Programs Under Fire in FY 2010 DOD Budget

The release of the fiscal year 2010 Department of Defense budget in early May has signaled some interesting changes in direction for the military. On May 14, three analysts with IHS Jane’s—military aircraft analyst Mark Bobbi, Navy analyst Mike Crochet and Army analyst Mark Brantley—discussed the impact of the budget on the military and its programs.

Q: What are the more heavily impacted programs under the 2010 budget?

Mark Bobbi
Obviously, the F-22 is the biggest program other than the F-35 that will have a dramatic impact, not so much on the industry, but certainly on the capability of the Air Force going forward to address potential threats down the road.

I’m one of those people that believe that acquiring only 187 was a big mistake, that we really need far more F-22s to maintain our ability to control the airspace in any future conflict. I think this administration, while they may think they’re doing the right thing vis-à-vis the combat air programs in terms of funding and focusing longer term on the F-35 and the existing wars in Iraq and Afghanistan, they may be underestimating the potential adversaries 10, 15 years out. And if they don’t launch a sixth generation fighter to go beyond the F-22, we can be in a world of hurt 15, 20 years from now if we don’t maintain our air dominance capability.

I think it’s one that Congress has been pushing back very strongly against, and I think there’s at least a 50/50 chance that Congress puts more airplanes in the budget. They may also do the same for the C-17 and a few other pet programs. Some senators and congressmen have fundamental differences with Secretary Gates and the president on strategies going forward, particularly with the mix of procurement programs, air, land and sea.

Mike Crochet
I think one of the drivers behind that apparent disconnect between the administration and Congress is the fact that there’s a Quadrennial Defense Review that’s supposed to take place this year and there’s been a great deal of reluctance on the part of the Department of Defense to offer the normal specificity it would provide pending the outcome of the QDR. For example, normally the DOD budget includes a Future Years Defense Plan (FYDP), where it projects out how much money and what sort of programs are going to be procured. That’s not present in this year’s presidential budget submission. Nor is the 30-year shipbuilding plan. That’s required by law, and when the president’s budget was submitted, the Navy said they were not going to provide it. This is also the first year that the Navy was supposed to submit the 30-year aviation plan to provide some idea of where naval aviation was going, and that didn’t show up either.

Mark Brantley
From the Army side, the major impact of this budget is that they cancelled the manned ground vehicle portion of the Future Combat Systems and they have accelerated and expanded the deployment of the Spin Out for the Future Combat Systems. Essentially the plan is that they are going to take the Future Combat Systems program, completely cancel the manned ground vehicle portion, but leave all the unmanned systems and the network in place.

Secretary Gates was concerned that they had not taken the lessons learned from Afghanistan and Iraq and incorporated them into the FCS program. They plan to have a concept for the new vehicle incorporating the lessons learned from the two theaters and from the Future Combat Systems, and present that plan after Labor Day. They hope to award that contract to somebody and have the vehicles start rolling in five to seven years, which is really not that much more of a delay compared with what was going to be delivered with the now-cancelled manned ground vehicle portion. They were going to get a few low-rate production items coming out in the next few years, but they were not going to go into full-rate production until 2014 or 2015 anyway.

Mike Crochet
From my perspective, there are a couple drivers behind what’s going on in the Navy. First of all, there’s the unaffordability of Navy shipbuilding. There’s some debate about whether it’s really unaffordable or not, but if you assume a nominal 35 years in service for the typical ship, and you multiply that against eight ships a year, which is what we’re building and have been building historically for the last few years, that gives you a Navy with about 280 battle force ships, and the stated objective was 313. There’s a difference there, but I don’t know where that’s going to go. My guess is that when the QDR gets done, you’re either going to have a larger mix of lower-end ships or the objective is going to be smaller. The other thing that drives the Navy’s budget is the need to preserve the industrial base. Unlike FCS with the Army, the Navy tends to try and spread the wealth among the major shipbuilders. 

We don’t know what the outcome is going to be. If one assumes that the United States Navy is a capabilities-based force, and the required capabilities come from the QDR and other documents like that, then it would be logical that there wouldn’t be any projections about what the future is going to look like until the QDR comes out.

The Navy is also required by law to submit its 30-year shipbuilding plan along with its budget submissions, but we haven’t seen it yet. I think the Navy is waiting for the outcome of the Quadrennial Defense Review before it reveals what the shipbuilding plan is going to look like, which makes sense if you say that the size of the Navy is based upon required capabilities. However, it is unclear if Congress will allow the Navy's action to stand—eight Republicans on the House Armed Services Committee have filed a “resolution of inquiry” directing the secretary of defense to file the mandated shipbuilding plan. 

Q. Do any of these changes concern you?

Mark Bobbi
I have less concern with an individual program being cancelled then I have with what the president has said about his focus going forward with respect to the defense budget and the actions in the budget itself. As I reviewed military aircraft and unmanned vehicle budgets, what really jumped out at me was the fact that in many cases, programs that the president has generically supported in the ISR community and unmanned air systems and special purpose aircraft for the Air Force and the Navy, they’ve actually reduced the request from the Bush FY09 request for FY10, and that really shocked me. I don’t know what the reason for that is, if they’re just trying to save money in this particular fiscal year, or if it’s an indication of what’s going to happen down the road. But I’m very concerned about what this administration says versus what it does. And what it said up to the release of the budget outline on April 10 is not what I see happening here. In fact, there are only one or two programs in ISR that they’ve actually increased. I don’t think that’s a good sign when the president says he supports these various technologies and then goes ahead and lets his secretary of defense reduce them.

Q: Are there other elements of the budget that struck you as significant?

Mark Brantley
From the Army side, a couple things surprised me, but I guess they make sense when you look at them in light of the shift from Iraq to Afghanistan. There were actually significant increases in some of the artillery purchases, lightweight howitzers in particular. As an example, one procurement line went from $38 million in the FY09 budget submission for FY10 up to $157 million in the FY10 budget submission for FY10. Another interesting increase was in semi-trailers and tractors: from $21 million up to about $61 million for semi-trailers and from $81 million up to about $137 million for tractors. Some of it is just because they are wearing them out in Iraq because these vehicles are used so much in convoys, but also the fact that they are going to have to start doing a retrograde operation for equipment coming out of Iraq.

Mark Bobbi
My view is we still have some contradictions here and I think a lot of it is because the DOD is waiting for more guidance from the top. Of course we have to wait to see what Congress does, but I’m pretty concerned about other things too. The F-35 acquisition this year is actually lower than what President Bush had proposed in FY09, so when Secretary Gates says he’s going to double the F-35 Lightning II in the aftermath of the F-22 cancellation, he’s really not speaking the truth. That’s going to hurt the Navy and the Marine Corps and particularly the Air Force. I agree with a lot of the cancellations or deferrals because of capabilities creep and requirements creep in the next generation bomber, in EPX and in the Aerial Common Sensor. But on programs that are near production or are in production, that have long-term ramifications on American capabilities vis-à-vis new threats—not just Iraq and Afghanistan, but places like China, and I can only imagine what the threat would be like if the Taliban were to take over Pakistan—I’m very interested to see how Congress responds to each of these major cuts. We’ve already seen a response from the House Appropriations Committee, which is talking about putting nine C-17s in the budget, and other congresspeople are talking about increasing that to 15. There’s a lot of disagreement in Congress—even though it’s a Democratic Congress, very much behind the president—there’s significant disagreement on a program-by-program basis. That goes for aviation, shipbuilding and land systems as well.

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