Greg Grant. DoD Buzz, 09 April 2010.
http://www.dodbuzz.com/2010/04/09/army-budget-share-will-grow/

Excerpt:

In DOD’s funding forecasts, future costs to fight the wars in Iraq and Afghanistan are vastly understated as are personnel and healthcare costs. “Reset” costs for Army and Marine equipment returning from Iraq are also vastly understated, as all are new aircraft programs, e.g. F-35, tanker. The shipbuilding plan is also underfunded. Cost overruns in the F-35 and satellites continue due to immature technologies, the analysis says, and risks shifts to existing platforms.

The biggest future growth areas will be in networked communications and overhead surveillance, followed by repair, maintenance and training. The future requirements process will be driven more by combatant commanders than service bureaucracy, more joint and fewer overall contracts and programs. There will be further monopolization of large platform primes, e.g. one tank builder, one aircraft tanker builder and one shipbuilder.

Winslow Wheeler. Straus Military Reform Project, 24 February 2010.

Under the Freedom of Information Act, the Straus Military Reform Project has obtained almost two years of monthly reports from the Defense Contract Management Agency on Lockheed-Martin’s production of the F-35 “Joint Strike Fighter.” The most recent of those reports show deterioration from previous reports in several respects.

The Defense Contract Management Agency’s (DCMA) most recent reports cover the months July through November, 2009. These will soon be available at the Straus Military Reform Project website.

Major elements of the July through November reports can be summarized as follows:

The F-35 assembly line at Forth worth is being cannibalized for parts to support flight testing. This may be the first time an assembly line has been cannibalized for parts for such a tiny number of flight test aircraft as Lockheed-Martin has been able to get into the air. See summary of August report below.

Continuing and sometimes deteriorating nature of the delays at Lockheed-Martin’s (L-M) Fort Worth plant refutes the L-M contention that things are getting better and that the F-35 program learned from the past and with new design techniques is avoiding the kinds of problems experienced by “legacy” aircraft programs.

The cause, nature and implications of the “stand down” mentioned in the November report could well be important, but details are redacted in the DCMA reports and the press is yet to uncover the nature of the “stand down.” It is a matter looking for an explanation.

Some details from the reports follow:

July Report: Page 4 talks about a new DCMA estimate to complete System Design and Development, but the numbers are redacted. DCMA calls the L-M estimate “inadequate.” This DCMA estimate is before the Pentagon’s second independent Joint Estimating Team (JET II) estimate was finished and available, and is presumably independent. Most importantly, it clearly was available for SecDef Gates Forth Worth visit in August. Was it briefed to him? If so, why was Gates so positive about the program at that visit; if it was not, is that an example of why the F-35 program manager, General Heinz, was fired: i.e. that troubling information was not getting to Gates on this high visibility program.

Page 4 also mentions without further discussion a “BF-4 STOVL Upper Lift Fan Door incident.” The context is the rising costs of the overall system, but there are no details. Given that the Short Take Off and Vertical Landing (STOVL) F-35B is on a short schedule to deployment, is this a problem that will further complicate the schedule for the F-35B?

Page 4 identifies a “Corrective Action Plan” to address “EVMS,” “Earned Value Management system” or the system that LM uses to measure and report execution of the program and its budget. I understand it to be the core method DOD uses to monitor and manage the program. Results of the plan are due to DCMA in August. (The October Report states that the plan was submitted, but no specifics are reported. It is only stated that “a more focused Review will occur in three to five months by the DCMA….” [Page 4 of October Report.]). There has been some reporting on the failure to meet EVMS criteria in the press. The threat to L-M is that it will have to maintain its “certification” to perform EVMS calculations—if it is lost, L-M could end up not legally eligible to be a contractor to the federal government.

August Report: L-M is cannibalizing the production line to provide spare parts for the flight test program (pp. 3 & 4). These cannibalizations are “causing significant workload to supply chain personnel and are disrupting the production line.” There is no further discussion or explanation. This may be the first time a development aircraft’s production line was cannibalized for spares.

September Report: “Execution of the Flight Test Schedule continues to be a significant Program concern.” (Page 3.)

