The budget for 2015 is President Obama’s seventh budget. During his term in office, the budget of the US Department of Defense (DOD) experienced numerous fluctuations. Initially it soared to US$ 690 billion a year in 2010, mainly owing to the substantial expenses in the two operational theaters, then plummeted by a significant percentage each year all the way down to US$ 575 billion in 2015 – an 18% cut.
Outgoing Secretary of Defense Chuck Hagel and senior Pentagon officials spoke recently at the Reagan Forum held on November 15, 2014 and attended by the top defense officials of the USA. In the USA, a common thread has unified all of the speakers: the attempt to specify the military force build-up on the basis of the revised defense concept set forth by the White House a few years ago.
This concept had the center of gravity shifted from the American deployment in the Middle East, Iraq and Afghanistan to a force build-up process and a deployment of forces vis-à-vis strengthening China. At the foundation of the new force build-up concept stands the decision to retain, at all costs, the relative advantage of the USA – mainly the technological edge – over the rest of the world, notably China and Russia, along with the realization that over the past 15 years, all services and branches of the US military were intensively preoccupied by the fighting in Iraq and Afghanistan and by other tasks. These activities drew the lion’s share of the Americans’ attention and budgets – both the operational budget and the force build-up budget. During that time, the BRICS countries (Brazil, Russia, India, China and South Africa) invested their funds and time in the development of state-of-the-art systems and in narrowing the technological gap. This effort included the development and acquisition of aircraft, modern submarines, long range high precision missiles, anti-aircraft and anti-ship missile systems, advanced cyber warfare capabilities and underwater and airborne strike capabilities. China alone increased its defense budget by 20% per year and by 2016 it is expected to have a defense budget that would be twice as high as the budget of 2011.
As a derivative of these realizations, the Pentagon announced the New Defense Innovation Initiative, intended to guarantee the American technological superiority. Delving a little deeper into the essence of this initiative, it seems to involve the taking of a (calculated?) risk in an attempt to skip over a technological generation. Two decades ago, in the IDF, we called it a “window of opportunity”. It is based on the understanding that US forces are going back home for a period of regeneration, revision, adjustment, and streamlining of their OrBat.
At the same time, over the course of the coming years, new technologies will be developed on which the future systems will be based. The US Order of Battle will be reduced significantly, along with the number of platforms, notably ground and aerial platforms but naval platforms as sell. The number of US Army and US Marine Corps warfighters will be reduced but the US Special Forces will retain their strength and may even be expanded.
The future technologies US DOD wishes to promote and currently budgets accordingly are: robotics, autonomous systems, miniaturization and 3D printing. The Pentagon has called on the private sector, including corporations which have never been involved in defense, to invest in these activities and come up with proposals.
The mid-term elections in the USA in early November 2014 led to a new situation where the Republicans have the majority in Congress – at both the House of Representatives and the Senate – while a democratic president, Barack Obama, is still in office at the White House. The impact of the elections on the budget of DOD is yet unclear. It is unclear whether DOD will continue to operate under a Continuing Resolution (CR), similar to the Israeli national budget until the election of a new government (1/12 of the budget, with severe restrictions imposed on the launching of new projects), or whether a new budget will be approved. The continued sequestration (a sort of lateral cut through the various government departments, with no discretion pursuant to the fact that the parties failed to reach an understanding regarding the new budget) prevents the actual implementation of the new force build-up strategy and could have an adverse effect on the preparedness of the military.
The Strengthening Plan – Quo Vadis?
The continued cuts in the DOD budget has a direct negative impact on the strengthening plan. Numerous projects have been cancelled after substantial investments had been made in their development stages. The US Army’s flagship GCV project, involving the renewal of their main Ground Combat Vehicle has been cancelled. The USMC flagship AAA project, involving the development of a new Advanced Amphibious Assault vehicle has been cancelled as well. The Joint US Army – US Navy NLOS missile development project (including the development of missiles for their LCS vessel) was cancelled a few years ago, leaving their new state-of-the-art surface vessel without an effective fire module.
Projects that survived the cuts, including JSF, have had their procurement periods extended and acquisition quantities significantly reduced.
