Highlights
News: The
House and Senate are moving forward with wildly divergent spending
plans neither of which adheres to the Budget Control Act’s
post-sequester spending caps. While the Senate will appropriate above
the topline cap authorized by the BCA, the House will instead ignore the
firewall that separates defense spending from domestic spending.
PDA Perspective: Hagel’s
focus in the Strategic Choices and Management Review on choices for
2015 is in denial of the reality of ‘sequester budgets’ in 2013 and
2014, which demand adjustment of strategic ambitions now.
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State of Play
In a long-awaited assessment,
Secretary of Defense Chuck Hagel notified the chair and ranking member
of the Senate Armed Services Committee about the potential impact of
sequestration cuts in Fiscal Year 2014. The Pentagon currently is in
the process of enacting almost $40 billion in cuts, and has until the
end of the fiscal year to do so. Hagel warned Senators Carl Levin
(D-MI) and James Inhofe (R-OK) that sequestration cuts would imperil
U.S. readiness, could cause a 15-20 percent cut in weapons modernization
accounts, and could result in “severe and unacceptable effects.” The
Secretary also bemoaned the fact that Congress has not permitted the
Pentagon to make modest reductions in weapons systems and personnel
benefits.
While, in the letter, Hagel implores
Congress to enact a balanced deficit reduction package that could
replace the military sequester, prospects for such action appear
nonexistent. It had been expected that the White House would push for
such a grand bargain compromise as a means of extending the debt limit,
which will require some action come this fall. However, Defense News’ John Bennett reports
that little progress is being made on Capitol Hill between the two
political parties in advancing a grand bargain deficit reduction
package. And with the economy improving, the Treasury Department may be
able to continue to put off raising the debt limit thereby further
reducing incentives for both parties to come together and compromise
over a solution to end sequestration.
Executive
Between now and the end of the fiscal year in September, the Pentagon will furlough approximately 650,000 civilian employees for eleven days each
for estimated savings of $1.8 billion. The Center for Strategic and
Budget Assessments’ Todd Harrison believes there is plenty of excess
civilian workforce at the Pentagon, and as a result, the impact of
furloughs will likely not be felt immediately. “There are a lot of
people who are constantly writing reports and doing analysis, and if
that work just doesn’t get done, does anyone care? Does anyone notice? I
suspect a fair amount of that work is not essential,” Harrison recently told the Christian Science Monitor.
It remains to be seen if there will be a similar public outcry over the Pentagon furloughs as there was over potential FAA furloughs earlier this year. Or, the Pentagon furloughs could bolster the argument of those who assert that the Pentagon can easily absorb sequestration cuts
with little or no impact on national security. And lest anyone thinks
that Pentagon acquisition will slow down as a result of sequestration,
just last week, the department unveiled a list of more than 260 new
contracts worth a combined value of $45 billion.
In an exhaustive survey, the Washington Post examined the White House’s warnings about sequestration to see if they measured up to the actual effects: in 24 cases, the Post
found the administration’s predictions turned out to be “wrong.” In
many cases, Congress passed minor legislative fixes or used unobligated
balances to mitigate the impact of sequestration. “In the process, the
‘meat cleaver’ of sequestration often became a scalpel. It spared
crucial programs but cut second-tier priorities such as maintenance,
information technology, employee travel and scientific conferences,”
report David Fahrenthold and Lisa Rein.
Case in point, since March of this year,
the Pentagon has warned that all procurement accounts would suffer an
equal sequestration cut of approximately 7.8 percent. However, military
budget planners are using prior-year unobligated balances to pay-down
sequestration cuts on specific accounts. As a result, for example, Breaking Defense reports
that Army procurement accounts will face a 4.4 percent reduction while
Navy procurement will see a 7.7 percent reduction. While the Navy
procurement account is undergoing a full sequester cut, service budget
planners were able to protect three high-priorities weapons systems
from undergoing any cuts by using unobligated balances to pay their
sequester tabs. While there is plenty of unobligated funding to use in
Fiscal Year 2014, the Pentagon may lack such a fiscal cushion next year.