“The volume of major CR’s [Change Requests] is projected to continue.” “…the number of major changes has exceeded projections. Additionally, the impact of timing these changes and the disruption to the floor were not anticipated.” (Page 3.) This would seem to be exactly the kind of thing that L-M promised would not happen: i.e. that they had learned from previous programs and with the benefits of advanced computer design, the F-35 would not have the kinds of design disruptions so common with “legacy” aircraft.

Page 4 addresses another delay issue: ”Wing-at-Mate” problems. These, I understand, have to do with the decision to mate the wing to the fuselage before the wing is “stuffed”. The plan was to mate the completed wing to the fuselage. But, because of delays, L-M decided to add wing components after mating, which – being inefficient — slows things down more.

“Composite production is not meeting the demands of the production operations – composites for the AFT and Empennage assemblies are paced by the availability and quality of composites.” (Page 4.) Again, the modern design feature of composites, said to not just reduce weight (of the over weight aircraft) but to facilitate design and fabrication is proving to be a source of delay and complication.

October Report: Flight test schedule still “a significant Program concern.” “AF-1 continues to be in a maintenance period as of this report, progressing towards taxi tests and first flight.” (Page 3.) This is an example of a problem addressed in earlier DCMA reports: aircraft coming off the production line incomplete and incapable of flight. They are sent to adjacent hangars for post-production production. This pre-first flight “maintenance” would seem to be a misleading misnomer.

Mentions that the program is about to get its “sixth schedule revision.” (Page 3.)

More on the “Wing-at-Mate overlap” which appears to be improving. (Page 3.)

November Report: Due to the need for the sixth schedule revision — coming in early 2010 — “Recent Program summary charts, scorecards, and management briefings do not consistently depict performance to the master schedule baseline.” (Page 3.)

The graph on page 6 shows Low Rate Initial Production (LRIP) aircraft delivery rate is on average 80 days late. The rate significantly deteriorated in April and stayed at that deteriorated rate. Individual aircraft deliveries are significantly above that: AF-6 will be 92 days late; AF-7 will be 142 days late. A sentence presumably explaining the increased delay was redacted. (Page 6.) This category is rated “red” by DCMA. On the other hand, DCMA confirms public reports that while LRIP 1 & 2 aircraft are months late, the “risk” that LRIP 3 aircraft will be late is rated as “low.”

Suppliers’ Delivery Rate (Page 8.) is also getting worse, now down to about 75% on-time. This category is also rated “red” by DCMA.

The Management Reserve of money is gone, “further straining the financial management of the Program.” Amounts are redacted. Given USATL Carter’s decision to used LRIP production money for SDD, how much of that will go to L-M’s management reserve slush fund, rather than directly to SDD activities?

A section is titled “Maintenance and Quality Verification Stand-Down” immediately followed by several redacted lines. Later the section states “This incident triggered a maintenance and quality verification stand-down to determine systemic root causes for increasing aircraft impoundment and suspension of operations incidents to date.” And later, “The focus areas are Software, Rework/Repairs, System Check Out Procedures (SCOPs) and Aerospace Equipment Instructions (AEIs).” (page 4.) The discussion in the section titled “Improve Software Productivity” refers to “F-35 stand-down events” and explains that a “Joint Process Review” effort to address software issues was “postponed until further notice as it was overcome by F-35 stand down events that took precedence.” (Page 18.)

This “stand down” would appear to have some significance, but has not been reported to the public by L-M or DOD.

Note: for links to the DCMA reports cited here see Winslow Wheeler, Pentagon Reports Document Continuing Lockheed-Martin Failures, Center for Defense Information, 24 February 2010.

by Carl Conetta and Charles Knight. Defense News, 21 February 2010.

During the past decade, the U.S. Defense Department has enjoyed a rise in its budget unprecedented since the Korean War. With President Barack Obama’s fiscal 2011 budget request, it is up nearly 100 percent in real terms from its post-Cold War low. But few observers believe that this level of spending can continue in light of the mounting national debt. So it is wise to think now about options for savings.

