Written by Lynn Goya,

Recognizing that even defense will be facing greater scrutiny, the Pentagon’s top weapons buyer, on Wednesday, indicated that new weapons programs would be decided not just on capability, but on budget.

Trimming the Beast

Acquisition chief Ashton Carter told an Heritage Foundation audience in Washington that the Pentagon would not purchase weapons programs that were too expensive to complete or that weren’t cost effective.  The spending spree after 911 has ended, he said.  Programs that will have greater scrutiny include the Air Force’s new long-range bomber aircraft program, the Army’s Ground Combat Vehicle (GCV) effort, and the Marine Corps-led Presidential Helicopter initiative.  When the Navy’s planned to acquire new nuclear-powered submarines at an estimated cost of $7 billion per model, Carter told Navy officials to go back to the drawing board to find a way to make it cheaper without losing key battle-ready attributes.  The redesigned models will cost $4.9 billion each.

Carter is also pushing DOD hardware contract races that will mirror the Air Force’s KC-X tanker competition. In that bid, Boeing bested a European competitor after a decade-long battle by offering a fixed-price contract that put a premium on cutting costs while producing the quality the DoD required.  DoD contracts are typically cost-plus contracts that inevitably incur massive overruns, decimating the Pentagon’s budget—if it actually had one.

Budget History

Annual defense budgets almost doubled over the last decade after adjusting for inflation – not counting the off-budget $1 trillion for the Iraq and Afghanistan wars.  President Obama first projected a $7.5 trillion defense budget over 10 years, then reduced it to $7.1 trillion, but at least he was including the wars in his calculations. Defense spent almost $700 billion in 2010, sucking up over half the discretionary budget and about 20% of the entire national budget. Half that money was for weapons and the other half was taken up by troops and their support services.  Most experts think that significant cuts in defense would have to entail a reduction in troop size. Obama is battling House Republicans to save his promised increases in veterans healthcare and retirement benefits, even as his advisors search for other ways to reduce costs.

Contractor Savings

The new scrutiny on suppliers and a new “preferred supplier program” should help drop dollars from fatty programs.  The Pentagon hopes that increased competition with the promise of reduced paperwork and less bureaucratic hurdles will help companies improve their products while still cutting costs. Defense Secretary Robert M. Gates calls the new effort the “better buying power initiative.”  Talking to the Heritage Foundation, Carter said the Defense Department will offer incentives to contractors that receive high performance tracking marks.  Contractors may also receive bonuses for coming in under budget or other cost-saving measures.

In addition to making new programs less expensive and driving down the costs of existing programs, the military is shedding some programs – at least it is trying to.  The upcoming battle over a second engine for the Joint Strike Fighter is illustrative.  The Defense Department recently terminated the General Electric/Rolls-Royce F136 and the Joint Strike Fighter alternate engine in the fiscal 2012 budget.  Because the Joint Strike Fighter engine is in limbo with no funding in the yet-to-be-passed 2011 budget, Carter issued a stop order on current work on the engine, saving $1 million per day. 

A GE spokesman immediately responded, saying, “While we are deeply disappointed by the DoD’s ‘Notice of Termination,’ …GE and Rolls-Royce will work closely with our congressional supporters during the 2012 budget process in pursuit of incorporating the engine into the program, and preserving competition. We continue to be encouraged by the bipartisan support for the engine on the merits of its performance and value. There is a significant willingness in Congress to revisit the funding debate as the consequences of terminating the engine are being fully understood.”

Dueling Budgets

The VA may be facing cuts or a higher budget, depending upon who wins the budget fight.  The president’s  budget requests over $132 billion in funding for 2012, a ten percent increase from 2010 to deal with the increased load it faces from returning veterans and the dramatic increase in female veterans.  The budget calls for $58.8 billion in operational costs for the VA and $65.5 billion for  benefits.  About $208 million would be dedicated to help those caring for severely injured service members from the two wars.  Female veterans would see a 26 percent increase in healthcare funds for a total of $270 million.  Homeless veterans would see $939 million for homeless prevention programs, a core promise from the administration since Obama got into office.  The administration’s budget would reduce construction spending by $709 million.

House Republicans would leave VA funds alone for the rest of this year, but implements key cuts in its proposed 2012 budget that passed on  a strict  party-line vote on April 15 that included asking veterans to pay more for medical services they receive.  Ed Wilkinson, from the Craig Daily Press, reports that House Budget Committee Republicans hope to cut $6 billion from VA healthcare costs by dropping veterans without service related medical conditions who are not poor. The committee thinks that affect 1.3 million priority 7 or 8 status veterans.

The Progressive Caucus’ “People’s Budget” has received little attention although The Economist calls it the most courageous of the three budget proposals.  The budget takes on the defense budget by calling for withdrawal from the two wars and reducing troop strength while maintaining full funding for TRICARE and veterans services.

An independent budget often used as a blueprint for veterans services was proposed by AMVETS, Disabled American Veterans (DAV), Paralyzed Veterans of America, and Veterans of Foreign Wars (VFW).  The authors requested $65.3 billion to cover veterans’ healthcare and benefits adequately.   The group was particularly concerned with proposed cuts to prosthetic research.

If the Pentagon budget is finally on the chopping block and the choice is between GE and GIs, however, veterans have a right to be concerned about which one will be cut loose.