Retour aux nouvelles

27 mai 2020 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité

Will defense budgets remain ‘sticky’ after the COVID-19 pandemic?

By: Eric Lofgren

Congress' unprecedented fiscal response to COVID-19 has many in the defense community wondering whether belt tightening will hit the Pentagon. On May 19, the Congressional Progressive Caucus wrote a letter arguing for substantial defense budget cuts to support additional spending on the pandemic. Nonprofit progressive supporters have been asking to cut a much larger $350 billion each year from the Pentagon in their “Moral Budget” proposal. What the progressives perhaps do not fully appreciate is the “stickiness” of defense budgets.

In economics, stickiness refers to rigidity in the movement of wages and prices despite broader economic shifts pushing for new equilibrium. The phenomenon is apparent in defense budgets as well. Most expectations are that the fiscal 2021 budget will remain over $700 billion.

Consider an analogy: the 2008 financial crisis. Lehman Brothers collapsed just a couple weeks before fiscal year 2009 started, leaving that $666 billion defense budget largely beyond recall. The following years' budgets were $691 billion, $687 billion, $646 billion and then finally in FY13 a more precipitous 10 percent fall to $578 billion. It took four years for the Pentagon to really feel the squeeze of the financial downturn.

The uninitiated may believe COVID-19 happened with enough of lead time to affect the FY21 budget. Congress received the president's budget in February 2020 and has until the start of October to make targeted cuts without encountering another continuing resolution.

The defense budget, however, represents the culmination of a multiyear process balancing thousands of stakeholder interests. It reflects a vast amount of information processed at every level of the military enterprise.

The Pentagon's work on the FY21 budget request started nearly two years ahead of time and includes a register of funding estimates out to FY25. Moreover, defense programs are devised and approved based on life-cycle cost and schedule estimates. Cuts to a thorough plan may flip the analysis of alternatives on its head, recommending pivots to new systems or architectures and upsetting contract performance.

Not only are current budgets shaped by many years of planning, but they get detailed to an almost microscopic level. For example, the Army's FY21 research, development, test and evaluation request totaled $12.8 billion, less than 2 percent of the overall Pentagon request. Yet the appropriation identifies 267 program elements decomposing into a staggering 2,883 budget program activity codes averaging less than $10 million each.

Congressional staff is too small to understand the implications of many cost, schedule and technical trade-offs. To gather information on impacts, the Pentagon is thrown into a frenzy of fire drills. More draconian measures, like the FY13 sequestration, leading to indiscriminate, across-the-board cuts can sidestep hard questions but comes at a significant cost to efficiency.

Targeted cuts at a strategic level, such as to the nuclear recapitalization programs and other big-ticket items, can expect stiff resistance. First, there is real concern about great power competition and the damage that may be wrought by acting on short-term impulses.

Second, targeted programs and their contractors will immediately report the estimated number of job losses by district. Before measures can get passed, a coalition of congressional members negatively impacted may oppose the cuts. Resistance is intensified considering the proximity to Election Day. Budget stickiness is built into the political process.

The FY22 budget is perhaps the first Pentagon budget that can start inching downward. More than likely, severe cuts aren't in the offing until FY23 or FY24 at the very earliest. That gives time for policymakers to reflect on the scale of the rebalancing between defense and other priorities.

In some important ways, congressional control of the Pentagon through many thousands of budget line items restricts its own flexibility. For example, continuing resolutions lock in program funding to the previous year's level until political disagreements can be resolved. The military cannot stick to its own plans, much less start new things. If budget lines were detailed at a higher level, such as by major organization or capability area, then the Pentagon could make more trade-offs while Congress debates.

Similarly, if the Pentagon had more budget flexibility, then Congress could more easily cut top lines and allow Pentagon leaders to figure out how to maximize with the constraint during the year of execution. Congress could gain the option to defer the hard questions that can make cuts politically difficult.

The Space Force recently released a proposal for consolidating budget line items into higher-level capability areas. It reflects the idea that portfolio-centric management is an efficient method of handling rapid changes in technologies, requirements or financial guidance resulting from economic shocks. Until such reforms are pursued, expect defense budgets to remain sticky.

