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6 new-start programs face budget delays

Chinook, Apache, Bradley programs feel budget squeeze

Mar. 20, 2013 - 02:33PM   |  
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Scout teams board a Chinook helicopter during the Gainey Cup Scout Competition on March 5 at Fort Benning, Ga. The Chinook program is one that will take a hit from budget cuts.
Scout teams board a Chinook helicopter during the Gainey Cup Scout Competition on March 5 at Fort Benning, Ga. The Chinook program is one that will take a hit from budget cuts. (Patrick A. Albright / Army)
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THE WAY AHEAD

Army acquisition’s five focus areas:
• Affordability and controlling cost growth
• Incentives for productivity and innovation
• Reducing nonproductive processes and bureaucracy
• Promoting real competition
• Improving tradecraft in acquisition services

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Army officials are taking decisive steps to protect the weapons and wheels of tomorrow. From finding efficiencies to entering multiyear contracts, service leaders are stretching and squeezing every dollar in a dire effort to save every program.

Every Army acquisition program will be affected by sequestration. Heidi Shyu, assistant secretary of the Army for acquisition, logistics, and technology, addressed this dark reality at the Association of the U.S. Army winter symposium. She said the $890 million cut in research, development, test and evaluation investments will extend those programs by six weeks to 18 months. This will increase unit costs and add to each program’s overall risk.

A $2.6 billion reduction in procurement programs will equate to funding cuts of 10 percent to 15 percent across the board. Current-year procurement will be delayed or reduced to meet sequestration targets — and there is no guarantee these monies will be restored in future years.

That means everything from your new carbine to the Ground Combat Vehicle is in jeopardy.

Sequestration isn’t the only problem. Congress’ continuing resolution forces the Army to operate on the fiscal 2012 budget, which cuts $6.1 billion from operations and maintenance funding. The resolution is scheduled to end March 27. Lawmakers with whom Army Times spoke said they expect the resolution to be extended through the second half of the fiscal year, which means the $6.1 billion will never be recovered.

A yearlong continuing resolution will delay six new-start programs, Shyu said. Namely, the Army will not be able to afford the multiyear Chinook contract or procure the number of Apaches needed. The Paladin Integrated Management program also would take a hit.

“The defense budget will not grow to accommodate the diverse set of challenges that is presented in the foreseeable future,” Shyu said. “So we need to make deliberate investment choices today to maximize our capabilities in the future.”

Strategic modernization planning is at the heart of this endeavor. Program executive offices and program managers have been ordered to lay out long-term modernization plans based on equipment life-cycle projections and sustainment costs.

Acquisition officials also are trimming the fat in every way possible. The goal is to move from “would cost” to “should cost.” Officials said the effort saved $370 million in fiscal 2012, and is projected to save $2.5 billion from fiscal 2013 through 2017.

The PIM is a key example. The Army needed 10 prototypes, but Congress’ continuing resolution allowed only seven. Lt. Gen. William Phillips and a team from the Office of the Assistant Secretary of the Army (Acquisition, Logistics and Technology) led a 60-day effort aimed at driving costs down. The team found 27 test efficiencies to include a way to cut the 23,000 validation rounds to less than 16,000, which saved $15.7 million and 13 months of tests. They also incorporated tests of the Excalibur round in that number, which saved $4 million and two months of test time for that program.

Similar cost-cutting measures have provided:

• $700 million in savings in Chinook and Black Hawk procurement.

• $286 million in savings through negotiated Humvee contracts that lowered unit cost by more than 15 percent.

• $578 million in savings in the family of wheeled tactical vehicles.

• $30 million in savings for the Bradley engineering change proposal.

• Eight test efficiencies for the GCV that has saved $8 million and two months of test time.

• Nett Warrior moved to commercial hardware and thus reduced procurement costs by 65 percent, or $880 million, between fiscal 2011 and 2017.

• Combining two Stryker variants saved $17.7 million, which was used to accelerate the fielding of a second brigade combat team with the double V-hull vehicle.

Service leaders also are turning to multiyear contracts to increase efficiency and decrease unit cost. This approach with the Black Hawk helicopter saved $11.7 million with an expected cost avoidance of 16 percent, or $1.4 billion, over the contract life.

The 2013 National Defense Authorization Act approved multiyear procurement contracts for CH-47F airframes. The first year is expected to shave 10 percent, or $535 million, off the cost. A second award is ready, but is in hang-fire status as Congress and the Obama administration battles over the budget. That $3.4 billion contract comes with an estimated savings of $810 million — nearly 20 percent from initial cost.

Money and priorities

But plenty of programs remain in danger.

Modernization of the Bradley Fighting Vehicle (scheduled to be in the inventory through 2030), M113 armored personnel carriers and Howitzers is in question.

The Army plans to shut down the Bradley industrial base for at least three years starting in 2014. This industrial base provides four of the five key vehicles used by armored brigade combat teams: The Bradley, the M88 recovery vehicle, the M109 family of vehicles and PIM, and the M113 personnel carrier.

BAE Systems officials said such a move will ultimately result in significant cost increases, the loss of skilled labor, the loss of combat vehicle competition and affordability. The manufacturer has proposed incremental upgrades to the Bradley fleet to keep the lines open.

But it all comes down to a question of money and priorities — and some of the answers must come from higher headquarters.

The Pentagon has required that ASA (ALT) submit all RDT&E and production contract awards or modifications that exceed $500 million to the undersecretary of defense for acquisition, technology and logistics for approval. This will affect a dozen key programs.

The GCV is the only RDT&E account that exceeds $500 million, rolling in at $640 million. But many programs fall into the category of production contract awards or modifications. They include:

• Upgrades to the CH-47F Chinook UH-60 Black Hawk ($1.4 billion).

• Upgrades to AH-64M ($1.2 billion).

• Apache Block III upgrades ($1.2 billion).

• Modifications to 2,000 MRAPs ($927 million).

• Equipping seven BCTs with 2,166 Warfighter Info Network-Tactical ($893 million).

• Equipping two companies with the MQ-1 Gray Eagle unmanned aerial vehicle ($518 million).

• Procure 84 Patriot PAC-3 missiles and 38 launchers ($647 million).

• Training Ammunition ($1 billion).

• War Reserve Ammunition ($632 million).

• Procure 11,059 Joint Tactical Radio Systems ($556 million).

• Tactical Wheeled Vehicle Modernization ($1.6 billion).

The retrograde of gear in Afghanistan and scheduled depot maintenance also presents a significant challenge. As it stands, six divisions — the 3rd Infantry Division, 4th ID, 10th Mountain, 25th ID, 101st Airborne Division (Air Assault) and 82nd Airborne Division — will not have the gear they need. Roughly 1,000 tactical wheeled vehicles, 14,000 communication devices and 17,000 weapons will sit untouched at depots. Only units headed to Afghanistan, South Korea or assigned to the Global Response Force BCT will be fully equipped.

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