Soaring Technology, Dwindling Budgets

Consensus is building among defense experts and Pentagon leaders that the military is at the threshold of a technological revolution. Technologies such as satellite communications, advanced sensors, remotely piloted drones, high-speed computers and advanced simulators have propelled the armed services to the brink of achieving a dominant advantage in awareness of what is happening on the battlefield. And as retired Adm. William Owens, former vice-chairman of the Joint Chiefs of Staff, says, "If you can see the battlefield and your enemy cannot, you win."

The key to realizing what some experts have called a "revolution in military affairs" may lie in the Defense Department's research and development budget. Because Pentagon officials consider R&D the down payment on the U.S. military's vaunted technological superiority, this section of the Defense budget has been protected more than any other during the recent military reductions. While overall funding for Defense fell by 35 percent between fiscal 1985 and 1996, funding for R&D was reduced by only 19 percent over the same period.

But in a procurement budget that has been slashed by 71 percent between fiscal 1985-its peak year-and fiscal 1997, military research and development is finding it increasingly difficult to avoid the budget ax. The Administration's fiscal 1997 request includes $34.7 billion for R&D, about $2 billion of it in funding for classified programs that previously had not been part of the procurement budget. Absent that addition, the 1997 R&D spending level represents a real decline of 8 percent compared to 1996.

The long-term prospects for R&D look equally cloudy. Under the Clinton Administration's future Defense spending plan, R&D funding is projected to suffer an 18 percent cut over the next 6 years, much deeper than the 5.4 percent cut planned in overall Defense spending between 1997 and 2002. According to the Electronic Industries Association's 10-year forecast, "research, development, test and evaluation funding will drop about 30 percent in real terms as very few major new programs are expected to start." Such a severe scaling back of military R&D has some experts wondering whether the Pentagon will reap the benefits of the "revolution in military affairs."

"The fact is, we're not exploiting our technological advantage sufficiently, because the money is simply not there, and the reason is we've cut modernization spending far too much to feed a very large force," says Richard Perle, a former assistant secretary of Defense and a fellow at the American Enterprise Institute for Public Policy Research, a conservative think tank. "Our military is presently only scratching the surface in terms of maximizing emerging technologies," he says, "and that's traditionally our greatest strength."

But Pentagon officials point out that much of the decline in R&D funding will result from the transition of major weapons systems from the research and development phase to the production line. Since second-ranked R&D contractor McDonnell Douglas began delivering operational C-17 airlifters to the Air Force, for example, the amount of funding for the program devoted to R&D has dropped dramatically. Total research, development, testing and evaluation (RDT&E) funding for the C-17 declined from $184 million in fiscal 1995 to $87.5 million in fiscal 1997.

RDT&E funding for the F-22 advanced fighter, developed jointly by first-ranked R&D contractor Lockheed Martin and sixth-ranked Boeing, shows a similar decline as it approaches deployment sometime around the turn of the century. In fiscal 1995, RDT&E spending on the F-22 amounted to $2.3 billion, falling to $2 billion in 1997.

Another major developmental program is the Navy's F/A-18E/F Hornet, built by McDonnell Douglas, with engines supplied by General Electric. Northrop Grumman is a major subcontractor on the program. In fiscal 1995, RDT&E funding on the program amounted to $1.25 billion, falling to $360.5 million in fiscal 1997.

DoD figures show that basic research, as opposed to the R&D embedded in major developmental weapons programs, will remain fairly constant during the next five years. According to the Center for Strategic and Budgetary Assessments (CSBA), an independent watchdog group, the fiscal 1997 R&D funding request is still roughly comparable to the average level of funding provided for Defense R&D during the last part of the Cold War (1974-1989).

"Moreover, even the level of funding projected for fiscal 2002 may be sufficient for the U.S. military to retain a substantial technological edge over potential adversaries for many years to come," concluded Steven Kosiak, CSBA's budget analyst in his assessment of DoD's fiscal 1997 request.

To retain technological superiority in an era of tight budgets, however, senior DoD officials believe they will have to better exploit research and development in the commercial world. Already in areas such as computers and advanced communications, a growing commercial market is leading-as opposed to following-the Defense Department. According to the EIA, telecommunications firms posted a startling 29 percent annual growth in 1994, with an estimated 24 percent increase for 1995. Computer industry commercial sales in 1995 were up 13 percent from the previous year.

The Pentagon has instituted a number of acquisition streamlining reforms to better tap the rapid technological advances of the commercial sector. These include a commercial-off-the-shelf (COTS) initiative to reduce cumbersome "military specifications" and allow military buyers to purchase parts produced for commercial use or on commercial assembly lines, rather than require assembly lines to be set up specifically for military products. The Pentagon has also begun to use standard commercial practices in developing new equipment.

By designating a number of developmental systems as "pilot programs" for this new approach, DoD officials are already seeing significant R&D savings. In the developmental JDAM missile program, which was designated a pilot program in 1994, DoD's use of commercial practices has resulted in an average cost reduction of $28,000 per missile. Savings over the life of the program are estimated at $2.6 billion. Similarly, DoD officials say they have saved $1.5 billion over the 11-year life of a new system that guides 2,000-pound bombs to their targets. Acquisition reforms saved an estimated $550 million on the Army's SMART-T system, a developmental satellite-like computer terminal for Humvee vehicles.

"The level of Defense R&D funding required to keep U.S. forces adequately modernized will depend, in part, on whether the U.S. military is able to make effective use of civilian commercial technologies," wrote CSBA's Kosiak in his report on the 1997 Defense budget. "The civilian sector is making rapid advances in many technologies, such as computers and electronics, with important military applications. If DoD is able to tap into advances in civilian technologies, the level of funding provided in the defense budget for R&D may be less critical."

Creative Budgeting

With so few major new weapons systems to drive major research and development work, DoD officials have found creative ways to keep R&D projects on life support. One major initiative has been the Advanced Concept Technology Demonstrators (ACTDs). These programs are descendants of the "fieldable prototypes" recommended by the Packard Commission in the mid-1980s, and the silver-bullet, low-rate production weapons promoted by the late Rep. Les Aspin when he was Defense secretary.

ACTDs already approved include: a medium-altitude, high-endurance unmanned air vehicle; precision electronic-signals targeting; precision strike to counter multiple-launch rockets; cruise-missile defense; and a joint-countermine system. For fiscal 1997, the Pentagon has requested $98.5 million for its ACTD programs, a significant increase over fiscal 1996 funding of $37 million and fiscal 1995's $30 million.

The picture is less rosy in the Pentagon's Technology Reinvestment Program (TRP), which sought to promote dual-use research and development that had both Defense and civilian applications. Many Republicans in Congress felt the program was an unwarranted dabbling in "industrial policy." For fiscal 1996, Congress cut the Administration's $500 million request for the TRP to $186 million. In fiscal 1997, DoD has scaled down and renamed the project the Joint Dual-Use Applications Program, and put it under the management of the Advanced Research Projects Agency. Funding requested for fiscal 1997 is $250 million.

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