On National Security | With a bigger budget, DoD will be pressed to show returns

by

“On National Security” appears in every issue of SpaceNews magazine. This column ran in the April 9, 2018 issue.

Defense Secretary Jim Mattis over the past year laid out the case that the United States for too long has under-invested in the modernization of the military. Power competitors like China and Russia are advancing while the Pentagon suffers from strategic atrophy, Mattis warned in the National Defense Strategy: “Our competitive military advantage has been eroding.”

Congress responded in a big way. Though six months late, the spending bill for fiscal year 2018 boosted military modernization accounts by 20 percent compared to last year’s budget, adding nearly $40 billion for research, development and procurement of new systems.

Mattis was visibly enthused when he spoke with reporters at the Pentagon a few days after a bipartisan two-year budget deal was reached. “We have the best budget predictability we’ve had in a dozen years,” he said. “You’ll see more money going into research and engineering.”

With a track record of questionable spending and many failed programs, DoD has little room for error. The Pentagon and defense contractors will have to show “visible improvements” relatively soon, cautioned industry consultant James McAleese.

Much of the responsibility for overseeing investments will fall on Deputy Defense Secretary Patrick Shanahan.

In a speech at the Center for a New American Security, Shanahan said the Pentagon was in awe over the increase. The consensus in the building was that a budget hike of this size would not happen, he said. But it happened. Now Congress implicitly is saying: “Show us that you’re going to produce the results,” Shanahan added. “And also show us that there’s real accountability for achieving those results.”

Accountability is going to be a major theme in Mattis’ Pentagon. Industry analyst Byron Callan said Shanahan’s comments are “evidence that DoD leadership is aware of the risk that spending plans are short-circuited by another bout of fraud, waste and mismanagement.”

In that vein, Mattis met with defense and aerospace industry executives April 5 to drive the message of “good stewardship” of taxpayer dollars, DoD spokeswoman Dana White said. “The secretary wants to create a culture of performance.”

One change proposed by Shanahan is to expand the role of the Pentagon comptroller, a job now held by David Norquist, and give him the title of “chief financial officer.” This would broaden his responsibility from just keeping track of the money to measuring the return on the investment, something that private sector CFOs are expected to do.

With regard to space modernization, a number of key lawmakers will be paying special attention to how DoD moves in this area. The National Defense Strategy mentions “resilience, reconstitution, and operations to assure our space capabilities” as a top investment priority.

The phrase “bold moves in space” has appeared in almost every speech and congressional testimony by Air Force leaders in recent weeks. “Bold moves” include the service putting more resources into space warfighting training and technology. It also means departing from traditional satellite procurements and using commercial approaches.

Congress is demanding faster modernization but it remains to be seen how much tolerance they will have for failures or for DoD betting on the wrong technology. The space industry was surprised that lawmakers did not support Air Force plans to buy commercial communications services instead of military satellites, but did not challenge the service’s decision to stop buying SBIRS missile-warning satellites and shift to a new constellation that conceivably would have more commercial technology.

Congress in fact cut SBIRS funding in 2018 to align with the DoD strategy. This is significant, said Jamie Morin, executive director of the Center for Space Policy and Strategy at The Aerospace Corporation. Congress is willing to give the Air Force an opportunity to prove it can field faster, he said. Government programs by nature are “incremental,” said Morin. “But the Air Force is clearly making a serious effort to move to more rapid acquisition.”

Shanahan suggested faster modernization calls for a more aggressive use of private-sector technology. “Our version of R&D will be ‘rip off and deploy,’” he said.

“The mindset has always been we’ll grow it ourselves,” Shanahan said. “What you’ll see with the team that’s in place is that we’ll leverage things that have already been done. This also gives us a chance to bring in new companies and new ideas.”

Sandra Erwin

 

Sandra Erwin covers military space for SpaceNews. She is a veteran national security journalist and former editor of National Defense magazine.