Navy Aviators Brace for Budget Turbulence

The Navy’s aviation programs are still very much under the gun. “Anything that has a big number is a target,” said Rear Adm. Michael C. Manazir, director of air warfare.

The Obama administration in about three weeks will submit a budget request for the Defense Department for fiscal year 2015, as well as a “future years defense plan” for 2015-2019. But much of what is in that budget request is still subject to radical change, Manazir said Feb. 4 at an industry gathering.

“If you are in industry and trying to figure out what to fund, I have no answer for you,” he told a lunch meeting of the National Aeronautic Association in Arlington, Va.

A breakdown of the traditional budget process at the Defense Department over the past several years has wreaked havoc on the Navy’s ability to plan future investments, said Manazir. “We submitted at least three POM 2015 budgets,” he said, referring to the “program objective memorandum” where the military estimates budget allocations for the coming five years.

Last month’s Bipartisan Budget Act approved funding levels for federal agencies for 2014 and 2015. It restored $32 billion to the Pentagon for those two years, above the spending limits mandated by the 2011 Budget Control Act, but provided no guidance for the period beyond. It was implicit from the budget accord that spending would have to return to the reduced levels set in the BCA for 2016 through 2021. For the military, that would mean steep cuts of about 10 percent across the board. The Obama administration so far has refused to submit budgets that comply with the budget caps set by law.

The Navy’s $42 billion aviation enterprise could stand to lose funding for prized procurement programs — including aircraft carriers and fighter jets — and for training and flying hours if the lower BCA spending limits are enforced in 2016. With overall budget levels still unsettled, Manazir said he prepared at least two POMs for the 2016-2020 plan.

The BBA capped 2015 military expenditures at about $498 billion, “but there was nothing behind the two-year deal for us to plan,” said Manazir. Without a clear picture of future funding, Manazir directed his staff of about 100 programmers and weapons experts to figure out how to “fund to the priorities of naval aviation as directed by the chief of naval operations,” he said.

To illustrate the brutish budget environment, Manazir compared it to a warzone. “We have to think of us like an MRAP [mine resistant armored truck] going through Fallujah,” he said. “My MRAP is going to make it through Fallujah … and we are all going to be alive. We might blow the tires off, we may take all the antennas off, and the outside armor, but the core is going to be whole,” he said. “We are building budgets so we keep that core whole.”

The Navy is still adjusting to shrinking budgets after a decade of unrestrained spending, when soaring equipment and personnel expenses were easily absorbed. Now, cost is the primary concern, said Manazir. The priority is not “value … but what costs the least,” he said. “Sometimes it amazes me what we will shed to get to the cost. But that is what matters now.” Affordability is what drives decisions, he insisted.

A menacing trend for aviation programs is the rise in personnel compensation costs, which are crowding into other portions of the Navy’s budget, he said. The Navy downsized its ranks in recent years by tens of thousands, and its current complement of 315,000 sailors is small by historical standards. The problem is that even as the number of people went down, the per-sailor costs were still going up, Manazir said. “We are trying to get our hands around that.”

The rule of thumb is that every dollar taken off the top line results in cuts two and half times larger for non-personnel programs. “Because of the personnel burden on the overall account, every dollar decrement causes a $2.4 impact on our program because you can't spread the reduction to manpower.” The ramifications are “gigantic” on accounts that fund readiness and procurement, he said.

Manazir said there is no guarantee that naval aviation programs will be beneficiaries of a new “investment fund” that the Obama administration has proposed as an addendum to the regular budget. A so-called “unfunded requirements” or “buybacks” list has been circulating in the Pentagon and everyone wants a piece of it, he said. “There is a desire by all stakeholders to understand what we would fund if we had the money.”

The fact that such a list exists is symptomatic of the chaotic budget process of the past two years, he said. “We've had such an extreme downturn in the budget. … Everyone who is a decision maker in the process is offering an idea, or a path to funding things.” The polarized political climate also complicates budget planning he said. The Pentagon was accustomed to a serial, methodical budget process and little pushback. “When the money went down that far, everyone jumped in the pool at the same time. And the communications about what to do were all simultaneous,” Manazir said.

“That,I haven't seen before. … Everyone is in the pool at the same time.”

Topics: Aviation, Joint Strike Fighter, Tactical Aircraft, Defense Department, DOD Budget, DOD Leadership, Procurement