What’s wrong with this picture? Just about everybody in Congress who follows military acquisition agrees the Pentagon could save billions of dollars annually by reducing unnecessary overhead and adopting smart buying practices. Meanwhile, the Air Force is delaying ramp-up of fifth-generation fighter purchases to a level where economies of scale could be realized, the Navy is threatening to unravel a joint multiyear purchase of helicopters, and the Army keeps changing its combat-vehicle modernization agenda in ways that make long-term planning impossible.
What’s wrong with the picture is the Budget Control Act of 2011, a misguided effort to restrain federal deficits that has done nothing to rein in the growth of entitlement spending — the main driver of deficits — but has made mincemeat out of efforts to modernize military hardware efficiently. Media coverage often makes it sound like military buyers have no notion of what they need to do to save money, but the reality is that they are operating in a fiscal strait-jacket that forces them to make bad choices — choices that raise the cost of modernization programs and undermine military preparedness.
Consider the case of the Pentagon’s biggest weapons program, the tri-service F-35 fighter. Contractor Lockheed Martin has been promising for years that once production runs increase to more economical rates, the price of the Air Force version (the variant most of our allies are buying) will decline to no more than what it costs to buy the latest version of the legacy F-16 fighter. That commitment is still in place, but the day when price parity is achieved keeps slipping because the Air Force and other services participating in the program keep delaying a production ramp-up due to budget constraints.
Such delays were justified several years ago on the basis of development concerns, but as risk is steadily retired from the program it becomes increasingly clear the real hold-up on F-35 is lack of sufficient funding to execute the program efficiently. In the case of the Air Force, it has to reconcile production of the fighter with development of a new tanker, bomber, radar plane and trainer while still staying within spending caps dictated by the budget law. So it ends up buying the fighters in lots too small to optimize potential savings. It looks like the service is living within its means, but the long-term consequence is to raise the price-tag of each fighter above what it needed to cost while delaying the replacement of Cold War planes that are on their last legs.
In the case of the Army, the Budget Control Act hasn’t just made weapons purchases less efficient — it has aborted most of the service’s modernization agenda. Since the budget law was enacted, the Army has canceled its future air-defense system, its future ground combat vehicle, its future scout helicopter, and a host of other modernization programs. If you think this will lead to big savings, then you don’t understand the long-run consequences of forgoing systems for which there is a valid military requirement. The Army of tomorrow will be facing enemies like Russia and China with combat systems built in the Reagan era. The cost of keeping such weapons survivable and effective will eventually dwarf the savings realized from killing replacements to stay within spending caps.
What the Army is being forced to do bears little resemblance to the smart buying practices congressional proponents of acquisition reform say they favor. Ironically, the efforts of legislators to rein in federal borrowing so that we do not pass on the burden of our fiscal profligacy to future generations has resulted in a different kind of bill being passed on: the price of modernizing an increasingly antiquated arsenal. There’s nothing wrong with insisting on fiscal discipline, but that’s not what the Budget Control Act is delivering. By undermining the efficient modernization of the joint force, it is making the world safer for America’s enemies — and for all those entitlement programs it fails to curb.
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