Monday, March 26, 2012

3/23/12 RD Bulletin: Cost Overruns for First Batch of F-35s and New Ford-Class Carrier Reach $1B

State of Play
Executive: General John Allen, the commander of NATO forces in Afghanistan, recently testified  before the House Armed Services Committee that he will not recommend further reductions in U.S. forces until later this year when the Afghan fighting season comes to a close and the current “surge” of U.S. troops ends.  Allen’s testimony follows several recent controversies in Afghanistan that have thrown into doubt the United States’ short-term plans for stabilizing the country.  Afghanistan is now requesting veto authority over nighttime raids and is demanding that the United States withdrawal from rural areas where the focus of stability and training operations is centered.   
During a hearing before HASC this week, GAO unveiled a new report that projects cost overruns of $1 billion for the first batch of 63 F-35 Joint Strike Fighters, putting the overall cost estimate for the procurement program at close to $400 billion.  This comes one week after Navy Secretary Mabus testified that cost overruns for the next Ford-class supercarrier are also $1 billion over the original estimate.  SASC Ranking Member McCain(R-AZ) wants the Navy to present a plan to Congress on how it will control Ford-class carrier cost growth. 
Inside Defense reports that the Pentagon plans on increasing weapon system procurement spending by 3.75 percent above inflation over the next five years.  This would raise spending on procurement from $98.8 billion this fiscal year to $122.8 billion in Fiscal Year 2017.  The publication also notes that the Pentagon will continue to “dial back” F-35 purchases unless Lockheed Martin demonstrates progress on controlling cost overruns in the procurement program 

The Marine Corps has announced that it will not force any service members out as a result of ground force reductions set to take effect over the next five years.  The Corps will also be sending more Marines to the Asia Pacific region as part of the administration’s “Asia pivot” by reviving the Unit Deployment Program.  The Navy has released a list of eleven ships that will be decommissioned in FY13, although HASC Chairman Buck McKeon (R-CA) has said that he wants to maintain and upgrade the cruisers slated for deactivation.  The Navy also announced that it plans on deploying four additional Avenger-class mine-sweeping ships to the Persian Gulf as well as four MH-53E mine-clearing helicopters, ostensibly to keep an eye on Iran in case she moves to close off the Strait of Hormuz. 

