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Defense Planning

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Below are some notes on Force Structures, Defense Planning and Budgeting, and the “Industrial-Complex” that characterize our overall National Defense System.  As objectively as possible, my goal throughout is to describe certain military capabilities for what they cost and what they can accomplish.

Briefly, my opinion is that U.S. defense spending is too high. This is primarily because a) military end-strength has grown too large because of two expansive wars/nation-building campaigns; b) the Pentagon buys too many redundant and high-cost combat systems; c) the Pentagon buys too many ineffective or dubiously useful combat systems; d) some resources are wasted in programs which have lengthy development schedules, i.e. 1o+ years; e) benefits packages (i.e. health care, retirement pay, and bonuses) are too high; and f) the defense establishment is spendthrift because it doesn’t have effective incentives to cut costs or be resourceful.

Now my notes:

U.S. Defense appropriations broken down by type and percentage

  • RDT&E: ~ 15% of base discretionary budget
  • Procurement: ~ 20% of base discretionary budget
  • Operations & Maintenance: ~ 35% of base discretionary budget
  • Personnel: ~ 25% of base discretionary budget
  • Other: ~ 5% of base discretionary budget

Total base discretionary budget: $550 billion + supplemental spending ($800,000 per year per soldier deployed).

2011 total defense cost: $708 billion

(Source: Comptroller, Office of the U.S. Under Secretary of Defense)

Related links

U.S. active military end strength (approx. 2011 figures)

  • Army: 547,000
  • Navy: 324,000
  • Marine Corps: 202,000
  • Air Force: 332,000

Total Active: 1,405,000

Ready reserve end strength (approx. 2011 figures)

  • Army Reserve: 205,000
  • Navy Reserve: 65,000
  • Marine Corps Reserve: 40,000
  • Air Force Reserve: 71,000
  • Army National Guard: 358,000
  • Air National Guard: 107,000
  • Individual Ready Reserve: 250,000

Total Reserve: 1,096,000

U.S. weapons systems (Courtesy http://www.GlobalSecurity.org)

Random notes on the Industrial Base

Characteristics of the defense industrial base (DIB)

  • Capital intensive. Significant barriers to entry reduce competition
  • Maturity and specificity of Technology raise costs. Technology often non-transferable to commercial sectors. Meaning many companies are reliant upon defense spending.
  • Service-providing companies now take up 1/2 the defense market. Services include:
    • Systems Engineering and Technical Assistance (SETA)
    • IT
    • Cyber
    • R & D

DIB financial condition is stronger than a decade ago

  • Low debt/solid credit ratings
  • With few new program starts, companies are maximizing profits and cash flow
  • Regular dividend increases are the norm for primes
  • Despite this, stock prices are down 30 to 40% due to “street” doubts about the future

Sectors of the DIB

  • Large scale primes: Includes complex integration (aircraft, missiles, satellites) and mature platforms (ships, armored vehicles).
  • Major subsystems: Includes defense unique components (guidance systems, combat systems, munitions, sensors) and dual-use items (engines, launch vehicles).
  • IT providers: The defense unique providers cover low-observables/stealth, high speed integrated circuits, while dual-use items include advanced materials, semiconductors, batteries, etc.
  • Service: Defense focused (SETAs, specialized R & D) and dual-use (IT, Cyber)

Reductions in spending outlook for hardware providers

  • Specialized technology firms broaden to non-DoD markets
  • Significant Reductions for hardware providers (15% to 20% top line reductions, 30% to 40% procurement reductions)
  • Primes take radical actions (e.g. major mergers, sales of business sectors, acquisitions to focus on non-DoD government or commercial markets, return capital to investors vs. investing in DoD programs)
  • Smaller players leave market or shift focus to DHS, VA, State/Local, etc

Competitive landscape (ranked by most competitive to least)

  • Highly competitive (e.g. unmanned aerial vehicles)
  • Moderate competition (e.g. radars, engines)
  • Monopoly/duopoly (e.g. ships, fighter aircraft)

Industry Prime Companies (ranked by 2008 arms sales)

