25 November 2011

Get Serious About Reform

Budget Challenges Will Force Hard Choices

Carl Conetta and Charles Knight
Defense News, 21 February 2010

During the past decade, the U.S. Defense Department has enjoyed a rise in its budget unprecedented since the Korean War. With President Barack Obama's fiscal 2011 budget request, it is up nearly 100 percent in real terms from its post-Cold War low. But few observers believe that this level of spending can continue in light of the mounting national debt. So it is wise to think now about options for savings.

A way to begin is to ask, what has driven budgets so high? Obviously, the wars are part of the answer. But they account for only 20 percent of today's expenditures. And they are the least likely targets for economizing.

It is more fruitful to reflect on the shortcomings in past efforts at defense reform. Can we do it better? It is also worth thinking about the practice of force modernization during the post-Cold War period, which has been distinctly undisciplined.

The end of the Cold War presented a unique opportunity - as well as a manifest need - for the structural reform of our defense posture. The force reductions of the 1990s necessarily risked decreased efficiency, due to the loss of economies of scale affecting support activities and equipment acquisition. The standard solution to such problems is to restructure as one gets smaller, matching reductions in size with a reduction in complexity - a practice the DoD did not, for the most part, follow.

Although smaller, DoD and the services have largely retained or even increased their complexity. For instance, there are today 50 major commands either one step above or below the service level - not much different from during the Cold War.

In our recent study of budget trends, we identify a dozen areas where significant changes had been proposed in the 1990s. These involved service roles and missions, consolidation of various support and training functions, and recentering budget and acquisition planning at the joint level.

In addition, the need to reform DoD's acquisition, logistics and financial management systems has been evident for a long, long time. However, only two reform initiatives - competitive sourcing and military base closures - were pursued far enough to yield significant annual savings, and these have not amounted to more than 4 percent of the defense budget.

There also was hope in the mid-1990s that a "revolution in military affairs" might lead to new efficiencies. We would reap more bang for the buck by means of increased battlefield awareness, improved logistics, increased capacities for standoff precision attack, and the networking of units within and across services.

In some areas, such as precision attack, capability has dramatically increased. Theater logistics also have improved. But nowhere has the revolution in information technology led to manifest and substantial savings. Rather than supplant-ing legacy capabilities and platforms, the new technology has mostly just supplemented them.

In prospect, the evolution of net-centric warfare might reduce the need for redundant capabilities. But progress toward the services sharing a common nervous system has been slow and mostly involved special operations units and precision ground attack. Generally, net-centric capabilities exist as an anemic overlay to traditional service-centric structures and assets.

DoD and the services have faced little pressure to economize or transform during the past decade. This is also evident in equipment acquisition.

We can discern three distinct acquisition trends at work in recent decades. First, there are legacy programs that came forward from the Cold War period with considerable institutional momentum. Second, there are programs reflecting the revolutionary potential of new information technologies. Finally, there are adaptive programs, such as the recent mass purchase of Mine Resistant Ambush Protected vehicles, that correspond to new mission requirements.

In an ideal world, the imperative to adapt to new missions and circumstances would draw on the revolutionary potential of new technologies to rewrite or supplant legacy programs. But this has not happened.

Too much of the $2.5 trillion in modernization funding since 1990 perpetuated the status quo circa 1990. Transformational acquisition was mostly restricted to producing supplements, such as Predator drones, to the legacy arsenal. And adaptive acquisition was largely delayed until field experiences forced a flurry of ad hoc efforts beginning six years ago.

The Pentagon's central authorities have done too little, too late to compel the integration of modernization efforts along adaptive lines. Legacy, transformational and adaptive modernization have lurched forward together, but poorly integrated and competing for resources. And yet, even though modernization spending now surpasses that of the Reagan era, no one is happy with the result.

For 10 years, Congress and the White House have been permissive when it comes to defense spending; this has undercut any impetus for reform and prioritization. Obama's decision to further boost the defense budget suggests that this dysfunction will persist for a while, but this, too, is a bubble that will burst. Preparing for that eventuality means revisiting options for structural reform and getting clearer on our strategic priorities.

15 November 2011

Shipbuilders Batten Hatches as Navy Weighs Cuts

Nathan Hodge
Wall Street Journal


NEWPORT NEWS, Va.—Mike Petters keeps a well-thumbed volume of naval history handy on his desk. One of its lessons, he says, is that maintaining a fleet is a long-term national investment that outlasts short-term politics.