Legislative
Last month, the Senate Appropriations
Committee moved forward with a spending outline for Fiscal Year 2014
that completely ignores sequestration – setting a topline cap of $1.058 trillion,
which is approximately $91 billion above what the House will allocate.
While the House has hewed to a smaller topline amount, House
Appropriations chair Hal Rogers (R-KY) has proposed doubling cuts to
domestic agencies in order to ignore the effects of the military
sequester. As a result, both the Senate and House spending plans will
run afoul of the Budget Control Act. Moreover, given the $91 billion
difference between the House and Senate spending plans, it is difficult
to see how the two chambers will be able to reconcile differences
through regular legislative order.
The House has completed consideration of
the annual Energy and Water appropriations bill, which includes funding
for the nation’s nuclear weapons arsenal. Among the amendments that
were offered was a proposal by Representative Mike Quigley (D-IL) that
would have cut funding for the B61 nuclear bomb Life Extension Program
(LEP). Analyst Jeffrey Lewis, working with a Ploughshares Fund grant, recently noted
that the B61 bomb will literally cost more than its weight in gold when
accounting for the fact that updating 400 of these weapons is estimated
to cost $10 billion. The Quigley amendment was defeated by a vote of 196-227.
The House is soon expected to consider
its annual military spending bill, which could come up as soon as next
week. Typically, the House GOP leadership has allowed appropriations
bills to come to the Floor under what’s known as an ‘open-rule process,’
where members can spontaneously offer amendments without preapproval
from the Rules Committee. However, due to internal divisions within the
GOP caucus related to arming Syrian rebels, U.S. aid to Egypt, and
controversial domestic surveillance programs, Republican leaders are considering bringing the defense spending bill to the Floor under a more closed process, where Rules Committee members can block controversial amendments.
The chair of the Republican-led defense
spending subcommittee, Rep. C.W. Bill Young (R-FL), for his part, says
he still supports bringing the bill to the Floor under an open rule.
Senior House appropriator Jack Kingston
(R-GA) remarked, “In this environment, sometimes you have to choose
between passing a bill with modified rule or not passing a bill, so I
think it is proper to explore this as an option.”
Weapons
On July 5, the Pentagon conducted a flight test of the Ground-based Midcourse Defense (GMD) system in Alaska, a test which failed for the third consecutive time since 2008. This embarrassing failure comes just months after Secretary Hagel announced a $1 billion plan to deploy additional GMD interceptors
to Alaska to guard against the threat posed by North Korean ballistic
missiles. The failed test cost the United States roughly $214 million to execute.
In a statement, Philip E. Coyle,
a former top weapons tester at the Pentagon, lambasted the Pentagon for
continuing to invest in this unproven system: “Whether you count the
performance over the past five years or the last ten, clearly the GMD
system is something the U.S. military, and the American people, cannot
depend upon. The idea of deploying 14 more of these same flawed
interceptors at Fort Greely in Alaska would be throwing good money after
bad.” Still, Pentagon spokesperson George Little said that the department will move forward with plans to expand GMD assets in Alaska despite the failed test.
For the second year in a row, the Air
Force has proposed cancelling procurement of the C-27J transport plane
in favor of the much-larger C-130. However, last year, Congress
required the service to continue to purchase the aircraft even though it was preparing to send its C-27s to a boneyard for retirement. Now, the Air Force is preparing to offer a sole-source contract for an additional five planes, however, Inside Defense reports that the Senate is attempting to scuttle the contract.
In his first assessment as the top acquisition official at the Pentagon, Frank Kendall has published a 126-page analysis
on the performance of the U.S. military acquisition system. In the
report, Kendall cites “poor management” as the biggest cause of cost
overruns in the department’s major acquisition systems.
Separately, in a new assessment, the Pentagon has acknowledged that the estimated costs for its long-range strike inventory has tripled from roughly $3 billion estimated last year to $10 billion now.
The increase in estimated cost comes from a more “realistic” assessment
of how much the long-range strike bomber will cost to develop and
procure.
