Friday, June 18, 2010

Understanding Sky High Defense Aviation Costs

By Rick Newbold

The Army has awarded defense contractor Northrop Grumman a $517
million, five-year contract to build the Long Endurance
Multi-Intelligence Vehicle (LEMV), which is an airship the size of a
football field capable of carrying 2500 pounds of equipment, including
a variety of sensors. The LEMV is only one of a family of
intelligence, surveillance, and reconnaissance (ISR) assets in use or
proposed for use in war zones and various regional hot spots.

Marty Sargent, LEMV project manager, described the capability in
today’s edition of Stars and Stripes as an “unblinking eye.” The craft
reportedly does not carry defensive weapons, requiring it to be based
in a relatively secure location. The unmanned aerial vehicle (UAV)
platform has rapidly grown in popularity, and costs continue to rise
while the Pentagon grapples with fiscal realities and potential
near-term domestic spending constraints. Looking outside the US, G2
Solutions forecasts a world market for unmanned persistent ISR
programs of $44.5 billion through 2019.

The General Atomics RQ-1 Predator first flew as an Advanced Concept
Technology Demonstrator in 1994, according to Aviation Magazine.
Northrop Grumman’s Global Hawk, an outgrowth of a Defense Advanced
Research Projects Agency (DARPA) program, first lifted off at Edwards
Air Force Base (California) in 1998. Since that time these two
unmanned aircraft systems (UAS) and a host of others have come to
represent mainstays for both the Department of Defense (DoD) and
militaries around the globe.

UAVs have in some ways proven to be a victim of their own success. In
a March 17th ISR report, the Government Accountability Office (GAO)
revealed that US Central Command (CENTCOM) exploits less than one-half
of the electronic signals intercepts collected from Predators.
According to DoD officials, finding native speakers of the collected
languages to successfully translate and exploit data collected in
certain foreign languages is difficult, and training analysts takes
time and is also difficult to manage with deployment schedules. Also,
linguists who translate and exploit electronic signals intelligence
(SIGINT) data must qualify for security clearances that require
extensive background checks and cost tens of thousands of dollars for
top secret and above, depending on the background of the applicant.

On April 19, 2007 the GAO reported that DoD’s approach to managing its
ISR assets limited its ability to optimize its use of those assets. US
Strategic Command (STRATCOM) is charged with making recommendations to
the Secretary of Defense on how best to allocate to combatant
commanders (COCOMs) theater-level assets used to support operational
requirements. According to the report, STRATCOM did not have
visibility into all ISR assets, and the commanders responsible for
ongoing joint air operations did not have visibility over how tactical
assets were being tasked. Additionally, tactical units had little
visibility into how theater-level and ISR assets embedded in other
units were being tasked. Finally, DoD lacked both metrics and feedback
to evaluate its own ISR missions, which has since that time led to
difficulty validating demand for ISR assets.

Adding to cost pressures are legacy systems scheduled to be phased out
but kept in inventory to avoid capability gaps as new systems come
online. For example, the Air Force had planned by 2012 for Global Hawk
to replace the U-2 spy plane, first flown in 1955, but delays in the
Global Hawk program contributed to the need for a current U-2
inventory.  In 2009, the Air Force stated that it plans to extend the
U-2 retirement from 2012 until 2014 or even later.

The 2006 Quadrennial Defense Review called for a shift from military
service-focused acquisition systems and concepts of operation to a
more joint approach to acquiring and employing defense assets.
Implemented in 2003, the Joint Capabilities Integration and
Development System (JCIDS) is DoD’s principal process for identifying,
assessing, and prioritizing proposals to improve existing capabilities
and develop new capabilities. The JCIDS process is designed to
facilitate coordination among DoD components in assessing proposals
for new capabilities to ensure they enable joint forces to meet the
full range of military operations and challenges.

A program often touted as the model for inter-service coordination and
cooperation is the  Joint Strike Fighter (JSF) program, which bills
itself as the Department’s focal point for defining affordable next
generation strike aircraft weapon systems for the Navy, Air Force,
Marines, and allies. The main selling point and focus of the program
has been affordability achieved through reduction of development,
production, and ownership costs.

As of December 31, 2007, the total estimated acquisition cost (the sum
of development cost, procurement cost, and military construction
[MilCon] cost) of the F-35 program in constant (i.e.,
inflation-adjusted) FY2009 dollars was approximately $246 billion,
including about $47.1 billion in research and development costs,
$198.4 billion in procurement costs, and about $496 million in MilCon
costs. However, the total price tag of the F-35 Joint Strike Fighter,
the military’s largest weapons procurement program, is now projected
to be $382 billion, 65 percent higher than original 2002 estimates,
according to the Pentagon’s own independent cost analysis group. The
per plane cost, including development and production, now sits at $112
million, nearly 85 percent higher than the original estimate of $62
million for an “inexpensive” replacement for the aging F-16 fleet.

Not only do cost saving measures and budgetary processes often
ultimately result in cost overruns, but there is little will in
Congress to kill unnecessary or even unwanted programs, partly for
fear of job losses in home districts. This is why defense contractors
masterfully scatter manufacturing facilities across the country in a
variety of congressional districts.

Currently on assignment in northern Iraq, Rick Newbold is a defense
project manager and policy analyst with extensive counterterrorism and
intelligence, surveillance, and reconnaissance (ISR) experience. He
holds a juris doctorate from Regent University and an MBA from the
Thunderbird School of Global Management.

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