Army Faces Troops-or-Hardware Budget Choices

By Sandra I. Erwin

Army leaders are considering deeper troop cuts than previously disclosed. Ballooning payroll costs are squeezing weapon-procurement accounts, and Army officials soon will have to make tough tradeoffs, said Maj. Gen. Anthony A. Cucolo III, director of force development.
Cucolo said the Army already is planning to shrink the active-duty force to 490,000 by 2017. “That’s doable,” Cucolo said Dec. 15 at an aviation industry conference in Arlington, Va.
But further cutbacks are contemplated to avert a scenario in which soaring personnel costs crowd out modernization programs, said Cucolo. Historically, the Army has been able to fund most of its high-priority procurement programs as long as personnel stays at less than 46 percent of the Army’s total budget, which was about $145 billion for fiscal year 2012. Equipment accounts — research, development and acquisitions — make up 20 to 25 percent of the Army’s budget.
Cucolo said personnel costs now are consuming 48 percent of the Army’s budget, which is sparking concern that some procurement programs might have to be delayed or cancelled.
“The cost of a soldier has gone up,” said Cucolo. The currently planned cuts would bring down the active-duty force of 570,000 to 490,000 by 2017. But the rising costs of pay, benefits and healthcare, estimated to grow by 2 to 3 percent after inflation, would still make a force of 490,000 soldiers too expensive to sustain within a projected flat budget.
“Manning may go down but the cost per soldier is still high,” Cucolo said.
For the Army to maintain its 20-25 percent share of funding for modernization, deeper force reductions might be necessary in the coming decade, said Cucolo. “The cuts that have to happen to manning to get back into balance are relatively significant.”
Chief of Staff Gen. Ray Odierno and Secretary John McHugh are “thinking through” the available options, he said. “They have not made any decisions, no matter what kind of rumors are out there,” said Cucolo. “There is a heck of a lot of analysis going on.”
The goal is to secure enough funding at least for the programs that are ranked highest on the Army’s wish list: a modern tactical network, an infantry fighting vehicle, the Kiowa Warrior helicopter and the Paladin howitzer.
In every case, said Cucolo, the “emphasis is on affordability.”
No program is one hundred percent safe from possible delays or even cancellations, he suggested. The fallback plan is to continue to upgrade existing weapon systems. “We are going to be looking at how to improve what we’ve got before we decide on a new start,” Cucolo said. “I’m not saying there will not be any new starts. I’m saying new starts will be very carefully examined through the lens of affordability.”
Only programs that have a “strong strategic business case” are likely to survive.
During a question-and-answer session, an industry executive pressed Cucolo on whether the Army will purchase a new helicopter to replace the Kiowa Warrior. After two failed attempts over the past three decades, the Army has said it still plans to acquire a new aircraft and has invited contractors to participate in a “technology demonstration” in 2012. But talks about budget cuts have stirred speculation that there will be no money for the program, and that the Army will continue to refurbish old airframes to like-new condition.
“Decisions have not been made,” Cucolo said. The Army has budgeted funds to keep the Kiowa Warrior flying “because we don’t know what’s going to happen with the tech demonstration,” he said. After the demonstration, “We’ll see.”
Cucolo also addressed complaints he has heard in recent months from industry officials about Army leaders shunning meetings with contractor representatives.
“The Army’s relationship with industry has been a little rough,” Cucolo said. “I can’t put my finger on exactly why.” He believes it “had to do with well-meaning lawyers who had counseled generals to stay away from industry” to avoid “getting yourself in trouble, or saying the wrong thing,” he added. “I figure if we just study the parameters of what we can and can’t say, we can have a great relationship. … Industry, my door is always open to you, come in and talk.”

Topics: Aviation, Rotary Wing, Defense Department, DOD Budget

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