DEFENSE

DEFENSE DEATH
DEATH SPIRAL
SPIRAL

Franklin C. Spinney
September 1998
Archive of Defense Commentaries
http://www.d-n-i.net
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 "If
"Ifwe
wedon't
don'tbegin
begintotobreak
breakout
outsoon
soonfrom
fromthis
thisdeath
deathspiral
spiralititwill
willbe
be
impossible to do so later.”
impossible to do so later.”
“The
“Therequired
requiredactions,
actions,IIadmit,
admit,are
areboth
bothunpopular
unpopularand
andextremely
extremelydifficult
difficult
but I believe we have no choice.”
but I believe we have no choice.”
Jacques Gansler
Under Secretary of Defense (Acquisition)
(Source: Defense Daily 3 Sept 1998)

WASHINGTON (AP, 29 Sept) -- The nation's top general said today

that without more pay, benefits and new equipment, America's
under-supplied and overworked military will go into "a nosedive" and
suffer irreparable damage.

"Our forces are showing increasing signs of serious wear," Gen.

Henry H. Shelton, chairman of the Joint Chiefs of Staff told the
Senate Armed Services Committee. "Our current readiness is fraying
and the long-term health of the total force is in jeopardy."
 Defense Death Spiral

Ready for What?

(Strategy - Threat - Forces)

A Modernization Program Declining

that Can Not Modernize Readiness &
the Force Rising Cost of
Front Loading
Low Readiness
Political
Engineering

Accounting
Shambles
 Ready
Ready for
for What?
What?

l Background: The Evolving Nature of War

l Strategic Changes Accompanying End of Cold War
l Implications for Future U.S. Forces & Capabilities

l Adapting to Change @ End of Cold War

ü Evolution of Threats & Military Strategy

l Pattern of Programmatic Adaptations

ü Budgets & Plans
ü Readiness & Rising Cost of Operations.
ü Modernization Agenda
 Background: Evolution of War
(Re: “The Changing Face of War,” Marine Corps Gazette, Oct 89)

l 1st Generation: Driven by Ideas

ü Linear Tactics of Column and Line -- Regularity Driven by Culture & Technology
ü Operational Art - Intuitive -- Napoleon’s use of Time & Space to Set Up Decisive Battle on His Terms
l 2nd Generation: - Attrition Warfare, Driven by Technology
ü Materialschlacht or Industrial War of Attrition - Civil War to WWI and Most of Allies in 2nd WWII (some
exceptions like Patton)
ü Linear Tactics - Regularity Driven by Technology (Indir. Arty, Mach. Guns, Barbed Wire Gave Advantage
to Defense)
ü Operational Art - Procure Success from Top Down: Move Around Defense to Destroy Adversary in a Battle
of Encirclement.
ü Space-Time Decisions Synchronized 1st by Molke, Based on Mobilization & RR (e.g., Schlieffen Plan)
l 3rd Generation: Maneuver Warfare, Driven by Ideas
ü Infiltration Tactics (1918) - Blitzkrieg (Guderian) - USMC & OODA Loop (Boyd, 1980s)
ü Nonlinear Tactics - Evolve Penetrations based on Ideas of Surfaces & Gaps, Recon Pull, Multiple Thrusts,
Mission Tactics & Decentralized, all harmonized, by Ideas of Commanders Intent & Schwerpunct, etc.
ü Operational Art - Dismember & Collapse Adversary by Penetrating Mind-Time-Space Frame of Reference
(ie., Penetrate His Observation-Orientation-Decision-Action Loops, 1st Recognized by Boyd)
l 4th Generation: Irregular Warfare by State & Non-State Actors, Driven by Ideas (?)
ü Revolutionary (Lawrence - Mao - Giap ) - Ethnic/Tribal/Religious - Gang - Terrorist - etc.
ü Tactical Penetration Techniques Still Developing, But are Clearly Spreading w/ Unknown Implications.
ü Operational Art - Collapse Adversary by Bypassing Army & Attacking Population, Culture, & Institution.

How Does this Relate to the Future?

 Are
Arethere
thereAny
AnyEvolutionary
EvolutionaryPathways
Pathwaysthat
thatMight
Might
Carry
CarryForward
Forwardinto
intothe
theFuture?
Future?
(Re:
(Re:“The
“TheChanging
ChangingFace
FaceofofWar,”
War,”Marine
MarineCorps
CorpsGazette,
Gazette,Oct
Oct89)
89)

Trends that Seem to Have Accompanied Generational Shifts

(Particularly from 2nd - 3rd - 4th)
l
l
Greater
GreaterDispersion
Dispersionon
onBattlefield
BattlefieldtotoNeutralize
NeutralizeIncreasing
IncreasingLethality
LethalityofofWpns.
Wpns.
üü Smaller,
Smaller,More
MoreAgile
AgileGroups
GroupsofofCombatants.
Combatants.
üü Greater
GreaterDecentralization
DecentralizationVia
ViaMission
MissionTactics
TacticsininAccordance
AccordanceWith
WithCommander’s
Commander’sIntent.
Intent.
l
l
Decreased
DecreasedDependence
Dependenceon
onCentralized
CentralizedLogistics
LogisticstotoReduce
ReduceVulnerability.
Vulnerability.
üü Increased
IncreasedPremium
Premiumon
onFast
FastMoving,
Moving,Agile
AgileForces
Forcesthat
thatCan
CanLive
Liveofofthe
theLand.
Land.
l
l
Shift
ShifttotoMultiple
MultiplePenetrations
PenetrationstotoDismember
Dismember&&Collapse Adversary. .
CollapseAdversary
üü More
MoreEmphasis
EmphasisononFire
Fire&&Movement
MovementininManeuver
ManeuverContext.
Context.
üü Less
LessEmphasis
EmphasisononFire
Fire&&Movement
MovementtotoDestroy
Destroy(Attrition).
(Attrition).
üü Penetration
PenetrationTargets
TargetsInclude
IncludePopulation,
Population,Culture,
Culture,and
andInstitutions.
Institutions.
üü Conventional Military & Unorthodox Non-Military Operations.
Conventional Military & Unorthodox Non-Military Operations.
l
l
Decreasing
DecreasingDistinctions
Distinctions&&Greater
GreaterIrregularity
IrregularityofofOperations.
Operations.
üü More
MoreIrregular
IrregularBattle
BattleFields
Fieldswith
withLess
LessDefinable
Definable“Fronts.”
“Fronts.”
üü Greater
GreaterIntermingling
InterminglingofofFriend,
Friend,Foe,
Foe,&,
&,Neutral.
Neutral.
üü Decreasing
DecreasingDistinction
DistinctionBetween
BetweenCivilian
Civilian&&Military.
Military.
üü Blurring
BlurringofofDifference
DifferenceBetween
BetweenWarWar&&Peace.
Peace.
 End of Cold War: Strategic Changes
• U.S. Forces in WWI, WWII, & Cold War Were Shaped Primarily to Counter Power
Imbalances in Europe and to Lesser Extent in East Asia.
• Collapse of Soviet Empire Restored Balance of Power Among European Countries &
Obviated Strategic Need for Massive Fwd Deployment of Heavy Air/Land Forces.
• End of Cold War Neutralized Organizing Dynamics of Bi-Polar Rivalry & Unleashed a
Welter of Nationalist, Ethnic, Religious, Tribal, and Criminal Conflicts, All Taking Place in
a Multi-Polar, Multi-Cultural, Political Environment of --
ü Over-population, Urbanization, Environmental Degradation, Poverty, Scarcity, Near Instantaneous Global
Communications, the Conflict Between Western Materialism and Non-western Religious Values, etc.
• Techniques of 4th Generation Warfare Spreading Rapidly as “State” & “Non-State” Actors
Learn to Exploit Weaknesses of Hi-Tech, Fire-Power Intensive, Conventional Forces.
ü Lesson of Gulf War -- If You Fight the West, Don’t Mass Conventional Forces in Open or in Static
Defensive Positions, Where It is Easy to Separate Friend From Foe.
ü Increasing Preference for Irregular/Urban Combat (Hue, Beirut, Mogadishu, Grozny), with Intermingling
of Friendly, Hostile, and Neutral Parties.
Rise of Different Forms of Warfare -- Arabs Achieved More with Intifada and Rocks, Backed Up by
Hamas, Hizbollah & CNN, than in 4 Wars with Israel.
U.S. Driven out of Somalia, in Part, Because Aideed Won the Infowar.
Heavy Russian Forces Defeated by Tribal Irregulars in Chechnya & Afghanistan.
Rise of State/Non-State Sponsored Terrorism to Achieve “Policy” Aims
Loose Nucs & Chem/Bio Wpns Magnify the Leverage of Irregular/Terrorist Forces.
 Implications For Future Capabilities
l Restored Balance of Power => US Military Operations Evolving Toward a Modern Variation of
19th Century Intervention Operations, at least in Near Term.
ü Increased Focus on Littorals (within 100 miles of sea), Where Most of World’s People, Wealth,
Commerce, Instabilities, and U.S. Interests are Concentrated.
ü Decreased Need for Large Standing Land/Air Forces (=> A Big Shift to Reserves).
ü Decreased Need for Heavy Naval Forces Configured for Global War at Sea and Heavy Bombing (=> Shift
to Sea & Air Control in Littorals to Support Interventions).
ü Still Need Intervention & Extraction Capabilities to Protect Lives, Property, Commerce, & Other Interests
(=> Evolution Toward Higher Speed, Lighter Forces, Configured for Autonomous Operations in Hostile
Regions).

