Next administration will face tough Defense modernization decisions

Regardless of whether Sen. Barack Obama or Sen. John McCain takes the oath of office in January, the new president will face difficult choices about how best to organize and equip the military, an industry group said on Wednesday.

A report released by the Aerospace Industries Association details a range of near-term challenges for modernizing air and space assets and sustaining an industrial base that will be vital to meeting emerging threats.

"The next president will inherit a military that is stretched and stressed -- its equipment, especially its aerospace equipment, is old in years and usage," said Fred Downey, the industry group's vice president for national security. Downey, a retired Army officer, served 12 years on Capitol Hill as a senior staffer on defense and foreign affairs for Sen. Joseph Lieberman, I-Conn., before joining AIA last spring.

The Pentagon's air and space assets have been underfunded for years, and the stress of operations is wearing them out faster than anticipated, Downey said. What's more, the new president and his defense team won't have much time to develop modernization plans. Over the course of 2009, they will have to prepare budgets for 2010 and 2011 and be well on the way to producing the next Quadrennial Defense Review, which is required by law in 2010.

The AIA report does not recommend buying specific weapons, nor does it prioritize the challenges. But in separate chapters the report makes the case for modernizing various types of aircraft, satellite systems, missile defense and logistics, as well as for investment in science and technology development.

Some of AIA's advice involves how the Pentagon is organized. For example, the report recommended the Defense Department establish a joint program office at the Pentagon to centrally manage vertical-lift technologies for all the services. The Army is currently the lead service for rotorcraft, but AIA noted "the Army's overall budget is focused on fighting today's wars with today's platforms" and its hardware development funding is a fraction of that of its sister services.

The crux of Defense's budget problem is that its portfolio of weapon systems far exceeds its resources. Katherine Schinasi, managing director for acquisition and sourcing management at the Government Accountability Office, told the Senate Armed Services Committee in June that, "From 1992 to 2007, the estimated acquisition costs remaining for major weapons programs increased almost 120 percent, while the annual funding provided for these programs increased only 57 percent. Current programs are experiencing, on average, a 21-month delay in delivering initial capabilities to the warfighter -- often forcing DoD to spend additional funds on maintaining legacy systems."

The total cost of planned weapons systems has grown by more than $300 billion since initial program estimates, Schinasi said.

In addition, operations and support costs have increased significantly during the past decade, paid for in part by reduced investment in procurement, research and development. The ongoing expansion in the number of ground troops (65,000 in the Army and 27,000 in the Marine Corps) and the focus on buying or rebuilding equipment needed to fight the current wars has shifted procurement funding away from other assets, such as tactical aircraft. Many, including Downey, expect that such aircraft will be critical in future conflicts.

"Money will be a constant headache" for the next administration, Downey said. "We have serious economic problems and there are huge bills to pay. There are going to be some who want to make Defense a bill payer."

That would be a mistake, he said: "Either we commit to a decade-long defense recapitalization and modernization" program or the United States will play a diminished international role.