Terminations, Reductions, and Savings: Budget of the U.S. Government, Fiscal Year 2010 (excerpt)
(Source: Office of Management and Budget; undated, released May 7, 2009)
The 2010 budget for the Department of Defense (DOD) requests $533.8 billion, or an increase of four percent from the 2009 enacted level of $513.3 billion.

This funding increase allows DOD to address its highest priorities. The budget meets the President’s commitment to increase the size of the Army and Marine Corps, improves medical treatment for wounded service-members, and confronts mental health needs.

The President’s plan provides $75.5 billion in supplemental appropriations for 2009, as well as $130 billion from the 2010 budget, to support ongoing overseas contingency operations, while increasing efforts in Afghanistan and drawing down troops from Iraq responsibly.

Reforms acquisition:
The Budget sets realistic requirements and incorporates "best practices" by not allowing programs to proceed from one stage of the acquisition cycle to the next until they have achieved the maturity to clearly lower the risk of cost growth and schedule slippage.

(EDITOR’S NOTE: The total savings made possible by these terminations and reductions are estimated by OMB at approx. $50 billion, and are detailed below for each program.


Termination: C-17 Strategic Airlift Aircraft
The Administration proposes to terminate production of the C-17 airlift aircraft and fund an orderly shutdown of the production line because the number of C-17s now ordered will be sufficient to meet the Department of Defense's (DOD's) airlift needs. The C-17 is designed to carry heavy military cargoes over long distances.

JUSTIFICATION:
A total of 205 C-17s have been ordered with budgetary resources provided prior to 2009. The Congress authorized six aircraft in 2009 but provided no funding. Continuing C-17 production would cost about $3 billion per year in 2010 and subsequent years.

The Government Accountability Office has urged a careful balancing of costs and requirements in determining how DOD should meet its airlift needs, and DOD has conducted such assessments.

For example, in the Quadrennial Defense Review in 2006, and in other internal reviews, DOD examined the strategic implications of various airlift force levels. DOD concluded that for long-range airlift 205 C-17s, together with the existing fleet of C-5 aircraft, would be sufficient to meet DOD's mobility needs, even under the most stressing scenarios.

Thus, no more C-17s need be ordered, and production will cease when the 205th aircraft has been produced.

The 2010 request includes $91 million for an orderly shutdown of the production line.


Termination: Combat Search And Rescue (CSAR-X) Helicopter
The Administration proposes to terminate the Air Force Combat Search and Rescue (CSAR-X) Helicopter Program because of problems with contracting, high costs, and questions about the need for an aircraft solely devoted to this purpose when multi-purpose aircraft are available.

JUSTIFICATION:
The Department of Defense is questioning the need for a single-purpose helicopter. Unlike the other services, which carry out this mission with multiple-purpose helicopters, the Air Force has traditionally carried out this mission with single-purpose aircraft. The Department will review the combat search and rescue mission in the context of multi-service requirements and capabilities.

Further, this program has experienced contracting problems that have led to delays and higher costs. A prime contractor was selected but, because of multiple protests by the losing contractors, the program has not begun development. The Congressional Budget Office, Government Accountability Office, and the Center for Strategic and International Studies (CSIS) all reported that faulty contracting actions would result in costly delays with no clear resolution.

The original estimate for the program was approximately $11.5 billion. Funding in 2010 will be used for a requirements review and in support of the CSAR mission as determined in the Quadrennial Defense Review.


Termination: F-22 Raptor Fighter Aircraft
The Administration proposes to terminate the F-22 Raptor program after production of the planned 187 aircraft because the Department of Defense (DOD) has determined that 187 F-22s, together with other fighter aircraft including the new Joint Strike Fighter now in production, will be able to meet foreseeable threats.

JUSTIFICATION:
This proposal would terminate procurement of the F-22 Raptor after 2009 when the current multiyear procurement contract ends. In December 2004, DOD determined that 183 F-22s would be sufficient to meet its needs.

The Administration's current plans would provide a total of 187 aircraft, including four additional F-22s funded in the 2009 supplemental request to replace legacy aircraft lost in the war theater. Once these 187 aircraft are built, the production line will close.

Both the Government Accountability Office and Congressional Budget Office have questioned the affordability of continuing the F-22 program, at about $3.5 billion per year, while simultaneously making other large procurements, such as the Joint Strike Fighter.

Moreover, several reviews within DOD, for example the 2006 Quadrennial Defense Review, have confirmed that 187 F-22s, together with the planned growth in the fleet of Joint Strike Fighters to 2,443, will meet DOD's requirements to maintain air superiority and to attack enemy forces on the ground.