Eric Lofgren is a research fellow at the Center for Government Contracting at George Mason University. He manages a blog and podcast on weapon systems acquisition. He previously served as a senior analyst at Technomics Inc., supporting the U.S. Defense Department's Cost Assessment and Program Evaluation office.

https://www.defensenews.com/opinion/commentary/2020/05/26/will-defense-budgets-remain-sticky-after-the-covid-19-pandemic/

Sur le même sujet

  • Contract Awards by US Department of Defense - November 29, 2019

    2 décembre 2019 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité

    Contract Awards by US Department of Defense - November 29, 2019

    DEFENSE LOGISTICS AGENCY Bell Boeing Joint Project Office, California, Maryland, has been awarded a maximum $218,749,892 modification (P00006) exercising the first one-year option period of a one-year base contract (SPRPA1-20-F-CD01) with four one-year option periods for performance based logistics and engineering support for the V-22 platform. This is a firm-fixed-price requirements contract. Locations of performance are Texas and Pennsylvania, with a Nov. 30, 2020, performance completion date. Using customers are Navy, Air Force, Marine Corps and Foreign Military Sales to Japan. Type of appropriation is fiscal 2020 through 2021 Air Force, U.S. Special Operations Command, Navy and FMS appropriated funds. The contracting activity is the Defense Logistics Agency Aviation, Philadelphia, Pennsylvania. NAVY Raytheon Integrated Defense Systems, San Diego, California, is awarded a $74,726,993 cost-plus-fixed-fee, indefinite-delivery/indefinite-quantity contract for design agent engineering services for networks and network user systems on operational landing platform/dock (LPD)-17 class amphibious transport dock ships. Work will be performed in San Diego, California (80%); Norfolk, Virginia (15%); Mayport, Florida (5%) and is expected to be complete by December 2024. Fiscal 2020 operations and maintenance, (Navy) funding in the amount of $689,680 will be obligated at time of award and will expire at the end of the current fiscal year. This contract was not competitively procured in accordance with 10 U.S. Code 2304 (c) (1), only one responsible source and no other supplies or services will satisfy agency requirements, as implemented by Part 6.302-1 of the Federal Acquisition Regulation. This contract was issued on a sole-source basis to Raytheon Integrated Defense Services. This requirement is for design agent engineering and technical services for the overall management, development, testing, troubleshooting, repair, configuration, maintenance and fleet sustainment of fielded networks and associated network user systems/clients on operational LPD 17-class amphibious transport dock ships. These services are in support of Naval Surface Warfare Center, Philadelphia Division, Code 52, which is responsible for the lifecycle in-service engineering agent support of mission critical interior communications data networks. The Naval Surface Warfare Center, Philadelphia Division, Philadelphia, Pennsylvania, is the contracting activity (N64498-20-D-0001). W.R. Systems, Fairfax, Virginia, is awarded a modification to a previously awarded (N65236-19-D-8001) indefinite-delivery/indefinite-quantity, cost-plus-fixed-fee, with provisions for firm-fixed-price task orders, performance based contract. This single award contract (SAC) is currently in its first year with a Feb. 15, 2020, contract expiration date. This modification increases the basic contract estimated ceiling by $61,999,996, and changes the cumulative estimated value of the contract from $49,999,995, to $111,999,992. This SAC is for position, navigation and timing and geospatial information services support to naval ships and shore facilities. Work will be performed in Norfolk, Virginia, and is expected to be completed by February 2020. This SAC was previously procured competitively by full and open competition via the Naval Information Warfare Systems Command e-commerce central website and the Federal Business Opportunities website. This sole-source contract was not competitively procured in accordance with 10 U.S. Code 2304(c)(1) and only one responsible source (Federal Acquisition Regulation subpart 6.302-1). The Naval Information Warfare Center, Charleston, South Carolina, is the contracting activity. General Dynamics/Electric Boat, Groton, Connecticut (N66604-20-D-D001); Huntington Ingalls/Newport News Shipbuilding, Newport News, Virginia (N66604-20-D-D002); and Oceaneering International Inc., Chesapeake, Virginia (N66604-20-D-D003) are being awarded a $49,921,536 indefinite-delivery/indefinite-quantity (ID/IQ) multiple-award contract to fabricate submarine safety/Level 1 (SUBSAFE/L1) hardware, and provide technical and engineering services. For these base ID/IQ five-year contracts, funding will not be obligated at time of award; the $1,000 minimum guarantee will be executed on each awardee's initial task order. Work will be performed at the contractors' locations and minimally at government locations, and is expected to be completed by November 2024. This multiple-award contract was competitively procured with three acceptable offers received via the Federal Business Opportunities website. This requirement is to provide SUBSAFE/L1 (or related) hardware, systems engineering, technical analyses, mechanical and electrical design, manufacturing, installation, test and evaluation, maintenance and repair services required to support existing and future fleet programs. In accordance with 10 U.S. Code 2304(c)(1), only a limited number of responsible sources and no other supplies or services will satisfy the needs of the agency. This tasking was limited to those activities qualified to perform SUBSAFE work per the Naval Sea Systems Command Notice 5000, fiscal 2019 Navy working capital funds. The Naval Undersea Warfare Center Division Newport, Newport, Rhode Island, is the contracting activity. Washington State Community College District #3, Bremerton, Washington, is awarded a not-to-exceed $18,000,000 five-year indefinite-delivery/indefinite-quantity contract for educational services in support of the apprenticeship, helper and after-hours program, which pays for tuition, lab fees, math fees, tutoring services and assessment fees in an effort to provide customers with quality, timely and cost efficient maintenance, modernization, and technical and logistics support by maintaining a highly trained and skilled workforce. These services are in support of Puget Sound Naval Shipyard and Intermediate Facility in Bremerton, Washington. This contract does not include options. Work will be performed in Bremerton, Washington, and is expected to be complete by December 2024. No funding will be obligated at the time of award. In accordance with Federal Acquisition Regulations Part 15, this was a competitive procurement with one offer received via the Federal Business Opportunities website. Operations and maintenance (Navy) funding will be obligated at the task order level prior to each semester. This is a commercial service contract that was competed in accordance with Federal Acquisition Regulation Part 15. Only one proposal by the incumbent was received. The Puget Sound Naval Shipyard, Bremerton, Washington, is the contracting activity (N4523A20D1300). ARMY General Dynamics Mission Systems, Taunton, Massachusetts, was awarded a $9,164,584 cost-plus-fixed-fee contract to procure contractor field service representative support services for the warfighter. One bid was solicited with one bid received. Work will be performed in Taunton, Massachusetts, with an estimated completion date of Nov. 30, 2020. Fiscal 2019 other procurement, Army funds in the amount of $6,363,737 were obligated at the time of the award. U.S. Army Contracting Command, Aberdeen Proving Ground, Maryland, is the contracting activity (W15P7T-20-F-0004). AIR FORCE Tunista Services LLC, Honolulu, Hawaii, has been awarded a $7,362,228 firm-fixed-priced contract modification (P00006) to previously awarded contract FA4855-18-C-0001 for continuation of operations, maintenance and support services at Melrose Air Force Range. The contract modification provides for the exercise of option year two procured under the basic contract. Work will be performed at Melrose, New Mexico, and work is expected to be completed by Nov. 30, 2020. The total cumulative face value of the contract is $22,676,639. Fiscal 2020 operations and maintenance funds in the amount of $7,362,228 are being obligated at the time of award. The 27th Special Operations Contracting Squadron, Cannon Air Force Base, New Mexico, is the contracting activity. https://www.defense.gov/Newsroom/Contracts/Contract/Article/2029052/source/GovDelivery/

