Experts: U.S. Budget Squeeze May Spark New Era of Efficiency, Innovation in Space

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WASHINGTON — An already-tight budget environment combined with the automatic budget cuts known as sequestration could help the U.S. Defense Department reduce redundancies and push the space community into new levels of cooperation and innovation, defense spending experts said here March 11.

Speaking during a panel discussion, these experts found a potential silver lining in the budget crunch that is all but certain to make less funding available for U.S. government space programs over the next few years. The panel, “Investing in National Space Security in an Age of Austerity,” was sponsored by the George C. Marshall Institute and the TechAmerica Space Enterprise Council.

Jay Gullish, director of space and telecommunications for Futron Corp. of Bethesda, Md., said one of the lessons from the last recession — and the subsequent budget austerity that it brought to the private sector — was that 5-10 percent cuts in spending often led to greater efficiencies and larger profits. The space industry could find similar efficiencies as Pentagon budgets shrink, he said.

Under a 2013 spending bill passed by the House of Representatives March 6, a U.S. Air Force budget account that traditionally funds much of the Pentagon’s space portfolio would be cut from $6 billion to $4.9 billion. A companion bill introduced in the Senate calls for a similar reduction.

When sequestration is factored in, the total for that account, dubbed Missile Procurement, drops to $4.5 billion, a 25 percent reduction from 2012.

But Gullish said austerity breeds innovations such as partnerships where investment burdens, along with the resulting benefits, are shared. As an example, he cited a private-sector partnership in which satellite operators Asia Broadcast Satellite of Hong Kong and Satmex of Mexico pooled their resources last year on a block buy of four telecommunications satellites from Boeing Satellite Systems of El Segundo, Calif.

John Sheldon, a fellow at the Marshall Institute, a think tank here, said military space leaders have long recognized that smaller budgets were on the way but that sequestration marks the start of a major restructuring within the Defense Department.

“Sequestration is a blunt instrument,” he said. “We will come through this. We will come to a new normal.”

Sheldon was the co-author of a paper published by the Marshall Institute in February titled “An Investment Strategy for National Security Space.”

To adjust to the new reality, Sheldon said, there needs to be more “imaginative, creative thinking” on space spending and decision making.

He and the other panelists agreed that the U.S. military’s reliance on space capabilities will only increase in the years ahead.

Bob Butterworth, president of Aries Analytics, a consultancy here, said that while space programs may receive disproportionately large budget cuts in the coming years, they remain essential to national defense.

Butterworth, who argued in a February 2012 newsletter that U.S. adversaries are working to extend warfare further into space, said military satellite programs make inviting targets for budget hawks in part because they tend to require huge up-front investments. Because satellite programs often can take a decade from design to launch, the adverse consequences of cutting their budgets is not immediately felt, he said.

This dynamic can lead planners to design programs that are “too big to fail,” Butterworth said. A better approach, especially in the current budgetary environment, is to gain a better understanding of what each element of a program — down to the individual satellites in a given constellation — contributes to overall military capabilities and prioritize accordingly.