l Rise of 4th Generation Warfare => Increased Need for Irregular Warfighting
Skills/Capabilities in Close Quarters Combat & Small Unit Operations Among State/Non-State
Actors.
ü Decreased Reliance on Firepower/Attrition in Ground Warfare
ü Decreased Reliance on Deep Strike/Interdiction/Strategic Bombardment of “Infrastructure” in Air Warfare.
ü Increased Reliance on Fast-Transient Littoral Penetration Opns, Infowar Opns, Special Forces Opns, Pol-
Mil Opns, Counter-Drug/Anti-Terrorist/Anti-Nuc Opns, and Increased Occurrences of Urban/Suburban
Combat.

l Increased Resource Constraints - Growing Internal Competition for Resources.

ü E.g., Need To Fix Decaying National Infrastructure & Pay For An Aging Population.
How Is Pentagon Adapting to the
End of Cold War?

• Short Term? (Readiness)

• Long Term? (Modernization)
 What Near-Term Threat Should We Prepare For?
(FY 1993-1996 & FY 1998-2003 Plan)

Response:
Response:Focus
Focuson
on2nd
2ndGeneration
GenerationConventional
ConventionalWar
War
Be
BeREADY
READYtotoFight
Fight22Major
MajorTheater
TheaterWarsWars(MTWs)
(MTWs)Nearly
NearlySimultaneously
Simultaneously
While
WhileCarrying
CarryingOut
OutaaVariety
VarietyofofSmall
SmallScale
ScaleContingencies
Contingencies(SSCs).
(SSCs).

Short-Range Threat Scenarios and SSCs:

• MTW-West: Iraq or Iran (Cultural Rivals & Historical Enemies)
• MTW-East: North Korea (Failed State & Can’t Even Feed Itself)
• Syria (Mouse-trapped by Turkey and Israel, Shaky Relations w/Iraq)
• Libya, Sudan & Cuba (Inconsequential as Conventional Military Threats)
• SSCs: Show of Force, Interventions, Limited Strikes, Noncombatant Evacuations,
Sanctions (No-Fly/Maritime), Counter-Terrorism , Peacekeeping, Humanitarian
Assistant, Military Support to Civilian Authorities.

Implications:
Implications:
•• Readiness:
Readiness:These
TheseScenarios
ScenariosDefine
DefineCurrent
CurrentRequirements.
Requirements.
•• Modernization:
Modernization:Capabilities
CapabilitiesMore
Morethan
thanAdequate
Adequate----Replace
Replaceas
asEquipment
EquipmentWears
WearsOut
Out
 Readiness Critique
The Strategy - Forces - Budgets Mismatch

• Forces Are Too Small to Execute 2-MTW Strategy

ü Had Much Larger Force During War with Iraq, but Still Required 75% of Active
Tacair, 42% of MBTs, 46% of Carriers, 37% of Army Personnel, and 46% of
Marines.
ü Took 5 Months to Get Ready and Required Extensive Cannibalization.
ü Burden of Forward-Deployed Units in SSCs Is Now Higher than in Cold War.

• Emerging Readiness Problems (Acknowledged in 29 Sept SASC Hearing)

ü Personnel: Declining Retention - Growing Skill Deficiencies (e.g., Pilots, 2nd Term
Enlisted).
ü Units: Understrength Combat Units & Undermanned Ships.
ü Material Condition: Spares Shortfalls, Rising Cannibalization Rates, Growing Depot
& RPM Backlogs, Increased Workloads.
ü Combat Training: Cutbacks, Reduced Realism, Declining Ammo Allowances.
ü Declining Morale: Frequent Deployments, Increasing Workloads, Quality of Life.
ü Leadership Problems (Not Mentioned @ Hearing) & The Wedge of Mistrust.
What Threat Should Guide Modernization For Long Term?
(FY 1993-1996 & FY 1998-2003 PYDP & FY 1999-2015 DPP)

Response:

Evolution of Long-Range Threat Scenarios (2010 +)

• Reconstituted Russian Superpower or China (1993 to McCain Proposal for
QDR in April 1996).
• Generic Emerging Superpower after 2010 (used circa 1994-6).
• Emerging “Peer” Competitor (used most of 1996).
• Emerging “Near Peer” Competitor (emerged in Late 1996).
• Asymmetric Niche Competitor => Need to Dominate the “Full Spectrum”
of Asymmetric Niche Competitors (emerged in Mar 1997).

Critique:
Mutations in Long Range Threat Predictions Have NOT Changed the
Contents of the Long-Term Modernization Program
 Modernization
ModernizationCritique
Critique
l Aging: New Weapons Too Expensive to Modernize Forces on a Timely Basis.
l Plan: Envisions 2nd Generation War of Attrition in Distant Future.
üJV-2010/RMA: More Complexity, Based on Old Mechanistic Ideas.
Ø Target-Based Automated SEE-DECIDE-STRIKE Cycle is New Version of Igloo White (1960s), Quick Strike
Surveillance-Recce (1970s), Assault Breaker (late 1970s).
Ø Increased Emphasis on Precision Wpns. Which Require Sharp Distinctions & Precise Knowledge.

l New Weapons & Force Structure: Tech. & Ideas Are Legacies of Cold War Thinking
üArmy: Smaller Version of Heavy Force Designed to Fight on North German Plain
w Comanche, Crusader, Digitization, and New Generation of “Fire & Forget PGMs.
w Increased Emphasis on Active Force Rather than Shift to Reserves.
üAir Force: Smaller Version of Force Configured for Bombing of “Strategic” Infrastructure &
Interdicting Tank-Heavy Ground Forces.
w Continued Emphasis on Cold War Technologies (Stealthy F-22 & JSF, Adv. PGMs, Force Multipliers).
w Less CAS & Dir. Supt of Army, But Increased Use of Space.
w Marginal Increases in Reserves.
üNavy: Smaller Version of Force Configured for Global War at Sea & Strategic Bombardment.
w Surface Combatants Configured for Air Defense (Aegis) and Cruise Missile Attack (TLAM).
w Air (F/A-18E/F & JSF) Configured for Deep Bombing..
w No Surface Fire Support / Sea-Based CAS to Support Marines in 3rd Generation Littoral Operations.
w Attack Submarines Configured for Open Ocean Warfare (NSSN) & Cruise Missile Attack (TLAM).
üMarine Corps: Only Service to Adopt 3rd Generation Warfare as Doctrine (1980s).
w Struggling to Evolve Doctrinal Response to End of Cold War - OMFTS & Urban Warfare.
w But Modernizing with High-Cost Weapons that are Legacies of Cold War (JSF / V-22 / AAAV).
Pattern of Programmatic Adaptation
l Budgets Adjustments and Plans
l Modernization Agenda
l Readiness & Rising Cost of Operations
 Changes in the Defense Budget
(Constant Dollars)
$500

Other
$400
FY99$ - Billions (TOA)

-31% -34%
$300
Proc
RDT&E

$200
Opns & Maint

$100

Mil Pers + Retir

$0
1951 1961 1971 1981 1991 2001
 US & Allies Now Spend Far More
Cutbacks Have Been Modest,
So Than All Potential Adversaries
When Viewed Over the Long-Term.
Combined.

