Pentagon Seeks Flexibility In Buying Plans

Pentagon planners could be forgiven for longing for the certitude of the Cold War, when they knew the enemy, could measure the threat and plan accordingly. Nobody understands that better than Paul Kaminski, undersecretary of Defense for acquisition and technology.

"It is a much harder situation today to plan insightfully," he says. Gone are the days when military officials looked to the Fulda Gap, planning for confrontation with the great Soviet steamroller that threatened to flatten Western democracy. Instead, the military finds itself engaged in more nebulous contingency operations like those in Somalia, Haiti and now Bosnia. In addition, Defense planners are left trying to predict the unpredictable, such as the actions of rogue states like North Korea and Iraq, or the future of the Chinese monolith.

"I think we probably need more room in what we're doing in the future to allow for some variation. As I look at what we have in the inventory today, and also at what we're thinking about in the future, I am much more motivated to try and build in some flexibility in future systems," Kaminski says.

The Administration has requested $243.4 billion in budget authority and $248 billion in outlays for the Defense Department in 1997. Of that, about $38.9 billion would be spent on the modernization of weapons and equipment, marking the last year the Pentagon anticipates substantially deferring modernization programs since the end of the Cold War. Between 1998 and 2001, Administration budget planners project modernization funding to increase to $60.1 billion-about 40 percent higher in real terms than next year's request.

Some Defense planners and Members of Congress are concerned that the Defense Department is banking on future budgets, which are by no means certain, especially when domestic budget pressures only promise to grow.

Given the budget situation and the uncertainty of future threats, military planners must have flexibility in terms of what systems they build, as well as the quantities they purchase, Kaminski says. Specifically, the Pentagon needs to be flexible when it makes decisions on the final tally for a number of systems the military is currently investing in, including: The F-22 fighter, the Air Force's next-generation air superiority fighter aircraft; Joint Strike Fighter, the future joint strike fighter for the Air Force, Navy and Marine Corps; and the F/A-18E/F Hornet tactical aircraft, the multi-mission tactical aircraft for the Navy and Marine Corps.

"Also, we have the issue of how to make do with those things that are in the inventory today," Kaminski says. "Does it make sense to extend the lifetime of some of those systems? Perhaps more importantly, can we extend or perhaps increase the effectiveness of those systems?"

To create more flexibility in future weapons systems, Kaminski is pushing for the development of system architectures that allow for a high-tech kind of plug-and-play capability. "One of the things we want to do is truly create what I would describe as an open systems environment, in which we set up architectures, for example, information architectures, in our major systems. In a fighter aircraft or in a tank it will be a [data] bus, in which one can plug in the capabilities. As new sensors come along, as more information comes along, we have a means to plug into an established system and upgrade that open system," he says. "The idea is to do as much of that as we can."

Flexibility Is Key

The Air Force's Airborne Warning and Control System (AWACS) shows the importance of building open systems, he says.

"We have found a means now to integrate that AWACS system with a whole variety of other information databases, terrain databases, intelligence databases. We can now give our commanders an integrated air picture-where our forces are, where unknown parties are, where adversaries are.

"We are now developing the means to transmit that picture to other aircraft. That's a big help for them because they're cued by that information, they know what direction to look in, and their radars don't have to be as capable. They don't have to look as far because they have the benefit of the big picture. All they have to be able to do is detect the target in the direction they were cued in. I think you can see how that extends the capability of existing systems and can reduce our investment in those systems by not having to put that capability on every platform. That is pretty much done. It developed over a period of 20 years.

"I'm seeing now that we have the tools to do that for the whole theater land picture. We did for the first time gain the benefit of that kind of a land picture in the theater in Bosnia, where we deployed our two [Joint Surveillance Target Attack Radar System] airplanes. Those airplanes were covering areas of 100-by-100 kilometers or more, providing the complete picture of everything that was going on on the ground and the ability to take images. We are now beginning to integrate that with other platforms, like our Predator UAV (unmanned aerial vehicle) to take final resolution pictures.

"The vision I have here isn't complete yet. But in the sense that I have described the air picture, we are now putting together tools to have the whole ground picture in the theater. You can see the leverage of being able to send that to individual ground commanders, to send it down to the division, brigade, battalion level, to the individual tank," Kaminski says.

"I don't want to be too rosy about this in that as you come to depend on this kind of information you'd better be sure you're going to be able to continue to get it when other people are trying to stop us from getting it. It isn't quite as simple as I make out, but what we're doing is starting to put the architecture together to be able to do this."

Several factors will play a role in how well the Pentagon achieves the flexibility it needs in weapons systems in future years. At the top of the list may be acquisition reform. The Defense Department has substantially revamped the way it purchases weapons systems by throwing out hundreds of military contract specifications, adopting common business practices and commercial technologies, and buying systems under multiyear contracts. The result has been greater efficiency and significant savings, which planners hope to plow back into underfunded modernization programs.

