As Space Force proposal moves forward, Shanahan hints at major changes in space procurements

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Deputy Defense Secretary Shanahan: “The Space Development Agency gets after how we, as a government, develop and field capability more quickly.”

WASHINGTON — Much of the criticism aimed at the Trump administration’s Space Force plan is that it creates an expensive new bureaucracy that the Pentagon does not need.

Deputy Secretary of Defense Patrick Shanahan agrees that the Space Force overhead is a concern, but it’s a relatively easier problem to solve than figuring out a new model for developing and procuring space technologies.

President Trump ordered the Pentagon to stand up a new military branch for space, and Shanahan is overseeing the drafting of a legislative proposal to establish a Space Force. Speaking on Friday at the 2018 Military Reporters & Editors conference, he said his focus now is on how to “deliver effects and capability” in space.

“That’s not to say that headquarters are not important,” he said. But standing up an office is easy compared to “fielding technologies in outer space.” Organizing a Space Force as a new military service will involve several steps. First up is setting up a new combatant command and a Space Development Agency, said Shanahan. “The Space Development Agency gets after how we, as a government, develop and field capability more quickly.”

There is broad agreement that the U.S. military has to modernize its space systems and make them more resilient for future conflicts where enemies might target American satellites. But there is a heated debate on “how” to do that, said Shanahan.

A lot of time is spent in the Pentagon discussing acquisition issues, he said. For space, the question is “How quickly can we get equipment and capability that is survivable and dominant in a contested environment?”

Shanahan envisions the Space Development Agency will have a technology focus but also will help to consolidate duplicative space projects pursued by individual services. “How do you align the department so we don’t solve the same problem multiple times?” he asked. The Space Development Agency would be a clearinghouse for commercial space technology, and for figuring out how to apply that technology across DoD, not just in a single service.

To illustrate his point, Shanahan mentioned the Air Force is looking to develop a battle-command network to replace the JSTARS surveillance aircraft, and the Army needs reliable communications systems for troops in the field. “They all are going to use space,” said Shanahan. Some investment could be shared, he suggested. The biggest challenge here is “not the technology but how do you get DoD aligned? How do we adopt commonality and develop standards?”

Shanahan’s thinking on the Space Development Agency appears to have been shaped by conversations with Army Futures Command’s Lt. Gen. John Murray. Ground forces are the military’s biggest users of space services like communications, timing, navigation and early warning of missile launches. Shanahan said the Army should have some say in the “space architecture,” such as how future constellations are designed and constructed. “If the Army is first in developing a component of our space architecture, how do we get everybody to hold hands and say the Air Force is going to adopt the same thing?”

The new agency would be the “enforcing function so we build out this new resilient, survivable capability as a standard for the department and other parts of the government,” said Shanahan. The Space Development Agency also would help address equipment problems on the ground, such as the compatibility between satellites and radios. Space is associated with satellites, he said, “but it’s also ground stations, how we deploy 5G, how we build out the network.”

One way to characterize the new agency, said Shanahan, is “systems engineering on steroids.”

Critics have questioned the idea of standing up a new space agency that would be disconnected from the space programs that the military services maintain. Most of the military’s space dollars are spent on “legacy” programs and it would be unrealistic to think that all that investment can be replaced overnight. But Shanahan said change has to start sooner rather than later. “The way I think about this is that we have to stop doing the things we know won’t be effective,” he said. Some programs should no longer get funded if they are not delivering “high performance in that new contested environment,” he said. The Space Development Agency would provide a roadmap “so DoD doesn’t fall back on past practices.”

On the question of “what things we need to transition over” to the new agency, “it’s not just legacy systems. It’s the organizations that go along with them and sustain them,” he said. “We can’t let any new work be done the old way.”

New agency a starting point
The Pentagon and Congress have spent decades trying to fix the procurement system to expedite the development of cutting-edge weapons. The space reorganization is not going to attempt to tackle those big problems, said Shanahan. “That takes too much time.”

The Space Development Agency should be a starting point, he said. “We need to stand it up. … And then we have to start expanding. We’ll expand in parallel to how quickly the organization can restructure itself.”

Most of the military’s space technology and procurement resources today reside in the Air Force’s Space and Missile Systems Center, in Los Angeles. Will the Space Development Agency take resources from the Air Force and from SMC? Shanahan said those are conversations that are under way. “When you look at SMC, we have a tremendous amount of resources,” he said, and he recognized that change can’t happen overnight. One of the challenges in the space reorganization is “figuring out how much pace can the organization stomach?” he said. “We have to start. I’m interested in starting tonight not in capturing everything.”

Shanahan pushed back on a reporter’s assertion that to pay for the Space Force, the Air Force would take a “huge budget hit.” He said the point is to use DoD’s resources more efficiently. Again, he pointed out how the Army is now developing its own communications networks and technologies to counter GPS jamming. “I asked Gen. Murray, ‘Are you sure you want to do that? Shouldn’t we use Air Force resources? … We can’t have the Army or the Missile Defense Agency going off and developing solutions,” he said. “When we look at projects, people should be doing systems engineering.”

Some space budget “realignments” will be proposed for fiscal year 2020, he said. “We might surprise you.”

That said, “I don’t think there’s going to be ‘budget hits.’” But there will be changes in how funds are allocated. “You’ll see Gen. Murray saying, ‘SDA we’re going to let you do the systems engineering.’” He said the current practice of each service developing its own solutions has to end.

Shanahan did not provide a cost estimate for the Space Development Agency or for the Space Force at large. Asked if he agreed with an Air Force estimate that organizing a new branch and combatant command would cost $13 billion over five years, Shanahan said the numbers are still being worked out. The cost will depend on “how fast do we want to go? How many pieces of the organization do we want to move simultaneously?” The Pentagon believes U.S. Space Command and the Space Development Agency should move first.

The cost of the Space Force could become a flashpoint in next year’s budget because the new service will have to be funded with existing resources. Trump has ordered spending cuts across the federal government. The president said the national defense budget will not exceed $700 billion in fiscal year 2020, while the Pentagon had projected a $733 billion topline. The national defense budget includes the Defense Department’s budget and also covers other expenses related to the nuclear arsenal, intelligence and law enforcement.

Shanahan said he is drafting two spending plans: one with a $733 billion topline and one with a $700 billion budget ceiling as directed by the White House. This will set the stage for a lot of horse-trading between the Pentagon and the Office of Management and Budget, including how to pay for the Space Force.