SEASCAPE IV

The Seascape – Part 4

As we sat down to begin work on this year’s edition of the Seascape, it occurs to us that this might be a shorter
article than previous ones because there just doesn’t seem to be that much that is new to report. Our traditional focus has been the integration of the Navy Reserve into the Navy and, while issues remain, it has for the most part been accomplished. We’ll see. At the same time, there is a temptation to comment on the new Administration and the signals that it has already sent to the Defense Department. And, there is certainly a lot that has been signaled which creates uncertainty for the 2011 budget year. We have to be careful, though, as you, the audience, are both Republican and Democrat, pro and con on almost any issue. We will begin this year, though, with some comments on the Department of Defense before we get to the Navy because there really is a lot going on there.

It is expected that the Administration’s 2010 defense budget will be about 4% greater than the current year budget. When inflation and rolling the supplementals into the base budget are factored in, that is a cut in available funding. And, there are concerns that the POM 11, 12, and perhaps 13 budgets will see some very deep cuts. There is no doubt that all major defense programs will come under increased scrutiny and that manpower programs will be pressing on systems acquisition.1 The new President didn’t have much time to get his budget to the Hill; it was due in March, so it seems that he might be giving the DoD a pass on POM 10. Not a bad move for a
President with a domestic crisis on his hands and not much defense experience. As we are going to press, however, the budget has been delayed by another two weeks. If Congress doesn’t get the budget until mid April, the talk around town is that the defense bills will not be ready before the fiscal year, and so, continuing resolutions may be in our future. By now, most of you have heard that the President has asked Secretary of Defense, Robert Gates, to stay on indefinitely, along with many others to include SECNAV and Assistant Secretary
of Defense for Reserve Affairs, Tom Hall. In the case of Secretary Gates, this is unheard of even between two Presidents within the same party. Unfortunately, many of these “hold-over” appointees will leave by 30th April and, since many others have already departed, there is a bit of paralysis in the Department. As we go to press in April, Secretary Hall and SECNAV Winter have said their good-byes. Secretary Winter’s relief is The Honorable Ray Mabus, former Governor of Mississippi and Ambassador to Saudi Arabia during the Clinton Presidency.

It has been widely reported that Secretary Gates has been having a number of serious meetings with the Service Chiefs, to include intense weekend meetings. All participants were asked to sign nondisclosure agreements. He has assembled teams to review eight areas: tactical aircraft, mobility, shipbuilding, network-centric capabilities, rotary-wing aircraft, missile defense, irregular warfare, and the nuclear triad.2 So what major combat systems may have a bull’s-eye on them? The Army Future Combat Systems (FCS) for one. This is a system of systems, eight vehicles in all, over budget and behind schedule. The latest word is that the Army might cut four of them in order to ensure survival of the other four.3 The Army has benefited in recent years from additional dollars for the war effort, but now the FCS is seen as cutting into the need to reset the Army and National Guard. [Editor’s note: Secretary of Defense Gates, on 6 April, announced the 2010 budget that he has sent to the President. In that speech, he announced canceling the entire vehicle portion of the FCS program. This, of course, is the Secretary’s input. The President and Congress now get a crack at it.

The Air Force next generation tanker has been out of the news recently but certainly looms as a major defense program that will come under serious scrutiny. You may remember that Senator McCain killed the original Air Force Plan to lease new Boeing tankers (a plan beset by scandal which saw a former Air Force acquisition official sent to prison). The next move was a competition between Boeing and Air Bus Industries, a competition won by the Air Bus consortium and subsequently set aside after an appeal filed by Boeing. Secretary Gates had intended to leave the next decision to his successor and, now, he is that person. While the Air Force intends to recompete the program, it is widely believed that some sort of shared award between the two prime contractors is the most likely outcome. In the meantime, tankers are aging and the whole situation is reminiscent of the Navy pushing the P3-P8 program further to the right until the P3 force was broken. Today, the country can afford some risk in ASW capability. Can we afford similar risk in our airborne tanking capability?