$600

Average Annual Defense Expenditures

6 to 1
(Constant Dollars) $500 Jap, S. Kor., Saudi,
Israel, Taiwan,
400 ANZAC

Def. Budgets ($-Bill)

Post Korea Vietnam Post-Vietnam Reagan/Bush
$400 5 to 1

Non-U.S.
DoD Outlays (FY99$ Bill)

300 Nato
$300
3 to 1
200
-12% -23% -7% -29% Today $200 N. Korea
Iran, Iraq,
Syria, Libya
100 $100 U.S. Sudan, Cuba

China
0 $0 Russia
53-62 63-72 73-82 83-92 FY99

Current Spending Relative to Cold War Averages Comparative Expenditures in 1997

 Defense Budget
(Constant Dollars)
$500

Other
$400
FY99$ - Billions (TOA)

-31% -34%
$300
Proc
RDT&E

$200
Opns & Maint

$100

Mil Pers + Retir

$0
1951 1961 1971 1981 1991 2001

How
HowDid
Didthe
theDifferent
DifferentAccounts
AccountsChange?
Change?
 End of Cold War Versus End of Vietnam - Patterns of Change
ACTUALS: RECOVERY HOPES & DREAMS:
Vietnam versus Cold War (Peak to Trough) FY 77-81 (Oct 75) versus FY 98-03( Feb 98)
0% 50%

40%
-15%
(Curr. $)
30%
-30%
20%
-45%
(Const. $) 10%

-60% 0%

-75% -10%
Total Proc O&M RDT&E Total Proc O&M RDT&E

68-75 -31% -50% -25% -23% 77-81 15% 34% 8% 28%

85-97 -34% -65% -17% -15% 98-03 11% 41% 8% -7%

l Similar Patterns of Actual Reductions l Similar Pattern of Planned Increases

ü Procurement Cut Faster than Total Bud.
ü O&M and R&D Cut Slower than Total Bud
l Asymmetry Magnified After Cold War
ü Vietnam: Proc. Cut = 2x O&M Cut
ü Cold War: Proc. Cut = 3.8x O&M Cut
ü Procurement to Increase Faster than Total Bud.
ü O&M to Increase Slower than Total Bud.
l Asymmetry Magnified After Cold War
ü Vietnam: Proc. Increase = 4.2x O&M Increase
ü Cold War: Proc Increase = 5.1x O&M Increase
l RDT&E “Pays Bill” for Magnification
 Asymmetries
AsymmetriesHelp
Helpto
toDiscern
Discernthe
thePathway
Pathwayto
tothe
theTrain
TrainWreck
Wreck
Vietnam
l Before Post-War Draw Down
üModernized Force W/Higher-Cost Wpns.
w E.g., F-4, A7, F-111 Replaced F-100 & F-105
w But Left Force With Higher O&M$/FH
l Pattern of Post-War Cutbacks
üShrunk Forces to Cut O&M by 25%.
w But Rising Cost of Opns Limited Size of Cutback.
w So, We Cut Readiness (Delib. Policy by Nixon Adm)
üSlashed Procurement by 50%
w End of a Modernization Cycle Made Cuts Easier
w Pacified Arms Industry w/FMS (Iran)
l Mushrooming Proc. Bow Wave (FY77-81)
üBegan R&D of Next Generation Weapons
w Services & Contractors Promised Higher Unit
Procurement Costs Would Be Offset by Lower
Operating Costs. (F-15 versus F-4)
w Made Long Term Cost of Bow Wave Look Affordable
by Using Learning Curves to Predict Sharp Declines in
Future Unit Costs of New Weapons (e. g., F-15 & F-16)
üAssumed Future Proc Would Grow by 34%, IF We
Hold O&M Growth to Only 8%
Cold War
l Before Post-War Draw Down
üModernized Force W/Higher-Cost Wpns.
w E.g., F-15, F-16, A-10 Replaced F-4 & A-7.
w But Left Force Wigh Higher O&M$/FH.
l Pattern of Post-War Cutbacks
üShrunk Forces to Cut O&M by 17% .
w But Rising Cost of Opns Limited Size of Cutback.
w So, Had to Cut Readiness, Despite Policy to Protect It.
üSlashed Procurement by 65%
w End of a Modernization Cycle Made Cuts Easier
w Pacified Arms Industry w/FMS (Saudi Arabia)
l Mushrooming Proc. Bow Wave (FY98-03)
üBegan R&D of Next Generation Weapons
w Services & Contractors Pomised Higher Unit
Procurement Costs Would Be Offset by Lower
Operating Costs. (F-22 versus F-15)
w Made Long Term Cost of Bow Wave Look Affordable
by Using Learning Curves to Predict Sharp Declines in
Future Unit Costs of New Weapons (e. g., F-15 & F-16)
üAssumed Future Proc Would Grow by 41%, IF We
Can Hold O&M Growth to Only 8%

Rising
RisingCost
CostofofLow
LowReadiness
Readiness
Collides
CollidesWith
WithMushrooming
MushroomingModernization
ModernizationBudget.
Budget.
 Which is Why DoD Has Readiness Problems, Even Though
Total O&M Spending Has Remained High on a Per Unit Basis
Navy Fleet $80,000
1200
O&M $ Per Active Duty Person
Carriers $120 $70,000

1000

DoD O&M Bud. (FY99$-Bill)

$60,000
DoD O&M Bud
# of Ships in Fleet

$90

O&M $ Per Person

800 $50,000
Surf Cmbts
$40,000
600
Amph $60
$30,000

400 $20,000

$30
$10,000
200 Subs
Other
$0
1951 1961 1971 1981 1991
0 $0
1950 1960 1970 1980 1990 2000

250 Army Active Maneuver Bns 140

9000 Air Force Fighter/Attack Force

$170 120
200 DoD O&M Bud

DoD O&M Bud (FY99$ Bill)

100
DoD O&M Budget (FY99$)

Active Man. Bns

$140
6000 150
Ftr/Atk Inventory

80
DoD O&M
$110

60
AT 100
K $80
3000 Heavy
Unclas 40

$50 50
FTR/INT 20
Light
0 $20
0 0
1960 1970 1980 1990 2000 2010
Year 1959 1969 1979 1989 1999
 Modernization

Declining
Readiness &
AAModernization
ModernizationProgram
Program
thatCan
that CanNot
NotModernize
Modernize DoD Rising Cost of
Low Readiness
theForce
the Force
Death
Spiral
• AF Tac Air Case Study
• Generalization

Accounting
Shambles
 Air Force Tac Air Modernization (1953-2017)
FY 1999-2003 FYDP & FY 2004-2017 Plan

Procurement Budgets & Costs

2500

Ftr/Atk Budget (99$ - Millions)

Avg Unit Cost (99$ - Millions)

$12,000 $400
Avg Unit Cost
2000
$9,000 $300
# Procured/Yr

1500
$6,000 $200
1000 F-15 A-10 F-16 F-22 JSF
JSF

$3,000 $100
500 F-86 - F16

F-22

0 $0 $0
1953 1968 1983 1998 2013 1953 1963 1973 1983 1993 2003 2013

Key
KeyPoints:
Points:
•• Costs
CostsGrow
GrowFaster
Fasterthan
thanBudgets.
Budgets.
•• Budget
BudgetBow
BowWave
WaveNotNotMatched
MatchedbybyCommensurate
CommensurateProduction
ProductionIncrease.
Increase.
•• Plan
PlanAssumes
AssumesFuture
FutureCosts
CostsWill
WillPlummet
PlummetBy
By96%
96%- -From
From$407
$407toto$39
$39Million
Million
 Air Force Tac Air Modernization (1953-2017)
FY 1999-2003 FYDP & FY 2004-2017 Plan
Inventory & Modernization Inventory & Average Age
10000 30% 10000 20

