Budget pressures beg for a serious look at overhauling acquisition system.

Author:Farrell, Lawrence P.
Position:President's Perspective

* The defense budget will be declining by an average of $52 billion per year between fiscal years 2013 and 2017. Even though Congress has not acted on the president's budget request, let's assume lawmakers agree to most of the elements--although the consensus is that changes to military retiree medical benefits don't stand a remote chance of being enacted as proposed. But if the budget is passed as is, and if sequester is enacted in January, another $500 billion to $600 billion will be deducted from the I 0-year budget.

It would be welcome news if Congress and the White House struck a grand deal to make sequester go away. But where will the money be found to "buy down" sequester? And which accounts are likely to become the bill payers?

Recent studies by the Center for Strategic and International Studies offer some clues. The data shows that spending continues to climb even as active duty strength declines. Also, that the base budget is projected to be flat from 2012 out to 2017 in constant dollars with OCO (overseas contingency operations) funding being undefined for every year except 2013, which is $89 billion. The services, especially the Army, need the OCO funding to repair and replace equipment for about three years beyond the end of combat operations, so this uncertainty is troubling.


Interestingly, procurement from 2012 to 2017 grows by 16 percent. All other accounts are flat except research and development, which declines by 1.1 percent.

There are many variables in the budget equation: Expiring tax cuts, the debt ceiling increase, sequestration, the Pentagon's opposition to further cuts, the president's refusal to repeal of sequestration without offsetting with tax increases, and the large national concern with the debt and large deficits.

Finally the CSIS numbers show that the procurement share of 2013 budget is 18 percent but shouldered 38 percent of cuts, while personnel accounts make up 24 percent of the 2013 budget, but suffered only 12 percent of the reductions. Operations and maintenance are 44 percent of the budget and contributed just 35 percent of cuts. If another deal is advanced, one might conclude that personnel and O&M might be the next targets. Or even procurement, which grew by 16 percent from 2012 to 2017.

By service, the Army loses the most (53 percent) while the Navy gives the least (7 percent). This is in line with the new strategy that "pivots to the Pacific" but is not supported by the...

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