Between sequestration, government shutdowns and continuing resolutions, budget uncertainty grips the U.S. Department of Defense (DoD) and the military space community. Not only is 2014 unsettled, but questions about the four following years are unanswered, leaving space priorities in limbo.
Todd Harrison believes these budget abnormalities may be here to stay and will push the Air Force and the Pentagon to re-examine how they fund the national space programs.
Earlier this year, the Center for Strategic and Budgetary Assessments released a report authored by Harrison, dubbed “The Future of Milsatcom,” that created waves for its recommendations for expanding U.S. military satellite communications capabilities within a constrained budget environment. Among other things, the report suggested that the U.S. Air Force develop a new class of satellites that use existing technology to fill the gap between protected and unprotected communications.
Harrison spoke with SpaceNews staff writer Mike Gruss as the budget shutdown began.
Is sequestration the new normal?
We should view that more as a ceiling rather than a floor in the defense budget. We’re going to come down to that level and maybe even go below it in future years. I say that because we’ve gotten this far into sequestration and it doesn’t seem to bother people on Capitol Hill all that much. If you look at the budget caps, you only go down slightly more in 2014 — the defense budget will hit about $475 billion. Then after that it will actually be allowed to grow a little in the coming years.
What does that do long-term to the industrial base?
The bottom line is DoD will not be able to support an industry of the size and of the capabilities that we have today. There are several ways this could play out. There could be some consolidation in industry. You could see prime contractors buying up some of the smaller subs. You could see some companies choosing to exit the defense industry or exit part of it. At the end of this, we’re likely to have a defense industry where there’s only one viable prime in many sectors.
Is space one of those areas?
I think we’ll see some specialization in space where companies may give up on trying to compete for certain kinds of space programs and just focus on their strengths, perhaps where they’re already an incumbent. We could see some primes saying, “Space is not a large part of our business” — military space in particular.
Do you see sequestration taking a bigger bite out of space and missile defense or are those areas somewhat sequestration resistant?
Strict sequestration is a uniform cut across everything, so space and missile defense would not be exempt. While I think DoD should prioritize space-based capabilities because it’s so important for enabling our forces, I’m not confident they will. I think the senior leadership in each of the services is more focused on the types of weapons systems and platforms that are visible. You can see a fighter jet. You can see a ship. You can see a tank. But folks don’t see the satellite that protects them.
Could space advocates within the Air Force be doing a better job of ensuring that their voices are heard?
The space community within the Air Force has always been viewed as somewhat of a second-class citizens because they’re not fliers. That’s a cultural issue and I don’t see that changing in the near future. Maybe one day we’ll have a chief of staff of the Air Force who comes from a space background and then we’ll see a shift. I’m not sure that will happen in my lifetime.
Did DoD inadequately prepare for sequestration under the assumption that it wouldn’t actually happen?
They were caught flat-footed. When fiscal year 2013 started, they put out direction to the services and all the components to continue spending as if sequestration would not happen that year. That meant by the time sequestration took effect in March, they had already been spending for almost half the year as if they were going to be at a higher budget level. They did not have the contingency plans they could put into effect immediately to start reduce spending.
When did it finally sink in?
It’s only in the past six months that folks throughout government started to wake up to the fact that this is real. There is not going to be more money for space in the future; there’s going to be less. The resource constraints have sunk in and that’s bringing people around to the notion that we have to fundamentally rethink architectures and the way that we acquire systems. There can’t be another T-Sat (Transformational Satellite Communications System).
How would you assess the space industry’s response?
With only a few exceptions, folks in industry are looking at this and they’re embracing the opportunity. They’ve got lots of great ideas about how to implement things like disaggregation, hosted payloads, being smarter about how DoD buys commercial satellite communications capacity.
How will the situation fundamentally change the way the military procures space capabilities?
