Operating costs will eat into DoD efficiency savings

By detailing the Defense Department’s initiative to trim $100 billion from overhead and unnecessary expenses last week, Secretary Robert Gates also provided some early glimpses into how the Pentagon will reinvest those savings.

But with one major caveat: More than a quarter of that money, which he originally intended to push into new defense resources, will be consumed by higher than expected operating costs.

The true number that will be on the table for the Army, Air Force, Navy and Marines to use for actual new or expanded capabilities will be closer to $72 billion over the next five years, Gates said Thursday.

He said approximately $28 billion would be consumed by unexpected costs over the next five years, including higher price tags for health care and other military compensation, training, and maintenance on weapons and bases.

“Nonetheless, the military services’ reform efforts have left them more than $70 billion from overhead and program savings to spend on high-priority military capabilities, funds that would not otherwise be available,” Gates said.

The Air Force was able to come up with $34 billion in savings. It will use its share to buy more Unarmed Aerial Vehicles – namely, the Reaper drone built by General Atomics. The savings will also allow the Air Force to transition funding for its reconnaissance missions out of the temporary war budget and into the long term base budget.

Gates said the Air Force will also ramp up purchases the the Evolved Expendable Launch Vehicle for space launches, buy more Joint Strike Fighter simulators, and modernize the radar systems on the F-15 fighter fleet.

He said the service would also develop a new, long range nuclear-capable bomber.

“This aircraft, which will have the option of being remotely piloted, will be designed and developed using proven technologies, an approach that should make it possible to deliver this capability on schedule and in quantity,” Gates said. “It is important that we begin this project now to ensure that a new bomber can be ready before the current aging fleet goes out of service.”

The Army found $29 billion worth of savings. In return, that service will modernize its fleet of Abrams tanks, Bradley Fighting Vehicles and Stryker vehicles, speed up delivery of a new tactical communications network, and improve suicide prevention and substance abuse counseling programs. Gates said the Army will also be getting some new UAVs.

“The demand from ground commanders for intelligence, surveillance and reconnaissance assets continues to exceed the military’s supply,” he said. “In response, the military, with the Army, will buy more MC-12 reconnaissance aircraft, accelerate procurement of the service’s most advanced Gray Eagle UAVs, and begin development of a new vertical unmanned air system to support the Army in the future.”

The Navy and Marines’ $35 billion in savings will translate into new ships. Gates said the Navy would propose the purchase of one more Littoral Combat Ship, a new destroyer and an ocean surveillance vessel. Also, partially as a hedge against more delays in the Joint Strike Fighter, the Navy would buy new F-18 fighters and spend additional money on extending the useful life of 150 planes already in the fleet. They’ll also spend on new electronic jamming systems and ramp up repairs to some of the Marines Corps’ equipment that has taken a beating in the Iran and Afghan wars.

Gates said DoD was also planning new spending on missile defense.

“I’m proposing more funding for long-range defense interceptors that will support the phased adaptive approach in Europe, and extend that level of protection to the continental United States,” he said. “In order to improve theater missile defenses, we will also purchase additional advanced radar systems that have been requested by combatant commanders in Europe, Pacific and the Middle East.”

Adm. Mike Mullen, Chairman of the Joint Chiefs of Staff said each of the military’s service chiefs were supportive of both the cuts and the reinvestment efforts that they will fund.

“This isn’t about just cutting or saving, it is about readiness,” he said. “Not only do these reforms preserve essential capabilities, which is the highest priority of this process, but I believe will actually improve our readiness. We’ll be able to do things smarter, more efficient — more efficiently and more in line with the challenges we face in the fiscal environment that we’re in. The services have been able to reinvest savings significantly into programs and capabilities that most meet their needs as they see and we see the future.”

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