25%
8000 8000 Avg. Age
15

Modernization Rate (%)

20%

Avg. Age Per A/C

FY99 Age Level
Inventory (TAI)

A/C Inventory
6000 6000

15% 10

4000 4000
Attack
10%

5
2000 2000
5%
Fighter / Interceptor

0 0% 0 0
1951 1966 1981 1996 2011 1960 1970 1980 1990 2000 2010

Modernization
ModernizationRate
Rate(%)
(%)==Proc.
Proc.Qty
Qty/ /Inventory
Inventory

When
WhenCosts
CostsGrow
GrowFaster
Fasterthan
thanBudgets
Budgets--Then,
Then,
•• Shrinking
ShrinkingForces
ForcesGet
GetModernized
ModernizedatatSlower
SlowerRates
Rates
•• Smaller
SmallerInventories
InventoriesGet
GetOlder
Olderon
onAverage
Average
•• Despite
Despite Large Future Budgets, theGrowth
Large Future Budgets, the GrowthofofAverage
AverageAge
AgeWill
WillExplode.
Explode.
 A Perfectly Excecuted Modernization Program
WILL NOT Modernize the Force!
Total AF Inventory & Avg. Age
30000 (Active & Reserve) 35

30

Generalization
Generalization 25

Average Age (Yrs)

Aircraft Inventory
20000 Average Age
An
AnAging
AgingAir
AirForce:
Force: 20
•• Smaller
Smaller 15
•• Older
Older AFR
10000
•• No
NoLight
Light@@End
EndofofTunnel
Tunnel 10
ANG

Active 5
Force
0 0
1950 1970 1990 2010

Age Distribution 1999 2003 2015

Current Distribution
Tac Air - % > 19 Yrs 17% 38% 58%
Better Airlift - % > 21 Yrs 60% 55% 64%
Tanker - % > 45 Yrs 0% 10% 80%
Older (Worse)
Bomber - % > 16 Yrs 45% 90% 100%
 A Perfectly Excecuted Modernization Program
WILL NOT Modernize the Force!

Army
Aging
AgingForces
Forces Age Distribution 1999 2003 2015
•• Smaller
Smaller Helicopters - % > 22 Yrs 40% 50% 80%
•• Older
Older Tanks/IFVs - % > 13 Yrs 1% 25% 62%
•• No
NoLight
Light@
@End
EndofofTunnel
Tunnel 155mm SP - % > 13 Yrs 0% 0% 52%
üüExcept
ExceptArmy
ArmyMed
MedTruck
Truck
Med Trucks - % > 13 Yrs 65% 58% 30%
üüExcept
Except Navy Tac Air(2015)
Navy Tac Air (2015)
üüExcept
Except USMC Helo/Armorinin
USMC Helo/Armor Navy / Marine
Far
FarOutyears
Outyears(2015)
(2015) Age Distribution 1999 2003 2015
Surface Cmbts - % > 19 Yrs 20% 39% 52%
Current Distribution SSNs - % > 17 Yrs 25% 38% 67%
Amphibs - % > 19 Yrs 52% 48% 58%
Better Navy/MC Tac Air - % > 13 Yrs 35% 58% 25%
USMC Helo - % > 15 Yrs 67% 72% 20%
Older (Worse)
USMC Armor - % > 17 Yrs 73% 100% 60%

What
WhatDoes
Doesthe
theGlobal
GlobalAging
AgingPhenomenon
Phenomenon
Mean
Meanfor
forthe
theFuture?
Future?
 Aging Equipment Drives
Up Operating Costs

Let’s
Let’sExamine
ExamineOperating
OperatingCosts
Costs…
…and
andthe
the…
…
Rising
RisingCost
Costof
ofLow
LowReadiness
Readiness
 Readiness

Declining
Declining
Readiness
Readiness& &
A Modernization Program Rising
RisingCost
Costofof
that Can Not Modernize Low
LowReadiness
Readiness
the Force DoD
Death
Spiral

Accounting
Shambles
Ingredients
Ingredientsof
ofOperational
OperationalExcellence:
Excellence:
People
People--Ideas
Ideas--Hardware
Hardware
Modernization Force Structure Funding

Engines
BOS Depots
DLRs
RPM Spares Hardware

TEMPO Training
Operational Art Ideas
Doctrine

Leadership
Cohesion People
Esprit

Readiness
Readiness
 Email from the Troops
l Aging Systems => Increased Workload
ü Fatigue/Corrosion/Parts Obsolescence => More Work Arounds, Longer
Hours, Longer Repair Times
l Parts Shortages
Hardware ü Rising Rates of Cannibalization => Increased Workload & Longer Hours
ü High Value Items (Engines/Electronics)
l Technical Orders Need Help
l Rising Depot Backlogs & Deteriorating Facilities
l Training Cutbacks
ü Budget Cuts Decrease Realistic Training Opportunities
ü Peacetime Presence => Method & Routine In Place of Training Variety &
Realism
ü Rising Operating Costs Decrease Training Per Dollar Spent

Ideas l Difficult to Maintain/Retain Trained People

ü Declining Retention Rates => Decreasing Experience Levels
& ü Understrength Units & Shortfalls in Critical Skills
ü Growing Gap in Post-Command Army/AF Colonels & Navy Captains
People
l Heavy Overseas Optempo Putting Stress on People &
Families
l Spreading Breakdown of Trust Between Senior Officers &
Junior Officers/Enlisted Ranks
 The Growing Officer Surplus

Officers
Enlisted
Total
Manpower Officers(%)
120
,000
,00 16%
14%
100
,000
,00

Officer Ratio (%)

12%
8,000,000
10%
6,000,000 8%
6%
4,000,000
_ 4%
2,000,000
2%
0 0%
1900 1920 1940 1960 1980

Historical Percentages (Ground Forces Only):

Roman - German - Israeli
(100AD) (WWI&II) (1967)
 6.00%

5.00%
Consequences
Ratio to Total Manpower

1997
4.00% • Officer Surplus
3.00% ü Combat Forces Reduced by 40%-50% Since
Mid-80s
2.00% ü Decreased Opportunity for Command
1945
1.00%
ü Short Command Tours Decreasing Command
Experience
0.00%
• Excessive Bureaucratization
dm

-6

-5

-4

-3

-2

-1
O

O
/A

ü Total Personnel Reduced by About 33% Since

en
G

8 Field Grade Company Grade Mid-80s

7 ü But Hq Staffs Reduced by About 15%
Ratio Multiplier (1945-1997)

6.4
6 ü Field-Grade Glut Moves Decisions Up Chain
5.3
of Command
5
3.9 ü Increasing Centralization
4 3.6

3
2.3
• “Up or Out” Promotion System
2 ü Risk Avoiding (“Zero Defects”) Mentality
0.8
1 0.6 ü Careerism and Ticket Punching
0 ü Little Time for Mentoring & Development of
-6

-5

-4

-3

-2

-1
dm

Subordinates
O

O
/A
en
G
 Rising Flying Hrs per A/C
RisingCost
Costof
ofLow
LowReadiness
30000 600
Readiness
Air
AirForce
ForceOperations
Operationsvs.
vs.Spending
Spending 25000 500
(1950
(1950-2003)
-2003)

Flying Hrs per Aircraft per Yr.