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Project on Defense Alternatives Perspective
The Pentagon’s 2012 Defense Guidance
was essentially a strategy revision that adjusted to the Budget Control
Act's caps on discretionary spending. Soon after, Joint Chiefs of
Staff Chairman Martin Dempsey testified before Congress about the
guidance. The American Forces Press Service reported at the time:
“It is a strategy that has to have this
budget to support it… Anything beyond this, we have to go back to the
drawing board on the strategy.” The defense strategy is an aggregate of
military objectives, the resources available, and how to meet those
objectives with those resources, he said. “We’ve got it balanced right
now,” the chairman said. “But any change in the future means we have to
go back and redo our strategy.”
In essence Dempsey was warning Congress
that should sequester happen it would sink the strategy. Now, of
course, sequester has happened and, more likely than not, sequester will
be in place at least through the mid-term elections in 2014.
By Dempsey's early 2012 assessment, the
Pentagon should have gotten busy redoing its strategy late last year
when it became clear there would be no ‘grand bargain’ with the current
Congress. Dempsey alluded to this need when he spoke at the Center for Strategic and International Studies in March 2013:
“As I stand here, I don’t yet know how
much our defense strategy will change, but I predict it will. We’ll need
to relook our assumptions. We’ll need to adjust our ambitions to match
our abilities. That means doing less, but not doing it less well.”
Dempsey's remarks followed closely on
Sec. Hagel's decision to order a Strategic Choices and Management Review
(SCMR) with the objective of framing "the Secretary’s guidance for the
Fiscal Year 2015 budget and will ultimately be the foundation for the
Quadrennial Defense Review due to Congress in February 2014.”
Note that the Review was meant to inform
planning for Fiscal Year 2015 and beyond, not Fiscal Years 2013 and
2014, years of likely sequestration and therefore most obviously in need
of serious strategic revision. Last week, Inside Defense
reported Sec. Hagel saying, “There will be no roll-out of any grand plan
on this. The aim was to determine how to live with further
sequestration in the event there is no alternative,” Hagel said.
Sec. Hagel must now face the fact that
there is no alternative to sequestration for the remainder of 2013 and
most likely for all of 2014. It is a diversion from the job at hand to
study and plan for 2015 when Fiscal Year 2014 and its $52 billion cut is
right around the corner. As Dempsey said back in March, the Pentagon
“needs to adjust [its] ambitions.” It needs to do that now, not wait
until 2015. When the department stops avoiding the budget reality
standing right before it, it can accomplish that adjustment in short
order.
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News and Commentary
Deutsche Presse-Agentur: New $34M military base to be demolished, SIGAR says - Subel Bhandari, Hafiz Ahmadi
“A never-used U.S. military base in
southern Afghanistan will likely be demolished, a government watchdog
reported Wednesday. Some $34 million was spent on the construction of
the full-fledged military facility, it said. ‘Based on these preliminary
findings, I am deeply troubled that the military may have spent
taxpayer funds on a construction project that should have been stopped,’
John Sopko, the Special Inspector General for Afghanistan
Reconstruction, said. ‘Unfortunately, it is unused, unoccupied, and
presumably will never be used for its intended purpose.’” (7/10/13)
Associated Press: MIA Work Acutely Dysfunctional – Robert Burns
“The Pentagon's effort to account for
tens of thousands of Americans missing in action from foreign wars is so
inept, mismanaged and wasteful that it risks descending from
‘dysfunction to total failure,’ according to an internal study
suppressed by military officials. Largely beyond the public spotlight,
the decades-old pursuit of bones and other MIA evidence is sluggish,
often duplicative and subjected to too little scientific rigor.” (7/7/13)
Breaking Defense: Closing Bases Can Be Good For Business, Brookings Scholars Say; Some Locals May Want Them Shuttered – Sydney Freedburg
“In past rounds of base realignment and
closure (BRAC), [Michael] O’Hanlon noted, many local economies (not all)
actually did better in the long run after their base shut down. Federal
grants to ease the transition helped, but more fundamental was
