Declining Budgets Create Challenges and Opportunities for the Navy, Panel Says

By Grace Jean

SAN DIEGO — No major cuts are expected for the defense budget, at least until later this decade. But Navy officials and experts gathered this week at a major industry conference say that now is the time to begin preparing for tough times. 
Uncertainty about precisely what weapon programs may be cut in the future has industry on edge. Nonetheless. there is a growing consensus that with austerity may come new business opportunities, officials said at a Jan. 25  panel discussion at West 2011, an annual symposium hosted by industry association AFCEA and the U.S. Naval Institute.
“In a situation like this, you could see a lot of innovative thinking going on,” said Ronald O’Rourke, a Navy expert at the Congressional Research Service.
Gridlock on Capitol Hill over future defense spending is likely to continue, he said. “Given this uncertainty about exactly where in that range we may fall out, it’s important to know upfront that the consequences for the Navy with a relatively flat budget could be considerably different from the consequences of a declining—especially steeply declining—budget,” he said.
The most significant challenge for the Navy is fleet modernization, O’Rourke said. Although the defense budget has doubled in the past decade, procurement accounts did not benefit from that spending surge. As a result, the Navy has no excess inventory to live off of as it did in the 1990s, following the Reagan era buildup.
The Navy’s 30-year shipbuilding plan is not supported by enough funding to meet the service's goal of expanding the fleet from 286 to 313 ships, he said. Declining budgets could force the Navy to downscale its ambitions, O’Rourke warned. Complicating matters is that the Navy has been funding some of its operational costs through wartime supplemental appropriations. Those emergency funds are expected to dry up over time.
Competing for dollars with procurement will be the Navy's efforts to increase the readiness of the surface fleet. Personnel costs have surged, and the Navy has limited ability to control those expenses and may have to dip into procurement accounts, said O’Rourke.
The Navy already has downsized it ship buying plans, including making cuts to the maritime prepositioning force, ending the Zumwalt DDG-1000 destroyer program after three ships in favor of restarting DDG-51 construction, canceling the next-generation cruiser, and downscaling requirements for the next-generation ballistic-missile submarine. 
If the Navy is forced to downsize, it could concentrate its presence in the Pacific, O'Rourke suggested. It could also extend the life of older cruisers, destroyers and attack submarines well beyond the expected service lives. O’Rourke said that he has identified 76 ships as potential candidates. The service could come up with creative use of forward "homeporting" that would involve longer-duration deployments and crew rotations at sea. Another option is for the Navy to transfer some of its missions to allied navies and encourage other nations to invest more in their own naval capabilities.
“All of these options pose very serious issues in feasibility and potential downsides,” said O’Rourke. But they also could spark innovation, he said. The Navy in the 1920s was constrained by budgets and arms control treaties. “Some feel it was precisely those constraints that helped to spur the innovations that the Navy and Marine Corps pursued during those years as they were preparing for what turned out to be World War II,” said O’Rourke.
What is happening to the United States today— ground war overseas, a debt crisis and greater demand for social programs — is similar to what Great Britain was experiencing a century ago, said Capt. Stuart B. Munsch, director of the naval strategy branch in the office of the chief of naval operations. England had completed a military campaign in Africa; its conservative government fell to an incoming liberal party; and there were growing concerns about the rise of Russia and France as potential naval powers. As a result, the British developed the torpedo to be launched from submarines and surface vessels and long-range gunnery to enable fast, lightly-armored ships to fight at standoff distances.
There are several lessons to draw from that, he said. The first is that it’s important to maintain a balanced fleet, said Munsch. The second is to be skeptical of emerging technology. Declining budgets often lead to cuts in testing and evaluation, and the Navy will have to fight that urge, he said. Finally, when budgets are constrained, there is a tendency to cut educational programs. That, too, needs to be avoided if the Navy wants to ensure a high-quality force for the future.
The Navy needs to take this period of tight budgets and turn it into an opportunity to make over the Navy-Marine Corps team from the inside out, said Capt. Victor Addison, director of advanced concepts on the Navy staff. Just as the Air Force has repostured itself as a service that provides intelligence, surveillance and reconnaissance capabilities for the nation, the Navy and the Marine Corps need to better articulate what they bring to the fight.

Topics: Defense Department, DOD Budget, Shipbuilding

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