Total Active Inventory (TAI
20000 400
30000 $40

15000 300
25000 O&M Budget

O&M Budget (FY 99$ - Billions)

Total Active Inventory (TAI)

$30 10000 200

20000

5000 100
15000 $20
0 0
1950 1970 1990 2010
10000 ANG
AF
$10
R O&M $ per Flying Hr
5000
30000 $14,000
Active Force
O&M $ per Flying Hour
0 $0 $12,000
25000

O&M$ per Flying Hour (99$)

1950 1970 1990 2010

Total Active Inventory (TAI

$10,000
20000
Observations
$8,000
• Forces Shrank Faster than the O&M Budget 15000
• O&M $ per FH Increased Sharply $6,000
• While Activity Levels Remained Relatively Constant.
10000
$4,000
Implication:
5000
$2,000
Operating Costs Are Growing Faster than Budget
(Like Procurement Costs) 0 $0
1950 1970 1990 2010
 Suspicion:
There is More to the Skyrocketing Ratio of O&M$ per Flying Hr.
than Just Aging Hardware.

l Effect of Aging Equipment

ü Cost Growth

l Effect of Increasing Complexity of Weapons

Mutually ü Cost Growth
Reinforcing Effects ü Growing Infrastructure Dependence
ü Shift of Maintenance Away from Operating Activity

l Growing Infrastructure Inefficiencies

ü Increasing Capital Intensity of Support Base
ü Forces Shrink Faster than Bases
 Direct
DirectEffect
Effectof
ofAging:
Aging: Cost Drivers:
Effect l Stress degradation
EffectofofAging
Agingon
onDepot
DepotMaintenance
Maintenance
(PDM) ü Fatigue, thermal cycles
(PDM)on onLarge
LargeJet
JetTransports
Transports
l Corrosion & material degradation
ü Airframes, subsystems, avionics &
propulsion
10
KC-135
l Parts Obsolescence
9 727 ü “Bit & Pieces,” major components,
avionics systems
737
8
DC9 l Capability Mods to Upgrade Older A/C
7 DC10
PDM Readiness Degraders:
2/4/7%
Escalator 6 l More frequent failures
(Ratio to 7%
ü Longer repair times
First PDM 5
Cost,
ü Increased Cann Rates
Constant 4 ü Higher workloads
Dollars) ü = Lower Mission Capable Rates
3
l Shrinking Forces
2 ü Retirements w/o replacement to cut
practical limit for support costs
1 fighter aircraft

0 Bottom
BottomLine:
Line:
0 20 40
Less
LessTraining
Training&&Fewer
FewerWpns
Wpnsfor
forCombat
Combat
Average Fleet Age (Years)
 But Increasing Complexity Also Interacts with Increased Age
to Drive Up Costs
$3,500
Complexity
F-15A
$3,000
Depot Costs Per Flying Hr. (99$)

B-52H High

$2,500

$2,000
C-141
$1,500 Medium
KC-135

$1,000
C-130E
$500 A-10A Low

$-
FY1981 FY1999

Increasing
IncreasingComplexity
ComplexityMagnifies
MagnifiesEffect
EffectofofAge
AgeGrowth
Growthon
onOperating
OperatingCosts
Costs
E.g.,
E.g.,Depot
DepotCosts
CostsPer
PerFlying
FlyingHour
Hour
 Moreover,
Moreover,Increasing
IncreasingComplexity
ComplexityIncreases
IncreasesOperating
OperatingCosts,
Costs,
Notwithstanding
NotwithstandingPromises
Promisesof
ofLower
LowerOperating
OperatingCosts.
Costs.

In 1974, AF & McAir Said F-15 Would Be Easier and Cheaper to Operate & Maintain than F-4
Even though it Cost More than Twice as Much to Buy as the F-4

The Same Promise is Now Being Made for F-22 Versus the F-15

Increasing Complexity Prediction

Unit Procurement Cost (99$-Millions)

$10,000 $120
O&M$ Per Flying Hour (99$)

Unit + Int.
$8,000
$90 Maint.+
DLR
Sust.
$6,000
Support
O&M$/FH
? $60
$4,000 Contract
Supt
$30
$2,000 Depot
Maint.

$- $- ProcCost

0D E C 2
0 F-4 F-1
5 F-2
F-1
 Rising Cost of Low Readiness: AF Bombers
O&M Costs Per Flying Hour

$70,000

Unit Opns
$60,000
Cost/Flying Hour (FY99$)

$50,000
Indirect Supt

$40,000
Sustaining Supt
$30,000

$20,000 Contract Supt

$10,000
Dep Maint
$-
B-52H B-1B B-2A

Increasing Complexity
 Rising Cost of Low Readiness: Army
Tracked Combat Vehicles (O&M$/Mile) Helicopters (O&M$/FH)

Incr. Complexity Incr. Complexity

$180 $4,000
Optempo - O&M$/Mile (99$)

Tanks 155mmSP IFV Observation Utility Attack

O&M $ Per Flying Hr (FY99$)

$150
$3,000
$120

$90 $2,000

$60 ?
$1,000
$30

$- $-

66
A

-1H
D

A
-1H

-64
1

2
3

M A5

M 3

-58

-58
-1

58

-60

H-
A

A
0A

A
M

UH

AH
AH
OH
-1

-2
09

09

13

RA
OH

OH

UH
-6

-1

-1

-1
M

••Each
EachNew
NewGeneration
GenerationofofWeapons
WeaponsCosts
CostsMore
MoretotoOperate.
Operate.
Adj. For Transfer To ANG
••Complex
ComplexTechnology
TechnologyShifts
ShiftsMaint.
Maint.Burden
BurdentotoDistant
Distant
Unit/Int Level Maint.
Depots,
Depots, which Implies Increasing DependenceofofSupply
which Implies Increasing Dependence Supply
Depot Maint. + DLR Sys. & Geographically Distributed Infrastructure.
Sys. & Geographically Distributed Infrastructure.
 Rising Cost of Low Readiness: Navy Ships

O&M$ Per SSN Per Yr. O&M$ Per Steaming Hr.

$90,000

$12,000,000 Carriers

O&M$ Per Steaming Hr (99$)

O&M& Per SSN Per Yr (99$)

$9,000,000 $60,000

$6,000,000
Amph. Aslt. Carriers
$30,000

$3,000,000

$- $-
SSN-637 SSN-688

D
itz
k

H
aw

LH

LH
LP
im
H

N
y
itt
K
Increasing Complexity Increasing Complexity

Unit & Int. Level Cost

Contract Supt
CostDrivers:
Drivers:
Indirect Supt. Depot Maint. Depot
DepotMaint.
Maint.&
&Contract
ContractSupt.
Supt.
 Rising Cost of Low Readiness: Marine Helos

Helicopters (O&M$/FH)
$10,000
Medium Lift Heavy
Lift
O&M$ Per Flying Hour (99$)

$7,500

? llCost
$5,000 CostDrivers:
Drivers:
? üDepot
üDepotMaint
Maint
üSustaining
üSustainingSupt
Supt
$2,500 ? llAge
Age(Esp.
(Esp.CH-46)
CH-46)

?
$-
D

D
E

V-22
46

53
6

3
-4

-5
H

H
H

H
C

C
C

Unit & Int. Level Sustaining Supt. Depot Maint.

 Age and Complexity
l Increasing Age Drives up Operating Costs
ü Age Growth is a Consequence of Growth in Unit Procurement Costs
w Procurement Costs Increase Faster than Budgets
w Production Rates Decrease Sharply
w Decreasing Replacement Rates Cause Force Structure to Shrink and Age.
l Increasing Complexity Drives Up Operating Costs
ü Promises of Lower Life Cycle Costs Have Not Materialized.
w Operating Costs Also Appear to Be Growing Faster than the Budget
ü Sources of Complexity-Induced Cost Growth
w Growth of Unit Level Costs Has Been Relatively Modest.
w Cost Drivers Relate to Maint. & Supt Activities that have been Displaced in
Time & Space From the Point of Operational Activity:
Ø Depot Level Repairables (Direct) & Depot Maintenance (Indirect)
Ø Contract Support
Ø Sustaining Support
ü Increasing Complexity Magnifies Rate of Age-Induced Cost Growth

Displacement
Displacementin
inTime
Time&&Space
SpaceRaises
RaisesQuestion:
Question:
How
HowisisAge-Complexity
Age-ComplexityConundrum
ConundrumImpact
ImpactSupport
SupportInfrastructure?
Infrastructure?
 Displacement of Maintenance in Time & Space
Line Intermediate Depot

Base Supply
Transfer Ship (Fed Ex?)

