The Pentagon’s program panacea: Delays

DoD hopes it can save many programs by pushing them back, but can it keep them out of the death spiral?

This year’s defense budget submission is like a Major League knuckleballer, depending on one key pitch to get through the game. If it works, he’s an ace, but if things don’t go his way, he risks getting blown out of the water.

The pitch is the delay — the bet that officials can push major programs back a year, two years, or more and come out a winner. The program stays alive, DoD gets to bank “savings,” for the purposes of Monday’s budget submission, and the long-term outlook keeps many of its important fixtures. For example, the Navy can continue to count on its Ohio-replacement ballistic missile submarine, which won’t get advance procurement funding until fiscal 2017 — pushed back from 2015 — and won’t be ordered until 2019.

That last point is key: Every year the Pentagon’s budget includes a five-year defense plan, ostensibly to give lawmakers and the defense industry a roadmap for what to expect beyond the current budget cycle. The farther down the FYDP a program winds up, the less certain it will continue to exist. Pushing a program “outside” the FYDP, as with SSBN(X), means the Navy can still say it’ll get it, but means it won’t have to put the full price tag on this budget it’s sending to Congress.

The Ohio-replacement is just one of many high-priced programs to get pushed down the line in Monday’s budget, “saving” an estimated $4.3 billion over the plan from 2013 to 2017. That goes for the Ground Combat Vehicle, which will account for $1.3 billion “saved;” a total of some $8.2 billion in military construction for the Army and Air Force; and others . Some programs are being pushed back without a clear view toward their “savings” or even their viability — Air Force Comptroller Marilyn Thomas told reporters that the service’s planned replacement for its trainer aircraft, “T-X” was being pushed back to 2017, and it didn’t seem as though officials want to deal with it a moment before they absolutely must. The Air Force’s planned M-QX drone seems to have disappeared so far into the future everyone forgot about it.

The Navy is pushing back development of a new amphibious ship, an attack submarine and some of its littoral combat ships, as we learned last month. But the day’s biggest enchilada was obviously the F-35: 179 jets will move out of the FYDP for a “savings” of $15.1 billion. Thirteen of those airplanes were deleted in fiscal 13, meaning this year’s orders will work out to six F-35Bs for the Marines; four F-35Cs for the Navy; and 19 F-35As for the Air Force. The technical issues with the airplanes still aren’t resolved — more on that in a moment — but DoD officials said they hoped the reduced orders would hit a sweet spot that balances keeping unit costs “low” (relatively speaking) but also slow production enough for Lockheed and the program office to resolve some of the aircraft’s problems.

Secretary Panetta, for his part, acknowledged to the leaders of the Senate Armed Services Committee on Monday that the F-35 still has a long way to go before it’s ready to fight. As Bloomberg’s Tony Capaccio reported, Panetta responded to their letter asking about the B’s probation by spelling out areas in which the B is doing better, all the while acknowledging he’s “acutely aware” of the importance of getting the program right. But crucially, Capaccio reported that DoD’s top testing officer, Michael Gilmore, was not involved with the decision to let the B off probation. If you needed more evidence that “probation” was a non-thing, there it is.

Panetta’s exchange with the Senate is a good example of the dangers involved with DoD’s delay-everything strategy: If nothing has actually improved at the end of your delay, your program is still in danger. But there’s another one — delaying programs can cause their unit costs to increase. Those increases can cause future DoD officials or lawmakers to call for your program to be scaled back. Lower quantities can mean higher unit costs, and all of a sudden you’re in the death spiral.

DoD’s budget submission takes an across-the-board wager that it can carefully and aggressively manage the cost growth of programs it pushes to the right. But when so many of them are moving downstream, and even out of the FYDP, the task becomes that much more complex. Pentagon Comptroller Robert Hale acknowledged Monday that one of the most important goals will be managing the Building’s program “stretch-outs,” but said that overall, he was optimistic it could be done.

The trick is, you can only brush so much dirt under the rug. In the past year, we’ve heard defense officials say over and over that there are dragons lurking just outside the FYDP, from a potential new joint ballistic missile to a new Air Force One to a brand new armed helicopter for the Army. Even known programs, taken together, are hiding just beyond the light: The Navy must somehow buy its new SSBN(X) and try to plug its cruiser-destroyer gap. The Air Force must somehow buy F-35s, KC-46A tankers and new bombers all at the same time. Each year brings the “future” ever closer, and the more programs that get pushed back, the more dollars are spoken for before you even have them.