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Gates Starts Huge Acquisition Shift; Congress Wary

On April 6, Defense Secretary Robert Gates offered the most fundamental restructuring of defense acquisition in at least two decades, taking the unprecedented step in post-Cold War history of killing half-a dozen major acquisition programs and radically restructuring the Army's flagship modernization effort.

On the larger field of strategy and threat analysis, Gates defended his decisions, saying that about 10 percent of the budget he has proposed for 2010 will go to irregular warfare, 50 percent will be spent on conventional warfare and about 40 percent will be spent on dual purpose capabilities.

Vice Chairman of the Joint Chiefs, Gen. James Cartwright, said the US is "at a crossroads" and had to make some basic decisions about the future of the nation's military. The decisions Gates has made represent the "best balance of most likely conflicts and the most dangerous conflicts we will face tomorrow."

Gates killed:

* The VH-71 presidential helicopter program, risking the wrath of the powerful chairman of the House Appropriations defense subcommittee, Rep. Jack Murtha, who has argued strongly that the country must buy at least a limited number of these new helicopters. Gates said buying the first increment of helicopters would be "neither advisable nor affordable" since these would have only a five-10 year useful life and do not meet the program's requirements. This will also entail the risk of increased European ire with the Defense Department, especially if the tanker contract award does not remain with Northrop Grumman and its European partner, EADS. Lockheed Martin and AgustaWestland lose.

* The CSAR-X search and rescue helicopter program, citing its "troubled acquisition history" and questions as to whether this mission can be better done by a joint asset instead of an Air Force aircraft. Boeing, Lockheed and Sikorksy all lose.

* The $26 billion Transformational Satellite program, which was to provide jam-proof and encrypted communication central to the Army's Future Combat System This is a blow to Both Boeing and to Lockheed who had committed significant resources to the program.

However, Gates committed to buying two more Advanced Extremely High Frequency satellites to make up for the lost bandwidth. And Lockheed builds those.

* The Airborne Laser will get to do its operational flight test this year and then it will become a research and development effort. Loser = Boeing.

* The Multiple Kill Vehicle missile defense program built by Lockheed Martin because of what Gates called "its significant technical challenges."

* And Gates killed the Next Generation Bomber "until we have a better understanding of the need, the requirement, and the technology." Losers are Boeing, Lockheed and Northrop-Grumman.

(It should be noted that Gates did not kill the requirements for the programs above, except for the bomber. But he did kill the programs of record.)

The Army's Future Combat System’s vehicle component – the Manned Ground Vehicle – will be cancelled. Then the Army’s entire vehicle modernization program will be re-launched under a competitive bid. Gates made clear he was troubled by the contract the Army signed with Boeing and SAIC. Because of the importance of the Army’s modernization effort, “We must get the acquisition right, even at the cost of delay.”

Perhaps the most difficult decision to uphold in the face of determined lobbying will be Gates' decision to hold the F-22 buy at 187. Although numerous powerful lawmakers have urged support for a much greater buy, without which the production line will close, and the Air Force had appeared to argue that they required more than 183. But Gates said today that the Air Force supported his decision and had set the requirement where it was.

While there were many big losers in the decision Gates made, substantial winners emerged as well. The biggest winner -- the men and women of the military. He said he remained committed to growing the Army and Marines and would stop reductions in the Air Force and Navy. That will require another $11 billion over last year's budget.

Special Forces will grow by another 5 percent -- 2,800 people. They will also get more special lift, mobility and refueling aircraft, Gates said.

He will boost medical research and development by an additional $400 million. Spending on the wounded will rise by $300 million. Spending on spouses, child care, housing and education will rise by $300 million.

Helicopter crews are winners. Gates is committing an additional $500 million to train maintenance crews and pilots so that more helicopters can be in the air at any given time.

Acquisition personnel are winners. Gates committed to hiring 9,000 acquisition experts by 2015, beginning with 4,100 in this next budget. In addition, he plans to take 11,000 contractors currently supporting DoD acquisition and make them regular government employees.

On the hardware side, intelligence, surveillance and reconnaissance systems win an increase of $2 billion. Among the beneficiaries is Predator-class UAVs. He is funding a 62 percent increase in capabilities to bring their numbers bought by fiscal 2011 to 50. Turbo-prop ISR aircraft, such as those used by Task Force Odin in Iraq will apparently be bought in increased numbers, though Gates did not offer any numbers.

THAAD and SM-3 missile defense systems are getting a boost of $700 million. However, the Missile Defense Agency's Budget will be whacked by $1.4 billion.

While Gates trimmed the F-22 program, he also committed to building a fight generation fighter "that can be produced in quantity at sustainable cost." And the F-35 was a big winner. He wants to buy 30 in fiscal 2010 from the 14 bought this year, increasing funding to $11.2 billion, with 513 purchased over the next five years.

The buy for Littoral Combat Ships will rise from two to three in fiscal 2010.

DoD will double the number of Joint High Speed Vessel ships it will charter until US production begins in fiscal 2011.

Regardless of who won and lost in Gates' plan, what will really matter now is how Congress reacts. So far, Hill reaction to the Gates' moves is cautiously supportive. House Armed Services Committee Chairman Rep. Ike Skelton (D-Mo.) called it “a good faith effort" but pointedly noted that, “the buck stops with Congress which has the critical Constitutional responsibility to decide whether to support these proposals."

Rep. Murtha praised Gates for taking “an important first step in balancing the Department’s wants with our nation’s needs. For far too long, the Defense Department has failed to address these challenges, and I applaud the Secretary for conducting this comprehensive review." But he echoed Skelton's comments that Congress will have the next say in how the nation spends its treasure.

The ranking Republican on the HASC, Rep. John McHugh (NY), was much more critical. He said that Gates' decision to move substantial amounts of funding that had been in supplemental spending bills into the baseline budget "will be tantamount to an $8 billion cut in defense spending" without an increase in the budget topline. He noted that the GOP supports building such funding into the regular defense budget, just not at the expense of overall spending.

McHugh also questioned Gates on missile defense, saying that the defense secretary's decision to move money to the SM-3 and THAAD programs and to effectively freeze Ground-based Midcourse funding "places unnecessary risk to the homeland. Just a day after North Korea launched a long range ballistic missile the Secretary missed an opportunity to re-commit to investment in missile defense capabilities."

Overall, Gates has made some dramatic decisions. But Winslow Wheeler, a former Congressional budget staffer and now an analyst at the Center for Defense Information, wonders how much will actually change.

“While Washington DC hisses and spits over the secretary’s hardware recommendations, it is probably more important to ask, what has changed, and if anything has, where are we now going? It does not appear that the basic DOD budget has changed; this set of decisions may be budget neutral, or it may even hold in its future expanded net spending requirements,” he said. “While many decisions were made, the Pentagon ship of state appears to be very much on the same basic course.”

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