CND?

ID Faulty RTOK?
Card &
Replace Fix

ID Faulty Box
Card

Box

Consequences:
• Repairs Shifted to Distant Depots
• CND/RTOK Drives Up Spares Inventory Cost
• Increased Dependence on High Skilled Labor & Contractor Support
• Increased Dependence on Computer Test Sets (Which Must Also be Supported)
• Proliferating Variety/Quantity of High Value Items => Increased Supply Mgt Cost (Overhead)
 Observation

Since
Sincethe
theDawn
DawnofofWar
Warasasan
anOrganized
OrganizedActivity,
Activity,
the
theGoal
Goalof
ofForward
ForwardRepair
RepairHas
HasBeen
Been
the
theCardinal
CardinalSimplifying
SimplifyingPrinciple
Principle
of
ofCombat
CombatLogistics.
Logistics.

Yet,
Yet,We
WeHave
HaveBeen
BeenUsing
UsingTechnology
Technologyto
toTransfer
TransferMore
Moreand
andMore
More
Repairs
Repairsto
toDistant
DistantDepots
DepotsDeep
Deepin
inthe
theRear,
Rear,

…
…which
which…
…

Increases
IncreasesVulnerability
Vulnerability&&Drives
DrivesUp
UpFixed
FixedOverhead
OverheadCosts.
Costs.
 Indirect Consequence of Complexity-Induced
Cost Growth
These
TheseRemove
Remove&&Replace
ReplaceMaintenance
MaintenanceArchitectures
ArchitecturesCreate
Create
Economies
EconomiesofofScale
ScaleFavor
FavorConcentration
ConcentrationofofWeapons
WeaponsininLarge
LargeFacilities
Facilities
…
…But
But… …
While
WhileShrinking
ShrinkingForces
ForcesDecreases
DecreasesDemand
Demandfor
forInfrastructure,
Infrastructure,
But
ButPolitical
PoliticalPressures
PressuresMake
MakeItItDifficult
Difficult totoClose
CloseBases.
Bases.

Result:
Chronic Excess Base & Excess Depot Capacities Drive
Up Per Unit Operating Costs Even Further

Examples From Recent Draw Down:

• Between 1989-2003, Navy Fleet Will Be Reduced by 46%, But
Berthing Spaces Will Be Cut By Only 18%
• Between 1988 & 1996, Army Eliminated 3.7 Division in US, But
Closed only 1 Divisional Base
• Between 1990 & 1996, AF Cut A/C Inventory by 43%, But Reduced
Base Capacity by Less than 25% (See Next Slide for Example)
 (BaseLoadFactors:FY90vs96)
Load Factors Load Factors
Airbases Ramp Space X1000 FY90 FY96 POM Chg Airbases Ramp Space X1000 FY90 FY96 POM Chg
Duke Field 1950 0% 21% 21% Tinker 6740 39% 34% -5%
Whiteman 5550 2% 11% 9% Keesler 1610 40% 53% 13%
Patrick 2170 6% 0% -6% Luke 3430 41% 35% -6%
McClellan 7828 7% 0% -7% Little Rock 8695 45% 37% -8%
Homestead 9999 8% 1% -7% Dyess 8465 53% 39% -14%
MacDill 8406 8% Closed McChord 4634 63% 65% 2%
Bergstrom 3589 12% 3% -9% Altus 5760 66% 63% -3%
Maxwell 3000 13% 13% 0% Norton 5806 68% Closed
Mather 6965 15% Closed Eaker 3566 68% Closed
Elmendorf 6274 16% 25% 9% GrandForks 3548 69% 68% -1%
Eielson 5302 16% 12% -4% McGuire 6921 69% 92% 23%
Moody 2759 18% 34% 16% Kelly 4325 70% 64% -6%
Anderson 7357 19% Closed Barksdale 8725 73% 36% -37%
Selfridge 5513 20% 17% -3% Sey. Johnson 3379 74% 45% -29%
Pease 9508 20% Closed (ANG) Fairchild 4977 75% 89% 14%
Shaw 4052 20% 17% -3% Charleston 5502 77% 122% 45%
Nellis 4785 21% 26% 5% McConnel 3425 77% 109% 32%
Robbins 3397 21% 15% -6% Grissom 3982 78% Closed
Langley 5957 22% 11% -11% Castle 5924 80% Closed
Pope 10119 22% 17% -5% Beale 2858 81% 49% -32%
Plattsburg 9528 24% Closed Dover 8139 83% 76% -7%
George 4666 24% Closed Wurtsmith 3500 84% Closed
MH
nt.ome 4850 24% 36% 12% Griffiss 3493 84% 1% -83%
England 3959 25% Closed Hurburt 2600 95% 120% 25%
Holloman 5625 26% 16% -10% Wright-Pat. 5517 103% 28% -75%
Tyndall 3001 26% 30% 4% Minot 2800 115% 49% -66%
March 9720 29% 26% -3% Travis 7967 117% 128% 11%
Scott 1851 32% 26% -6% Loring 2359 129% Closed
Offut 5862 34% 38% 4% KIS.awyer 2555 129% 1% -128%
Malstrom 3181 36% 46% 10% Westover 1715 158% 157% -1%
Eglin 5709 37% 34% -3% Carswell 2337 171% Closed (ANG)
Cannon 3324 38% 27% -11% Davis-Mon. 1066 188% 170% -18%

FY90 FY96 Change

Total Ramp Space (X 1000) 322076 244213 -77863
# of Bases closed 13
AverageLoadFactors 46% 41% -5%
 Accounting Shambles

Declining
A Modernization Program
Readiness &
that Can Not Modernize
the Force DoD Rising Cost of
Low Readiness
Death
Spiral

Accounting
Accounting
Shambles
Shambles
 DoD’s Budget Shambles

Past Expenditures Budget Future Expenditures

Accounting Continuum

Unauditable Books Plans/Reality

Disclaimers of Opinion Mismatch
 Accounting Shambles
l Cannot Audit or Track Actual Expenditures
ü Disclaimers of Opinion Issued By DoD/IG Because Acctg Deficiencies Prevented Audit
w 26 July 96 - Waived Audit of $70-80 Billion DBOF
w 19 Nov 96 - Waived Audit of AF & Army General Fund Financial Statements for FY95
w 10 Ap 97 - Issued 3 Audits Outline Discrepancies in Army, N/MC, & AF Financial Statements for FY 96.
w 16 Ap 97 - Issued Disclaimers of Opinion on 15 of 16 DoD Accounts
Ø E.g., DFAS Indianapolis Center made $350 billion of unsupported adjustments to make the FY 1997
Army General Fund general ledger accounts ($70 bill)match the corresponding status of appropriations
data.
ü IG’s Reason DOD's lacks a double entry accounting system & failure to track expenses on the
transaction level leads to billions of dollars in accounting errors, the IG reports.
ü GAO Reports on Problem Disbursements
w 11 Jun 96 - Acctg Sys Could Not Link $20-$30 Billion to Items Money Purchased.
w 30 Ap 97 - Problem Disbursements Increased to $43 Bill, DoD/Comptroller Objected Saying $18 Bill Could
Not Be Accounted For.
l Plans/Reality Mismatch
ü Outyear Estimates Biased to Understate Future Consequences of Current Decisions. (Anatomy of
Decline --- Calculations Validated by GAO

Implications
ImplicationsofofCorrupt
CorruptAccounting
AccountingSystem
System
•• Impossible
ImpossibletotoUnderstand
UnderstandororFix
FixReadiness
Readiness&&Modernization
ModernizationProblems.
Problems.
•• Makes
Makes a Mockery of Democratic Governance & the AccountabilityClause
a Mockery of Democratic Governance & the Accountability Clause
ofofthe Constitution
the Constitution
 AABrief
BriefIntroduction
Introductiontotothe
thePlans/Reality
Plans/RealityMismatch
Mismatch&&Nature
NatureofofCost
CostOverruns
Overruns
Front
FrontLoading
Loadingthe
theF-18A
F-18A