The F-35 is the most costly new program on the books at present. It has surfaced recently again as a target. Sources tell us that the Navy is waiting for the Marine Corps to decide whether to buy some of the F-35Cs for carrier operations or only buy the F-33B VSTOL version. That will impact the Navy request for the C model. As costs continue to grow for the F-35, the total numbers become more problematic. Apparently, the Air Force could buy some additional F-22s cheaper than the initial production run of the F-35A. Navy shipbuilding will come under increased scrutiny unless and until the Navy message on exactly what ships it needs becomes clear. At a recent impromptu meeting with Congressman Gene Taylor (D-MS) of the House Armed Services Committee, he told us The Pentagon that CNO Roughead “has it figured out.” We hope so. As of this writing, a follow-on contract for the next Lockheed version of the Littoral Combat Ship (LCS) has finally been let. The Navy recently was forced to give Lockheed some funding to keep the LCS shipyard in Wisconsin open while contract negotiations continued. As we have reported previously, the Marine Corps’ Expeditionary Fighting Vehicle remains way behind schedule and way over budget. This is a program that probably should already have been cancelled except that it, along with the V-22, form a major part of the Corps’ new rapid maneuver force. One could certainly question the viability of a two-legged force with only one leg. At present, widespread fielding isn’t expected until 2015 which is a whopping 12 years behind schedule. Unfortunately for the Corps, development problems early on have caused the march of time and a changing threat to catch up to the concept. The vehicle is flat-bottomed at a time when the greatest threat is the IED which has resulted in V-hull vehicles being the choice for the warfighter. “It was a great idea when it was conceived, but the operational environment has changed,” said retired Lt. Col. Dakota Wood, now a defense analyst at the Center for Strategic and Budgetary Assessments. “There is an element both within and outside the Marine Corps that agrees it’s time to cancel the EFV program.”5

Since we are spending time in this Seascape on the Department of Defense as a whole, here are a few facts to put things in perspective with respect to acquisitions: 6 l

• The change in total acquisition cost from first estimate, in FY 2000– 6%, FY 2005– 18%, FY 2007– 26%. l
• Estimated total acquisition cost growth FY 2005– $42B, FY 2005– $202B, FY 2007– $295B. 
• Share of programs with more than 25% increase in acquisition cost, in FY 2000– 37%, FY 2005– 44%, FY 2007– 44%.
  
  It should be noted that any program with a cost growth of more than 25% in Program Acquisition Unit Cost (PAUC) incurs what is called a Nunn-McCurdy Breach, and that program must be recertified

by DoD to satisfy that Congressional requirement. The new Presidential helicopter program just incurred such a breach.7
 

• Average delay in delivering initial capabilities in FY 2000– 16 months, FY 2005– 17 months, FY 2007– 21 months.
  
  The main drivers for military personnel costs since 1999 have been:8 
• Six years of Employment Cost Index + 1/2 % pay raises.
• Four rounds of pay table reform. 
• Increased housing allowances to balance on-base and off-base costs.
• TRICARE for Life.
• “Concurrent receipt” of retired and disability benefits.
• Repeal of the 1986 “Redux” retirement system (lower pensions for new recruits). 
• Repeal of the offset of SBP for receipt of Social Security after age 62. Note: the Naval Reserve Association has supported all these initiatives.
  
  The main drivers for increases in Operations and Maintenance costs are:9 
• Most civilians are paid from O&M funds. Note: Department of the Navy civilians = 181,227 as of June of ‘08; Reserve Component was 69,343.
• Health care cost growth for serving members.
• Quality of life and environmental cleanup and compliance.
• Costs of recruitment and training.
• Costs of operating and maintaining modern weapons.
  
  The same study from which we drew these statements suggests that behind the increase in weapons costs are some interesting facts that we would call the result of unintended consequences:
• The push to “transform” has led to pursuit of immature technologies with attendant unexpected cost increases.
• Requirements expand in part due to uncertain strategic requirements. Note: This brings to mind the Navy’s uncertainty regarding the DDG 1000.
• Tight budgets increase incentives to go low in order to buy in.
  
  What is the shortage lessons-learned from the current conflict?10
• Small Army systems perennially under funded and not acceptable any longer.
• Force protection.
• Communications – every Marine needs a radio. 
• Trucks and helos – transportation. l National Guard cannot be rotational if not equally equipped.
  
  Note: At the March House Armed Services Committee, Reserve Caucus breakfast, Lieutenant General Jack Stultz, Chief of Army Reserve, explained that he needed equipment at home not just for training but because he had units without equipment rotating forward where there were no equipment sets in place to fall in on.
  
