This month, Defense Secretary Donald Rumsfeld is scheduled to unveil
the document that the defense community has been waiting for: the
Quadrennial Defense Review.
Much has been speculated about what the QDR will say concerning
the national security strategy and about the force structure needed
to meet that strategy.
Despite many press reports indicating otherwise, Secretary Rumsfeld
has hinted that the current size of the force will not necessarily
be cut. But cutbacks remain a possibility, only because there may
not be enough money to keep the current force and modernize it.
As he explained at various press conferences, the Pentagon he inherited
has a huge problem: the mismatch between programs and resources
to pay for them. That mismatch has been estimated to be as large
as $100 billion.
That amount is debatable, but it is important to note a Congressional
Budget Office (CBO) analysis released in September 2000, titled
“Budgeting For Defense: Maintaining Today’s Forces.”
That study concluded that the Defense Department needed a budget
increase—over the fiscal year 2000 appropriation—of
As Secretary Rumsfeld said, the administration inherited forces
and weapon systems that are in far worse shape than they had anticipated.
That is the result of a long period of funding cutbacks—14
consecutive years of reductions—and an increase in the number
of deployments by all the services.
The president requested an $18.4 billion increase for fiscal year
2002, but Congress is not convinced the nation can afford to pay
for that, given the reductions in the federal budget surplus and
the president’s decision to cut income taxes.
It is important to recognize that military forces have not always
been structured based on strategy nor have they always been funded
to support current readiness needs and recapitalization. To understand
this notion, one must reflect upon the real reasons for America’s
traditional success in the “profession of arms.” With
some exceptions, American triumphs on the battlefield have been
achieved through superiority in equipment and superbly trained warriors.
Well-trained and amply-supplied units equal readiness.
Today, the training provided to U.S. troops is not only unequaled,
it is approached by none of our competitors and few of our allies.
Our emphasis on technological superiority since the late ‘70s
has produced a set of weapons that is the envy of the world. In
the last several years, our readiness has come at a price, however.
The services have, of necessity, sacrificed procurement and modernization
to keep readiness the number-one priority. Other accounts, like
base operating support, depot maintenance, real property maintenance,
military construction, housing, vehicles and communications have
suffered from even greater cuts.
One other problem should be noted in the context of this brief
analysis. The services have excess infrastructure to support. The
average Air Force base costs about $80 million to $100 million per
year to operate. A large Army or Navy base will cost even more.
The shortage of funds, thus, is exacerbated by having to spread
precious base-operating funds over a large, underutilized infrastructure.
In summary, there is not only a strategy-forces mismatch, there
is also a forces-resources mismatch. It is in this light that we
should view the problem that Secretary Rumsfeld and his team face.
The holy grail, of course, is a coherent national strategy that
can be met with appropriate resources. The existing strategy—which
calls for the United States to be prepared to fight and win two
major regional wars nearly simultaneously—presents a real
stretch in execution, not only because of the force levels, but
also because of the inadequate funding for the existing forces.
Strategy aside, it is not apparent that all of the services’
problems can be solved with the available funding. If Congress balks
at $18 billion additional funding, it is hard to imagine getting
the $51 billion that CBO recommended a year ago.
Whatever the outcome, the issues for the defense industrial base
are fairly constant: The need to maintain and increase R&D,
the need for continued prototyping and fielding of advanced capability
systems, the need to maintain competition, the need to continue
rational consolidation in the interest of efficiency and the survival
of critical industrial capability, the need to advocate and maintain
adequate levels of profitability in the industrial base, a rededication
to acquisition reform and a continued search for better balancing
of responsibilities between the private sector and government through
better partnering, outsourcing and privatization—with models
that stress innovation over process and “administrivia.”
Secretary Rumsfeld has asked each service to propose changes to
its force mix. Defense companies will have to be prepared to work
with the services on new capabilities that are “transformational,”
and that can be implemented without sacrificing near-term readiness.
The good news for industry is that the administration is committed
to increases in research and development spending.
It is foreseeable, though, that the services will continue to struggle
with aging equipment and shortfalls in their recapitalization accounts.
The success of American arms over the past 20 years rides on the
back of past investments in technology and an industrial base that
has been very effective at adapting to new national security requirements.
Despite shrinking Pentagon budgets, our industry has managed to
remain viable and the most competent in the world. We should be
alert to the danger that, if acquisition spending continues to lag,
more companies might be forced out of the defense sector.
In the final analysis, we need to continue to emphasize that the
defense industrial base is a for-profit enterprise. It competes
in the same markets as other industries for personnel, material,
resources and financing. A level-playing field demands adequate
profitability and an unburdened competitive environment.
No matter the outcome of the current QDR, our objective should
remain to provide the equipment and service support that allows
our Defense Department to continue to field the most capable, the
best equipped, and the best trained warriors in the world. This
is not an option.
As your new president, I welcome your comments about the changing
landscape of the defense community and your ideas about what NDIA
can do to help you strengthen our industrial base—both in
the private and public sectors—to meet the challenges of a
transforming Defense for the 21st century.