"You end up building ships for the administration after next," said Mr. Petters, the president and chief executive of Huntington Ingalls Industries Inc. "That's the history of shipbuilding."
But with economic constraints putting pressure on the Pentagon's budget, it may not be the future of shipbuilding—at least in the U.S.

Huntington Ingalls, formed as a spin-off of Northrop Grumman Corp., is building the USS Gerald R. Ford at its shipyard here. The Navy plans to buy the next Ford-class aircraft carrier in fiscal 2013, as part of a request to be submitted to Congress early next year.

In recent months, however, rumors have swirled in Washington about a possible delay. Rather than buying one carrier every five years, as it does now, the Navy may buy one every six or seven years.
Such attempts to save money, Mr. Petters said, can drive up the cost of the ships, which the Navy currently estimates at around $11 billion each.

"When you start stretching them out, you have to start disbanding the [shipbuilding] teams, and you have them go do other things," he said. "So you break those learning curves, and suddenly you've lost the opportunity to create efficiency."

How many ships does the nation need? Not everyone agrees that the Navy should maintain an 11-carrier fleet, its current force, set by law. The Sustainable Defense Task Force, a nongovernmental panel endorsed by Reps. Barney Frank (D., Mass.) and Ron Paul (R., Texas), concluded in a June report that the Navy could downsize to nine carriers without compromising national security.  "The capabilities to do what we did in the past with fewer carriers are there," said Carl Conetta, co-director of the Project on Defense Alternatives and a contributor to the report.

Naval shipbuilding has even emerged as an issue in the 2012 presidential campaign, with Republican candidate Mitt Romney proposing a 50% boost in shipbuilding budgets in a speech last week.  In congressional testimony in July, Adm. Jonathan Greenert, now the Navy's top officer, told lawmakers that a five-year interval between purchases was "about in the sweet spot" for carrier construction. Asked whether a longer interval was being considered, he conceded that a "whole host of items" were on the table in internal discussions about the 2013 budget. Navy officials said no decisions had been made to change the procurement schedule.

Building carriers is a labor-intensive task that requires a sizable work force and major investments in heavy equipment. The 550-acre Newport News shipyard, which stretches for two miles along the James River, is bustling with activity: In addition to the work on the new carrier, employees are busy overhauling the USS Theodore Roosevelt, another nuclear carrier, and are building two Virginia-class submarines.

It also requires handing down skills from one shipbuilder to the next. Inside the machine shop, Jimmy Witt, a 50-year veteran of the yard, supervised shipbuilder Kenny Walker as he machined a 55-ton propeller shaft for the new carrier.  "Young guys are not too fond of the grinding and the legacy shipbuilding stuff," said Joey Perry, the head of the machine shop. "We're trying to make this stuff exciting and challenging as a career path."

Naval analyst and author Norman Polmar said the Newport News yard could easily maintain its nuclear expertise without building carriers at the current rate, because it also builds nuclear-powered submarines. But piecing together a massive carrier, he said, "is a major issue, because that's 100,000 tons of steel, and it takes a lot of skill to glue it all together."

The yard currently employs 20,000 people, and with unemployment high around the nation, it has few problems attracting job applicants. Christopher Spanos, a second-generation shipbuilder who is enrolled in the company's apprentice school, said the yard offered the promise of steady, long-term employment. "When the economy headed downhill, it was time to come back to what you know," he said.

Mr. Petters, the Huntington Ingalls CEO, said the budget debate had forced a return to a recurring discussion in Washington: "How big does the Navy need to be? What do we need a Navy for?"

The key difference now, he said, was the nation's fiscal situation. "Now we're at the point where it's time to make the deal," he said. "Are we going to build the ship, or are we going to do something else?"

02 November 2011

RD 11/2/11: DoD Funding Freeze May Be Thawing

PDA Reset Defense Bulletin – 11/2/11
ed. Ethan R. Rosenkranz

State of Play

Legislative: CQ Today reports that Congressional appropriators are considering providing $518 billion in funding for the Department of Defense in FY12, which is $5 billion more than the Senate Appropriations Committee approved-bill and $12.5 billion less than the House passed-legislation.  While disagreements remain over detainee provisions, SASC Chairman Carl Levin indicated that the defense authorization bill will likely head to the Senate Floor before the defense appropriations measure is considered, which is expected to occur sometime in December.  The Senate has completed work on a mini-omnibus appropriations measure comprised of three regular spending bills, however House GOP opposition could derail the package as it’s considered in conference.   The Senate will likely take up another mini-omnibus appropriations bill later this week.