Procurement Reform

"I never imagined that we would actually overhaul the Defense acquisition system, and yet we are in the process of doing just that," said Defense Secretary William Perry at a ceremony honoring public servants.

"A few years ago, if a Defense program manager wanted to use a commercial specification he had to get a waiver. Today, if that manager wants to use a Defense spec instead of an industrial spec, he has to get a waiver.

"Why did we do that? Because it gets us access to the best technology available wherever it is, and in an information age, most of the best technology is being developed for commercial purposes. And of course we can reap big cost savings, savings that we can plow back into our modernization program," Perry said.

Pentagon officials point to the Joint Direct Attack Munition (JDAM) program, a joint Air Force and Navy missile program, as an example of the savings to be reaped through acquisition reform. On JDAM, the average price per missile has dropped from $42,000 to less than $20,000, saving billions over the life of the contract. But the savings on other programs are harder to measure, Kaminski says.

"It is very hard for me to answer the question: What are we saving with acquisition reform? I don't believe we'll ever be able to come back with a number or a percentage that is truly auditable. We're taking the budget savings as we go so it's a difficult thing to be able to explain what our savings are. I believe they're very significant, but it's frustrating to me to not be able to say something more precise.

"JDAM is one of those examples where we have the benefit of having started this the old way, and now we've put in place all the new rules and arrangements. We have the $42,000 baseline that we could compare against," Kaminski says.

Increased use of multiyear contracts also will help the Pentagon save billions of dollars. When DoD commits to a fixed number of purchases over a period of time, contractors can invest in more efficient manufacturing practices and save on materials and services by purchasing in higher quantities.

The best example of such savings has come in the C-17 transport aircraft program. The Air Force this year ordered 80 more aircraft from McDonnell Douglas and Pratt and Whitney (which builds the engines) over the next seven years at a cost of more than $16 billion. Air Force officials estimate the multiyear contracting technique will save about $1 billion.

Air Force Secretary Sheila Widnall called it an historic day when she signed the contracts in May. "The C-17 program has shattered decades-old paradigms of how we develop and buy weapons systems," she said at a Pentagon ceremony.

While multiyear contracting can save money, it locks the Pentagon into programs and takes away program flexibility.

"It takes away flexibility, but giving up that flexibility you can often double the savings in a multiyear contract because you've committed to a stable program. One of the things that costs us a lot of money in the department is changing our minds," Kaminski says.

"In the programs where we're proceeding with a multiyear contract, we as a department are very sure of those systems. In those cases where we're not so sure, I am still trying to have us achieve the second benefit: the benefit of a stable program where we can. I think that is one area where this department has really changed. Each of the service acquisition chiefs that I deal with day to day have put a high priority on maintaining stability in procurement where we can.

"There has been a tendency in the past to do what I would describe as salami slicing, where you just cut costs, take 5 percent off every program. We've worked very hard to resist that," Kaminski says.

Priority Programs

In this uncertain fiscal environment, Pentagon planners are concerned about maintaining the momentum of long-range programs like the Joint Strike Fighter (formerly the Joint Advanced Strike Technology program). The Administration's budget request would provide $589 million in development funding in 1997. The program is intended to yield an affordable fighter by 2008 to be used by the Air Force, Navy and Marine Corps. While such joint programs have failed in the past, largely because one service's requirements would preclude another service's requirements, Pentagon officials insist the Joint Strike Fighter will succeed. And they are probably right. The Pentagon cannot afford for it to fail, as aircraft like the F-16, which Joint Strike Fighter is to eventually replace, reach the end of their life span.

"We bought systems like the F-16 at high rates. That was good news at the time, but it will be bad news when that system starts to reach the end of its useful life. We need to have in place a program to replace that system," Kaminski says.

"I also have a high priority on some key leveraging international programs," he says, including the Multifunctional Information Distribution System (MIDS), a program to form the framework for a digital communications network between the United States and its allies.

One contentious Pentagon program is the Ballistic Missile Defense program. Despite congressional criticism that DoD isn't doing enough to protect the United States from the threat of a missile attack, Kaminski says the Pentagon takes the threat seriously.

In a departure from previous Republican administrations, the Clinton Administration has shifted its focus from a national missile defense system (which would protect the United States from intercontinental ballistic missiles) to a theater missile defense system (designed to protect against short-range missiles deployed against U.S. forces on the battlefield). Of the Administration's $2.8 billion request for the Ballistic Missile Defense program, more than $2 billion would go for theater missile defense programs. The remaining $700 million would be spent on national missile defense and support technology programs.

Such an approach complies with the Anti-Ballistic Missile Treaty and would enable the United States to develop within three years the elements of a missile defense program, which could then be deployed in another three years, Defense officials say.

"We have a very high priority, despite impressions one might gain, on our theater missile defense systems," Kaminski says.

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