Navy searching for $40 billion to reinvest from old systems

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The Navy is in search of $40 billion within its own budget as it finds itself with too many fiscal demands, like building a larger fleet, and a lack of appetite from Congress to raise the defense funding topline without fiscal accountability from the service.

In a Feb. 18 memo, acting Navy Secretary Thomas Modly details how the service will undertake its own Night Court — a process already being undertaken in the Army and Defense Department as a whole, which stands for a full, comprehensive review.

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“I have commissioned a Department of the Navy Stem-to-Stern (S2S) Review,” Modly said in the memo. “The S2S will apply a strategic lens to the DoN program, with a fiscal goal of saving $40 billion in savings (average of $8 billion a year) across the 2022-2026 future years defense program. These savings will be repurposed in accordance with my top three priorities: designing and building a future integrated naval force structure (355+ ship Navy by 2030); advancing our intellectual capacity and ethical excellence; and accelerating digital modernization across the force.”

The savings account for about 7% of DoN’s discretionary budget when force structure, manpower and operational tempo are not included.

The S2S will identify low priority, redundant or legacy programs and headquarters functions that can be realigned, reduced or eliminated.

“No part of the DoN program is exempt from the review,” Modly said.

It will, however, focus on IT duplications; consolidation of headquarters, commands and organizations; streamlined naval logistics; outsourcing capabilities; reducing Global Force Management offerings; significant reductions in service support contracts; and repurposing military personnel contractors.

The review will commence immediately, and will be co-chaired by the deputy undersecretary of the Navy, the chief management officer and a three-star from each service. The representatives from the chief information officer and the assistant secretaries will be included as well.

The S2S will finish on April 15 to coincide with the next budget cycle.

The Navy memo makes it clear that the service cannot continue its current priorities without changing the way it is spending or getting more money. The fiscal environment is unlikely to afford a higher topline for defense after four years of budget increases.

The Navy wants a bigger fleet, to recapitalize its submarine force, and to increase its readiness and lethality. All of those priorities are expensive.

“We must act now to make tough, fiscally-informed choices in order to fund our key strategic priorities using the budget we have, not the budget we wish we had,” Modly said in the memo.

The Army pioneered the Night Court process and found more than $30 billion over the next five years to reprioritize into its Big Six programs: long-range precision fires, next-generation combat vehicle, future vertical lift, air-and-missile defense, soldier lethality and the network.

However, yesterday Lt. Gen. Thomas Horlander, military deputy to the Army comptroller, said the low-hanging fruit is gone, and further Night Courts will not be as productive. The Army is therefore asking for a bigger slice of the budgetary pie in the future to fund programs it deems important.

The Navy may be realizing that it needs to shape up its books before it can ask for a larger piece as well.

The Pentagon also went through the process with its fourth estate and found at least $5 billion in waste.