May 13, 2013
Workhorse programs sacrificed for costlier studs
By Sean O’Keefe, chairman and CEO of EADS (North America), chairman of the National Defense Industrial Association and former NASA administrator
Despite massive furloughs looming, reductions in troop strength planned, fleets at anchor and air wings grounded due to severely curtailed operating funds, the Pentagon seems to be finding odd ways to dig itself out of the fiscal mess it is in.
In this new age of post-sequester and lower baseline budgets, the atmosphere in the Pentagon is more dire, confused, chaotic and somber than at any time since that uneasy era at the end of the Cold War.
In the name of saving money, the US Army is holding selection boards to push large numbers of combat-tested lieutenant colonels and colonels into retirement; the Air Force is grounding its Thunderbirds flight demonstration team; and the Navy is canceling goodwill port visits to such far-off places as New York City.
Meanwhile, Pentagon budgeteers whistle past the graveyard. The most recent submission to Congress assumes that the sequestration nightmare will simply go away. Indeed, anything much less than the topline submitted will prompt another round of disruption and instability.
Too often, budget “savings” achieved are anything but. For example, the Air Force plans to deactivate the two units of C-27 medium transport aircraft. To meet these missions the Air Force performs for Army units, they’ll use C-130s with a considerably higher cost per flying hour.
The relatively new C-27s will be “surplused” to either the Forest Service or Coast Guard. To the receiving agencies, this would seem to be a good deal because the aircraft come “free” from the Air Force.
But a whole new class of aircraft will be introduced to public agencies that will have added costs to maintain and fly them — precisely the reason the Air Force is getting rid of them. And at last check, the Forest Service and Coast Guard weren’t flush with operating funds relative to the Air Force.
This solution will increase the cost of doing business for everyone, and the taxpayer is the big loser.
Some of the biggest cuts in the fiscal 2014-2018 budget seem to be coming in procurement. Although there are undoubtedly savings to be had in that arena, these near-term cuts will not lead to long-term savings.
In keeping with their service identities, the Army, as the largest service, is contending with the growing fiscal impact of an all-volunteer force that has been in combat for more than a decade by reducing the number of divisions and units in the hopes of personnel savings.
The Navy is paring utilitarian programs such as the P-8 anti-submarine aircraft to protect ships and big-ticket airframes such as the F-35.
Allowed to proceed on the current glide slope, we are likely to have the equivalent of a cavalry that has trouble getting around quickly and efficiently because the Pentagon is shooting workhorses in favor of show horses.
The Navy’s approach is to stretch out and truncate multiple lines of aircraft procurement, altering the most efficient buying pattern to fund shipbuilding growth and protect the vertical-takeoff-and-landing variant of the F-35.
To pay for such choices, the Pentagon budget would do things such as slash its most successful helicopter program, the UH-72A Lakota, a low-cost program with more than 260 on-time and on-cost deliveries. The Lakota is built by a highly skilled workforce, more than half of which are military veterans, at my company’s Columbus, Miss., helicopter production facility. The Army has decided it’s time to end this record of accomplishment next year.
And what will the Army and National Guard use to take on the mission planned for the Lakotas? No one will say for sure, but there are signs that they hope to buy more Black Hawk helicopters down the road or take some returning from Afghanistan and repurpose them for the job, aircraft that cost twice as much to maintain and operate.
It is like taking used Escalade SUVs and converting them to do the job of a midsize pickup and the gas bills to go with it.
The Army’s decision also puts at risk the option of a Lakota variant as the next-generation Armed Aerial Scout. This assures that it will keep the inventory of 1960s OH-58 Kiowa Warrior helicopters, which cost three times as much to operate and require constant maintenance.
The message from the current budget exercise seems to be to cut spending now while ignoring future cost increases as we use assets that are more costly and capable than necessary for the job.
The budget cuts lack a unity of purpose or an overall plan. That’s what the sequestration mindset yields, since everything has exactly the same priority. It has the air of an ad hoc plan done late at night with little attention to how the world will look when the sun comes up.