  • New Poco RAT Targets Spanish-Speaking Victims in Phishing Campaign

    11 juillet 2024 | International, Sécurité

    New Poco RAT Targets Spanish-Speaking Victims in Phishing Campaign

    Discover how Poco RAT, a new remote access trojan, targets Spanish-speaking industries through sophisticated phishing campaigns and Google Drive explo

  • DISA awards $199 million contract for cloud security

    24 août 2020 | International, C4ISR

    DISA awards $199 million contract for cloud security

    Andrew Eversden WASHINGTON — The U.S. Defense Information Systems Agency awarded its first production other transaction authority contract on Aug. 20, the agency announced. The production OTA contract, with a ceiling of about $199 million, was awarded to By Light Professional IT Services to support the Defense Department's Cloud Based Internet Isolation program. The contract has a one-year base with four one-year options. The Cloud Based Internet Isolation program falls under the purview of DISA. It's meant to reduce the risks involved with non-mission-essential internet browsing by isolating the browser in the cloud instead of on the user end point. Isolation in the cloud is meant to prevent malicious code or content from accessing Pentagon networks. “By partnering with industry, DISA's CBII team determined a means to transform how [the Department of Defense] defends against internet web browser-based threats,” the DISA news release read. “This partnership will provide direct support to our nation's warfighters by providing cybersecurity within the cloud while protecting the warfighter's electronic devices from exposure to direct threats.” https://www.c4isrnet.com/disa/2020/08/21/disa-awards-199-million-contract-for-cloud-security

Toutes les nouvelles