Army Begins Procurement Holiday That Could Last Five Years

Army leaders typically come to the Association of the U.S. Army’s annual gathering to lay out their vision of the future and to present their equipment wish lists to arms manufacturers.

This year’s event — which came on the heels of a two-week government shutdown and just three months before the Pentagon faces another round of sequester spending cuts — was all about the things the Army wants and needs, but can’t afford to buy.

It’s not unlike the financial quandary that many American families confront when they realize they are going to have to keep driving their old car for a few more years until they can afford a new one, said Lt. Gen. Raymond V. Mason, Army deputy chief of staff for logistics.

Three years without a proper budget, sequester cuts, and no hint of any fiscal stability on the horizon have effectively put the brakes on nearly every procurement program, officials said at AUSA.
“We’re probably not going to buy a lot of new equipment,” Mason said. “We are going to have to take better care of the equipment we’ve got.” When a family decides it has no money to buy a new car, it still has to ensure it has maintenance dollars to keep its old car running, he said. “In the Army, it’s almost as simple as that, but multiplied by thousands and thousands of pieces of equipment.”

While the Army takes a procurement holiday, soldiers are going to have to learn how to fix and maintain their trucks and helicopters, he said. Over the past 12 years of war, soldiers have focused on combat and the Army contracted out most of the equipment maintenance work. With less money to spend on contractors, soldiers will be expected to take on that load, said Mason.

Chief of Staff Gen. Ray Odierno bluntly delivered the bad news at an AUSA news conference: Because of the funding chaos, only two Army brigades are fully equipped and ready for combat.

“Functioning like this is just dysfunctional," Odierno said. After sequester went into effect in March, he noted, the Army had to stop training for six months. A slowdown or possible termination of procurement programs is inevitable, he said, adding that  “sequestration has to be paid with readiness and modernization.”

A downsizing of the force is coming but not immediately, he said. If the choice is between people and hardware, the Army will support its people, said Odierno. “In the end, we have to take care of our soldiers and families.”

The Army had announced a year ago it would reduce its active-duty force from 580,000 to 490,000 by 2017. That deadline was moved up to 2015. If sequester continues, the Army faces deeper cutbacks, and the force could shrink to 380,000, according to a Pentagon review that examined possible funding scenarios.

Odierno said the Army does need new equipment. He mentioned Humvees, Bradley fighting vehicles and Black Hawk helicopters among the aging fleets that need replacement. “But we can't afford it,” he said. “We may need to delay modernization for four to five years.”

The good news, he said, is that “our soldiers continue to do their job regardless of the problems we have here.”

Amid the gloom and doom, Odierno said, it is important that “people understand that we are looking forward.” Having a full-year budget would help, though. “Since I’ve been chief of the Army, there’s been nothing but budget uncertainty," he said. "No proper budget, just continuing resolutions, no planning, programs that waste money because we can’t predict what budget we are going to have.”

Army Secretary John McHugh said hundreds of procurement programs are either going to get the ax or will be shelved for a while. “Even great programs are going to have to be restructured and done differently.” With continuing resolutions, “you can’t start new programs. That’s enormously problematic when we are trying to equip an army and develop new platforms.”

McHugh hinted that the Army’s flagship armor modernization program, the ground combat vehicle, is on shaky ground. “We are not making any announcements about the ground combat vehicle,” he said. Army analysts are crunching numbers to help inform decisions in anticipation of a 2014 budget that could be 10 to 20 percent smaller than what the service had requested.
Washington fiscal fights also have dealt major blows to Army hardware maintenance programs.

In preparation for the coming sequester in January, the Army preemptively canceled all depot maintenance work orders for the third and fourth quarters of fiscal year 2013. “This had a psychological and physical impact on the workforce. It caused delays in manufacturing and ammunition programs,” said Lt. Gen. Patricia McQuistion, deputy commanding general of U.S. Army Materiel Command. After sequester kicked in, the Defense Department furloughed civilian workers for six days. That caused more disruption, she said during a panel discussion at AUSA. In recent weeks, Army depots received $759 million worth of new orders. That is good news but because of the delays in 2013, the backlog will be more difficult to manage, and customers will be waiting longer and paying more for the same work, she said.

Aviation repairs have suffered, said McQuistion. The typical cycle to refurbish an aviation brigade's helicopters takes two years, to make sure that 50 percent of the inventory remains available for training. These efforts are now in jeopardy, she said. The Army in 2013 had requested $520 million to refurbish 385 aircraft. It ended up with $327 million, for 274 aircraft.

Military buyers and contractors will have to hold their breaths for at least several more months until the next budget showdown that is scheduled for January.

Defense experts worry that budget uncertainty will propel the Army to make knee-jerk decisions about what programs to cut. The conventional wisdom in Washington is that the United States will not be fighting another major land war, and terminating big-ticket Army hardware buys appears to be a safe choice. That thinking can be dangerous, though, said former Pentagon Comptroller Dov S. Zakheim, who served during the Bush administration. Nobody ever predicts these things correctly, he said. “We don't know if we are going to fight another land war. Nobody knows.”

There has to be some deliberate planning during the coming lean years, he said. “When we think about defense, we have to be careful not to cut those things that will be impossible to replenish once the money starts coming in,” he said. “We have to be very careful to not cut our nose off to spite our face,” Zakheim said. “Once you get rid of something, it's very hard to get it back. Let's be awfully cautious.”

Topics: Aviation, Rotary Wing, Combat Vehicles, Defense Contracting, Defense Department, DOD Budget, DOD Leadership, Logistics, Manufacturing, Strategic Weapons, Procurement