This month I want to discuss with you three apparently disparate, but actually
connected issues. They are: Kosovo, the impact of fuel costs on the defense
budget, and investment shortfalls in modernization.
Let me first describe each issue individually and then propose the connection.
With regard to Kosovo, as has been extensively reported, after approximately
four weeks of a very limited war against Yugoslavia, the Air Force is running
dangerously low on air-launched cruise missiles. The inventory is reported to
be at a level of approximately 90 missiles, which is about the same quantity
that was used last December in operation Desert Fox against Iraq.
Prior to that time, the Air Force reported that it had 250 of the cruise missiles,
which had been converted from nuclear to conventional use. Unfortunately, the
plant that performed the conversion was shut down more than a year ago. Today,
cruise missiles are the weapons of choice because they are unhampered by weather,
they are precise, and they minimize the risk to pilots, as well as collateral
damage.
One must wonder how long it will take to replenish the inventory of these weapons
in order to meet U.S. defense requirements. Is there a production line in place?
How long will it take to activate the assembly line? Are there other munitions
in similar short supply?
To be sure, the problem has been acknowledged by senior defense leaders. Deputy
Defense Secretary John J. Hamre noted during last month's NDIA Tech Trends 2000
conference that "there has been concern about the inventory of certain
weapons." He also said that the Defense Department still believes it has
adequate stocks to be able to undertake this operation and have a reserve.
Defense Undersecretary for Acquisition and Technology Jacques S. Gansler also
addressed the issue at the same conference. "Original plans for use were
much lower than they are today. We have been using them at a higher rate than
anticipated."
Retired Air Force General Larry Skantze pointed out that this was, more than
anything, a budgetary problem. "The Air Force took a conservative view
when it placed its orders because it was watching its dollars," he said.
"Who would have predicted they would be conducting a three-to-four week
campaign using so many cruise missiles?" Skantze added. These observations
point to the reality of today's budgetary environment: when money is tight,
the services are forced to cut back on acquisitions and, in some cases, to cut
corners.
The bottom line is that if the Air Force depletes its inventory of cruise missiles,
it will take at least two years before another missile comes off the assembly
line, regardless of whether it is a conversion or a new system.
Now, to the problem of fuel costs. It has become obvious from the prices displayed
at gas stations that fuel costs have increased by approximately 25 percent in
a matter of months. This has a significant impact on the defense budget. The
Administration increased the fiscal year 2000 budget by $12 billion. At the
time, NDIA noted (President's Perspective, February 1999) that the $12 billion
was composed of $4 billion in new money, with $8 billion from constrained inflation
and fuel savings resulting from depressed oil prices. According to the Office
of Management and Budget, the impact of the fuel price increases on the defense
budget has yet to be fully assessed. However, it is reasonable to assume that
part of the $12 billion budget increase has now evaporated.
The consequence of this shrinking defense budget is that funding shortfalls
are offset by reductions in modernization investments, which in turn, affect
the long term readiness of our forces.
Now, to shortfalls in modernization investments.
At a recent NDIA Washington Chapter Luncheon, Navy Secretary Richard Danzig
made several points, one of which was that the services tend to perpetuate a
mentality of conscription. By this he meant that, for example, the Navy still
employs sailors to chip paint, as well as to walk the decks of aircraft carriers
checking for foreign objects. Danzig's message was that machines can do both
of these jobs better, but the services have failed to make the necessary capital
investments to trade human power for modern equipment.
The secretary makes a convincing case. On the one hand, the services must be
credited for being at the forefront on issues such as equal opportunity and
gender integration. But, on the other hand, they have fallen behind other sectors
of the economy where investments in automation have helped to offset manpower
requirements. The continuing shortfalls in modernization budgets, therefore,
exacerbate this problem.
These investments also are needed to entice young people to join the services.
Highly-motivated and computer-literate high-school graduates increasingly will
be unlikely to choose a military career if they don't perceive the services
are on the cutting edge of technology. At a time when three of the services
are failing to meet recruiting quotas, there is ample reason to be concerned
about both the quantity and the quality of the 21st century force.
Now, to how these three issues are tied together. Unfortunately they all have
to do with money! Unless we resource our national security programs-so that
they support long-term readiness, which is really modernization, as well as
near-term readiness-we are going to continue to face shortfalls in weaponry.
And we will continue to experience manning levels which are unachievable in
our full-employment economy because Defense has not been provided the funds
with which to trade manpower for equipment.