A way to begin is to ask, what has driven budgets so high? Obviously, the wars are part of the answer. But they account for only 20 percent of today’s expenditures. And they are the least likely targets for economizing.

It is more fruitful to reflect on the shortcomings in past efforts at defense reform. Can we do it better? It is also worth thinking about the practice of force modernization during the post-Cold War period, which has been distinctly undisciplined.

The end of the Cold War presented a unique opportunity – as well as a manifest need – for the structural reform of our defense posture. The force reductions of the 1990s necessarily risked decreased efficiency, due to the loss of economies of scale affecting support activities and equipment acquisition. The standard solution to such problems is to restructure as one gets smaller, matching reductions in size with a reduction in complexity – a practice the DoD did not, for the most part, follow.

Although smaller, DoD and the services have largely retained or even increased their complexity. For instance, there are today 50 major commands either one step above or below the service level – not much different from during the Cold War.

In our recent study of budget trends, we identify a dozen areas where significant changes had been proposed in the 1990s. These involved service roles and missions, consolidation of various support and training functions, and recentering budget and acquisition planning at the joint level.

In addition, the need to reform DoD’s acquisition, logistics and financial management systems has been evident for a long, long time. However, only two reform initiatives – competitive sourcing and military base closures – were pursued far enough to yield significant annual savings, and these have not amounted to more than 4 percent of the defense budget.

There also was hope in the mid-1990s that a “revolution in military affairs” might lead to new efficiencies. We would reap more bang for the buck by means of increased battlefield awareness, improved logistics, increased capacities for standoff precision attack, and the networking of units within and across services.

In some areas, such as precision attack, capability has dramatically increased. Theater logistics also have improved. But nowhere has the revolution in information technology led to manifest and substantial savings. Rather than supplant-ing legacy capabilities and platforms, the new technology has mostly just supplemented them.

In prospect, the evolution of net-centric warfare might reduce the need for redundant capabilities. But progress toward the services sharing a common nervous system has been slow and mostly involved special operations units and precision ground attack. Generally, net-centric capabilities exist as an anemic overlay to traditional service-centric structures and assets.

DoD and the services have faced little pressure to economize or transform during the past decade. This is also evident in equipment acquisition.

We can discern three distinct acquisition trends at work in recent decades. First, there are legacy programs that came forward from the Cold War period with considerable institutional momentum. Second, there are programs reflecting the revolutionary potential of new information technologies. Finally, there are adaptive programs, such as the recent mass purchase of Mine Resistant Ambush Protected vehicles, that correspond to new mission requirements.

In an ideal world, the imperative to adapt to new missions and circumstances would draw on the revolutionary potential of new technologies to rewrite or supplant legacy programs. But this has not happened.

Too much of the $2.5 trillion in modernization funding since 1990 perpetuated the status quo circa 1990. Transformational acquisition was mostly restricted to producing supplements, such as Predator drones, to the legacy arsenal. And adaptive acquisition was largely delayed until field experiences forced a flurry of ad hoc efforts beginning six years ago.

The Pentagon’s central authorities have done too little, too late to compel the integration of modernization efforts along adaptive lines. Legacy, transformational and adaptive modernization have lurched forward together, but poorly integrated and competing for resources. And yet, even though modernization spending now surpasses that of the Reagan era, no one is happy with the result.

For 10 years, Congress and the White House have been permissive when it comes to defense spending; this has undercut any impetus for reform and prioritization. Obama’s decision to further boost the defense budget suggests that this dysfunction will persist for a while, but this, too, is a bubble that will burst. Preparing for that eventuality means revisiting options for structural reform and getting clearer on our strategic priorities.

Carl Conetta. Project on Defense Alternatives, 05 February 2010.
http://www.comw.org/pda/1002BudgetSurge.html

Federal Debt as Percent of Gross Domestic Product

Excerpt:

The most ready comparison to America’s current circumstance are the years of the Second World War. Back then, the level of debt rose higher than it has today, but the period during which the burden exceeded 100% of GDP lasted only 4 years. Today, by contrast, it looks as though the period during which debt will equal or exceed 100% of GDP will last for more than twice as long. If we think of the mid-1940s as representing “the Mount Everest” of US debt accumulation, then the period after 2008 should represent “the Tibetan plateau” (which is not as high as Everest, but far wider.)

