DOD report shows decline in the military's spending portfolio

Scaled-back spending is being felt across the Defense Department’s major acquisition programs, which saw a collective reduction in spending of $9.1 million, or 0.6 percent, between December 2013 and December 2014, according to a just-released DOD report. But although many of the programs reviewed saw decreases, some others did increase, according to the Selected Acquisition Reports, which are prepared along with the president’s budget, and compared the December 2014 reports to those of a year earlier.

In a similar vein, a recent Government Accountability Office report found that in the past year, DOD’s major defense acquisition program portfolio decreased from 80 programs to 78, while the estimated cost has decreased by $7.6 billion. “The size and cost of the portfolio is currently the lowest in a decade”” the report said. “The decrease in current portfolio cost is due primarily to significant quantity decreases on two programs—most other programs actually experienced a cost increase over the past year.” 

Despite overall reductions, not all programs succumbed to this fate. For example, the Warfighter Information Network-Tactical Increment 2, the Army’s high-speed, high-capacity tactical communications network that is vital for command communication to field communication, increased to the point that it was in violation of the Nunn-McCurdy unit cost breach, a statutory stipulation that requires program managers to maintain current estimates of Program Acquisition Unit Cost and Average Procurement Unit Cost (APUC). A 25 percent or more increase in current Acquisition Program Baseline objective, or 50 percent or more above original APB objective, requires program termination unless the Secretary of Defense can certify the program is necessary for national security.  

According to the release, WIN-T Increment 2 increased by 36.2 percent and the APUC increased 39.5 percent above the original APB. This was attributed to a quantity reduction of 1,684 nodes from 5,267 to 3,583 along with an eight-year extension of procurement schedule that aligns with the revised Army modernization strategy, which transfers WIN-T Increment 2 requirements to WIN-T Increment 3. 

Regarding Increment 2, the GAO report stated “fiscal constraints forced the Army to adjust its funding priorities and requirements, and led to the restructuring of the overall WIN-T effort. The Army eliminated the requirements for WIN-T Increment 3 unique hardware production, but retained the software development efforts which will provide WIN-T Increment 2 with improved capabilities in fiscal year 2016... The Army also plans to increase procurement quantities of WIN-T Increment 2 configuration items to complete WIN-T capability set fielding requirements previously slated for WIN-T Increment 3. “

The WIN-T Increment 3 program, which was designed to provide software enhancements to the Army's communication and will be used to update and enhance hardware for Increments 1 and 2, saw costs decrease between reporting sessions according to the Pentagon’s SAR. Costs dropped by $1.8 million, from $3.7 million to $1.8 million, again due to a decrease in nodes. Decreases in fielding, new equipment training and hardware end of life also decreased. 

Back in June, the Army reported that, due to fiscal restraints, they had received permission from the Office of the Secretary of Defense to restructure WIN-T Increment 3. The restructuring was aimed at enhancement and simplification of Network Operations, which would simplify the network and reduce the number of network management tools communication officers would utilize to manage communications.  "Converging NetOps into a single, simple, integrated solution will reduce sustainment costs, allow us to support high-priority future network improvements, and most importantly, make it easier for soldiers to manage the network to achieve mission success," Army Col. Edward Swanson, project manager for WIN-T, said at the time.         

The reduction in nodes between both the WIN-T Increments 2 and 3 programs is significant because more nodes put more stress on bandwidth. The nodes utilize satellite communications that enable “regionalized reach-back to the Army’s global voice and data network.”  Nodes provide personnel in the field with immediate access to both secure and non-secure internet and voice communications.    

In addition to tactical communication networks, the Defense Department’s SAR noted that the Army’s Joint Tactical Radio System Handheld, Manpack, and Small Form Fit Radios (JTRS HMS)—adios designed to interoperate with existing radio systems while boosting communication network capabilities—demonstrated cost decreases due to revised estimates for recurring manufacturing methodology, decreases in initial spares and decreases in other support costs.