  • BAE (UK) – $32.4 billion
  • Lockheed Martin (US) – $29.9 billion
  • Boeing (US) – $29.2 billion
  • Northrop Grumman (US) – $26.1 billion
  • General Dynamics (US) – $22.8 billion. Four main business segments – Marine Systems, Combat Systems, Information Systems & Technology, and Aerospace.
  • Raytheon (US) – $21 billion
  • European Aeronautics Defence and Space (EADS) (EU) – $17.9 billion
  • Finmeccanica (Italy) – $13 billion
  • L-3 Communications (US) – $12.2 billion
  • Thales Group (France) – $10.8 billion
  • United Technologies (US) – $10 billion
  • Science Applications International Corporation (SAIC) (US) – $7.4 billion
  • Kellog-Brown & Root (KBR) (US) – $5.7 billion
  • Computer Sciences Corp (US) – $5.7 billion
  • Honeywell (US) – $5.3 billion
  • ITT Corporation (US) – $5.2 billion
  • Rolls Royce (UK) – $4.7 billion
  • Almaz-Antei (Russia) – $4.3 billion
  • Navistar (US) – $3.9 billion

Specific notes on aerospace

Ways in which aerospace is affected by DoD Strategic Choices

  • Industrial base becomes increasingly specialized and reliant on DoD funding for high-tech systems
  • Differences between force-planning time frame at DoD (every 4 years) and Industry business planning (quarterly and yearly) require Industry to retain excess capacity and technical know-how during periods of uncertainty; leads to higher costs.
  • Generally speaking, DoD requirements increases and/or budget cuts lead to greater consolidation of industry. The “Last Supper” of 1993, a meeting in which industry leaders were informed that budgets would be reduced, led to the consolidation of more than 50 major defense companies into only six.
    • This dynamic leads to reduced competition.
  • Program restarts get more expensive as the lapse time grows. This is because of the cost related to capital investments in idle plants and the retention of quality personnel.
  • Strategic choices
    • Low-intensity conflict requires more low-tech tactical aircraft over strategic aircraft, which means reduction in both design expertise and production facilities. COIN aircraft need to have an emphasis on C4ISR, sensors, net-centric operations, precision strike, and visual and acoustic stealth.
    • Technology intensive strategic aircraft include agile air-to-air combat, long-range strike, full-spectrum stealth, speed and maneuverability at medium and high altitudes. None of these needed for low-intensity conflict.
    • Unmanned aerial systems are generally useful in any strategic scenario
    • U.S. industrial base strategic infrastructure and skills have eroded; the only strategic ballistic missile the U.S. continues to produce is the Trident II SLBM
    • Long-range strike platforms have seen innovation become dormant. The B-2 is used but with no foreseeable replacement.

Specific notes on shipbuilding

Current Navy Shipyards

  • Norfolk Naval Shipyard, Virginia (NNSY): co-located alongside Northrop Grumman Shipbuilding Newport News.
  • Northrop Grumman Shipbuilding Newport News, Virginia (aka Newport News Shipbuilding): 1 of 2 shipyards that produce and service all types of nuclear powered submarines. Only shipyard that can build supercarriers (displacement more than 70,000 tons).
  • General Dynamics Electric Boat, Groton, Connecticut: 1 of 2 shipyards that produce and service all types of nuclear powered submarines. Primarily builds SSN-774 Virginia-class attack submarine (about 2 Virginia-class builds a year)
  • Bath Iron Works (BIW), Bath, Maine: builds private, commercial, and military vessels including frigates, cruisers, and destroyers.

Related links

Miscellaneous

Acronyms

  • COTS (Commercial Off The Shelf)
    • Navy and Defense Industry recognize that if data is stored on a network instead of a server or hard drive, they can purchase computers on the open market; and as software and hardware advance they can upgrade their machines without taking them offline. This IT program includes COTS reform.
  • C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, Recon). C5ISR (Combat Systems). C2 (Command and Control)
    • CANES (Consolidated Afloat Networks and Enterprise Services): Navy’s shipboard networks modernization plan

Further Reading

Print publications

Websites

"Through these doors pass the most awesome fighters..."

 

Written by gringolost

December 23, 2010 at 11:12 pm

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