USA President Barrack Obama submitted his Fiscal Year 2015 (FY15) President’s Budget Request (PBR) of $495.6 billion (Base Budget only) to Congress on 4 March 2014. The Overseas Contingency Operations (OCO) portion will be submitted when the Administration has a better understanding of troop requirements in Afghanistan following withdrawal later in 2014. With an OCO placeholder value of $79.4 billion (the lowest since Fiscal Year 2005), total discretionary budget would equal $575 billion.
This budget is the third of a series subject to the controls established in the Budget Control Act of August 2011. Due to the agreement in the Bipartisan Budget Act of 2013 of 26 December 2013, the process of sequestration will not apply to the FY15 Department of Defense (DoD) budget, but still exists as a possibility for Fiscal Year 2016 (FY16). Sequestration will see automatic cuts made against all 2,500 programme, project and account (PPA) lines. In light of sequestration, many contracts will need to be renegotiated, contract options may not be awarded, fewer quantities of articles will be procured, unit prices will rise and in general the entire acquisition process will slow down. The impact is felt contract by contract.
Nevertheless, the Base Budget submitted for FY15 is $45.2 billion less than what was requested for FY15 in the Fiscal Year 2014 (FY14) Future Years Defense Plan (FYDP).
As the US Congress begins its work on defence budget legislation in early May 2014, Secretary of Defense Chuck Hagel sought to underscore the difficult choices and tradeoffs that the Pentagon hopes lawmakers adopt in their bills.
The House Armed Service Committee began consideration of FY15 defence authorisation bill on 7 May and congressmen did not appear keen to accept many of the DoD’s efforts to cut costs and balance ‘readiness’, manpower and equipment needs.
“DoD’s senior leaders and I will continue making the argument to Congress that readiness must be an urgent priority,” Hagel said during remarks to the Chicago Council on Global Affairs on 6 May.
Readiness refers to the training and maintenance activities that keep troops prepared for combat.
He added that sustaining a ready force amid legislated budget caps would require some difficult trade-offs, such as “adjusting military compensation, retiring ageing weapons platforms and reducing the overall size of the force – both active and National Guard and Reserve”.
Members of Congress have taken issue with plans to retire certain weapons – such as the Fairchild Republic A-10 Thunderbolt close air support fleet – and amendments to the budget legislation are likely to try to block some of the Pentagon’s requests.
Hagel said his second priority would be to invest in “major next-generation weapons systems, including the new [Lockheed Martin F-35 Lightning II] Joint Strike Fighter (JSF), the new long-range bomber and new submarines and aircraft carriers”, as well as space, cyber, unmanned systems, precision strike and intelligence platforms.
He added: “It means continuing to invest in science, research and technology, and strengthening organisations like DARPA, the Defense Advanced Research Projects Agency,” which would get a funding boost in the Pentagon’s FY 2015 request.
Absent from Hagel’s remarks was any mention of the Pentagon’s request for a new round of infrastructure consolidation under the base realignment and closure (BRAC) process, a proposal that stands little chance of acceptance in Congress.
According to a report released by the DoD on 15 April 2014, plans to buy JSF, Virginia-class submarines and Arleigh Burke (DDG 51) destroyers will be affected if the sequestration’s legally mandated budget caps are not reversed in FY 2016.
As of April 2014, President Obama’s FY 2015-19 FYDP requests stood at $115 billion above levels mandated by sequestration, so that law would have to be overturned for such funding to materialise.
The report, Estimated Impacts of Sequestration- Level Funding, detailed what in the requested FY 2015-19 FYDP it would have to give up to fall within the legislated caps. The report was not requested by Congress and essentially provides fodder for those pushing to reverse sequestration.
“Compared with plans under the fiscal 2015 budget, the department would buy eight fewer ships in the years beyond fiscal 2016 – including one fewer Virginia-class submarine and three fewer DDG 51 destroyers – and would delay delivery of the new carrier John F Kennedy (CVN 79) by two years,” the report said.
The services would have to buy 17 fewer F-35s, five fewer Boeing KC-46A aerial refuelling tankers and six fewer Boeing P-8A Poseidon maritime patrol aircraft, it added.
Soldiers and vehicles Also already revealed and widely discussed has been the Pentagon’s plan to reduce the size of the US Army and USMC to budget for sequestration. The army would drop to 420,000 active duty soldiers, 315,000 guardsmen and 185,000 reservists, while the USMC would fall to 175,000 activeduty marines. Even without sequestration, the FYDP would have the army shrink its active duty end strength to between 440,000 and 450,000 soldiers.
