Posted on 12/22/2005 3:59:47 AM PST by SLB
The Pentagon last week was poised to approve Army plans to move billions of dollars within its spending plans, including small cuts to hundreds of modernization efforts while boosting its modularity initiative.
In a draft program budget decision obtained by Inside the Army, the Pentagon describes a set of “program change proposals” nominated by the Army to modify its spending plans over the next five years.
The PBD, No. 701, includes more than 20 pages of line items, each outlining a cut or a boost to a specific program.
Most of the cuts impact procurement and research and development plans, with much of that money shifted to modularity and operation and maintenance activities.
The largest single modernization cut is to the Guided Multiple Launch Rocket System, slated to take a hit of more than $300 million.
The document also accepts Army program change proposals covering military construction as well as certain aviation programs, including a decision to buy seven fewer Black Hawk helicopters.
The bulk of its changes are tied to what is known as the Army's “Business Re-engineering Initiative,” an effort to find money within the Army budget to pay for modularity, the service's plan to convert from a division-based force to one that is brigade-based.
PBD 701 does not, however, address a program change proposal dealing specifically with Army modularity. That proposal has been addressed in a separate PBD that leaves intact the service's plan to transform the Army's 43 active and 34 National Guard and Reserve brigades, according to a source who has seen the document ( ITA , Dec. 5, p1).
The Army's Business Re-engineering Initiative was tied to its modularity plans by a late 2004 budget decision, PBD 753, which awarded the Army $5 billion per year between fiscal years 2007 and 2011 to fund modularity but instructed the service to “rationalize” its plans and find billions of dollars in “efficiencies.”
The business re-engineering proposal was aimed at finding those efficiencies through the conversion of some military jobs to civilian slots, reducing contract support and implementing industry best practices like “Lean Six Sigma,” according to an Army memo on the outyears budget that was submitted to OSD in early September ( ITA , Sept. 19, p1).
The PBD shows how the service plans to enact many business-related moves. The steepest individual procurement cut is directed at GMLRS, a self-guided rocket program. The re-engineering proposal accepted by OSD snatches $304 million from the program.
That amount comprised the bulk of reductions to missile procurement accounts, which were cut by a total of $441.2 million, according to the document.
Aircraft procurement accounts are reduced by $119.3 million under the business re-engineering. “Other procurement” accounts, which cover a wide range of vehicle, communications, technology and logistics programs, is sliced by $433 million over the future years defense plan.
Reductions to ammunition procurement accounts would total $63.2 million.
As a whole, research, development and engineering accounts are tapped for $1.3 billion in budget reductions, the document states.
Those reductions help fund an increase of more than $4.1 billion to the Army's modularity plans. The PBD adds more than $1.3 billion per year in FY-09, FY-10 and FY-11 for the intiative.
The proposal also includes hundreds of millions of additional funds for Operation and Maintenance budget lines for items like “administration” “force readiness operations support” and “specialized skill training.”
OSD also has rejected portions of the Army's business re-engineering proposal, according to the draft PBD. One would have reduced funding for National Guard military technicians by $50.6 million starting in FY-08, while another would have reduced National Guard and Reserve personnel accounts. OSD did not accept cuts to the Reserve personnel budget and lowered reductions to the National Guard's. As such, Guard personnel accounts will be lowered by $323 million, the PBD states.
The program change proposal covering Army aviation adds $48.6 million to procurement and research coffers to integrate and procure an alternate communications system for 122 new-production Black Hawks, Apaches, Chinooks and Armed Reconnaissance Helicopters.
The “alt-comms” package is needed because of program delays to the Joint Tactical Radio System, the document says.
The draft PBD also adds $2.2 million to “enhance the Tactical Airspace Integration System that facilitates airspace deconfliction at the brigade through theater levels,” as well as $38.1 million to “fund fly-by-wire technology development” for Black Hawks, the PBD states.
The Army proposed to finance those bills by buying seven fewer Black Hawks in FY-07, which would save $88.9 million, according to the document.
The PBD comes as the Pentagon is wrestling with its FY-07 budget request, due to Congress in February. More PBDs and separate program decision memoranda will make the larger moves tied to the budget as well as the Quadrennial Defense Review, which is nearly complete.
In October, the services were told to expect at least $32 billion in cuts over the future years defense plan; the Army's share of that bill is $11.7 billion.
Some changes to key Army programs are still outstanding. For instance, an Army change proposal may cut a key network program -- the Warfighter Information Network-Tactical -- by $710 million ( ITA , Dec. 5, p1).
Sizable reductions to the Army's largest development program, the Future Combat System, are expected but have not been publicly circulated. The Army maintains that FCS cannot be cut (see related story).
Separate PBDs address Air Force and Navy program change proposals.
I have been predicting the death of FCS for a year. Boeing is trying to line it's pockets at the expense of the taxpayer for too long. All the gee whiz stuff that is being touted by the engineers is just at the too hard and too costly point right now.
FCS is a complete and total cluster.
Boeing, which is the "lead systems integegrator", has a contract that actually has them acting AS THE GOVERNMENT in this acquisition program. Dangerous in the best of circumstances, but suicidal when the contract vehicle you use is the equivalent of writing a contract on the back of a cocktail napkin.
The original contract was done by DARPA, not the Army. They used a little-known clause in the Federal Acquisition Regulations called an "OTA" (Other Transaction Agreements). This clause was intended for use with small non-Defense entities (like colleges and universities) so that they don't have to hire 100 accountants to comply with all the FAR reporting requirements (e.g. cost reports, prgress reports, etc.). The biggest OTA I every saw (at DARPA) was ~$20 Million. The OTA for Boeing is now valued at $162 BILLION. (http://www.defenselink.mil/releases/2003/nr20030815-0374.html)
At a SASC hearing earlier this year, the question was asked, "what percentage of FCS subcontract money goes to 'traditional' defense contractors ?" The answer was "98%".
Other questioning revealed that Boeing uses contract instruments very similar to FAR-based contracts to deal with their subs. This means that the government has less protection against Boeing screwups than Boeing was willing to accept with their subs. It's outrageous.
The Army is in the process of converting this abortion contract to a more traditional FAR-based contract. But of course, to get Boeing to 'agree', the government will have to sweeten the pot with a larger potential award fee (read a $ 4-8 Billion extra profit).
To make matters worse, Boeing chose to implement the program as a jobs program, using the contract to keep aircraft-industry employees on the payroll during the downturn in the commercial aircraft industry. Boeing has employees at dozens of facilities working independently on different facets of the program. And most of them don't know a platoon from a battalion. And now that the aircraft business is picking up, the employees that have been trained up are now being moved back into the commercial side. Boeing's bureacracy is almost as bad as the governments.
I disagree with McCain on a lot of things, but on the FCS/Boeing boondoggle, I can't help but agree with him. This could turn into a bigger fiasco than the tanker deal.
-R
Oops broken link.
Here's the Pentagon announcement showing the FCS cost growth going from $98.8 Billion to $161.4 Billion:
http://www.defenselink.mil/releases/2005/nr20051115-5102.html
-R
You have it almost right.
Boeing's bureaucracy is WORSE!
The two loser groups are the troops and the taxpayers.
IOW: "The Clintoon era concept i.e. patient is inoperable, don't cut it, destroy it"
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