Legislative: House Budget Chairman Paul Ryan (R-WI) released the Republican budget resolution this week, which would freeze defense spending at FY12 levels, representing a $3.7 billion increase over the President’s FY13 budget request, while preventing one year of sequestration cuts to the Pentagon by using the reconciliation process to find additional savings elsewhere in the federal budget.  The Ryan budget, if passed by the House, will complicate efforts for Congress to complete appropriations bills this year.  The Senate, which will set its annual discretionary spending cap by passing a “deeming resolution,” will adhere to the BCA caps setting up a future battle with House appropriators over final appropriations levels for FY13. 
While giving a speech last week at the Ronald Reagan Library in California, Chairman McKeon not only expressed deep concern about pending sequestration cuts, but alsoregistered his disapproval of the White House’s plan to trim the defense budget by $487 billion over ten years from previously planned levels, despite the fact that the administration’s proposal conforms with discretionary spending caps set by the Budget Control Act, a law which McKeon supported.  
Senate Armed Services Chairman Carl Levin (D-MI) and Ranking Member John McCain (R-AZ) wrote the White House earlier this week urging it to postpone any plans to reduce force structure until the committee has had the chance to fully review the administration’s FY13 request and approve of troop reductions.  McCain also sent a letter to the Pentagon, along with Senator Tom Coburn (R-OK), encouraging it to eliminate wasteful and duplicative programs before making reductions in force structure and procurement programs. 
The Chairman of the House Budget Committee, Paul Ryan (R-WI) introduced the Republican budget resolution this week which would prevent sequestration cuts to defense for one year by cutting discretionary spending elsewhere in the federal budget.  In justifying an increase in defense spending above the administration’s request, Ryan noted that defense spending as a proportion of GDP has fallen, even though the administration FY13 request is above Cold War average spending levels  (3/22/12)
The Will and the Wallet: A Ways to Go
During an interview at the Roosevelt Institute, Gordon Adams argued that the defense budget will continue to decline beyond what the White House has proposed in its latest request.  Adams said, “We’ll see something like 20 to 25 [percent] – at least – reduction in constant dollars in the defense budget,” in line with previous post-conflict military drawdowns. (3/21/12)
Ben Freeman reports on a recent letter by six House Republicans expressing opposition to Pentagon’s plans to shift personnel funds from the DoD base budget into the OCO account.  Freeman says that, “POGO opposes using OCO budgets as a 'slush fund' and supports the effort of these House Republicans to make sure that war funding is used to actually pay for wars, not the Pentagon bureaucracy.”  (3/19/12)
In analyzing an annual report put out by the International Institute for Strategic Studies, which compares military expenditures by country, Winslow Wheeler laments that the IISS only included funding for the Pentagon’s base budget when calculating how much the United States spends on security.  (3/16/12)
Other News and Commentary
David Axe reports that the Navy and submarine supporters spent years trying to push down the costs of the Virginia-class submarine in order to allow the United States to purchase two vessels per year.  However, by pushing one submarine outside of the five -year defense plan, the Department may increase the per-unit cost by $600 million.  (3/23/12) 
The United States and Japan are in final negotiations to relocate Marines from Okinawa and spread them out across the Pacific, including in Darwin, Australia.  Roughly 10,000 Marines will remain in Okinawa.  (3/22/12)
Senator Claire McCaskill (D-MO) says she will block legislation creating a new BRAC round - all but killing a Pentagon proposal to advance legislation authorizing new domestic base closures.  However, the Pentagon has said it will move forward with base closures even if Congress does not authorize a new BRAC.  (3/22/12)
A new GAO report shows that the F-35 program’s development and procurement costs could exceed $400 billion, while the current first round of procurement will cost $1 billion more than originally planned.  (3/21/12)
The Chairman of the House strategic forces panel, Mike Turner (R-OH) criticized the administration this week for proposed reductions in nuclear deterrence and offensive capabilities.  When asked by a reporter why the United States need to maintain a Cold War triad to deter states like Iran and North Korea, Turner cited future threats from well-established nuclear powers.  Turner is also pushing legislation that would support expanded membership in NATO.  (3/20/12)
SASC Chairman Levin and Ranking Member McCain sent a letter to Secretary Panetta this week encouraging the department to hold off on plans to reduce ground force strength until Congress approves the change.  Levin and McCain contend that the Pentagon is prematurely moving forward with plans to cut end strength, which would be difficult to reverse if Congress ultimately rejects the White House’s proposal.  (3/20/12)
The Lexington Institute’s Loren Thompson predicts that if both parties maintain their respective majorities in the House and Senate following the November election, they will be unable to compromise over revenues and entitlements and sequestration will likely take effect.  (3/16/12)
Navy Secretary Ray Mabus admitted during Congressional testimony last week that cost overruns for the next Ford-class supercarrier would reach $1 billion, bringing the total projected cost of the ship up to $12 billion.  Mabus told SASC Ranking Member John McCain that the Navy will likely request authorization from Congress next year to go above the cost-overrun cap.  (3/15/12) 
Seeking to assure other countries that have committed to purchasing the F-35, a senior Air Force official told reporters in Sydney last week that there would be no further delays in the rollout of the expensive fighter jet.  (3/15/12)
Despite having voted for the Budget Control Act, HASC Chairman Buck McKeon (R-CA) now says that he does not support funding the Department of Defense at levels mandated by the deficit reduction law.  Specifically, McKeon supports increased spending for shipbuilding, nuclear modernization, and tank upgrades.  For more on McKeon’s concerns, click herefor an Associated Press account.  (3/14/12)
Pulitzer Prize-winning Afghanistan expert and author of Ghost Wars, Steve Coll, shares his thoughts and provides historical perspective on the unraveling situation in Afghanistan. (3/15/12) 
Government Accountability Office: DOD Faces Challenges in Fully Realizing Benefits of Satellite Acquisition Improvements  (3/21/12)                                                                               
House Armed Services Committee: Challenges to Doing Business with the Department of Defense  (3/19/12)
Congressional Research Service: Change in the Middle East: Implications for U.S. Policy  (3/7/12)
Congressional Budget Office: An Analysis of the President’s 2013 Budget  (March, 2012)
Stimson Center: Engaging Iran on Afghanistan (March, 2012)
At 9:30 am on March 29, 2012, the Open Society Foundations will host a book discussion on Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex with author William Hartung and an expert panel on reforming Department of Defense budgeting and contracting.  To RSVP, please click here.