DoD summary prepared for press briefing, 01 February 2010. Hosted on the Commonwealth Institute website.
http://www.comw.org/qdr/fulltext/FY11budgetsummary-dod.pdf

Office of the Secretary of Defense, 01 February 2010. Hosted on the Commonwealth Institute website.
http://www.comw.org/qdr/fulltext/1002QDR2010.pdf

Carl Conetta. Project on Defense Alternatives Briefing Report 20, 18 January 2010.
http://www.comw.org/pda/fulltext/1001PDABR20.pdf
Executive Summary: http://www.comw.org/pda/fulltext/1001PDABR20exsum.pdf

Excerpt:

… DoD’s total workforce is probably as large today as it was in 1989 (or even larger), but less of the total is in uniform. This accords with the rise in O&M spending and also with studies… which suggest that the contractor workforce may have grown by as much as 40% since 1989. By comparison, the full-time military and DoD civilian workforces are both about 32% smaller today than in 1989.

When strategic discipline is lax, legacy modernization tends to predominate, due to its institutional momentum. Eventually, external circumstances may compel a rush of ad hoc adaptive measures – as is the case today with regard to procurement to meet counter- insurgency needs. These may then come to predominate, prematurely. The only remedy is to strongly discipline force modernization in accord with a sustainable, adaptive, and cost-effective national security strategy. The various scenarios and missions that define military requirements must be strongly prioritized, and these priorities must be enforced from the center.

A permissive spending environment is the precondition for the types of problems identified in this report. It is easy enough to point to the 11 September 2001 attacks as the progenitor of this condition. However, as we note, the surge in spending began before 2001. Moreover, Gallup polls show that public support for increased spending was higher in the two years prior to the attacks than in the two years after. And it has receded significantly since then. This points to a more fundamental enabling condition: presently there seems to be little political gain (and much risk) in pressing for the type of tight DoD budget constraints that might prompt through-going reform and transformation. Nonetheless, emerging fiscal realities may soon compel increased attention to how the nation allocates scarce resources among competing national goals — foreign and domestic, military and non-military. And this might put the nation on the road to a disciplined defense.

Director of Operational Test and Evaluation (DOT&E), pp. 21-25, January 2010.
http://www.comw.org/qdr/fulltext/DOTE F-35 JSF 2009 Annual Report.pdf

Tony Capaccio. bloomberg.com, 19 January 2009.
http://www.bloomberg.com/apps/news?pid=20601103&sid=a0UQXRzi1Fhc

Excerpt:

Sixteen of 168 planned flights were completed in fiscal 2009, the second year of flight testing, according to Michael Gilmore, the Pentagon’s director of weapons testing. The program calls for 5,000 sorties to prove the aircraft’s flying capabilities, electronics and software.

The development phase must now be extended by at least one year, to October 2015, according to Gilmore, the former head of the Congressional Budget Office’s defense unit.

George C. Wilson. Government Executive, 19 January 2010.
http://www.govexec.com/dailyfed/0110/011910cdam1.htm

Excerpt:

“There ain’t no education in a second kick of a mule.”

for more on the F-35 see: http://www.comw.org/wordpress/dsr/gates-calls-for-delay-in-pentagon-purchases-of-lockheed-f-35s-capaccio

Colin Clark. DoD Buzz, 12 January 2010.
http://www.dodbuzz.com/2010/01/12/navair-offers-f-18-ammo-amid-jsf-woes/

Excerpt:

That would put operating costs of the F-35 B and C versions some 40 percent higher than the cost to operate the existing (larger) fleet of F-18A-Ds and AV-8s.

Tony Capaccio. Business Week, 07 January 2010.
http://www.businessweek.com/news/2010-01-07/gates-calls-for-delay-in-pentagon-purchases-of-lockheed-f-35s.html

Excerpt:

One recent study agreed with a similar one from a year earlier that predicted a 2 1/2 year delay in development beyond the current target of October 2014 and an added cost of $16.5 billion. The new estimate recommended the Pentagon add $314 million to the five-year plan to beef up testing. Gates did so.