F/A-18ABCD HORNET (N)

( FYDP Predictions versus Reality )
250

200

Quantity
150
Average Unit Costs
100

180 50

0
160
Avg. Unit Costs ( 97 Constant Budget $ M )

'76 '81 '86 '91 '96 '01

Buy In Post Buy In End Game Bars : Actual Quantity --- Lines : FYDP
140 Predictions

120

Annual Budget
100
Buy In Post Buy In End Game
6000

Budget ( 97 Constant Budget $

60-70% 80
5000
Cost Overrun 60
4000
@ the Margin

M)
40 3000

20 2000

1000
0
0 200 400 600 800 1000 1200 1400 0
Cum. Quant. ( FY 75 = 0 ) '76 '81 '86 '91 '96 '01
Heavy Line : Actual Costs --- Thin Lines : FYDP Predictions Bars : Actual Budget --- Lines : FYDP Predictions

Point: Most of Cost Growth Occurred During Buy-In When

Pentagon and Congress Spent More Money than Planned
 FRONTLOADING
FrontTheLoading
LearningCurveinActithe
on F-18E
In 1991, the Navy Sold the to OSD & Congress as a Low-Risk Modification to F-18C,
But the Navy's Own Estimates of Future Production Costs Assumee the F-18E was a New Airplane.

F-18E vs. F-18C 160

Physical Differences: 140

NewWingDesign(DifferentAerodynamics) F-18A/B/C/D F-18E:Pre-EMDEst.

120
RadicallyDifferentAirInlets (Source: Navy)
New Engine 100
DiferentStructure(92%byWt).
DifferentSubsystems(65%byWt) 80

PhysicalSimilarities 60
Actuals
Avionics(90%Common)
40
SimilarLoadPathsinMuchofStructure
20
Economic Differences FY 78-82 FYDP (Post-EMD Est)

Pre-EMDEst.MoreUncertainthanFYDPest. 0
MaxProd.Rate=40%of78FYDPPrediction 0 500 1000 1500 2000 2500

MuchLowerPlantUtilzation Cumulative Quantity Procured

MoreUncertainFiscalOutlook

GAME:
Mask, Distort, & Downplay Differences to Bypass the Prototype Phase, Obtain a Premature
Commitment to Concurrent EMD Program, and Set the Stage for the Political Engineering Operation.
 What Would Happen if F-22 / JSF Had an Overrun
Equal to About Half that of the F-18A?
$15,000 $500

Average Cost Per Ftr (99$ - Millions)

Inventory & Average Age
Avg Unit Cost 10000 20
$12,000 $400
Ftr Budget (99$ Billions)

8000 Avg. Age

15
$9,000 30%Overrun $300

Avg. Age Per A/C

A/C Inventory
FY99 Age Level
6000

10
$6,000 $200
4000
Attack

5
$3,000 $100 2000

Fighter / Interceptor

0 0
$0 $0 1960 1970 1980 1990 2000 2010
1953 1973 1993 2013

Answer:
• We Would Spend More than Spent in Most Expensive Decade of Cold War…
• To Modernize a Force Half the Size …
• And the Average Age of the Inventory Would Rocket Upwards to 20 Years
What Does this Kind of Age Growth Imply for the Future of our Military?
 END GAME:
MACRO-ECONOMICS OF THE FUTURE MELTDOWN

Growing Budget Pressure (Soc Sec + Medicare + Infrastructure)

$500
DEFENSE BUDGET (BILLIONS)

$400

$300 retchouts
ction St
Modernization: Produ
Cost Overruns
$200

$100 Operations: Rising Cost of Low Readiness

$0
2000 2002 2004 2006 2008 2010
 Possible Evolutionary Pathways Into the Future
• Additional Force Cutbacks -- if the cost of operating the oldest airplanes becomes prohibitive.
ü Cost Overruns or Budget Cutbacks - Could replacement rates further & magnify the rate of age growth,
thereby increasing the pressure to cut back force size.
• More Readiness Reductions:
ü Reduce Training Rates to contain age-driven growth of operating costs & effects of assigning a smaller
number of older aircraft to combat units and bases.
ü Declining Retention - skilled maintenance personnel leave because of higher workloads and morale-
busting workarounds that are needed to support aging, depot-intensive, hi-tech equipment.
ü Increasing Morale Problems & Decreased Training Opportunities - if smaller forces make it
necessary to increase the proportion of deployed units in support of foreign policy commitments.
ü Planners or Politicians Might Rob Readiness - bail out the collapsing modernization program.
• Change the Strategy to Conform to Consequences of Cost Growth in Procurement:
ü Cave In to the Pork-Barreling Pressures of the Defense Industry - adjust the National Strategy to
match the shrinking forces made inevitable by out-of-control costs in the procurement program.
• Rationalize Status Quo With Half-Baked Theories of Technological Revolutions:
ü Declare that Further Force Reductions are Not Only necessary, but Desirable - because technological
Breakthroughs make it possible to replace manned weapons with a variety of un-manned, higher-cost,
remote-controlled, surveillance and reconnaissance sensors, computerized command and control systems,
and precision-guided weapons - all wired together into an all-seeing, all-knowing war machine.

Raises
RaisesQuestion:
Question:
How
HowDo
DoCan
CanWeWeBreak
BreakOut
Outofofthis
thisDeath
DeathSpiral
Spiraland
andEvolve
EvolveaaViable
ViablePlan
Planfor
for
Coping with a Real World of and Uncertain Resource Constraints?
Coping with a Real World of and Uncertain Resource Constraints?
 Recommendations

The Central Question is How to Change the Complex Adaptive Behavior

of an Assemblage of Quasi-Independent Living Systems.

Implication:
There is NO Silver Bullet Solution to the Death Spiral

Aim of Reform
Evolve
Evolve the
the Information
Information Needed
Needed to
to Produce
Produce Coherent
Coherent Goal-Seeking
Goal-Seeking Behavior
Behavior
Among
Among the
the the
the Microscopic
Microscopic and
and Macroscopic
Macroscopic Levels
Levels of
of Organizatio
Organizatio Zn.
Zn.
 RESTORING
RESTORINGCOHERENCE
COHERENCEAND
ANDINTEGRITY
INTEGRITYTO
TODECISION
DECISIONMAKING
MAKING
AANotional
NotionalList
ListofofRecommendations
Recommendations(Based
(Basedon
onthis
thisBrief
Briefand
andthe
theAnatomy
AnatomyofofDecline)
Decline)
〈 R1- Policy Stand Down for a Reality Check (Department of Defense).
〈 R2 - Declassify the Future Years Defense Plan (Department of Defense).
〈 R3 - Swear In All Witnesses at All Congressional Hearings (Congress).
〈 R4 - National Threat Assessment - Joint Resolution Passed by Congress Every Two Years, Sponsored by
Foreign Relations/Affairs Committees (Congress).
〈 R5 - Replace the PPBS With a Strategic Planning Process Designed to Evolve Priorities by Examining the
Tradeoffs Among the Macroscopic and Microscopic Possibilities, Constraints, and Uncertainties that
Decision Makers Must Contend With (Department of Defense).
〈 R6 - Shift to Sequential Prototyping Practices In Accordance With Classical Engineering Principles
(Department of Defense).
〈 R7 - Shift to Standard Commercial Industrial Engineering Cost Estimating and Work Measurement
Practices (Department of Defense).
〈 R8 - Tie Operational Testing to the Sequential Prototyping Strategy (Department of Defense).
〈 R9 - Establish Independent Defense Evaluation Board (Department of Defense - Congress Interface).