Termination: Future Combat Systems Manned Ground Vehicles
The Administration proposes to eliminate the Future Combat Systems (FCS) manned ground vehicles because of their high cost, concerns about their survivability in future conflicts, and the lack of a coherent tactical vehicle strategy. FCS includes unmanned aerial and ground vehicles, unattended sensors and rockets, manned vehicles and a network that links all systems together.

JUSTIFICATION:
The Future Combat Systems is the largest development program in the history of the United States Army.

The program costs have swelled from $92 billion to $159 billion. The manned ground vehicle (MGV) portion of the program includes eight different vehicles built on a common chassis that are operated by a crew inside the vehicle. Individual vehicles are estimated to cost much more than the vehicles they were developed to replace.

The eight manned ground vehicles are:
l) reconnaissance and surveillance vehicle;
2) mounted combat system;
3) non-line-of-sight cannon;
4) non-line-of-sight mortar;
5) field recovery and maintenance vehicle;
6) infantry carrier vehicle;
7) medical vehicle; and
8) command and control vehicle.

The Government Accountability Office has questioned the feasibility of the technology requirements for FCS and whether the technology will be developed and available in time and at a reasonable cost for production. MGVs are the most controversial part of the FCS program because of their high cost, uncertain application to irregular warfare, and reduced armor compared with currently fielded combat vehicles. The Congressional Budget Office has raised questions whether the lighter armor on FCS vehicles makes sense in the types of wars our nation may face in the future.2 The vehicle program was developed nine years ago and does not take into consideration the Army's recent investment in Mine Resistant Ambush Protected, Stryker, and upgraded, existing combat vehicles.

The Department of Defense intends to cancel the manned vehicle portion of FCS and will reevaluate requirements and available technologies to develop the next generation combat vehicle. The Department intends to retain and accelerate the fielding of other FCS capabilities that have demonstrated success, such as the unmanned ground and aerial vehicles and the unattended sensors. Through 2015 the remaining elements of FCS should cost approximately $24.5 billion including $2.981 billion in 2010.

Net savings from cancellation of the manned ground vehicles totals approximately $22.9 billion.


Termination: Joint Strike Fighter Alternate Engine
The Administration has decided not to fund the Joint Strike Fighter (JSF) Alternative Engine Program (AEP), because it is no longer needed as a hedge against the failure of the main Joint Strike Fighter engine program. The Department of Defense (DOD) proposed cancelling the JSF AEP in the President's 2007 Budget because development of the main engine was progressing well and analysis indicated that savings from competition would not be offset by high upfront costs. DOD did not request funding for the program in the 2008 and 2009 Budgets.

However, the Congress has rejected the proposed cancellations and has added funding each year since 2007 to sustain the AEP development.

JUSTIFICATION:
Because DOD wanted to reduce technical risk in the development of the JSF engine, the Department has had two contractors developing separate JSF engines. However, in 2007, DOD proposed to cancel the contract for the second (alternate) engine because the main engine program was progressing well, making a second engine program unnecessary. Moreover, financial benefits, such as savings from competition, have been assessed to be small, if they exist at all, because of the high cost of developing, producing and maintaining a second engine.

The reasons for canceling the AEP in 2007 remain valid today. Studies by both the Government Accountability Office and Congressional Budget Office have questioned the affordability of the current defense program, particularly the high cost of modernizing tactical aviation.

Canceling the AEP will result in estimated near-term savings of over a billion dollars.


Termination: Multiple Kill Vehicle Program
The Administration proposes to terminate the Multiple Kill Vehicle (MKV), which is a long-term research and development program designed to counter ballistic missile threats by using several "kill" vehicles launched from a single interceptor, or missile.

The Administration will instead focus on proven, near-term missile defense programs that can provide more immediate defenses of the United States, its deployed forces, and allies against ballistic missile attack.

JUSTIFICATION:
The primary reason the Administration proposes to terminate this long-term development program is to focus, instead, on proven, near-term missile defense programs, such as the Terminal High Altitude Area Defense (THAAD) and the Aegis Ballistic Missile Defense programs. The capabilities of the THAAD and Aegis Ballistic Missile Defense programs have been demonstrated through numerous successful flight tests.

This termination of MKV will save over $4 billion from 2010 through 2015.

In addition, program requirements are uncertain and the program is already behind schedule and over budget because of technological problems. In its 2009 Assessments of Selected Weapon Programs, the Government Accountability Office (GAO) assessed 16 of the program's critical technologies as immature and questioned whether the program could achieve its goals because it has yet to set top-level requirements.

