Slowdown in Defense spending could rein in procurements
Last month, department reported that 25 major programs had surpassed original cost estimates by 50 percent.
A long-feared downward slope in defense spending could serve as the best incentive for the Pentagon and Capitol Hill to rein in increasingly escalating price tags on the military's biggest procurement programs, according to several defense analysts.
After nearly a decade of historic growth in defense spending, many budget watchers expect the Pentagon's annual funding requests to grow more modestly over the next two years, and take a slight downward turn after fiscal 2009 due to the ballooning federal deficit.
"We had a period where defense spending, even exclusive of the war, grew quite dramatically after 9/11," said Steve Kosiak, an analyst at the Center for Strategic and Budgetary Assessments. "It's definitely a slow-down in the plan."
That has not been lost on Capitol Hill, where senior members of the House and Senate Armed Services committees want to change the Pentagon's weapons-buying system to eliminate unnecessary spending.
"We've got a big problem," House Armed Services Tactical Air and Land Forces Subcommittee Chairman Curt Weldon, R-Pa, said Thursday. The goal, he added, is to "take existing defense budget numbers and work smarter within the existing numbers."
The Pentagon's program portfolio will cost $1.3 trillion, with $800 billion of that investment yet to be made, the Government Accountability Office estimated in a report late last year. Annual investments are expected to grow from $149 billion in fiscal 2005 to $178 billion in fiscal 2011.
"Clearly the department's plans don't show any downturn," Katherine Schinasi, GAO's managing director of acquisition and sourcing management, said in an interview.
Indeed, the department intends to shield its procurement accounts from cuts by reducing personnel and making other adjustments. But even with those efforts, Kosiak said he is "dubious" procurement dollars will grow.
"Once the top line starts flattening out or declining, it would be unprecedented to have procurement funding continue to grow," he added.
There is no precise number for how much acquisition overhaul efforts could save, with estimates ranging from 5 percent to upwards of 10 percent of the Pentagon's budget. But in recent years, Congress's efforts to improve weapons-buying methods have largely fallen flat and cost hikes still are the norm rather than the exception.
Last month, the Pentagon released a report indicating that 25 major programs had surpassed original cost estimates by 50 percent. Another 11 programs posted cost increases of between 30 percent and 50 percent.
"Acquisition reform has been going on for 50 years," said Winslow Wheeler, a former Senate Budget Committee analyst who now tracks military spending at the Center for Defense Information. "And it's perpetually gotten worse."
Rising costs were true in the Reagan-era weapons buildup, during which the Defense Department began many programs still in the works today, including missile defense and the F-22 Raptor fighter jet.
"Prices were rising as the budget was going up," recalled Jacques Gansler, Pentagon procurement chief during the Clinton administration.
After all, analysts say, there is little desire to refine the Defense Department's buying system when it can draw funds from a seemingly bottomless pot of money.
"You get better acquisition reform when you squeeze the resources," observed Gordon Adams, Office of Management and Budget associate director of national security during the Clinton administration. "If you've got them by the balls, their hearts and minds will follow."
With the budget tide changing, the Defense Department is angling to safeguard its program portfolio. Last year, for instance, Deputy Defense Secretary Gordon England convened an independent commission to study buying practices.
And on Capitol Hill, Sen. John McCain, R-Ariz., is expected to take over chairmanship of the Senate Armed Services Committee next year. A watchdog for government waste, McCain is also expected to make acquisition reform his top priority.
But Schinasi cautioned that effective reforms, even in a period of fiscal restraint, are not a guarantee that cost overruns would become a thing of the past. Tighter defense budgets "hopefully will be part of the incentive for the department itself to change this," she said.