Defense budget: not a license to steal

Jan. 1, 2002
If there ever was a license to steal, as the critics of the Reagan defense buildup have contended, that license has expired.
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If there ever was a license to steal, as the critics of the Reagan defense buildup have contended, that license has expired.

John Rhea

WASHINGTON — Momentum is continuing to build to beef up the nation's defense budget in the wake of the Sept. 11 terrorist attack, but now Office of Management and Budget (OMB) officials are quietly warning that this is not going to be a license to steal.

The roughly $2 trillion federal budget for the fiscal year 2003, which begins Oct. 1, should be unveiled this month, and the U.S. Department of Defense (DOD) can reasonably expect to get at least $350 billion.

However, at a conference at the National Press Club in Washington early last month OMB director Mitchell Daniels warned that the military services — and their contractors — will be held accountable to verify that their efforts are contributing to national security under the new environment.

The reason: budgeteers have awakened to the reality that the United States is not as rich as everyone thought it was. "On Sept. 11, the two World Trade towers were not the only structures which were brought down, and one could say that the twin towers of America's fiscal health and strength were leveled at essentially the same time," Daniels told the gathering.

Daniels warned that he didn't expect a balanced federal budget before fiscal year 2005. As a result, he said, the OMB staff will scrutinize any programs that don't contribute to the anti-terrorist program — and measuring the effectiveness of the programs that do.

Even before Daniels and his staff went public with their concerns, the Arlington, Va.-based Government Electronics and Information Technology Association (GEIA) trade association had anticipated the most likely economic scenario to be what the group's officials called the "mild near-term recession."

This would be similar to the 1990-91 recession, they told the organization's annual DOD and NASA forecast conference in October, and amount to a one- or two-year downturn with negative real growth of 1.5 percent during the first half of the current fiscal year.

The reality is that the defense budget is what GEIA calls a "zero sum game" in which some programs have to be sacrificed in order to find enough money for the high-priority items. Even before the Sept. 11 attacks, the group noted, information warfare and space were big winners in that game. In the aftermath information superiority is the big-ticket item.

The week before Daniels spoke at the National Press Club, OMB staff members were warning a Nuclear Science Advisory Committee meeting of the Department of Energy and the National Science Foundation that new measurement criteria will be established this fall as a planning tool for basic research programs in the fiscal 2004 budget.

In making the case for program funding it will be "absolutely important" that a program's objectives be clearly defined in understandable language, one of the speakers said. Also necessary will be an explanation of why the research is necessary and a demonstration that progress is being achieved.

This is a little tougher language than is usually associated with research programs, which by their nature tend to be somewhat open-ended, and in which many of the best results are achieved by serendipity.

Nonetheless, this get-tough approach is not unprecedented. The previous administration tried to make a start on establishing performance criteria with the Government Performance and Results Act, and in 1999 a committee of the National Academy of Sciences developed five-year measurement criteria centering on the quality of the research program, relevance to agency mission, and degree of international leadership.

The American Institute of Physics, based in College Park, Md., which monitors federal research policies, conceded that these policies could be beneficial if working scientists participate wholeheartedly and lend their expertise in developing the evaluation methods.

For example, even though the U.S. House of Representatives cut defense research spending in the new budget by 3.5 percent (since reconciled with the more generous Senate) it did modestly fund two programs of importance to the electronics industry: $10 million to the Defense Microelectronics Agency to establish a Center for Nanosciences Innovation to pursue defense applications, and $15 million transferred from university research initiatives to the defense research sciences budget line item to augment existing programs in spin electronics and to accelerate development of this new generation of electronic devices.

On the other side of the zero sum game, one of the losers was the U.S. Navy's Area Missile Defense Program. In mid-December Edward Aldridge, under secretary of defense for acquisition, technology, and logistics, announced that the program was being canceled because it failed to meet the standards established by legislation known as the Nunn-McCurdy Act.

This legislation requires that if the program unit cost of a weapon system increases by 25 percent the DOD must conduct a formal certification process to allow the program to continue.

There are four criteria in this certification process, and they are likely to become increasingly important as the DOD tries to get on top of the military buildup following the Sept. 11 attacks. They are:

  1. the acquisition program is essential to national security;
  2. there are no alternatives to the acquisition program that will provide equal or greater military capability at less cost;
  3. the new estimates of the program acquisition unit cost or procurement unit cost are reasonable; and
  4. the management structure for the acquisition program is adequate to manage and control the costs.

In the case of the Navy anti-missile initiative, the program acquisition unit cost and average procurement unit cost increased by 57 percent and 65 percent respectively. The work stoppage affected such contractors as Raytheon in Tucson, Ariz., and Lockheed Martin in Moorestown, N.J., and Middle River, Md., and the Naval Surface Warfare Center facilities in Dahlgren, Va., and Port Hueneme, Calif.

Over the next several months the Ballistic Missile Defense Organization (BMDO) will address sea-based missile defense as part of its plans to develop an integrated ballistic missile defense system that provides a layered defense against ballistic missiles of all ranges. With the Bush administration's abrogation of the Anti-Ballistic Missile Treaty of 1972 in order to proceed with the National Missile Defense System, this means that BMDO will now be responsible for certifying that the various anti-missile programs meet the tougher performance criteria.

If there ever was a license to steal, as the critics of the Reagan defense buildup have contended, that license has expired.

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