Editor’s Comment:

With Afghan war costs rising and political pressure to reign in the federal deficit mounting Gates needs to reduce the year to year Pentagon procurement budget for big ticket items. Postponing and stringing out the acquisition of major platform buys (such as a new fighter aircraft like the F-35) is one way to get some of those savings without having to take on the much harder political task of canceling programs or cutting structure. Unfortunately such an approach usually makes an acquisition program more costly when production efficiencies of scale are lost as fewer units are manufactured each year over a longer period.

This article says, “More than $2.8 billion that was budgeted earlier to buy the military’s next-generation fighter would instead be used to continue its development.” So it may seem that this decision simply shifts spending from production to development accounts with neutral effect on the Pentagon topline. However the article doesn’t adequately address whether Gates may have been facing increased development costs overlapping ambitious production schedules which would have cost much more in the next five years than had been previously planned. This decision delays the onset of large production costs to the years after 2014.

The Navy has indicated it will need to buy more F/A-18s if the F-35 doesn’t appear when it had previously been promised. But the Navy’s requirement assumes there are no carrier cuts (and associated Naval combat wing cuts) in this period. If there are, it will make those F/A-18s redundant.

And what if five years from now drones are proving themselves to be the combat craft of the future at the very time the F-35 is meant to start appearing in operational units in significant numbers? Maybe then the buy of the next generation manned fighter plane can be in the range of 1200 units instead of the 2400 units in the current plan. Then we could realize real savings in this acquisition program. (for some options on future fighter buys and program savings see: David Axe, “Congressional Budget Office’s Plans to Save the Air Force”, War is Boring, 18 May 2009.)

If five years from now drones play a more central role in air combat power and there are fewer carriers in the fleet the decision to slow the F-35 acquisition program down will prove to be a very practical one.

Sandra I. Erwin. National Defense Magazine, November 2009.
http://defensealt.org/Hc1DyN

Excerpt:

Acquisition and R&D accounts now make up 34 percent of the defense base budget. Assuming a flat budget and growth in personnel a bit above inflation, modernization accounts 10 years from now will be down to 25 percent of the budget, according to TechAmerica estimates.

Unless the Defense Department decides to reduce the size of the force, procurement spending will continue to be squeezed, says budget analyst Steve Daggett, of the Congressional Research Service. He estimates that the average service member costs 45 percent more — including salary and benefits after adjusting for inflation — than in 2000.

Industry analyst Jim McAleese, of McAleese & Associates, says he is certain that the Obama administration has effectively flat-lined defense spending for the foreseeable future. But many major decisions have yet to be made regarding how money will be allocated within a flat budget.

“I would caution you to really pay attention to Defense Secretary Robert Gates’ vision,” McAleese says in an interview with Federal News Radio. “I believe he is fundamentally using the QDR [quadrennial defense review] to put the finishing touches on his legacy. Gates wants to “optimize” the Army for long-duration counterinsurgencies, he says. “The priority in the Army will be investing in a world-class quality combat force, that is well-supported, and that the soldiers’ families are well-supported.” The upshot is that many of the expensive weapons systems that the services have been accustomed to buying will no longer be affordable.

Megan Scully. Government Executive, 28 October 2009.
http://www.govexec.com/dailyfed/1009/102809cdpm1.htm

Colin Clark. DoD Buzz, 23 October 2009.
http://www.dodbuzz.com/2009/10/23/hill-aides-call-for-jsf-restructure/

Megan Scully. Government Executive, 14 October 2009.
http://www.govexec.com/dailyfed/1009/101409cdpm1.htm

Matthew S. Goldberg. testimony before Committee on the Budget, U.S. House of Representatives, Congressional Budget Office, 14 October 2009.
http://cbo.gov/ftpdocs/106xx/doc10633/10-14-DoD_2010_HBC_Testimony.pdf

Megan Scully. Government Executive, 09 October 2009.
http://www.govexec.com/dailyfed/1009/100909cdpm2.htm