  One can certainly see how these factoids will affect the Quadrennial Defense Review and future budgets. Certainly, major legacy systems such as aircraft carriers will be looked at hard and our Navy story had better be rock solid. Here is one more piece of the perspective: In 1968, (Viet Nam) defense as a percentage of GDP was 9.5%. In 1986, it was 6.2%. In 2000 – 3.0%; and in 2008 – 4.4%.11
  
  I used to think that the problem here is that America doesn’t understand that we are at war, and I faulted Presidents Clinton and Bush for not making the case correctly – stop talking about bringing people to justice! This isn’t a legal, law enforcement issue. It is war! I don’t often quote VADM John Cotton and maybe he didn’t think this up, but I’ll give him credit because I got this thought from him: What if this is the normal state of conflicts and what we thought of as war was the abnormal state? What if IEDs, suicide bombers, and snipers are the real threat to national security? I believe it was Commandant Charles Krulak who got the Corps into urban warfare training and, today, they are the best at it. Wasn’t that prescient? What if the world in this century is entering a phase where war as we studied it just isn’t going to happen that way? After all, we have fought three significant “wars” in my lifetime where war was never declared. Look at the mess that we are in because the Geneva rules for armed conflict don’t apply when you don’t have a war between standing armies of nation states. And, keep this in mind: The United States Navy is larger than the next ten navies combined; and seven of those are our friends.
  
  The point is that these questions are being asked inside and outside of the Department of Defense. They will make it much more difficult for the nonboots-on-the-ground forces, the Navy and the Air Force, to make their case for weapons systems.
  
  The U.S. Navy
  
  The good news for the Navy is in manpower. The economy is helping, of course, but overall recruiting and retention for both the Active Component and the Reserve are very high. DoD recently released the February statistics and all Active and Reserve Components met or exceeded recruiting goals. Things in the personnel shop are doing so well, in fact, that the Navy’s new Perform to Serve model is now addressing the more junior enlisted ranks. Perform to Serve is a new force shaping tool that goes beyond the gates established under the High Year Tenure program actually to compare performance across a rate/rating. In essence, the Navy feels that it can now pick and choose whom it retains. I have commented before that the Navy was on the cutting edge of trying to adjust career paths for the Millenials and their concept of careers. Vice Admiral Ferguson speaks to this in this month’s guest column on page 7. This is not going to be an easy adjustment for a company with almost 400,000 employees structured around a twentyyear career model, but we should be pleased that our Navy is dealing with it up front. I believe that we have been honest in taking the Navy to task when we see a problem. In this case, this has to be seen as a positive, bold step. For those of us who question the seriousness of Active- Reserve Integration, we must acknowledge that if Active Component personnel begin to move, even in small numbers, into the Reserve force and back again, it will strengthen the appreciation of the Reserve force capabilities. It will unavoidably bring the two forces closer together. Under the heading of nothing stays the same for long, the Navy’s realignment, begun by CNO Clark, continues to evolve. In March, CNO Roughead announced the stand up of the new Navy Air and Missile Defense Command. Headquartered in Dahlgren, VA, the command reports to Commander Third Fleet and is the Naval component of the Missile Defense Agency. This command deals with the air threat concerns of the Air, Surface, and Subsurface communities in much the same way that the Naval Mine and Antisubmarine Warfare Command in Corpus Christi, TX, deals with all underwater threats.12
  
  The less than good news continues to be in Navy shipbuilding. As we predicted last year, the Zumwalt (DDG-1000) has now reached a $6B price tag. The Navy has terminated the production at three ships for which funding is already programmed. Last fall, when the Navy announced this decision, the rationale given to Congress was that the Raytheon radar under development for the Zumwalt did not have the ballistic missile defense capabilities of the upgraded Arleigh Burke class. Bottom line, we can’t afford $6B destroyers. As mentioned earlier, the Navy has finally moved ahead with the contract for the third LCS platform to be named Fort Worth. As we understand the thirty-year ship building plan today, the Navy still intends to procure 55 LCS. More significantly, the recently released plan indicates eight CGX cruisers instead of the earlier requirement for nineteen ships and a delay in the first ship while requirements are studied. The Navy seems to be considering filling that gap with the FSC – Future Surface Combatant, the design for which is not yet set. We believe that the thirty-year plan calls for eighteen of these vessels.13
  
  At this year’s Surface Navy Association meeting in January, CNO Roughead stated that 313 ships was the “floor” that the Navy should consider. He went on to say that “at some point, quantity becomes a capability.”14 Prior to his departure, Secretary Winter said in an interview, “So the whole question is, how do you build that balance between capability, performance, and numbers?”15 As we have been hearing for some time now, stemming the appetite for ever-increasing capabilities is the devil in the details. The beginnings of a trend is perhaps now evident in that the thirty-year plan seemingly calls for smaller, cheaper ships up through the cruiser classes.
  
