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U.S. Defense Companies Should Remain Strong if No Sequestration

Mar. 8, 2012 - 12:46PM   |  
Deputy Defense Secretary Ashton Carter said his department has thought through the ramifications of sequestration "carefully."
Deputy Defense Secretary Ashton Carter said his department has thought through the ramifications of sequestration "carefully." (Staff file photo)
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Defense companies that survived broad cuts in the Pentagon’s 2013 budget proposal are likely to see their programs continue over the next five years barring additional reductions.

“I think that’s a fair assessment, if there is no sequestration,” Deputy Defense Secretary Ashton Carter said at a March 8 conference sponsored by McAleese and Associates and Credit Suisse in Arlington, Va.

The U.S. Defense Department plans to cut $259 billion from planned spending over the next five years, as mandated by the Budget Control Act of 2011. This is part of $487 billion in defense spending cuts mandated by the law over the next decade.

But DoD is facing an additional $500 billion in cuts through sequestration if Congress cannot strike a deficit-reduction deal by January 2013.

“We’re going to continue to think through our situation and make adjustments and so forth as we go forward because this is a slow process of making a very major transition, but what you see is what you get,” Carter said. “We’ve thought it through pretty carefully.”

Rep. Adam Smith, D-Wash., the ranking Democrat on the House Armed Services Committee, said he does not expect sequestration to happen. The congressman said that expiring tax cuts would cover the sequester expense, meaning no deal is necessary.

“I think that the likely scenario is that the tax cuts expire, sequestration doesn’t happen, and we go into January fighting,” Smith said at the conference.

Smith also said that he expects Congress to pass a budget and avoid a continuing resolution (CR) because of pre-established spending caps. Congress has passed continuing resolutions to fund the federal government a number of times in recent years because lawmakers were unable to pass legislation before the beginning of the fiscal year.

“There’s reason to think that we won’t have to go through a CR this time because the Budget Control Act already kind of set what you can do,” he said.

While DoD plans to reduce procurement quantities in a number of areas to meet budget targets, it still aims to make investments in other areas, such as cybersecurity and electronic warfare.

“It’s an area we’re not only protecting our investments in, but making bigger investments,” Carter said of cybersecurity.

Carter said he is “still not remotely satisfied with where we are in dealing with cyber.”

As for electronic warfare, it is an area DoD has “undervalued and understressed in the recent past and in some cases fallen a bit behind, lost some of our edge,” Carter said. “We need to catch up.”

Speaking at the conference, Air Force acquisition executive David Van Buren called on industry to innovate in the cyber arena.

“People are looking for new ideas,” he said. “For you and industry, that’s an area that you might focus on a little more.”

Cyber is the only area in the Air Force budget that is growing, Gen. Norton Schwartz, the Air Force chief of staff, said at the same conference.

“This is a place for imaginations to move quickly,” Schwartz said. “We certainly are endeavoring to allow our imaginations to expand.”

Carter said he is “particularly worried about the effect of jammers on our large, installed base radars.”

Last summer, defense officials began looking at DoD’s electronic warfare portfolio for areas “where we have fallen behind in expectation,” Carter said.

“Fortunately, in many cases, with a reasonable investment, we can catch up quickly,” he said. “We still have the expertise in some places and government to do that.”

DoD has made strides in responding to electronic warfare over the last decade in Iraq and Afghanistan, Carter said, but these threats “aren’t as challenging” as ones the military could experience elsewhere.

“For any aircraft, however capable, however stealthy, to have a chance, it needs electronic warfare,” he said. “You can’t do all of that on board.”

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