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Budget Realities versus Capabilities: Reassessing DOD’s Role July 15, 2009

Posted by Stephen Abott in Analysis.
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The Department of Defense’s (DOD) procurement budget may not be sufficient to create the force structure the Pentagon currently plans to maintain. The result of the DOD’s current and growing gap between budgets and capabilities is also a mismatch between means and ends. The military must either reform its procurement system to deliver platforms at lower cost, increase the DOD budget (even though it has ballooned over the last decade), or reconsider the role the military plays in US strategy.

A prime example of this problem is the Navy’s “ship gap.” The Navy’s goal of maintaining a 313 ship force (currently at 283) in order to fulfill the DOD’s role as a forward-deployed force has become more difficult. Increased procurement costs and growing but insufficient procurement budgets have meant that the Navy is unable to build the number of ships it wants.

The Government Accountability Office (GAO) recently released a report detailing the continued increase in naval procurement costs. The sea service currently estimates that it will cost $16 billion a year to buy the ships necessary to meet its 313 ship goal, but the GAO and others believe that the true number is between $20 and $24 billion. The bottom line is that with approximately $14 billion a year of ship procurement, the Navy will not reach the 313 ship goal and faces a budget gap of $6-10 billion.

Navy Shipbuilding Budget and Procurement

Fiscal Year

Total Shipbuilding and Conversion Budget

Ships Procured/ Requested

FY 2008 Actual

$13.2 billion

3

FY 2009 Estimate

$13.0 billion

8

FY 2010 Request

$13.7 billion

8

Sources: CRS Report Navy Force Structure and Shipbuilding Plans (RL32665) ;FY 2010 Navy Budget Procurement; Notes: Shipbuilding total includes supplemental appropriations; the original FY 2008 request was for 4 ships, but one Littoral Combat Ship (LCS) was later cancelled.

The continued departmental and congressional attempts to reform the procurement system have not succeeded in curtailing cost growth (the most recent attempt – the Weapons Systems Acquisition Reform Act of 2009 – remains untested). Absent extraordinary changes in DOD procurement practices, serious cost cutting is unlikely. Even if cost growth ceased, however, current shipbuilding budgets cannot cover future procurement, as shown in the chart above.

Equally important, it will be hard to increase the budget to fill the gap. The Pentagon’s budget has ballooned over the past decade to historically high levels. Between FY 2000 and FY 2009, the DOD base budget increased 38.6%; if supplemental funding is included there is a 73% increase over FY 2000 levels. The increase to Reagan era and Vietnam era levels leaves the budget, in real dollars, higher than at any time since the end of WWII. It is doubtful that much additional funding can be squeezed out for additional procurement in general, let alone Navy shipbuilding in particular. To increase the naval procurement budget drastically over the coming years, congressional players would have to expend significant political capital. In effect, with a decade of increasing budgets and a fiscal crisis, it is unlikely that Congress can find another $6-10 billion a year for shipbuilding alone.

The Navy is pushing itself to do more than its foreseeable budget allows. As America continues to rely on the Pentagon to act as a catch-all for many foreign affairs capabilities, including new responsibilities that parallel US civilian programs (such as Foreign Military Financing), the DOD’s core mission becomes increasingly weakened because it must focus on building capabilities that are not core to its martial mission, but are already entrusted to civilian agencies with long experience. By continuing to build non-war capabilities into the Navy, cost rise and mission creep settles in. In a time of economic crisis and burgeoning procurement costs, change is needed. Thus, the combination of the imbalance between means and ends and America’s over reliance on the Pentagon to perform civilian agencies’ duties leads to the need to reassess the military’s role in foreign affairs.

It may be time for DOD to realize that its capabilities are not infinite and its missions are not endless. Fundamentally, we need a more holistic approach to foreign affairs, using both military and civilian resources united under civilian leadership, to take pressure off the DOD and its budget. The Pentagon and the Navy need to face this procurement reality and work with Congress to create reasonable goals for America’s armed services; goals that may include modifying the DOD’s mix of conventional and unconventional ground forces, and relying more on relationships with allies to maintain freedom of the seas.

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