The 15%-20% budget cut over a number of years has, without a doubt, had a dramatic effect on US defense industries. Numerous corporations streamlined their workforces and closed down some of their business activities. The small and medium enterprises sustained the most severe damage, but some of the major corporations, notably those involved in ground systems, were also damaged. The American industries are currently fighting over each and every US solicitation, large or small. American corporations may be found on the international market as well, competing for solicitations they had never competed for in the past.
What are the implications on Israeli defense industries? In order for us to understand the budget situation correctly and mainly avoid drawing any wrong conclusions, we should bear in mind the fact that the budget of US DOD, about US$ 575 billion per year, is equal to the sum total of the joint defense budgets of the next ten countries in the list, including China, Russia and India. From an Israeli perspective, it is a challenging market possessing a tremendous potential, both business-wise and value-wise. There is no doubt that Israeli industry has a lot to offer technologically, operationally and conceptually. In order to do business in the USA at this time, Israeli industries must gain a profound understanding of US acquisition processes, familiarize themselves with the various organizations and mainly develop the ability to operate in accordance with the American culture. In order to tap the US market, a true cooperative alliance with a US industry must be established and the product/system must be adapted to the requirements of the US client. It is impossible to come over and sell a product as is and directly (with the exception of emergency acquisition). A Defense Industrial Base (DIB) is mandatory in a situation where workplaces in remote areas across the USA are a primary consideration in the decision-making process. Today, DIB has evolved into DITB, with the “T” denoting Technology, which means not just jobs and production, but the actual transfer of technologies to the USA (as in the case of the project involving multipurpose 120mm tank cannon ammunition).
From Programs to the Actual Management of the Layout
The Pentagon has been trying for years to improve the efficiency of its acquisition processes. It is understood that these processes are ineffective, that the development periods are exceedingly long, that the changes on the battlefield are rapid and that the product eventually delivered to the battlefield is no longer relevant vis-à-vis the evolving threats, so massive investments in development go down the drain. In most of major projects, the distance between design and execution is substantial in both timetable and budget. There are numerous examples, including the NLOS project, where a missile originally intended to cost US$ 300,000 soared to US$ 650,000 and the plan was cancelled. The Excalibur long-range, high-precision 155mm artillery shell was originally intended to cost US$ 30,000, but was eventually acquired at US$ 80,000 a piece! The F-35 fighter, originally intended to cost US$ 100 million, has now reached a price of US$ 150 million, and the list goes on and on.
A few years ago, the Under Secretary of Defense for Acquisition, Technology and Logistics (AT&L), Dr. Ashton Carter, appointed several teams and charged them with the task of coming up with suggestions for improving the efficiency of the processes through which the Pentagon “does business”. The same Ashton Carter is about to be appointed as Secretary of Defense in place of Chuck Hagel. As someone who came from the economic world, Dr. Carter’s concept maintains that the efficiency of this process may be improved significantly and that a lot of money may be saved. Dr. Carter was highly supportive of seeking solutions even overseas so as not to “reinvent the wheel”. Better Buy Power (BBP3) is the result of that staff work effort, with the third version issued about two months ago. The principles consolidated as part of this version: affordability, life cycle cost management, incentives for productivity and innovation in the industry and within DOD, streamlined bureaucracy, encouragement of competition, and support for small and medium enterprises, including support for development. The primary trends for force build-up at DOD level: investments in cyber, in ballistic missile defense, in nuclear deterrence, in the space program, in precision guided munitions, in ISR and in counterterrorism. Budget savings at DOD level will be achieved through prevention of duplicity, reduced management overheads, increased competition, cancellation of some projects with others extended over longer periods of time, and amalgamation of bases.
A strong USA, politically and militarily, is a significant interest of the State of Israel. A public debate is currently under way in the USA around the question of whether the USA is conceived as weak, and if it does – whether it stems from a leadership that radiates weakness, or from the reduction in OrBat and capabilities. These issues will have implications on the IDF force build-up and employment.
Colonel (res.) Yitzhak Elimelech served as R&D attaché with the IDF Mission to the USA. He currently serves as CEO of IMI Services in the USA.