innovative repurposing of former military facilities and real estate
into industrial parks, recreational parks, community colleges, and so
on. In a post-recession economy driven by bottom-up alliances of local
governments, the private sector, and civic groups — what Brookings’
Bruce Katz calls the ‘Metropolitan Revolution’ — there are ever-more
metro areas that could find alternative uses for a closed military base
that would more than outweigh the loss of federal dollars.” (7/2/13)
Foreign Policy: Just How Many Weapons Can America Sell? – William Hartung
“When the leaders of the global aerospace
industry met late last month at the 50th anniversary staging of the
Paris Air Show, one word predominated: exports. With military budgets
leveling off or declining in the United States and Europe, arms
companies are looking to deals in the Middle East and Asia to bolster
their bottom lines. Nowhere has this strategy been more successful than
in the United States, where an export-friendly Obama administration has
presided over the largest arms-export boom in history. In 2011, the most
recent year for which full statistics are available, the United States
entered into arms sales agreements worth over $66 billion -- an
astounding 78 percent of the world market.” (7/2/13)
U.S. News and World Report: How U.S. War Funds Get Wasted ... And How to Stop It – Michael Shank
“If the American people think the IRS was
bad, take a quick look at Afghanistan. Late last year, a U.S. army
staff sergeant was charged with smuggling $1 million in cash inside
numerous DVD recorders loaded for shipment to the U.S. Another U.S. army
sergeant pleaded guilty to smuggling $100,000 in a backpack at the end
of her overseas tour, while a former U.S. army chief was convicted of
conspiracy for his role in a bribery/kickback scheme, after soliciting a
$60,000 bribe. Afghanistan war profiteering is ubiquitous. A U.S. army
sergeant first class stole $225,000 in funds earmarked for
reconstruction. A U.S. army 7th Special Forces group sergeant stole tens
of thousands of dollars hidden inside a teddy bear. The convictions are
constant, the charges are countless and the monies lost are by now in
the billions. But don't take my word for it; read the SIGAR report.” (7/1/13)
Washington Times: Army’s internal battle: Fight with GAO over battlefield intelligence system – Rowan Scarborough
“The Army’s vaunted battlefield
intelligence processor is ‘difficult to operate’ and suffers
‘workstation system failures,’ a confidential government report says.
The Government Accountability Office examined the Distributed Common
Ground System (DCGS), which some soldiers in the war zone have rejected
as being too slow and unreliable. The GAO report says users testified
that the system actually ‘impeded the flow of intelligence information.’
But the Army says the system is a great step forward in collecting
multiple pieces of intelligence for analysts to retrieve to better
understand the enemy — in this case, insurgents in Afghanistan or
Islamic terrorists.” (7/1/13)
Foreign Policy: Reboot: Why the Army's plan to cut 80,000 troops doesn't go nearly far enough – Philip Carter, Nora Bensahel
“The Army [has] announced plans to hit
the reset button on its force structure, cutting its head count by
80,000 soldiers from 570,000 to 490,000, effectively taking the force
back down to pre-9/11 levels… Unfortunately, these cuts do not go far
enough to insulate the Army from the dawning age of fiscal austerity,
and even deeper cuts in the future. And, by embracing such modest cuts
now, the Army is missing a huge chance to leverage this crisis moment to
embrace more fundamental change. This is the moment for the Army to fix
its anachronistic business model, including its obsolete system of pay
and benefits, and trim its bloated network of bases. The Army should
also re-examine its mix of active and reserve forces to better leverage
its part-time soldiers. And as the largest service, it must also invest
more heavily in unmanned systems to break the link between cost and
manpower that shackles the force. Troop cuts are but one part of the
equation; they are necessary but not sufficient.” (6/26/13)
Roll Call: Shrinking Warhead Stocks Mean Uncertain Future for Nuclear Triad – Megan Scully
“The Pentagon has vowed to preserve the
famed nuclear triad despite President Barack Obama’s goal to cut
strategic nuclear weapons by as much as a third, avoiding — at least for
now — a heated political debate over the future of the nation’s land-,
