The Pentagon and defense industry have been behind some of the most important technological achievements in history, said defense acquisition chief Frank Kendall, but continued advances are threatened by reduced research spending.
The military played a role in the creation of radar, stealth and even the Internet. These achievements — and many others — have given the US military an unmatched edge since the end of World War II.
Stealth aircraft technology, for example, has been developed, advanced and refined over decades, largely through secret military projects. Even throughout defense downturns in the 1970s and 1990s, technological advancements continued — particularly with stealth — providing the US military an ace in the hole in battle.
But now as the Pentagon is preparing to downsize again — this time after a decade of unprecedentedly high spending levels — concern is mounting that DoD and the defense industry will not align adequate funding to develop technology for weapons that could help the US win a war 20 years from now.
“I’m very concerned about eroding technological superiority and where we’re headed,” said Kendall, DoD’s undersecretary for acquisition, technology and logistics. “We’re cutting our budget substantially while some of the people we worry about are going the opposite direction.”
While Kendall did not name specific countries, one he was clearly referring to is China, which has increased its defense spending for 22 consecutive years and has more than doubled its military budget since 2006, according to a November report by the US-China Economic and Security and Review Commission.
China is actively working to build stealthy tactical fighter jets and unmanned combat aircraft that some say could rival US-made platforms.
“We’ve had 20 years since the end of the Cold War [and] sort of a presumption in the United States that we are technologically superior militarily,” Kendall said. “I don’t think that that’s a safe assumption. In fact, I think that we’ve gotten complacent about that and we’ve been distracted for the last 10 years fighting counterinsurgencies.”
DoD’s research-and-development spending — which includes money for the Pentagon’s high-tech science projects — has been declining from a high point of more than $80 billion in 2009. That number fell to nearly $68 billion in 2013, a 14 percent drop. Sequestration was responsible for cutting R&D funding more than 8 percent below the enacted spending levels in 2013.
DoD has already projected R&D funding falling to about $65 billion by 2018, according to budget documents. That number could fall substantially more if sequestration continues.
Since military personnel are exempt from sequestration, research-and-development accounts were cut by a greater percentage than any other budget account in 2013. The largest dollar-value hit came to operations and maintenance accounts, about $20 billion in 2013. Procurement and R&D — called the modernization or investment accounts when grouped together — took a $15.8 billion hit.
“As force structure comes down, that frees up some resources to go back into the investment accounts and back into readiness,” Kendall said. “But if we don’t know where we’re going to end up with force structure, we’re going to be reluctant to take it down and to take it down as fast as we should in order to provide adequate resources for the forces that are going to remain long term.”
A two-year budget deal stuck by Congress and signed by President Barack Obama late last month is not likely to alleviate the pressure on R&D accounts in the coming years.
“Without a ramp to a reasonable future force structure that you could take us down in a graceful way, we were going to have a big problem in the first few years,” Kendall said of the budget. “Essentially, we’re having less of a problem, but still a big problem in those years. And we don’t know where we’re going, which compounds the problem.”
Under the compromise budget passed by Congress and signed by President Barack Obama in late December, DoD spending is capped at about $498 billion in 2014, $29 billion less than DoD requested, but $21 billion above the original sequester cap. In 2015, DoD spending is capped at $521 billion, more than $9 billion above the previous $512 billion cap.
DoD plans to submit the 2015 budget plan that it prepared for the sequester budget and buy back items with the restored funding.
“We know what the bottom looks like; the money that’s coming back, we’re buying it back,” Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, said during a Dec. 19 briefing at the Pentagon. “We’ll buy it up to the level we can buy it and there will still be a delta. The work is done.”
Each service will still likely face a $7 billion to $8 billion cut in 2014, Jim McAleese, a defense contracting and budget expert who runs McAleese and Associates, a Virginia-based consulting firm, said in a note to clients. Of the money restored, it is fair to assume 70 percent of the restored funding will go toward readiness and operations and maintenance while the remaining 30 percent will be put toward modernization.
McAleese noted that the 2015 spending cut is still $42 billion below planned levels, lowering DoD’s purchasing power.
“We are still going to be in an environment … with an enormous amount of uncertainty about … what [DoD] is going to look like long term,” Kendall said. “Without that, it’s very hard for us to get on the path to a future generation, future posture for the department that we understand and we’re sure we can get to and execute.”
If DoD is forced to retain force structure, research and development and procurement will bear the greatest burden of the spending cuts.
“The money has to come from somewhere,” Kendall said. “It tends to come from partly readiness and partly investment accounts, modernization and R&D and procurement.”
As DoD’s research-and-development funding falls, Kendall has encouraged defense executives to continue company-funded projects. The reaction from defense firms has been mixed with some executives and surrogates arguing DoD should pay up if it wants the projects done.
“We’re in a cyclical downturn right now; it will end and then there will be an upturn,” Kendall said. “The people who are prepared with products that we need or have done the technology [development] to get ready to build the products that we will need will be much better positioned when that upturn occurs.”
Kendall for months has been pressing industry executives not to abandon these internal projects and said bailing on these efforts would be a mistake.
“I think it’s very much a function of whether the leadership of the corporation involved is thinking long term or short term,” he said. “If you’re only thinking about your quarterly report, which unfortunately our system tends to encourage people to do, you’re not going to think about this.”