Budget Fight: Big-Ticket Weapons Square Off
And who can blame them? With only a handful of banner weapon projects up for grabs over the next few years, each one becomes a make-or-break proposition for Pentagon contractors.
With the future of their companies at stake, executives obsessively look for hidden messages in senior officials’ pronouncements, as well as in their silence.
One upcoming major procurement that has defense contractors on edge is the Air Force’s long-range strike bomber, a program that could be worth as much as $100 billion over the next two decades. All three manufacturers in contention for the contract — a Boeing-Lockheed Martin team competing against Northrop Grumman Corp. — see the strategic stealth bomber as the last major opportunity in the combat aviation market for the foreseeable future, and are pulling out all the stops in anticipation of a summer award.
Although the bomber program has been endorsed by the Pentagon’s top leadership, contractors worry about what-ifs, and they fear that the yet-to-be-built bomber is already under attack. Further, they see warning signs that the bomber — even if the Pentagon selects a contractor this year — will be vulnerable over the coming decade as other expensive projects compete for a fixed pool of military procurement dollars.
Case in point were recent comments by Chief of Naval Operations Adm. Jonathan Greenert. Many contractors gasped last month when, during a presentation at a technology conference, Greenert suggested that “stealth may be overrated.”
His words were read — or possibly misinterpreted — as a swipe at the F-35 joint strike fighter, although the comment was in line with Greenert’s previous declarations that radar-evading aircraft are not silver bullets. He said future threats will require a mix of stealth and electronic warfare technologies to counter enemy “anti-access/area denial” systems like multi-frequency radar and highly accurate surface-to-air missiles.
Regardless of what the CNO really meant to say, to bomber advocates, Greenert’s skepticism about stealth is a “big blow,” according to one executive, because it raises doubts about the effectiveness of stealth aircraft, especially among policy makers who might be predisposed to consider the bomber a luxury rather than a necessity. To the bomber faithful, this is also another sign that the Navy secretly hopes the Pentagon ends up ditching the bomber to free up money for the $90 billion SSBN-X ballistic missile submarine program to replace the aging Ohio class.
Senior Air Force officials often bring up the age of the service’s current bomber, the Cold War-era B-52, as compelling evidence that a new one is urgently needed. In the view of some executives, that argument does not carry enough weight because the B-52 somehow keeps going decades after it was declared obsolete. So what’s the rush now? Bomber supporters, too, wish Air Force leaders had consistent talking points and were as assertive in championing the aircraft as the CNO is about his top procurement priorities.
“Adm. Greenert leaves us no doubt as to why the SSBN-X submarine or the Ford-class carriers are important to the Navy. We would all like to see the Air Force talk a little bit more frequently about the missions of the new bomber,” said military aviation analyst Rebecca Grant, who works with major defense contractors. When a program is about to get off the ground in a tough budget environment, it is not helpful that the leadership has “chosen to remain quiet about it,” she said. Obviously, many details are classified and officials are understandably cautious, “but I would like for them to talk more about the extremely unique role that the bomber has and its capabilities. About the fact that no other nation has this.”
The troubled history of the last bomber program the Air Force embarked on, the B-2, stirs legitimate worries that history will repeat itself. And the Pentagon’s track record of late with procurement programs should give the industry anxiety about the future. So far, there is no reason to believe that the Air Force’s relative silence on the bomber program is an ominous sign.
But fiscal realities could put this and other programs in danger. If the new bomber runs into trouble, will the Air Force walk away and protect scarce funding that it needs to ramp up F-35 fighter production? That is not an inconceivable scenario considering the $400 billion price tag of the F-35. Within the Air Force, it is well known that the fighter camp is far more influential and, if push came to shove, it would act to delay the bomber program if that is what it took to keep the F-35 on track. When the bomber budget reaches $3 billion to $4 billion a year beginning in 2020, there will be fighter pilots questioning why that money is not being spent on the F-35 or the new aerial refueling tanker. And the Navy will continue to press its case for the Ohio replacement. Some people are not so sure the Air Force will have a strong enough bomber constituency to defend the program from bureaucratic fratricide.
Truth is that no program is safe these days. The Pentagon’s chronically troubled procurement system inspires little confidence, says Deloitte aerospace and defense consultant Tom Captain. “Can we afford our own future?” he asks. He forecasts that in 10 years, the average cost overrun of major U.S. weapon systems could exceed 46 percent, up from 26 percent today. For sponsors of new programs like the bomber or the Ohio replacement, the political battles ahead will be daunting. Even approved programs are forced to re-justify themselves every year, Captain points out.
“Given our nation’s competing budget priorities, it is very likely that the Defense Department and the industry will be forced to set priorities and make difficult tradeoffs about what they can really afford.”
Topics: Business Trends, Doing Business with the Government, Defense Contracting, Procurement