Aim:
Aim:
Improve
ImproveDoD’s
DoD’sFitness
FitnesstotoCope
Copewith
withan
anEver-Changing
Ever-ChangingEnvironment
Environmentwhile
while
Restoring
RestoringAccountability
AccountabilitytotoCongress
Congressand
andthe
theAmerican
AmericanPeople
Peopleby
by----
• • Improving
ImprovingIntegrity
IntegrityofofInformation
Information&&Checks
Checks&&Balances
Balances@@Micro
Micro&&Macroscopic
MacroscopicLevel
LevelofofDecision
DecisionMaking.
Making.
• • Reducing
ReducingTechnical,
Technical,Economic,
Economic,and
andProgrammatic
ProgrammaticRisks
RisksBefore
BeforeMaking
MakingCommitments.
Commitments.
• • Evolving
Evolving Coherent Priorities Among Incommensurable Program Competingfor
Coherent Priorities Among Incommensurable Program Competing forScarce
ScarceResources
Resources
 Recommendation:
Policy Stand Down for a Reality Check

External Internal

Relations
Relations Constraints
Constraints
With
WithOutside
OutsideWorld
World Strategy (Forces
(Forces&&Budgets
Budgets
(Goals
(Goals&&Threats)
Threats)

Aim:
A Strategic Planning Activity
that Evolves Realistic Priorities by
Harmonizing External Relations with Internal Capacities
 Strategic Planning
An Idealized View
Activity Goal

Decision-Making & Force Planning Should:

• Reflect and be Responsive to the Short-Term, Microscopic
Needs of Individual Programs
• Combine the Individual Programs Into a Coherent
Macroscopic Framework that is Responsive to Long-Term Internal Consistency
Policy Intentions of the National Leadership.
with
w Desired Tradeoffs between Readiness, Force Size/Composition and
Modernization Rates Consistent Matchup
• Account for the Long-Term Consequences of Current With Real World
Decisions in Terms of the Unfolding Possibilities, (External Consistency)
Constraints, and Uncertainties of the Real World

AIM:
Continuously Improve Current Decisions and Preserve Future Freedom of Action
by Making Visible the Possibilities, Constraints, and Uncertainties
Decision Makers Must Contend With in the Real World.
How
How Can
Can We
We Convert
Convert this
this Ideal
Ideal into
into Reality?
Reality?
 Stand Down for a Reality Check (I)
l Step1: Put DoD on Autopilot for At Least 1 Year
ü Theme: Maximize Decision-Making Flexibility in Near Term.
w No New Long-Term Commitments - Maintain Level of Effort in Existing
Programs.
w Proceed With All Planned Terminations, Cutbacks, and Base Closings.

l Step 2: Direct Military Services to Clean Up Books and Open them to

Debate.
ü Remove Special Access Clearances from All Programs Except Intell.
Programs.
ü Establish Readiness Baseline via Physical Audit of Stockpiles, Personnel,
Training Tempos, and Materiel Readiness Indicators.
ü Re-price Procurement & O&M Budgets with More Realistic Outyear Costs,
Assuming Realistic Training Tempos, Exercises, Spares Fill Rates, Ammo
Allowances, etc.

l Step 3: Each Service to Construct “Best” Force Package for 5

Outyear Budget Scenarios
ü Each Services Provides JCS/OSD With Its Assessment of the Strengths and
Weaknesses of Each Force Package. JCS/OSD Synthesis of Service Inputs.
 Stand Down for a Reality Check (II)

Planning Options in an Historical Context

$400
Planning Options
Annual Defense Budget (TY $)

Repriced Baseline (?$ in FY 2003)

$300
Option 2 (Clinton Plan - $285 Bill in FY 2003)
Option 3 ($252 Bill in FY 2003 - Cut = $35B)
Option 4 ($218 Bill in FY 2003 - Cut = $67B)
$200
Option 5 ($185 Bill in FY 2003 - Cut = $100B)

$100

$0
1950

1960

1970

1980

1990

2000
 Stand Down for a Reality Check (III)
Strategic Planning Options:

Option 1: Repriced Baseline

$? Billion in FY 2003

Option 2: $285 Billion in FY 2003

AIR
Pres. Bud. (FY 98-03 FYDP)
FORCE

Step 4: OSD/JCS
Threats-Opportunities-Constraints Sec Def/ Option 3: $252 Billion in FY 2003
Inter/Intra Service Tradeoffs President's Curr $ Freeze (TOA Cut = -$35 Bill in 03)
NAVY/
Evaluation/Harmonization Prioritization
MC
Strengths/Weaknesses
Analyses/Synthesis
Option 4: $218 Billion in FY 2003
TOA Cut = -$67 Bill in 03 (-24%)

ARMY
Option 5: $185 Billion in FY 2003
TOA Cut = -$100 Bill in 02 (35%)

Aim
Aim
Generate
GenerateMore
MoreReliable
ReliableInformation
Informationin
inthe
theShort
ShortTerm
Term
I.D.
I.D.Options,
Options,Explore
ExploreLower
LowerCost
CostAlternatives,
Alternatives,and
andEvolve
EvolveAppropriate
AppropriatePriorities
Priorities
To Break Cost Spiral & Produce a More Relevant Adaptation to the
To Break Cost Spiral & Produce a More Relevant Adaptation to the
Uncertainties
Uncertaintiesofofthe
theEmerging
EmergingWorld.
World.
Preventing the Collapse of Air Force
Tactical Fighter Aviation

Illustrative
IllustrativePlanning
PlanningOptions
Options

Caveat: Calculations are two years old and a little out of date.
Today’s requirements are higher than depicted in this section
 GOALS:
Maintain 20 TFWs
Stabilize Average Age of Aircraft @ 10 Years by 2002

Two Problems
Short Term: The Procurement Hole.
Long Term: Low Sustaining Rate (Cost Growth > Budget Growth)

Implications
1997-2002 2003-2013 Total
Current Program 80 902 982
Addional Aircraft Required 900 590 1490
Total Requirement 980 1492 2474
 Preventing the Collapse of AF Tac Air

12000 25
2500
Avg A/C Age 76-13)
Aircraft Procured/Yr

Average Aircraft Age (Yrs)

20
2000
Aircraft Procured/Yr

9000
Add’l A/C
15

Inventory
1500
6000

1000 10
Ftr/Int Atk
F-15 A-10 F-16 3000
JSF
500 5
Other F-22 BUR Rqt

0 0 0
50 60 70 80 90 0 10
50 60 70 80 90 0 10
 Illustrative Acquisition Strategies
Goal: Stabilize Avg Age or 20 TFWs @ 10 Yrs 2002-13

• Option 1 ($125 Bill.) : Stabilize Age by Adding New F-16s to Current F-22/JSF
Procurement Plan (F-16s @ $26M/Cy)
• Option 2 ($65 Bill): Terminate F-22/JSF & Stabilize by Buying New F-16s
($26M/Cy)
• Option 3 ($44 Bill.): Terminate F-22/JSF & Stabilize by Buying a Mix of --
• Re-manufactured F-16s & A-10s (F-16s@ $11M/Cy & A-10s @ $5M/Cy
• New F-16s ($26M/Cy)
• CAS-Xs (Fast-Paced Prototype Program, Cost Target = A-10A Cost Profile =
$14M/Cy)
• Ftr-Xs (Fast-Paced Prototype Program, Cost Target = F-16A Cost Profile =
$23M/Cy)
Some
SomePeople
PeopleAssert
AssertExcessive
ExcessiveBudget
BudgetReductions
Reductions
Caused
Causedthe
the
Deteriorating
DeterioratingReadiness
ReadinessPosture
Posture

Given the Problems Described Here,

How Useful for Policy Makers is this Hypothesis?
 “The dogmas of the quiet past are inadequate for the
stormy present. The occasion is piled high with difficulty,
and we must rise with the occasion. As our case is new, so
we must think anew, and act anew. We must disenthrall
ourselves, and then we shall save our country.”
Abraham Lincoln

Change
Changethe
thelast
lastword
wordto
to“MILITARY”
“MILITARY”
…
…and
and......
We
Wehave
havean
anaccurate
accuratedescription
descriptionof
ofthe
the
Challenge
Challengefacing
facingthe
thePentagon
PentagonLeadership
Leadership