  In the world of Navy aviation, Secretary Gates has announced that his 2010 budget recommendations will include 31 more FA-18s. That is, of course, good news and will help with the projected shortfall beginning in 2012. If you remember last month in our interview with VADM Kilcline, we discussed our concern that dropping down to ten aircraft carriers for a thirty-month period might send the wrong signal. In his 2010 budget proposal, Secretary Gates announced a change to the Navy carrier build program resulting in a ten carrier force after 2040.16 If that indeed has become a part of the Navy’s thirty-year plan, one might
  wonder about the number of air wings and support vessels. Staff in Ranks for Quarters (NOSC Norfolk)
  F-18G
  
  The Navy Reserve
  
  The news from the Navy Reserve is that the force continues the integration efforts begun several years ago. VADM Dirk Debbink has now gotten his sea legs and is firmly in command. He, along with FORCE Wright, recently completed a swing through the combat theater. (See CAPT Dave Mitchell’s article on the visit next month.) On the 4th of March, Admiral Debbink unveiled a new Strategic Plan for the Navy Reserve. The new mantra is: Navy Reserve, Ready Now, Anytime, Anywhere. With this new strategic plan, he has set his own imprint on the future of the force. As one might expect, much of the verbiage is similar to the preceding document; but there are some themes that have new emphasis: “on-demand expertise,” “unique skill sets,” “continuum of service.” The thread here seems to be the special enhancements that a Reserve force can bring to the Active Component Navy––not just morebodies. That’s no surprise to most of our readers but still a lesson in progress for the AC. The continuum of service is tied to the concept of moving back and forth from AC to RC as one’s life needs dictate. We should keep our eye on this one.
  Part of the Vision reads: “Our contributions to national security are enabled by policies, processes, and administrative systems that are transparent and seamless, making it easy for Sailors and their families to serve.” That is certainly the vision of those who lead the force. It is a vision that requires more work to become reality, however. The elusive seamless pay system is high on the list of Reserve issues yet to be rectified by our Navy. Gaps in pay, missing pay, and incorrect pay still plague our force, particularly those mobilized. This is not something that VADM Debbink can control. In fact, it is a DoD problem as the DIMHRS (Defense Integrated Management Human Resources System) pay system seems hopelessly mired down. Your Association continues to press Congress for a solution to this problem.
  Regarding mobilization or deployment which is the preferred word today, a 2008 Rand Corporation study of the deployment experiences of
  Guard and Reserve families found that family preparedness for deployment was key to the individual’s success as well as the overall family’s success. They also found that families with a longer history of military service fared better.17 No surprises there. The Navy Reserve is working these issues and trying to provide more access to information through the NOSCs (Navy Operational Support Center). Sources tell us that part of the unintended consequences of Reserve Unit COs receiving their fitness reports from the supported Active Command is that NOSC COs have less influence and control over unit activities. Therefore, there is less surety that training events happen in a standard manner across the force. We suspect that individual personalities play a large role in this; but, ultimately, it is the Active Component that should be responsible for training the Reserve Component. More work to be done on that one. On a very positive note, the Navy Reserve has a program called the Returning Warrior Program (Not the Wounded Warrior Program; that is something else.) This is a great effort by the force to help reintegrate those returning from the combat zone. ]See our interview with FORCE Wright in the February issue where he discusses this program. Both he and VADM Debbink can be very proud of this ongoing effort.[
  So, the Navy Reserve still has work to do as the integration process continues. That is to be expected as the “low-hanging fruit” was picked first and now the more difficult issues must be addressed. Nonetheless, from our perspective here in Washington, it is clear that the leadership is working well with the CNO, CNP, and, in fact, the rest of the Pentagon staff. Of the forty-eight Reserve Flag Officers, twenty or so are recalled to active duty. Five of those are in command and a couple command Active Component units. While the names have changed over the last two years, the number of recalled Flags has remained pretty constant. That speaks well of the capability that our Reserve Flags bring to the effort today, and they are representative of so many more Reservists answering the call.
  We remain watchful of the strategic/operational issues and still believe that we need to see how ARI (Active Reserve Integration, have you forgotten already?) works as the need for deployed Reservists winds down. That, of course, assumes things will wind down; and, today, we still provide 46% of the Navy boots on the ground in theater. On the equipment side, it is our understanding that the Navy intends to replace our C-130s with the new C-130Js. The wolf closest to the sled, however, is the F/A-18G to replace VAQ-209’s EA6Bs. That is worth a watchful eye as well.
  That is the seascape as we see it this year. The next couple will surely be interesting as new budget realities and a new Administration take hold. Hope is not a strategy; but let’s hope for following seas anyway.