March 11, 2009 -- A senior Pentagon budget official today attempted to lower expectations for dramatic policy shifts in the fiscal year 2010 budget request that will be released in the coming weeks, noting that significant changes will be made in the Obama administration's second defense spending request in 2011.
DOD officials intend to cut procurement in the FY-10 budget by 2 percent or 3 percent, according to Kevin Scheid, the Pentagon's deputy comptroller. However, more substantial programmatic cuts or adds will be influenced by the Quadrennial Defense Review and implemented beginning with the FY-11 request, due to Congress in February 2010.
“The administration will make . . . a partial statement with the FY-10 [budget's] details, but the full statement will be really communicated in the FY-11” budget, Scheid said today during a presentation at an Aviation Week-sponsored conference in Washington.
The Pentagon has a $1.7 trillion major defense acquisition program portfolio. That figure accounts for costs accrued during the life spans of major weapons systems, which for some programs date back decades. To date, only about $800 billion has been spent, according to Scheid; another $552 billion was included in the Bush administration's future years defense plan projections for the next five years. The remaining $480 billion lies outside that five-year time frame.
“When the new team is looking at our strategic modernization programs . . . we would look at the systems that have little sunk cost and are inconsistent, perhaps, with the new strategy that the [defense] secretary and the president are articulating -- and those would be vulnerable programs,” Scheid said. “Programs that we have a major sunk cost and they are consistent with the strategy, those would be ones that we would continue.”
The FY-11 budget will contain “major muscle movements” both “positive and negative” and influenced by the QDR, he said. At the same time, the FY-10 budget request -- which is expected to be unveiled the week of April 20 -- will not include outyear numbers because QDR work is just beginning. Gates has accelerated the Pentagon's QDR build.
“I think it's just going to be a topline and we'll work the details in the FY-11” budget, Scheid told a small group of reporters after his presentation when asked about FYDP projections in the FY-10 budget plan. “I don't think you'll see the procurement [and research, development, test and evaluation] numbers in the FYDP.
“The secretary has asked . . . to hold the FYDP as a place holder in this one instance so that we can do a review and make the strategic trade offs that we need to make in the coming months,” he added.
Defense Secretary Robert Gates has made it clear he does not want to do “salami-slice” budgeting, but will instead review the budget in a strategic manner, according to Scheid.
One area that could see a spending increase is intelligence, surveillance and reconnaissance. Gates has been a staunch proponent of using ISR assets in the current conflicts in Iraq and Afghanistan.
“Some of big ideas that are rattling around in the [Pentagon] include this notion of . . . having to go after individuals versus armies,” Scheid said. “We've really geared our intelligence systems in the past, and a large part today, to go after . . . large conventional armies.
“We now need systems, and we have invested in systems and are developing them to go after individuals, go after small cells, groups, urban targets. That requires a different type of intelligence approach,” he added, noting the Pentagon's investment in Air Force Predator and Reaper ISR- and strike-capable drones.
DOD also plans to invest in partnership capacity building in its upcoming budget, Scheid said, citing the Pentagon's commitment to building the Iraqi and Afghan military, as well as reducing the number of “ungoverned territories” in different parts of the world, like Pakistan.
“There are investments that we're making in this area in the upcoming overseas contingency investment, or the global war on terror investment,” he said.
Another area being examined by DOD budget officials is fuel cost coffers. The Pentagon spends about $10 billion per year on fuel for its aircraft, ships and trucks. Roughly half of that money goes toward jet fuel. Over the past five years, the price of oil has fluctuated wildly.
“We're experiencing a little bit of relief with the decline in the price of oil when we budgeted for a higher level,” Scheid said. “A lot of our overseers are now looking at that as maybe we should rescind those funds [or] maybe we should do something else with those funds. That has not been decided yet, [but] those options are on the table, which will of course bring down our topline, tighten up our budget a bit.”
The Pentagon's $513 billion FY-09 budget includes $181 billion for procurement and research, development, test and evaluation. Aircraft, ground systems and mission support equipment accounts for the bulk of those funds. -- Marcus Weisgerber