Modernization Plans in Jeopardy

t's a situation that leaves Army officials frustrated and feeling unfairly treated. Many believe the Defense budget process favors expensive, high-profile programs pursued by other military services over the less glamorous but more practical needs of the Army. The proof of the bias is in the numbers, Army officials say: In 32 of the last 36 military missions, the Army has provided 62 percent of the forces, yet the service receives only about 25 percent of the Defense budget.

"Something is wrong here," said Sen. Joseph Lieberman of Connecticut, ranking Democrat on the Air-Land Subcommittee of the Senate Armed Services Committee, at a March 25 hearing. Lieberman was drawing a comparison between Army modernization and the Pentagon's plans to buy three new tactical fighters. "The procurement portion of the three tactical aviation programs is about 14 percent of the modernization budget, almost equal to the entire Army research, development and acquisition budget."

But fair or not, the Army's modernization budget isn't likely to grow much in the coming years, lawmakers warned senior leaders.

Army leaders must "take a much more serious look at what the realistic prospects are for funding and start making some of those tough decisions as to where we allocate those resources in an order of priority, because it is apparent to me we cannot fund everything that you are asking us to fund," said Sen. Rick Santorum, R-Pa., chairman of the panel.

In its 2000 budget request, the administration asked for $9.7 billion for Army procurement programs and $4.4 billion for Army research and development. Major procurement plans include:

• Continued development of the RAH-66 Comanche armed-reconnaissance helicopter. The Army hopes to eventually replace the three helicopters that now handle the reconnaissance and attack missions-the AH-1, OH-58 and OH-6-with the Comanche, being developed jointly by Boeing and United Technologies' Sikorsky division. The long-troubled program is currently limited to the development of a prototype, but Army leaders hope to begin production in the next decade.
• Continued upgrades to the Longbow Apache helicopter. Under the upgrade program, all Apaches will be outfitted with the radar-frequency fire-and-forget version of the Hellfire missile and a portion of the Apache fleet will be equipped with a mast-mounted fire-control radar. The Army also plans to buy 2,200 Longbow Hellfire missiles. The Apache Longbow program is a joint venture of Lockheed Martin, Northrop Grumman and Boeing.
• New UH-60 Black Hawk utility helicopters. The Black Hawk, whose prime contractors are United Technologies and General Electric, is the Army's primary helicopter for air assault, general support and medical evacuation units. A modified version is also used for command and control, electronic warfare and special operations. The Army plans to buy eight more in 2000, and another nine in 2001.
• Continued upgrade of the M1 Abrams tank to the M1A2 model. The Army, with contractor General Dynamics, will continue to revamp the older tanks with better armor and fire-control systems and improved navigation and communications systems.
• Continued upgrade of the Bradley Fighting Vehicle. The Army plans to modify its first- and second-generation infantry and cavalry fighting vehicles to the M2A2 configuration, which has better communications systems, more firepower and improved armor and is more easily supported and maintained in the field. The Army is also working with contractor FMC to develop the next-generation configuration M2A3, with enhanced command and control capabilities.
• Continued development of the Crusader artillery system and the Future Armored Resupply Vehicle-Ammunition program (FARV-A). Also developed by FMC, the Crusader is intended to provide direct and general support fire to forces on the battlefield. The Army intends to start production in 2004, a year later than it had planned last year.

Major Concerns

When the Army was forced to reduce funding from last year's projections for the Comanche, one of its highest-priority programs, lawmakers took it as a sign of serious trouble. "If you cannot even adequately fund your highest priority, what does that mean for the rest of the complement of the priorities that you have in your budget?" asked Santorum.

It's a concern Paul Hoeper understands. As assistant secretary of the Army for research, development and acquisition, Hoeper knows well the trade-offs the Army has made in recent years because of funding shortfalls. "Funding challenges have forced us to either reduce the quantities of systems [purchased] or stretch our programs to great lengths or both," he told the Senate Armed Services Committee's readiness panel in March. "These actions raise unit costs and further delay modernization. In many cases, we maintain our procurement programs at minimum sustaining rates rather than more efficient economic rates. Add to this the fact that our weapon systems are aging because we have not modernized them as quickly as we should have.

"When coupled with the Army's increased operational tempo over the last decade, increased maintenance is required in order to avoid degradation in operational readiness. More maintenance means increased operations and support costs. And the increased O&S costs mean less money for modernization," he said, referring to the trap Defense acquisition chief Jacques Gansler calls the modernization "death spiral."

For example, Hoeper said, the Army is struggling to sustain and recapitalize the Abrams tank, while at the same time developing its eventual replacement.

While modernization funding in 2000 remains relatively flat, by the Army's calculation that's progress, Hoeper said. Between 1985 and 1998, the Army reduced its forces by 40 percent but took a 65 percent cut in modernization funding, leaving the Army with the lowest modernization funding level, in real terms, since 1960.

The fiscal 1999 budget broke that trend by adding $1.3 billion for procurement, research and development from previous year's levels, Hoeper said. And the fiscal 2000 budget, he noted, "not only maintains that level of funding, but also takes pressure off the modernization account by providing increases in the accounts for readiness, base operations and real property maintenance. Shortfalls in these accounts often turn modernization into the bill-payer for near-term requirements."

Banking on Reform

Like officials in the other services, Hoeper is optimistic that acquisition reforms being pursued by the Army will reap substantial savings that can be redirected to weapons programs. By pursuing plans to rely more on commercial, off-the-shelf products, streamline program management, reduce military specifications and move to paperless contracting, the Army expects to save time and money.

"In today's environment, we must acquire our weapon systems and equipment, supplies and services far more efficiently than ever before," Hoeper said. "Much has been accomplished, including the elimination of military specifications, the adoption of commercial and performance standards, the shift from lowest-price source selections to real emphasis on best-value procurements, reduced internal management, streamlined oversight and the adoption of a teamwork philosophy using integrated product teams."

The Army selected 10 pilot programs this year to test life-cycle cost reduction initiatives. Lessons learned from the pilots will be incorporated into other Army programs. In one such initiative, the Army is changing the way it buys spare parts. Instead of continuing to use what may be outdated specifications, the Army is using performance specifications that can take advantage of new designs and manufacturing technologies. The idea is to enhance performance and reliability of weapons systems while at the same time using resources more efficiently.

Called "modernization through spares," the initiative already has saved more than $80 million and improved reliability by 92 percent after it was applied to the Patriot missile program, Hoeper said. The Army was also able to reduce the cost of shock mounts for helicopter gyroscope systems from $336 per unit to $2.48. Additional technology improvements to the gyroscopes are projected to yield $62 million in long-term support savings.

Another reform initiative the Army is pursuing, called the Simulation and Modeling for Acquisition, Requirements and Training (SMART) program, uses simulation technology to identify problems with weapons systems while they are still in the development phase. In the Crusader program, for instance, the Army discovered a problem with the automatic munitions loading arms by using a virtual prototype. Engineers were able to redesign the prototype with a single-arm loader, resolving the original design flaw-saving potentially millions by discovering the problem before the cannon system went into production.

"We are working hard to achieve a leaner, more efficient Army where more money is spent on soldiers and modernization and less on overhead," Hoeper said. "We have made good progress, but we have a long way to go."