DID: Rapid Fire 2012-01-27: FY13 DoD Budget Guidance

The Defense Industry Daily.com sent out some highlights in an email  from the new FY13 Department of Defense Budget Guidance briefing on what the DoD sent to the President for submission to Congress.  

Found it interesting that there is going to be another Base Realignment and Closure Committee (BRAC) process started in 2014-2015.  This explains Senator Brown's comments earlier about making sure Hanscom AFB, MA, is prepared for for the BRAC.  He has been joined by other members of Congress from New England for the fight.  My recommendation would be to get with Senator Olympia Snowe who was successful in her challenge to the BRAC on the Portsmouth Naval Shipyard in Maine and the Naval Submarine Base in New Groton, Connecticute.  Both bases had flawed data the Pentagon gave the BRAC about the two installations.  Once Senator Snow presented the real facts, the BRAC voted to take the two off the list. 

The same thing happened to the B-1 base, Ellsworth AFB, in South Dakota where Senator Thune did the fighting.  The powers at be at the Pentagon wanted to consolidate all the B-1's at a base in Texas which was beyond stupid as Dyess AFB, TX, where they were to relocate had only one runway.  Many people associated with the DoD were wondering why the planners would put all the B-1's we have in the inventory in the same location.  In the Ellworth AFB was also removed by the BRAC when Senator Thune presented the real facts.

During the visit with one of my Senators, was told to my face by a retired three-star General that the Pentagon never makes a mistake when I asked the question why these three locations were on the BRAC list.  I told him in the research that had been done it showed flawed data from the Pentagon but he said once again the Pentagon never makes a mistake.  Talk about arrogance.   He turned out to be wrong and the data from the Pentagon was very flawed.  The BRAC agreed that the Pentagon had used flawed data.  

The installations who end up on the BRAC submittal from the Pentagon need to do their homework because the Pentagon does make mistakes and the proof is in the last BRAC process.

We will keep you advised of the status as the FY 13 DoD Budget goes to Congress in February.  The one thing is clear is that there are going to be cuts.  The question is how much and to what programs.  Here is the brief analysis of what lies ahead in FY 13 for the Department of Defense:

Rapid Fire 2012-01-27: FY13 DoD Budget Guidance

Top Pentagon officials gave a briefing yesterday (1/26/12) on major budget decisions ahead of the FY13 President Budget request coming on Feb. 13. Highlights among the outlined priorities [PDF]:

• A relatively stable topline at $613.4B, made of a $525B baseline plus $88.4B overseas contingency operations (OCO). The former is a couple billion dollars below the FY10 actual budget and reflects a 5% decrease from the FY12 request, but in reality is just $6B below what DoD ended up getting last year. The OCO funds are 25% lower than last year’s $117.8B request but they remain at a pretty sizable level now that troops have left Iraq. Again, a significant part of the cuts Panetta and House Republicans have most vocally objected to are actually found in a) reductions vs. baseline growth previously projected by DoD – as opposed to net cuts – and b) a drop in war funding which arguably makes sense when you’re withdrawing troops from combat.

• Force and infrastructure adjustments, starting with a new base realignment and closure (BRAC) process. The last one dates from 2005 and wrapped up only very recently. Well, almost. Also, the start of a 5-year process that aims to lower active troops to 490,000 for the Army and 182,000 for the Marines; and a 10% reduction in the number of Air Force tactical air squadrons from today’s 60. A new BRAC is sure to open a whole new can of worms in Congress.

• Slowing down JSF procurement – again – to allow for more testing and address the laundry list of issues outlined in the latest DOT&E report [PDF]. This decision reflects the conclusions of the Concurrency Quick Look Review [PDF] that talked of a “lack of confidence in the design stability” and of the “concurrency driven consequences of the required fixes.”

• Retirement or divesting of 27 C-5As, 65 C-130s and 38 C-27s. Cancellation of Global Hawk Block 30 (not the whole program). Early retirement of 7 cruisers; delayed or reduced production of 14 ships, spread between LHA, LCS, JHSV, Virginia-class sub. Termination of the Defense Weather Satellite System (DWSS). Reduction in JAGM funding. Focus on JLTV rather than HMMWV Recap.
• Adjustments to pay raises shouldn’t start until 2015. Health care fees, co-pays and deductibles for retirees on the other hand will start to rise earlier. Beyond that, DoD is asking Congress to establish a commission to review military retirement. What could go wrong with that?

DID will obviously follow budget developments closely as they unfold and further details are made available. For reference, the FY12 DoD budget documents are found here. In other news:

• Lockheed Martin reported sales growth of 1.8% to $46.5B for 2011. Aeronautics is where most of the growth was, followed by electronic systems, while information and space systems saw a slight drop in sales. The company’s total backlog grew by 3% to $80.7B. The 8-K filing or press release don’t detail how much of that number is funded, and there’s the question of actual F-35 delivery rates in the next few years. As of the end of 2010 the funded backlog amounted to 64% of the total, based on that year’s 10-K filing.

• Raytheon’s AGM-65E2 laser Maverick passed its testing, clearly the way for delivery and use of the back-in-production missiles.

• The Defense Acquisition University published its Better Buying Power (BBP) learning materials.