeds will be encrypted.

According to the DefenseNews.com article—

The Air Force isn't relying solely on encryption to protect the video [signal].  An immediate solution is to narrow the area from which the video feeds can be received, making it more likely that an insurgent would be spotted trying to intercept them, a defense official said. Typically, militants would need to be within 100 yards of the airman or soldier receiving the signal.

However, the Iraqi insurgents aren’t relying solely on COTS software to track the UAVs.  The DefenseNews.com article reports that—

‘We noticed a trend when going after these guys; that sometimes they seemed to have better early warning’ of U.S. actions, said [an] officer briefed on the raid. ‘We went and did a raid on one of their safe houses and found all of this equipment that was highly technical, highly sophisticated. It was more sophisticated than any other equipment we'd seen Iraqi insurgents use.’ … The [militia] group had a ‘very long and well-documented history’ of getting their training and equipment from Iran, the officer said.  ‘It was the technological know-how to make the antennas, computers and software go together and pick up the appropriate bands that was impressive. It is something that would take some very smart electrical engineers to put together. Iran had to choose the most loyal and capable surrogates that they could trust with equipment like that.  They knew that we were flying Predators over their heads 24/7, so it's easy to say 'yeah, I know that I'm going to do a signals analysis search for [the drone]' and take advantage of it,’ the officer said.

Finally, the DefenseNews.com confirms our suspicion that the lack of encryption was at least partially caused by the “spiral development” of the Predator UAV.  The article quotes former Air Force Secretary Michael Wynne, who stated, “"I would say that the enemy can find a flaw in a 70 percent solution and they are going to exploit it.  On the other hand, before they did exploit it, you did get utility from it … in the case of the Predator, we've extracted tremendous utility out of them."

EADS Insider Trading Charges

In November we wrote about several EADS/Airbus executives facing insider trading charges with respect to the reporting of A380 program problems and delays.  The executives’ defense was, essentially, that they were unaware of the program’s problems when they exercised stock options in March 2006, opting to purchase shares (for resale) at the current stock price—despite the company’s March 8 announcement of record 2005 profits.  Such an announcement should logically lead to delays in the exercise of the options (i.e., the options logically should be worth more in the future, based on an expectation of continued earnings growth).

We questioned the executives’ defense.  If true, why was it true?  Why were the executives unaware of the program’s problems—problems that only three months later led to a 26% drop in the stock price?  As we opined in our article—

In a risk-aware management culture, EADS and Airbus executives wouldn’t need an email to tell them that turbulent times were ahead for the program; they would already know it because they would be aware of current program status. They would be actively monitoring program risks and would clearly see inflection points in risk probabilities. Their management ‘radar screens’ would clearly show trouble ahead.

On December 21, 2009 AviationWeek.com reported that “French stock market regulators cleared 17 individuals and two main shareholders” and dismissed the insider trading charges implicating the executives.  AviationWeek.com reported that—

EADS applauded the decision, noting it was ‘satisfied that the Sanctions Commission has recognized that EADS has complied with all applicable market information duties, in particular in respect of risks affecting the A380 program and its development, and that there has been no breach of insider trading rules. EADS is confident that this point of view will also prevail in all other pending proceedings based on the same facts.’

The Wall Street Journal reported that “The AMF ruling doesn't mark the end of the protracted EADS case, because a parallel judicial investigation into alleged insider trading at the aerospace company is still under way. But EADS said it was confident that similar facts would lead to similar rulings.”

We see no reason to doubt the veracity of the EADS/Airbus executives, and we believe they were unaware of the A380’s problems prior to exercising their stock options.  But we also continue to ask why were these executives so oblivious to the program’s problems?  This was the largest aircraft development effort in the company’s history.  It was a bet-the-company program.  How could the executives be so blissfully unaware of the significant development and production problems, especially since one program delay had already been reported?  Did the program manager(s) successfully hide the new problems from management scrutiny, or were the executives merely incompetent?