A fourth brigade set of double-V hull Strykers would also be dropped during a continued sequester, and procurement of about 1,000 Joint Light Tactical Vehicles for the army and USMC would be delayed, the Pentagon report said.
Many of these cuts are meant to preserve operation and maintenance (O&M) accounts – which include military training activities – as much as possible. The DoD explained that O&M budgets overall would grow at an average of about 2 per cent a year in the FYDP at sequestration levels, compared with 3 per cent a year in the FY 2015 request.
Research, development, test, and evaluation (RDT&E) accounts would decline in the FYDP at sequestration levels, and ‘investments’ (a mixture of procurement and RDT&E funding) would increase by a total of 14 per cent across the FYDP during sequestration, instead of growing almost per cent in the requested budget. The Pentagon’s $2.7 trillion FYDP asks for a base budget of $535.1 billion in FY 2016 (about $35 billion above sequestration’s cap), $543.7 billion in FY 2017 ($31 billion above the cap), $551.4 billion in FY 2018 ($27 billion above the cap), and $559 billion in FY 2019 ($22 billion above the cap).
Key land programmes
Overview: The Abrams main battle tank has been in service for more than 30 years. It exceeds space, weight and power-cooling (SWaP-C) limits.
To restore lost capability, the Army and Marines have initiated engineering change proposal (ECP) and modification (MOD) programmes. The ECP provides hardware and modification to address SWaP-C gaps and allows for hosting future technologies.
FY15 budget: FY15 PBR for the combined Army and Marine M1 programmes is $371 million ($53.7 million more than the FY14 enacted amount). Army funding increased, while Marine funding was lower due to Abrams Suspension Upgrade (ASU) and the Armored Vehicle Launched Bridge (AVLB) not being procured in FY15. Total spend is approximately $20 billion.
- Army R&D ($112.5 million) – ECP1, SWaP-C prototype builds, testing and qualification;
- Army procurement ($237.0 million) – modifications to incorporate ECP1 – Vehicle Health Management, Blue Force Tracking, Power Train Improvement, Total Integrated Engine Revitalization (TIGER) and Transmission Enterprise;
- USMC procurement ($21.9 million) – Abrams Integrated Target and Display System (AIDATS).
Overview: The Stryker FOVs have been in service for a decade, but are also in need of SWaP-C upgrades. Beyond these, survivability, through a double-V hull, is necessary for current operations. Additional crew protection improvements are also part of the upgrade. FY15 budget: FY15 request increased $25.4 million over FY14 enacted figures, reflecting the continuation of funding a third brigade for the Army.
A $500 million reduction in ground combat vehicles means the Army has not had to find extra money for these vehicles.
- R&D for MOD ($39.79 million) – safety, operational issues and obsolescence with C4I;
- Procurement ($385.1 million) to fund third brigade set of DVH;
- R&D – ECPs for SWaP shortfalls, funding supports prototype build and testing efforts.
Overview: The Bradley Fighting Vehicle, in service since the early 1980s, also exceeds SWaP-C limits. Three related programmes combine to address these and other shortcomings: Bradley (MOD), Bradley Fire Support Team (BFST) and ECP. MOD procures hardware and fields modification based on ECPs via R&D and the BFST vehicle replaces the ageing M981 Fire Support Vehicle.
FY15 budget: FY15 PBR for Bradley programmes is $37 million less than the FY14 enacted amount. MODs will continue as ECP (improvements) are completed. The Fire Support Team (FIST) programme has no funding reflected in the budget request beyond FY15.
Total spend is approximately $10 billion.
- MOD FY15 ($107.5 million) procures ODS-SA for ARNG, installation of 146 upgrade kits for ECP1 and funds the digitisation of 23 vehicles;
- FIST ($26.8 million) funding for FY15 appears to be completed with FY15. Supports the procurement of 28 FS3 sensors;
- Improvement ($92.4 million) funds ECPs for suspension, track, powertrain and electrical system.
Paladin Integrated Management (PIM)
Overview: The upgrade programme to convert existing M109A6 Self-Propelled Artillery (in service for more than 20 years) to the PIM standard. Some 580 vehicles sets, comprising one self-propelled howitzer (SPH) and one carrier ammunition tracked (CAT). PIM integrates components of the Bradley, Future Combat Systems and the current M109 fleet onto a new chassis. This will extend platform life for another 30 to 40 years.