In addition, in a March 2009 report, GAO pointed out that MKV experienced software development problems that delayed its planned 2008 fall test by several months.2 In that same report, GAO estimated that one of MKV's task orders would have a cost overrun of between $1.6 million and $2.5 million, or between 8 to 13 percent, above the original budgeted amount.


Termination: Next Generation Bomber
The Administration has decided not to pursue development of a new long-range bomber, which the Department of Defense (DOD) had planned to begin fielding in 2018 as a means of augmenting the existing bomber fleet. The existing fleet of 173 bombers will be able to meet expected threats.

JUSTIFICATION:
The 2006 Quadrennial Defense Review proposed that DOD develop a new long-range heavy bomber by 2018 to augment the current bomber fleet of B-52s, B-2s and B-1Bs. The Administration has decided not to pursue technology efforts aimed at developing a new bomber because the current fleet is performing well.

Further, as a result of ongoing efforts to upgrade the existing bomber fleet with new electronic and weapons systems, current aircraft will be able to meet the threats expected in the foreseeable future. Since there is no urgent need to begin an expensive development program for a new bomber, the Department will utilize the additional time to develop a better understanding of the requirement and to develop the technologies most suitable for a long-range bomber. Also, the Congressional Budget Office, in its analysis of the long-term implications of the defense program, concluded that DOD's weapons acquisition program, including the future bomber fleet, may not be affordable over the next six years.

Not pursuing this program will result in savings of several hundred million dollars through 2013.


Termination: Presidential Helicopter (VH-71)
The Administration proposes to terminate the Presidential Helicopter replacement (VH-71) program and to initiate a new Presidential Helicopter replacement program, and to properly develop options for a fiscal year 2011 follow-on program.

The Presidential Helicopter is responsible for the safe, reliable transport of the President in administrative and contingency environments, worldwide. The VH-71 is being developed to replace the existing VH-3D and VH-60N helicopters, which currently serve as "Marine One".

JUSTIFICATION:
The VH-71 program is six years behind schedule, and its cost has grown from $6.5 billion to over $13 billion. Over $3.2 billion has already been spent on this program with no operational aircraft delivered.

The Government Accountability Office has warned that future costs of the VH-71 are unknown, and the Congressional Research Service has raised the question if the current program should be cancelled. These high costs and schedule slippage have occurred because of challenging program requirements and an ambitious schedule. Instead of continuing to pursue the current program, the Administration proposes to cancel it, review requirements, and establish a new program.

A new Presidential Helicopter replacement program will allow the Administration to take advantage of new technologies and develop a helicopter that is fiscally responsible while still meeting the President's requirements.

Funding in 2010 will cover termination costs, Government efforts to develop options for a Presidential Helicopter replacement program, and service life extensions for the current Presidential Helicopter fleet.


Termination: Reliable Replacement Warhead (Department of Energy)
The Administration proposes to cancel development of the Reliable Replacement Warhead (RRW) – a new design warhead intended to replace the current inventory of nuclear weapons -- because it is not consistent with Presidential commitments to move towards a nuclear-free world.

JUSTIFICATION:
Development of RRW was scheduled to require $60 million between 2009 and 2014 to complete both design work and analysis for a new family of nuclear warheads. The 2009 request for the program went unfunded by Congress. Terminating RRW is consistent with Congressional priorities and the Administration's commitment to move toward a nuclear-free world.

In recent studies, the National Academy of Sciences, the Government Accountability Office, and other prominent groups have concluded that the current stockpile will remain reliable for an extended period as long as planned maintenance and certification programs continue. On-going Life Extension Programs (involving replacement of aging components and selected improvements to safety, security and reliability) support these maintenance and certification efforts and will continue.

The Nuclear Posture Review will address the programs needed to support long-term certification of the stockpile and how to maintain the required skilled and specialized workforce. Until its results are published, committing funding to any particular programmatic solution is premature.


Termination: Transformational Satellite
The Administration proposes to terminate the Air Force's Transformational Satellite (TSAT) program because of significant cost increases and slips in schedule. It intends instead to buy additional Advanced Extremely High Frequency (AEHF) satellites, which offer maturity and stability in technology development and in design. The TSAT program was envisioned as a constellation of four satellites and a spare – with supporting ground infrastructure -- designed to provide strategic communications and Internet-like capabilities to deployed forces.

JUSTIFICATION:
The TSAT program has suffered from funding instability, and increasing costs and development delays. Moreover, the program's schedule has slipped significantly. The Government Accountability Office (GAO) noted that the revised date for the launch of the first satellite was 2019 -- almost four years later than previously scheduled. GAO further noted that the launch delay was supported by the Office of the Joint Chiefs of Staff, which had concerns about TSAT's development progress and synchronization with other programs. Also, in recent testimony before the Congress regarding alternate budget scenarios, the Congressional Budget Office pointed to the cancellation of TSAT as a potential cost-saving measure.

