Changing Pace

With the threat of automatic budget cuts hanging over the Pentagon—picture tens of thousands of civilian layoffs, unpaid furloughs and multibillion-dollar programs thrown into turmoil—Defense Department Comptroller Robert Hale could offer little reassurance to a nervous defense community at a public appearance in late September.

“There isn’t a plan,” he said at a Government Executive event in Arlington, Va. “I know this frustrates people, but we haven’t done detailed planning. We still are hopeful we can avert this.”

On Jan. 2, 2013, now just weeks away, sequestration—a measure initially intended only as a threat to force lawmakers to settle on a reduced spending plan—is set to take effect and cut Defense across the board by 10 percent. The Pentagon already is trying to figure out how to live within a more constrained budget in the midst of an operational shift to the Asia-Pacific region, all while continuing to invest in programs that are as flexible and agile as the post-Afghanistan military envisioned by top leaders.

Without question, the next administration will have its hands full before the glow of inauguration has even had a chance to fade.

By far the biggest issue is sequestration, the dark storm cloud looming over the military services and anyone even remotely tied to the world of defense. At congressional hearings, news briefings and just about any public engagement, Hale and other Pentagon officials continually deal with the question.

“I definitely hope sequestration won’t happen, and I still believe there is a reasonable chance that it will not,” he said at the forum. “But it is the law. We can’t ignore it.”

Sequestration was never supposed to happen. The $1.2 trillion across-the-board cuts to defense and domestic programs during the next decade was meant as a sort of punishment to spur a congressional super committee to strike a deal on more targeted reductions. But after the super committee failed to reach an agreement in 2011, the clock has continued to tick toward Jan. 2.

Trend 1: Spending Cuts 

The Pentagon already is scaling back planned expenditures. The 2011 Budget Control Act mandates a reduction of $500 billion in defense spending during the next 10 years. But the term “reduction” can be misleading. The Pentagon budget would continue to grow—just half a trillion dollars slower—and officials get to choose which programs to cut.

Sequestration, on the other hand, would lead to all sorts of unpleasantness, Hale warned. Right off the bat, it would eliminate an extra $52 billion from the budget in fiscal 2013 and those cuts would extend through 2021. Defense officials have “limited flexibility in how we can accommodate that cut,” he said. The department can exempt military personnel from the budget ax, but that only means cuts everywhere else would have to be larger, he added. Civilian employees in particular would be “severely affected,” Hale said, adding Pentagon planners would have to consider unpaid furloughs.

“I don’t want to do it, none of us do, but we can’t rule it out,” he said.

Procurement programs also would experience “a lot of disruption,” Hale cautioned, although they may not feel much of the pain right away.

“We will not cancel contracts for money that is appropriated,” he said. “The money that’s already obligated will almost always be exempt . . . There won’t be, on Jan. 2, a lot of contract cancellations.” Instead, the short-term effects likely would be that a program wouldn’t pick up a contract option, or officials would have to make some changes.

Operationally, sequestration will require scaling back spending on training and maintenance, ultimately leading to a military force that is less ready to respond to crises around the globe, Hale said.

Dealing with spending rollbacks under the Budget Control Act was a challenge itself for officials, but the Defense Department was allowed to develop a strategy and craft a budget that fit that strategy. Sequestration would necessitate going back to the drawing board, Hale noted. “If a decision is made that there will have to be further cuts, we’re going to have to revisit the strategy,” he said. “And then we would try to redraw the budget.”

Not everyone is couching sequestration in as dire terms as the Pentagon and the defense industry. Michael O’Hanlon, director of research for the Foreign Policy program at the Brookings Institution, says he is “strongly against” what he describes as a “really messy” way to make policy, but notes the effects might be overstated.

“It’s not clear that it’s the end of the world,” he says, adding the actual reduction in outlays for defense contractors may be more in the realm of 6 percent, rather than the 20 percent range as some have been claiming.

But O’Hanlon agrees sequestration is still something that should be avoided. Whether it will happen depends on the climate in Washington once the elections are over and that’s anyone’s guess, he says. “We’re all at the mercy of congressional and White House leadership,” he adds. “It becomes a question of: Do we believe elections will resolve anything?”

O’Hanlon says it’s possible that whoever loses the election will accept defeat and agree to terms favored by the winners, and the winners could decide that they’d best compromise because now that they’re the incumbents sequestration is on their shoulders in the next election. But no one can predict how cooperative the two sides will be, he notes.

Trend 2: Asia-Pacific Shift 

As Congress, Defense and industry wrangle over budgets, the top brass is continuing its aggressive shift to the Asia-Pacific region after spending more than a decade in protracted land wars in Iraq and Afghanistan.

The shift has long been planned. The Pentagon for years has been investing in assets suited for the region, such as the Littoral Combat Ship, which can operate in near-shore environments better than a destroyer or a cruiser. The military services have been buying stealthier platforms, standoff weapons and other systems meant to counter an “anti-access/area-denial” type of environment where a hostile entity attempts to deny entry into an important region. Iran’s threats to mine the Strait of Hormuz is one example.