FY15 budget: FY15 PBR for PIM programmes is $11.9 million more than the FY14 enacted amount. The focus for FY15 is support for low rate initial production (LRIP) resulting in 18 PIM sets. Total spend is approximately $7.4 billion.
- Procurement ($247 million) supports PIM LRIP, resulting in production of 18 SPH and 18 CATs;
- R&D ($83.3 million) for developmental fixes, subsystem qualification and testing, as well as full up system live-fire using LRIP platforms.
The US Air Force (USAF) would, if sequestration continues, reduce F-35A procurement by 14 aircraft in FY 2016 and by one aircraft in FY 2017. “There would be no changes” in F-35B investments and procurement quantities, the report added. The US Marine Corps (USMC) and foreign governments are buying the short take-off/vertical landing B-model. The US Navy (USN) would reduce its planned F-35C carrier variant procurement by two aircraft in FY 2016. Under sequestration, the USAF would have to abandon its Adaptive Engine project intended to develop a next-generation military aircraft engine, because the effort’s slated $1.3 billion “would be eliminated”, the Pentagon said.
Moreover, the USAF would “also shrink its tanker fleet to 468 aircraft by FY 2019” by divesting all its McDonnell Douglas KC-10 tankers beginning in FY 2016, fully removing the aircraft by FY 2020. The service would buy 64 instead of 69 KC-46A tankers across the FYDP (three fewer in FY2017 and two in FY2018).
The USAF would also be capable of sustaining only 45 instead of 55 MQ-1 Predator and MQ-9 Reaper Combat Air Patrols (CAPs) by the end of FY 2019 because sequestration would necessitate divesting the Predator fleet in FY 2016 and substantially reducing the Reaper fleet in FY 2018-19, according to the report.
Continued sequestration-level funding “would have a greater impact on the post-FYDP force levels [for the USN] because eight fewer ships would be procured and would deliver outside the FYDP”, the report noted. However, the navy in that timeframe would still lay up six destroyers and 11 cruisers awaiting mid-life modernisation and overhaul for lack of funding, it added.
Although previously announced, the report also mentioned that the navy would not fund nuclear refuelling and overhaul for USS George Washington (CVN 73), which is scheduled to begin that process in FY 2016, and would retire the carrier and its associated air wing.
This is particularly controversial because George Washington would be retired after only 24 years in service and the USA would drop to 10 carriers.
The USN would also buy three fewer DDG 51 Flight III destroyers if sequestration remains effective (one fewer in FY 2017, FY 2018 and FY 2019). The report noted that the FY 2015 budget request and FYDP would “provide for 96 cruiser/ destroyers with four in lay-up compared with 93 ships with 14 in lay-up” that would result from sequestered funding.
There would also be insufficient funding to buy a second Virginiaclass attack submarine (SSN) in FY 2016. “Eliminating this submarine from the shipbuilding plan would reduce the submarine force to 40 SSNs in 2029 and extend the period that the SSN force level is below the desired 48 fast attack submarines by four years,” the DoD said.
Canada In February 2014, Canadian Prime Minister Stephen Harper’s government announced it was cutting projected defence outlays by C$3.1 billion ($2.8 billion) over the coming four years.
Minister of Finance Jim Flaherty defended the move, alluding to challenges in the procurement process that have led to widespread procurement problems. Major defence acquisitions – ranging from plans to buy Lockheed Martin F-35 Lightning II Joint Strike Fighters to shipbuilding and combat vehicle programmes – have stalled in recent years, been cancelled or are only slowly moving forward.
Also in February 2014, the Canadian government announced it was changing defence procurement policies in a move first made public with the country’s 2013 budget.
The new policy, which favours domestic industry, will include the creation of a new defence secretariat that will be operated within the Public Works and Government Services Canada (PWGSC), in a bid designed to smooth the bureaucratic overlap between the PWGSC and Ministry of National Defence.
Expert third-party reviews will also be instituted to provide greater clarity in the process on all large projects. This move appears designed to counter criticism of the government for awarding a sole-sourced fighter jet contract to Lockheed Martin, without fully evaluating competitor offerings.
Starting in June 2014, an annual guide will also be published that will list all procurement projects expected to be developed over 5, 10, 15 and 20-year timeframes. The publication, which is designed to help industry to quickly identify new opportunities, will include projects expected to cost more than C$100 million ($90 million) and smaller initiatives that have leveraging potential for Canadian industry.