If a system is going to cost billions of dollars per satellite, it isn’t going to happen. If you think of what people call the iron triangle of engineering — cost, schedule and performance — you can only make one of those a priority for a system. In the past, we alternated between schedule being a priority and performance being a priority. Now I think it’s completely changed and cost is the driver. That’s the priority here and you’re going to have to sacrifice schedule and you’re going to have to sacrifice performance if you want to stay under your cost cap. You can’t get everything you want in a satellite anymore.
Can you elaborate on the schedule aspect?
You’re going to have to be more flexible. You’re going to get it when you get it. This is going to be a really hard transition for people who for their whole career, this is how it’s been — “Well, performance is king or schedule is king and I’ll get the money I need because I can justify it.” It’s not going to work anymore. You’re going to be given a certain amount of money and you’ll be lucky to get that.
What have you learned from the commercial satellite industry since your report came out?
They’re ready to move out and there are ways that they can provide commercial satellite communications services with an increased level of protection at a more affordable cost to DoD if DoD will act more like a commercial customer.
Some people have said DoD will never do that.
It’s going to be hard. This is one of those things that’s going to require a complete rethink of how we acquire commercial services. It’s foolish to continue buying off the spot-market, using short-term leases as needed. That’s how we end up in a situation like where we are now where we have really no choice but to lease capacity from a satellite owned by a Chinese company.
If you look at companies like Xtar, what did they do? They went out and built something DoD needed and hoped, “If you build it, they will come,” and DoD is not showing up. Are commercial providers going to continue to throw money at ventures like that? No.
But I guess I’m an optimist because I think that change can happen.
What, in your view, will the next U.S. military communications satellite system look like?
It’s going to be an evolution of systems and components that we already have today. Whether it’s a hosted payload or some sort of modular satellite bus, that’s still TBD.
Is this budget process — with continuing resolutions and shutdown threats — what we should expect every year?
If you look at the makeup of Congress, particularly in the House of Representatives, one-third to one-half of the members are less than six years in office. They’ve never seen firsthand how the system is supposed to work. That scares me a bit that we may be leaving behind the regular order of the budget process and not be able to come back to it easily. I sure hope we get back to regular order, but I don’t see it happening anytime soon. Because the fundamental issues that divide folks in Congress, the issues causing this budget turmoil, they’re not getting resolved.
And then that creates turmoil within DoD.
Absolutely. How do you plan? You had a sequester in 2013. You have no idea what the budget for 2014 is going to be. You’re planning for one level. It’s probably going to be $50 billion less than that, but you don’t know. You don’t even have a continuing resolution so how do you project that out? How do you think of 2015, much less the [five-year defense plan] that goes with that budget? Right now, DoD has two parallel budgets that they’re working and they don’t even know which one they’re going to go forward with in the spring.
What did you think of recent remarks by Gen. William Shelton, commander of Air Force Space Command, that sequestration will break every U.S. military space program?
I don’t think he’s overstating it too much. I think it’s going to break a lot of things. And in space, programs are already on tight timelines and budgets, and it doesn’t take much to derail a program. The kind of budget turmoil we’re seeing from sequestration, from continuing resolutions, from a government shutdown, that almost makes it mission impossible for program managers.
What should the military space community expect as the budget shrinks?
In previous drawdowns, procurement spending dropped to about $62 billion in today’s dollars. At the end of the Vietnam drawdown, procurement came down to about $62 billion in today’s dollars. At the end of the Cold War drawdown, procurement came down to $62 billion. Right now we’re at about $99 billion. What if we came down to $62 billion? Think about the impact that would have. How many satellites could you buy if that much of the procurement budget is cut?
What number is likely?
Probably somewhere in between. You look at major acquisition programs within the Air Force budget that are going to be competing with each other. The big ones are things like the tanker, the Joint Strike Fighter, the next-generation bomber that are supposed be ramping up over that time period. You can’t do all of those in a $62 billion total procurement budget, much less anything space.
Follow Mike on Twitter: @Gruss_SN
