Air Force Civilian Leader Predicts Painful Budget Cuts

By Sandra I. Erwin
The U.S. Air Force is bracing for a budget squeeze that could set off massive layoffs and cutbacks in weapon procurement programs. Although funding has been steady in recent years, the future is shaky, at best, said Erin C. Conaton, undersecretary of the Air Force.
By most measures, the Air Force will be shrinking, Conaton said March 31 at a Center for Strategic and International Studies panel discussion in Washington, D.C.
“We’re a different force than we were 10 years ago,” Conaton said. While the Air Force has expanded its ISR (intelligence, surveillance and reconnaissance) fleet by more than 300 aircraft, the overall size of the fleet is heading down. At least 1,500 aircraft have been retired from service in recent years. Although new hardware is being acquired, only 50 percent of what’s coming out is being replaced, she noted.
Since 2004, active-duty personnel have shrunk from 360,000 to 332,000. A cause for alarm is the prospect of having to lay off thousands more as a result of the rising costs of payroll and benefits, Conaton said. During the past seven years, the Air Force has seen a 7 percent decline in its ranks and yet personnel expenses have gone up 16 percent. “If you keep personnel spending constant … we found that if the trend line continues over the next five years, we would have to get rid of 47,000 people just to keep costs stable,” she said.
The best hope to avert such drastic force cuts is that Congress agrees to reform compensation plans and health care benefits, such as increasing Tricare fees for retirees, Conaton said. The Air Force already is taking steps to eliminate some reenlistment bonuses for occupations that are in lower demand. If actions aren’t taken now to curb personnel costs, she said, the inevitable outcome will be massive force reductions.
As if things weren’t grim enough, the Air Force also is unable to make accurate budget projections because of thecurrent impasse on Capitol Hill over the federal budget for fiscal year 2011.
Budget officials at the Pentagon now are expected to be working on the fiscal year 2013-2018 funding plan. But with no clarity on the 2011 or 2012 top lines, speculating on 2013 is “very challenging,” Conaton said.
Conaton, who was staff director of the House Armed Services Committee before becoming undersecretary of the Air Force, acknowledged that the current political climate is throwing an unexpected wrench into long-term planning.
“Congress is prioritizing things differently than when we were up there,” she said.
Air Force leaders are now turning their full attention to meeting an ambitious $33 billion “efficiencies” target, Conaton said. Defense Secretary Robert Gates directed all the services to reallocate wasteful spending into modernization programs and force readiness. That means the Air Force will have to cut $33 billion from various accounts order to fund a laundry list of key programs, she explained. Conaton acknowledged that there isgrowing skepticism in Congress about the services’ ability to reach the efficiency goal.
There is no choice on the matter, she said. “We already booked the savings” against several programs. “We’re highly motivated to achieve those savings. We’re holding leaders accountable.”
The $33 billion would help pay for the Air Force’s new long-range bomber and its associated ISR weapons package, for F-15 fighter radar upgrades, F-35 Joint Strike Fighter simulators and MC-12 ISR aircraft. “It puts the burden on us to make the case to Congress why those capabilities are essential,” said Conaton. “If we don't get the savings we’d have to do tradeoffs,” she said.
Even under a best-case scenario where all $33 billion in efficiencies are achieved, she said, the Air Force still will face enormous fiscal pressures. The likelihood is that U.S. defense spending will come down as part of a broader U.S. debt-reduction plan. That would call for a sweeping review of military roles and missions, in order to determine what can be afforded, she said. “I think we are going to be faced with big-picture strategic choices.” The Air Force would have to make tough choices between end-strength and modernization, while “ensuring we don’t hollow out the force.”
Rising aircraft maintenance costs also are a huge concern, she said. “New aircraft generally are more expensive to maintain. They’re more sophisticated, they are more software intensive.” The current cost trends are “unsustainable,” she said. To avert a future shortfall in maintenance accounts, the Air Force initiated an “end-to-end assessment of the entire supply chain all the way to the depots.”
On the weapons acquisition side, the mantra is to control cost, said Conaton. A new stealthy long-range bomber has risen to the top of the Air Force’s wish list from concerns that other countries are developing “anti access” air defenses that would deny U.S. forces the ability to penetrate enemy airspace. “We need to ensure that we’ve got a new platform with the best technology … in a way that’s affordable,” Conaton said. The program will be closely scrutinized from the highest levels of the Pentagon to make sure it avoids the pitfalls that have doomed other military programs.
The current Libya air campaign, she noted, is bolstering the Air Force’s case that a new bomber would be able to hit targets deep inland far less expensively than cruise missiles. “When it’s over a million dollars a hit, that rapidly adds up,” she said. “Investing in a new bomber [would mean] putting multiple munitions on target with a single platform.”
The entire Defense Department acquisition community has been directed to hammer at cost, she said. “That has to continue.”
This week, theGovernment Accountability Office released yet another blistering report that documents major cost overruns in defense acquisition programs. Although Congress two years ago passed the Weapons Systems Acquisition Reform Act precisely to attack this problem, it takes time for changes in the procurement process to deliver results, Conaton said.
“I was on the Hill and closely involved with the acquisition reform act … I strongly support it,” she said. But the full impact of WSARA is not likely to take effect for another three to four years.”
The basic tenets of WSARA are influencing how programs are managed, she said. That means being “realistic at the front end, not being overly optimistic, getting better at cost estimating earlier in a program, watching requirements diligently, providing better incentives for contractors to be cost conscious.”

Topics: Defense Department, DOD Budget

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