Daniel Chiu, deputy assistant secretary of Defense for strategy, says the Asia-Pacific region is of interest to more than just the Pentagon—it’s important to all sectors of the U.S. government and the nation. “You [have to] understand the key national security priority we place on the Asia-Pacific region and that’s what this rebalance is really intended to reflect,” he says. “It came from the White House. It’s really a whole-of-government effort.”

The U.S. military hopes to deepen ties with countries there and foster stability. “This really is about building relationships—making them deeper, making them stronger,” Chiu says.

But just because the Pentagon is looking at that particular region doesn’t mean it won’t be keeping one eye on just about every other part of the globe. The Defense Department plans to keep a major presence in Latin America, Africa, Europe and even the Middle East.

In fact, the department has launched a major effort to provide ballistic missile defense to Europe by positioning Aegis Ballistic Missile Defense System-equipped destroyers and cruisers in the region until land-based sites are established, which will take about a decade.

“Globalization has really had a big impact on the way the world works,” Chiu says. “It’s really, really difficult to kind of disentangle ourselves, from an interests perspective, from any particular region. There’s no one region that doesn’t have interconnectivity with another region.”

The elephant in the room is China, a rising superpower. Many outside observers are quick to suggest the rebalancing of focus is to counter China, but Chiu says Pentagon planners aren’t focusing on that nation any more than others in the region. “China is obviously a main consideration for us,” he says. “However, we try to make it extremely clear, and we’ve been extremely honest about this: China is not the primary purpose of this rebalance. Our interests in the region are as a Pacific power.”

Chiu acknowledges, however, that China is a big player in the region. “It is in our interest and it has been our policy for quite some time to work hard to develop productive, constructive relationships with China,” he says.

Sequestration could pose some risk to the rebalancing of U.S. forces, although it wouldn’t cause the Pentagon to change course, according to O’Hanlon. Because the Defense Department is unlikely to cut back on health care or base operation costs, sequestration’s primary effect on the U.S. military in the Asia-Pacific region is likely to be reduced readiness.

“What you’re going to do is cut back on exercises and deployments, and that is going to scale back your perceived presence and perceived dependability,” he says. “It’s not good. If it just lasts for a few weeks, it’s not the end of the world, but . . . it is going to take a lot of the money that is used to sort of establish and reinforce our visibility [in the region].”

The Air Force and the Navy figure prominently in the shift to the Asia-Pacific, but the need for Army resources won’t diminish much, according to O’Hanlon. “We’re still in Afghanistan,” he says. “They’re going to be there in substantial numbers for a couple of more years. We still have all this unrest in the Middle East.”

Trend 3: Weapons Modernization 

The Pentagon’s operations now and in the future depend on a force that is agile and flexible enough to respond to modern threats around the globe. With technology evolving at a rapid pace, Defense is trying to get away from its old habit of replacing large amounts of hardware every time an update is needed to a weapons platform, whether it is the Air Force F-16, Navy DDG-51 destroyer or Army M1A1 Abrams tank.

Instead, during the past few years, a departmentwide push for open architecture has focused on developing modern systems, such as a multifunction display in an aircraft cockpit with software that can be upgraded whenever new technology becomes available. Officials even are releasing what is normally proprietary data so more companies can bid for work on programs.

In March, Navy Secretary Ray Mabus told the House Appropriations Subcommittee on Defense that the service is trying to avoid having to start over whenever the next best thing hits the market. “We can simply pull out whatever we’ve got there and replace it,” he said. “One of the things that we’re trying to do not only with the LCS, but also with all the ships that we build, is to make them modular so that as things change, as technology improves, that we can keep up with the latest technology and that we don’t have to replace the whole platform to do that.”

A successful departmentwide effort would produce defense systems that are better able to adapt to changing needs and, perhaps more important, save the Pentagon some cash during a time when it is sorely needed.

Isaac Porche, a senior engineer at RAND Corp., says although open architecture has been around for years, in many ways the concept is in its infancy as the Defense Department tries to figure out how to transport the idea from PowerPoint slides to real-world systems. A prime example, he says, is the Navy’s Consolidated Afloat Networks and Enterprise Services program, or CANES, which uses open architecture to combine the many computer networks on a ship into one. But, Porche adds, “there remains some skepticism in DoD whether it can achieve what it sets out to do.” 

Industry leaders like Google have been developing cloud computing concepts and big data analytics in recent years, which helps set the standard for how open architecture should work at the Defense Department.

Still, for the most part, Defense officials have a ways to go to figure out which open-system standards work for their programs and which don’t. For example, weapon system networks need more security than other systems.

If programs can find their way in the relatively unknown realm of open architecture, it could be a boon to program managers looking to increase flexibility while driving down costs, according to Porche. “The big benefit is the ability to have development platforms that allow smaller companies—or even uniformed personnel themselves—to create capabilities more quickly,” he says.

Dan Taylor is managing editor of Inside the Navy