During the last five years, the Defense Department has doubled its planned investments in new weapon systems from about $700 billion in 2001 to nearly $1.4 trillion in 2006, according to the Government Accountability Office.
At the same time, research and development cost growth on new weapons maintains its historical level of about 30 to 40 percent. “This is the lens that must be used to look at major new investments … because more money may not be an option for the future,” GAO says. “Rather, the key to getting better outcomes is to make individual programs more executable.”
These cautionary observations from GAO underpin the spending quandaries facing the Defense Department, particularly when it comes to the procurement of new weapon systems.
The administration’s fiscal year 2007 proposed budget of $84.1 billion for defense procurement is slightly smaller than the $86.5 billion appropriated in 2006, and considerably more modest than the $98.5 billion the Pentagon received in 2005. But the Defense Department can expect to see an additional $17 billion worth of procurement dollars as part of a $70 billion supplemental appropriation for war expenses in fiscal year 2006.
Since Congress already provided $50 billion for war costs in the recently enacted fiscal 2006 defense appropriations act, this would bring total funding for military operations this year to $120 billion, and total funding for national defense to some $562 billion, notes Steven M. Kosiak, of the Center for Strategic and Budgetary Assessments. “In inflation-adjusted terms, this would mark the highest level of funding for defense since the height of the Korean War (1952),” Kosiak tells the House Budget Committee.
Many observers wonder whether the escalating costs of the war and the rising price tags of weapon systems eventually will result in the clichéd budget train wreck so many analysts have predicted for several years now. “Fiscal imbalances faced by the federal government will continue to constrain discretionary spending,” GAO concludes.
During the past four years, the long-term fiscal picture for the federal government has dramatically deteriorated, says Kosiak. “It seems unlikely that Congress will cut the administration’s defense budget request for fiscal 2007. However, over the longer term, once a decision is made to address seriously the ballooning federal deficit, history strongly suggests that cuts in defense spending — or at a minimum slower rates of growth in defense spending — will be part of the solution adopted.”
If history is any guide, he adds, “Major weapons acquisition programs are unlikely to meet projected cost goals. Similarly, operations and support activities — military pay, health care, and a wide variety of operations and maintenance functions — are likely to cost more than anticipated.”
The 2006 quadrennial defense review recommended scaling back or terminating a number of weapons programs, including the J-UCAS unmanned combat aircraft, the E-10 surveillance aircraft and the B-52H standoff jammer. “But these are relatively small programs,” Kosiak says. The largest weapons programs, such as the F-22 and F-35 fighter programs, the Army’s Future Combat System, and the Navy’s DD(X) destroyer survived essentially untouched. That means that an existing “plans-funding mismatch” has yet to be addressed, says Kosiak. The conclusion is that “hard choices are left to next administration.”