Funding the Future: The experimental X-47B unmanned combat air system demonstrator prepares to launch in November. Top Pentagon officials are directing the services to maintain more research and development funding in their fiscal 2015 budget submissions. (US Navy)
WASHINGTON — Senior Pentagon leaders are trying to protect vulnerable research and development (R&D) funding in the fiscal 2015 budget plan, despite desires within the military services to put money toward other near-term initiatives, according to Defense Department officials and sources.
While DoD’s 2015 budget plan is still in flux, the tension over R&D funding has arisen at different points through the arduous process of building the spending plan and has been on the radar of top DoD officials, these sources said.
US Defense Secretary Chuck Hagel — after reviewing budget proposals from the military services late last year — ordered each to go back and find about 15 percent more money for their R&D projects, according to several sources with knowledge of the decision.
The move is an early indicator the Pentagon leadership is backing up its tough talk about the need to protect R&D spending, much of which is used to develop new technologies for future weapons.
“Secretary Hagel has placed a high priority on research and development to ensure that the United States maintains its competitive edge for the future,” a senior defense official said. “Simply, losing our edge on capability particularly in the out years would make force planning all the more difficult and just put future forces at risk.”
While an emphasis on R&D funding may be good for industry, the impact will vary depending on where the funds are directed, said Byron Callan, an analyst with Capital Alpha Partners.
“It really depends on what level that money is targeted,” Callan said. “If it’s going to basic research, that’s great for the labs and universities. If you’re just throwing more R&D money at things like the Ohio replacement program, or the JSF, that’s helpful to the industrial base.”
R&D spending accounts bore the greatest percentage of Pentagon’s sequestration cuts in 2013 since DoD leaders opted to shift money into operations and maintenance accounts. The upcoming fiscal year 2015 budget provides one of the first opportunities for Hagel to make strategic choices and build a budget that fits within the mandates of the $521 billion budget cap.
Sources said the 2015 budget proposals drafted by the services had included a high concentration of funds in the operations and maintenance accounts in an effort to reverse some of the damage done to military readiness from sequestration.
Hagel, in consultation with DoD’s acting R&D chief Al Shaffer, told the services to go back and boost R&D accounts 15 percent above the proposed levels, the sources said.
In 2012, the Army spent $8.7 billion on R&D, the Navy and Marine Corps spent $17.7 billion and the Air Force $26.3 billion. Those numbers were fairly flat in the president’s 2013 budget request, but dropped for 2014 to $8 billion, $16 billion and $25.7 billion respectively due to sequestration budget caps.
Pentagon acquisition chief Frank Kendall has predicted R&D spending would continue to bear the brunt of defense budget cuts and expressed concern the continued pinch on R&D could threaten US tech superiority and harm the industrial base.
“I’m particularly worried about sustaining technological superiority over time and what deep cuts to R&D are going to do to that,” Kendall said.
The military services are aware of this issue, “but they have near-term, recurrent missions they have to perform at the same time that they’re trying to live within these budgets, so there’s tension about all of this, obviously in our planning,” Kendall said.
“I’ve spoken to the secretary about this and others in senior leadership, but at the same time, we have the constraints that we have and we’re trying to do the best we can to balance out all the different needs that we have.”
Over the past year, as Pentagon R&D funding has been pinched through sequestration, Kendall has strongly encouraged industry CEOs to protect company-funded development projects.
Callan said that an effort to bolster DoD R&D spending might be a sign that efforts to convince industry to increase investment aren’t working.
Even with the cuts, DoD is still investing more in R&D than almost every country in the world, said Gordon Adams, who oversaw defense budgeting during the Clinton administration and is now a professor at American University.
“We are at no long-term risk with respect to our technological capabilities,” he said. ■