Based on a recent revision of the program, the estimated investment cost for the current TSAT program is $19.4 billion. This represents an increase in the cost for each satellite of roughly $400 million over the original estimate. Significantly, the latest TSAT configuration has substantially less technical capability than what was proposed for the original configuration. The Air Force has spent approximately $3.3 billion on the TSAT program through 2009.

A preliminary assessment done by the Department of Defense (DOD) anticipates savings of about $1.5 to $2.5 billion dollars though 2015 as a result of procuring AEHF satellites in the place of TSATs.

Procuring more than the four AEHF satellites currently under development will allow DOD to continue upgrading its communications satellite inventory with less expensive satellites than TSAT. AEHF satellites will provide a significantly higher data throughput capacity than protected satellites currently in use. Also, they have enhanced features to make them more survivable, jam-resistant, and secure from eavesdropping than current protected satellites. Most importantly -- and as noted by GAO -- AEHF component technologies are mature and their design appears stable.


Reduction: Airborne Laser Program
The Administration proposes to terminate the second Airborne Laser (ABL) prototype and instead focus the program's research and development efforts on resolving the numerous technology problems with the first ABL prototype. The goal of the ABL program is to destroy enemy missiles during the boost, or initial, phase of their flight. However, the ABL program must work out many technical and operational problems before it will be ready for operational testing and production.

JUSTIFICATION:
The first ABL prototype has been in development since 1996 and has experienced many cost overruns, schedule delays, and technology problems. Technical difficulties with the beam control hardware in 2008 caused the program to incur unanticipated costs and schedule slippage. Recent tests have indicated excess jittering, which must be reduced so the vibration of the aircraft does not degrade the laser's aim. These problems and others have been highlighted in numerous Government Accountability Office reports. The Congressional Budget Office included an option for canceling ABL in its 2007 Budget Options report.

Further, ABL's affordability and feasibility as an operational system is in question because of the large number of aircraft and unique support system required to be effective. A report by the American Physical Society noted that maintaining one ABL aircraft continuously in one area would require tanker support and defensive air cover. That same report also raised questions about the effectiveness of ABL and its ability to defend the United States against a liquid-propellant Intercontinental Ballistic Missiles launched from a country such as Iran because of its geographical size.

The Missile Defense Agency had planned to begin developing a second ABL prototype in 2010. This prototype was intended to be more robust, supportable, and producible than the testing prototype and suitable for operational testing. However, the technological problems with the first prototype need to be resolved before proceeding with a more advanced version.


Reduction: Aircraft Carrier Build Schedule
The Administration proposes to delay the aircraft carrier, CVN-79, by one year from 2012 to 2013 which reduces advance procurement funding for the ship in 2010. CVN-79 is the second ship in the Ford Class of aircraft carriers. This next generation aircraft carrier will include new technologies such as advanced radar and an electromagnetic aircraft launch and recovery system. The delay will allow the Navy to begin procuring aircraft carriers at five-year intervals instead of four, while still meeting its wartime requirements and forward presence goals.

JUSTIFICATION:
The Budget seeks to delay CVN-79, the second ship of the Ford class by one year. This delay will allow the Navy to begin procuring aircraft carriers on a five-year build cycle. Because aircraft carriers have a service life of fifty years, the total number of aircraft carriers will remain at 11 for most years through 2040.

However, after 2040, this building rate will support a force structure of 10 aircraft carriers, which will still allow the Navy to meet wartime requirements and maintain a sustainable and independent forward presence.

USS Gerald R. Ford (CVN-78, the first ship in the Ford class) is experiencing cost growth and schedule delays in the new Electromagnetic Aircraft Launch System (EMALS), the system used to launch aircraft, the new dual band radar and the advanced arresting gear. The Government Accountability Office has raised particular concerns about the aircraft launch system because some carrier-specific functionality testing will conclude shortly before shipyard delivery in 2013 leaving little time to resolve problems before it is installed on the ship. With an additional year, the Navy will have more time to work through these challenges before these technologies are installed on CVN-79.


Reduction: Government Reliance On Contracted Service Support
The Budget proposes reducing spending on contractor services in the Department of Defense (DOD) in 2010 to achieve net savings of $0.9 billion by bringing some contracted services in house.

JUSTIFICATION:
DOD intends to reduce the number of support service contractors from the current 39 percent of the defense workforce to the pre-2001 level of 26 percent. To that end, DOD's 2010 budget request reduces funds for service contracts and expects to achieve savings of 40 percent per year by replacing selected contractors with 33,600 Federal civilians by 2015.

