Navy walks tightrope in downsizing environment

Since World War II, the U.S. has gone through a series of defense buildups followed by reductions in personnel and equipment, Work said. But the current defense buildup, which began in 2001, is unique in the nation’s history for a number of structural and economic reasons that make the corresponding build-down both problematic and vitally important. “We are going to make decisions in the next two years that will set the stage for the DOD for the next 10 years or more,” he said.

There have been four major defense buildups since the Second World War: the Korean War, the first Cold War buildup in the mid 1950s leading through the Vietnam War, the second Cold War buildup in the early 1980s, and the current growth period. The current decade-long buildup has its roots in post-Cold War policy to make the United States more active on the world stage and prevent potential conflicts and situations from escalating by shaping events. “Our strategy called for us to win two conventional wars in 90 days,” he said, adding that this policy was unrealistic.

In 2010, Defense Secretary Robert Gates wanted to move DOD’s focus back to warfighting and meeting other major contingencies. But the most recent buildup coincides with the longest war in U.S. history — the continuing conflict in Southwest Asia.

“This is unprecedented. This is unlike anything in U.S. history,” Work said. A number of funding and structural differences make the current buildup very different from its predecessors and will lead to challenges when force levels must be reduced.

The most striking difference is how the current war is funded, Work said. Money for its operations comes from supplemental appropriations, which are separate from the military’s official budget line. By comparison, there was one supplemental appropriation during the Korean War and five during the Viet Nam conflict. But now DOD’s base budget and funds for overseas contingency operations — what supplemental appropriations cover—have become intermingled, he said.

Another challenge is that the current conflict is being fought with an all volunteer army, which means that personnel levels have remained flat throughout the war. Traditionally, when the military was made up of draftees, there would be massive personnel increases followed by post-war demobilization, he said. Besides keeping personnel numbers flat, the other issue of an all volunteer force is that manpower costs are growing. For example, Work said Navy personnel were reduced by 64,000 over the last 10 years, but the cost per sailor and other service personnel went up by 18 percent during this time due to medical costs and pay raises. Although supporting personnel is laudable, getting manpower costs under control will require creativity by Congress, he said.

The Navy and DOD also face procurement problems. Most military buildups involve new equipment being procured, but only a few new major types of vehicle platforms have been acquired. For example, he said the Army and Marine Corps are essentially using the same military platforms that they used in the early 1990s. This problem can be attributed to difficulties in the procurement process and the shrinking of the defense industrial base due to business consolidation.

One result of this process is that all of the services have pent up industrial base needs. Work cited the example of the Navy’s budget, which had a baseline of $115 billion in fiscal 2001 and a budget of $150 billion in fiscal 2011. This represented a 40 percent increase, modest for a military buildup, he said.

Readiness costs for ship operations also rose by 74 percent, from 2.67 billion in fical 1998 to 4.64 billion in fiscal 2011. But while maintenance funding per ship has gone up 65 percent during the preceding decade, the Navy is not making enough new ships to maintain current force levels. “We’re wearing our ships out,” Work said.

If costs are not controlled in 10 years the military may not be able to buy a single fighter jet, Work said. This is lack of industrial and economic flexibility what makes this build up different, DOD does not have the financial or industrial leverage to make mistakes when the drawdown comes.

The proposed $400 billion in defense spending cuts will not count any savings from operations in Afghanistan because that funding is off the books, Work said. The cuts will come from the base budget and the only way to make such cuts is to reduce the strength of units supporting national strategy, he said.

The coming drawdown is critical in many ways. The military must carefully plan its withdrawals from Iraq and Afghanistan, and DOD and Congress must work out how to align overseas contingency operations costs with the actual budget. Other concerns are force structure cuts to units and production cuts must be done carefully because it could damage an already weakened national industrial base. “If we don’t do this cut right, our margin of error is extremely thin,” he said.