sea- and air-based delivery systems. At some point, though, the nuclear
arsenal may simply become too small to justify the expense of
maintaining and replacing the aging bombers, submarines and
intercontinental ballistic missiles that make up the triad. Where that
point might be, however, is a matter of intense debate.” (6/25/13)
New York Times: A Modest Nuclear Agenda
“President Obama’s latest nuclear weapons
proposals, announced last week in Berlin, were a disappointing example
of what happens when soaring vision collides with the reality of
obstructive Republican senators, a recalcitrant Russia and a convergence
of regional crises… Mr. Obama’s main proposal was an offer to seek to
reduce deployed strategic weapons by about one-third beyond the New
Start level of 1,550 warheads, to about 1,000 warheads. He also said he
would seek ‘bold reductions’ in America’s 500 short-range nuclear
weapons, which are said to be safely guarded, and Russia’s 2,000 or more
short-range weapons, which may be vulnerable to theft. The key is the
word seek. Mr. Obama wants to negotiate reductions with Russia, a
standard way of doing business. But this could give Russia a veto over
American force levels, given that President Vladimir Putin has refused
to talk until the two sides resolve differences about the United States
missile defense program.” (6/22/13)
TIME: Triad And True… How much could be saved by trimming the U.S. nuclear triad…and at what cost to U.S. security? – Mark Thompson
“With the Pentagon budget in decline,
amputating a leg of the triad would surely save money. But the dollars
are tough to nail down, and spread among hundreds of U.S. government
accounts. Figuring out precisely how much might be saved is challenging:
triad boosters tend to minimize the cost ($10 billion annually to
operate!), while those eager to jettison nuclear weapons tend to
maximize them (more like $56 billion when you include the cost of
replacing the aging systems used to actually deliver them!). It’s a safe
bet the truth is somewhere in-between.” (6/21/13)
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Reports
Government Accountability Office: Military Training: DOD Met Annual Reporting Requirements and Continued to Improve Its Sustainable Ranges Report (7/9/13)
Congressional Research Service: China Naval Modernization: Implications for U.S. Navy Capabilities — Background and Issues for Congress (7/5/13)
Congressional Research Service: Pakistan: U.S. Foreign Assistance (7/1/13)
Center for a New American Security: Right-Sizing the Force: Lessons from the Current Drawdown of American Military Personnel (6/28/13)
Department of Defense: Performance of the Defense Acquisition System (6/28/13)
Government Accountability Office: Military Bases: DOD Has Processes to Comply with Statutory Requirements for Closing or Realigning Installations (6/27/13)
Government Accountability Office: Contractor Performance: DOD Actions to Improve the Reporting of Past Performance Information (6/27/13)
Government Accountability Office: Defense Forensics: Additional Planning and Oversight Needed to Establish an Enduring Expeditionary Forensic Capability (6/27/13)
Congressional Research Service: Egypt: Background and U.S. Relations (6/27/13)
Congressional Research Service: Mixed-Oxide Fuel Fabrication Plant and Plutonium Disposition: Management and Policy Issues (6/25/13)
Congressional Research Service: Ballistic Missile Defense in the Asia-Pacific Region: Cooperation and Opposition (6/25/13)
Government Accountability Office: Defense Infrastructure: DOD's Excess Capacity Estimating Methods Have Limitations (6/20/13)
Government Accountability Office: Military Airlift: DOD Needs to Take Steps to Manage Workload Distributed to the Civil Reserve Air Fleet (6/20/13)
Government Accountability Office: Defense Contractors: Information on the Impact of Reducing the Cap on Employee Compensation Costs (6/19/13)
Government Accountability Office: F-35 Joint Strike Fighter: Restructuring Has Improved the Program, but Affordability Challenges and Other Risks Remain (6/19/13)
Congressional Research Service: Next Steps in Nuclear Arms Control with Russia: Issues for Congress (6/19/13)
Government Accountability Office: Defense
Management: More Reliable Cost Estimates and Further Planning Needed to
Inform the Marine Corps Realignment Initiatives in the Pacific (6/11/13)
Government Accountability Office: Defense Infrastructure: DOD Should Improve Reporting and Communication on Its Corrosion Prevention and Control Activities (5/31/13)