The net savings is $0.9 billion.

In 2003, the Government Accountability Office (GAO) reported that DOD spends more on services than on supplies and equipment and that these costs are increasing year after year. Between 1998 and 2007, DOD service contract obligations grew 83 percent. This growth was due to increased operations and maintenance requirements from overseas contingency operations, a relative decrease in the number of military personnel available to provide support services, and the previous Administration's emphasis on competitive sourcing.


Reduction: Ground-Based Midcourse Defense Program
The Administration proposes to hold the number of deployed Ground-Based Midcourse Defense (GMD) interceptors at 30, which provides an adequate near-term defensive capability of the United States, while allowing for additional testing and the resolution of problems with interceptor technology.

The GMD program tracks and intercepts intermediate and long-range ballistic missiles in the midcourse phase, which is the longest phase of flight, using missiles called Ground-Based Interceptors (GBI). The program had planned to deploy 44 interceptors at Fort Greely, Alaska, and Vandenberg Air Force Base, California, by 2011.

JUSTIFICATION:
The Missile Defense Agency has procured the hardware for 44 interceptors of which it plans to deploy 30 interceptors by the end of 2009. These 30 deployed interceptors will provide the United States with a sufficient inventory of operational interceptors based on the current intelligence assessment of the national security threat.

Technology and hardware problems delayed planned tests of the GMD and have raised questions about the effectiveness of the system and the reliability of the interceptors already fielded. In a March 2009 report, the Government Accountability Office (GAO) expressed concern that the GMD program is fielding interceptors before they are properly tested. The GAO concluded the interceptors were produced before being tested in a realistic environment.

In light of these concerns, the Administration proposes to hold the number of deployed interceptors at 30 and instead focus on testing and correcting any remaining technology and software problems. The Administration will decide at a later time if deploying an additional 14 interceptors is warranted.


Reduction: LPD-17 and Mobile Landing Platform Transport Ships
The Administration proposes to delay building both the eleventh LPD-17 and the Mobile Landing Platform (MLP) ships by one year. The LPD-17 transport dock ship is an amphibious ship designed to transport up to 700 Marines and their heavy equipment into a hostile environment. The MLP ship is designed to facilitate at-sea cargo transfers. The LPD-17 delay allows the Navy more time to fully analyze required amphibious fleet capabilities and the MLP delay allows the Navy to develop a more mature design for this ship.

JUSTIFICATION:
The Department of Defense (DOD) proposes to delay these two ships by one year in order to assess costs and fully analyze required capabilities. In 2009, the Congress provided partial funding for one LPD-17 (the tenth). The 2010 request provides the remaining funding for that ship and delays funding for the eleventh ship. This delay will give the Navy an opportunity to assess its needs for amphibious lift in light of the Administration's strategic review.

The 2010 request also provides funding for materials needed before the start of construction for the MLP. This request is significantly lower than the full funding request originally planned by the Navy.

This delay will allow the Navy to develop a more mature design for the MLP before beginning construction, consistent with the President's announced principles of acquisition reform and reduce the risk of cost growth that has plagued other Navy shipbuilding programs.

Together, delaying these ships saves approximately $3 billion in 2010 compared to what the request would have been if it included full funding for these ships as had been planned.


Reduction: Navy CG(X) Cruiser
The Administration proposes to delay the next generation Navy cruiser beyond 2015. The CG(X) next generation cruiser is a multi-mission ship with an emphasis on air and ballistic missile defense. It will replace the existing Ticonderoga Class Cruisers.

This delay will allow the Navy additional time to decide on the hull and propulsion system for this ship and develop the needed capabilities.

JUSTIFICATION:
The Navy originally planned to procure its first CG(X) cruiser in 2011 but will now delay this procurement. The Navy will continue to fund a research and development effort that represents an increase from 2009, but is a significant reduction from what it would have been if the ship were still planned for procurement in 2011.

The CG(X) hull and some new technologies such as advance radar were originally based on the next generation destroyer program (DDG-1000). However, continued development, testing and a study of alternatives is necessary before deciding on the preferred hull and technologies on CG(X). This delay will allow the Navy additional time to decide on the type of hull and propulsion required for the CG(X) and then to develop the needed capabilities. In the near term, to meet its warfighting requirements, the Navy will buy additional DDG-51 class destroyers that will have advance capabilities.

Delaying the procurement of the cruiser saves approximately $150 million in 2010 compared to what the request would have been if the Navy still planned to procure the cruiser in 2011.


Click here for the full report (131 pages in PDF format) on the OMB website.


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