Army modernization plans face funding challenge

The Army's plan to modernize its aging helicopter fleet is at risk because it will have to compete for procurement dollars with the service's $200 billion flagship modernization program, Future Combat Systems, which will enter full rate production just as spending on helicopters is projected to be highest, according to a new congressional report.

The Army plans either to replace or significantly upgrade nearly every one of the 3,500 helicopters in its current fleet at a projected annual cost of $3.3 billion from 2007 through 2030, according to the Congressional Budget Office. The years of highest spending occur after 2020, when the FCS family of armored vehicles, manned and unmanned aerial and ground vehicles and communications links enters full production.

"The Army thus could find it necessary to alter the timing or content of one or more programs to fit within available budgets after 2020," CBO said in its November paper, Modernizing the Army's Rotary Wing Aviation Fleet.

A 2006 CBO report estimated the annual costs for buying FCS equipment will be $8 billion to $10 billion a year beginning in 2015 and continue through at least 2025. The Army has indicated that it may stretch out FCS procurement, thus reducing annual expenditures.

Even if FCS is trimmed, both that program and helicopter modernization will compete in the budget with rising personnel costs as the Army expands its ranks by 65,000 to a total of 547,000 worldwide and the need to replace and refurbish war-worn equipment from Iraq, along with equipment such as ammunition, trucks and generators, which the Army buys annually. The service estimates that every additional 10,000 soldiers carry fixed costs of $1.2 billion a year.

CBO said the Army has few options to reduce spending on helicopters over the next 10 years, short of making big cuts in the size of its fleet or continuing to fly aging airframes. But, a larger Army ground force will demand more helicopter support in the future. "The potential for realizing savings while maintaining forces is limited because the Army's plan pursues relatively low cost approaches for its continuing and near-term efforts," CBO noted.

Planned moves over the next 10 years include replacing the UH-1 Huey utility helicopter with the new UH-72A Lakota; upgrading the UH-60A/L Blackhawk utility helicopter to the newer M-model; and upgrading the CH-47D Chinook heavy cargo helicopter to the improved F-model.

Beginning in 2025, higher spending on Army aviation will be driven by development of the Joint Heavy Lift, a massive quad tilt rotor transport helicopter intended to haul up to 30 tons. The Army also plans to develop the Joint Multi-Role helicopter, which will eventually replace the Blackhawk utility helicopters and the Apache attack helicopter.

The Army's modernization plans also could conflict with its plans to refurbish war-worn equipment from Iraq and Afghanistan. In a process known as "reset," the Army restores equipment returning from the battlefield to almost new condition while simultaneously upgrading vehicles to the latest available versions. A reduction in the intensity of the fighting in Iraq could ease budget pressures so the Army would not have to replace as many battle losses as it has in the past.

So far, Congress has provided the Army with $38 billion in supplemental appropriations for reset. According to the Government Accountability Office, the Army received $17 billion for reset in 2007 alone. Army officials have said that they will require $12 billion to $13 billion per year for reset as long as combat continues in Iraq, and up to two years after troops are withdrawn. CBO found that up to 40 percent of that funding will be spent on upgrading equipment or buying more modern equipment.

Since combat operations began in Iraq, the Army has received $49 billion in procurement funding through the supplementals. CBO said the Army received more money to buy new equipment through the supplementals than through the Pentagon's base budget.