DoD suffers from a serious plans-funding mismatch, according to the OMB’s new director for defense spending, Steven Kosiak. OK, that's not his view as an official of the Obama administration; it's what he said in a report he wrote last year before he left the Center for Strategic and Budgetary Analysis to become head of defense matters at OMB. Kosiak is known among defense reporters as probably the smartest guy around on budget issues, so this looks like a good move on the part of the new administration.
Down side for us reporters: good luck interviewing Kosiak now as OMB people are notoriously tight lipped. Good thing he laid out in pretty fine detail in his CSBA report the budget challenges DOD faces in coming years.
Kosiak predicted that, as the defense budget competes for other funding priorities over the next two decades, the topline will remain relatively flat, at roughly $518 billion a year. Problem is, to buy all the weapons currently in the pipeline and pay growing personnel costs would require at the very least an additional $55 billion a year. How to reconcile that shortfall?
Kosiak laid out five options. The first three are the most likely, based on the historical record, and involve considerable tradeoffs. He also proposed two other, more innovative, options that might make more sense given the security landscape.
• Reduce the size of the military. U.S. military planners have long traded quantity for quality, accepting reductions in force size as the price for buying costly next generation weapons. Kosiak notes that even a modest reduction in force size might go far towards reducing the plans-funding mismatch.
• Introduce new generations of weapons systems less frequently. DOD has historically accepted a substantial reduction in the frequency with which new weapons are rolled out as a price it must pay to buy costlier systems. He says DOD should continue this practice.
• Accept an older weapons inventory. For the past several decades, DoD has kept weapons in service for longer periods of time.
The two more innovative options Kosiak proposes are:
• Acquire less costly weapons systems. Kosiak points out that in the commercial sector new products, such as computers, are typically better performing and more reliable, yet their prices don’t always go up. “There is nothing to prevent U.S. military planners from taking a similar approach when acquiring next-generation weapon systems.” If the military could somehow control the dramatic cost growth in weapons systems, it could free up a lot of money for other uses.
• Transform the military. While the idea of transformation got tainted by its association with Rumsfeld, Kosiak says advances in command and control, space weapons, long-range precision strike and unmanned aerial systems could be dramatically more cost effective than the systems they displace. He cited a 2005 CBO study that said if the services shifted to a more transformational force structure, buying unmanned aircraft to replace manned aircraft for example, the Pentagon could save $50 billion a year.
Kosiak said that DoD will be forced to adopt a combination of these various options as there is no “one-size-fits-all” approach. “Ultimately, it may not be possible to meet satisfactorily U.S. national security requirements without further increasing the level of resources allocated to defense.” We’ll soon find out which options Kosiak thinks make most sense as OMB is working the FY 2010 budget.