The Super Committee met publicly yesterday to receive testimony from the Co-Chairs of the Fiscal Commission, Erskine Bowles and Alan Simpson, as well as former Senator Pete Domenici and former OMB director Alice Rivlin.  Despite 15 closed-door meetings and several public hearings, the Super Committee remains far apart on the issue of taxes and is still trying to find agreement on a broad framework that can pass both chambers.  At a classified, closed-door House briefing last night, Sec. Panetta, Gen. Dempsey, and other top administration officials lobbied lawmakers to approve recommendations put forth by the Super Committee in order to avoid sequestration cuts to defense.  Panetta also said that he expects half of the $450 billion in defense cuts to come from weapons systems, while the remaining savings will likely come from efficiencies, health care reforms, and cuts to troop end strength.

Executive: The service chiefs are testifying at a HASC hearing this morning, where the discussion is expected to focus on the upcoming Pentagon strategy review and how it will influence forthcoming budget cuts.  Testifying at a HASC subcommittee hearing last week, the service vice-chiefs indicated that the strategy review should be completed by December of this year.  The New York Times reports that the Administration is considering sending to Kuwait some of the 39,000 troops scheduled to leave Iraq by year’s end.

Highlights

Democracy Arsenal: Our False Debate on Cutting Defense Spending
Michael Cohen responds to a Washington Post editorial by Robert Samuelson and rebuts his claim that military spending is more important than domestic spending.  (10/31/11)

Capital Gains and Games: Defense, Jobs, and the Making of Hypocrites
Gordon Adams slams the AIA jobs arguments and exposes its underlying hypocrisy.  (10/30/11)

National Interest:
Strategy vs. Jointness
Benjamin Friedman argues that removing the “golden ratio” will encourage strategic competition amongst the services leading to greater efficiency.  (10/28/11)

Other News and Commentary

Huffington Post:
Super Committee Could Pass a Resolution Giving Itself More Time
The Super Committee has the option of reporting out a resolution that would provide additional time for it to complete its work.  (11/1/11)

Secrecy News: Prospects Fade for a Separate Intelligence Budget
Although DNI James Clapper supports a separate budget for the National Intelligence Program, he admitted in a speech last month that it “ain’t gonna happen.”  (11/1/11)

The Hill: Pentagon May Shift Focus to Asia-Pacific
Sources say the upcoming strategy review may recommend cancellation of the littoral combat ship.  (10/31/11)

Battleland: Triad & True
Mark Thompson responds to a recent piece defending the nuclear triad in the Weekly Standard.  (10/31/11)

Danger Room: Army’s Vision for the Future: Mostly Doom, Some Idiocy
The Army is hosting a symposium called “A Vision of Alternative Futures” where government officials, academics, and contractors will make the case for maintaining the Army’s budget at $140 billion.  (10/31/11)   

New York Times: Bombs, Bridges and Jobs
Paul Krugman acknowledges defense spending creates jobs, but exposes the overall hypocrisy of the military jobs argument.  (10/30/11)

Small Wars Journal: Salami Slices, Cheese Spread and Kool-Aid: A Recipe for Anorexic Organizations
Two Air War College academics argue against across-the-board cuts to defense and in favor of allowing strategic vision to guide defense reduction.  (10/29/11)

CQ: In Downsizing Defense, Politics Trumps Strategy
Gordon Adams disputes the notion that past defense builddowns have endangered U.S. national security.  (10/29/11)

New York Times: The Bloated Nuclear Weapons Budget
New York Times editorial calls for significant savings from the nuclear weapons budget, including forgoing modernization of the B61 bomber in Europe and reducing to 1,220 the number of deployed strategic nuclear weapons.  (10/29/11)

Defense News:
Slight Drop in U.S. Funding for Intel Programs
Recently released funding figures for the intelligence community show that, although the overall National Intelligence Program’s budget increased from FY10 to FY11, the Military Intelligence Program received three billion dollars less.   (10/28/11)

Reports and Publications:

CBO: Recent Development Efforts for Military Airships (November, 2011)

Center for International Policy and Common Cause: Tools of Influence: The Arms Lobby and the Super Committee
Bill Hartung finds that Super Committee members have received over $1.1 million in campaign donations from defense lobbyists over the past two election cycles.  (October, 2011)

Department of Defense: Report on Progress Toward Security and Stability in Afghanistan  (April, 2010)

 
Compiled and submitted by:
Ethan R. Rosenkranz, program associate
Project on Defense Alternatives (PDA)
http://www.comw.org/pda/
202-316-7018