More Weapons Face Cuts or Terminations, Mullen Says

The U.S. Defense Department likely will recommend in its fiscal 2012 budget additional spending cuts or terminations in major weapons systems that are missing cost and schedule goals, the nation’s top military official said.

The cutbacks would follow more than 20 programs that Defense Secretary Robert Gates terminated or truncated in April 2009, saving what the Pentagon estimated as more than $300 billion in long-term costs.

Those were “really, really tough decisions,” Admiral Michael Mullen, chairman of the Joint Chiefs of Staff, said in an interview during a taping of “Conversations with Judy Woodruff,” airing Oct. 15 on Bloomberg Television. “There will be more cuts.”

“We’re going through that process right now,” Mullen said. “Major programs from all the services which aren’t performing well, which can’t get themselves under control in terms of cost and schedule, they’re going to be looking at either being slowed down dramatically or being eliminated.”

Defense accounted for at least 51 percent of overall discretionary federal spending last year, according to the Office of Management and Budget, so the military budget faces increased pressure, including from the National Commission on Fiscal Responsibility and Reform that President Barack Obama created to identify tax and spending options to cut the deficit.

Defense Cuts

A bipartisan group of 57 representatives and senators released a letter today asking the commission to consider defense cuts.

“Are things at risk? Sure,” Air Force Chief of Staff General Norton Schwartz said in an interview today. “This is a challenging time to be a program manager.”

“If there are programs that are more costly, not occurring as quickly as they should be, not testing well -- the bottom line is that there will probably be less patience than there has been over the last few years,” Schwartz said.

Mullen’s remarks are “an early indicator of what to expect” in the budget request for fiscal 2012, which starts next Oct. 1, said Todd Harrison, a budget analyst for the nonpartisan Center for Strategic and Budgetary Assessments in Washington.

“The Defense Department seems to be placing a greater emphasis on cost and schedule at the expense of performance,” he said. “This is in stark contrast to a decade ago, which placed a premium on improved performance with little regard to cost or schedule.”

Tightening Budget

The shift in emphasis “is not only a reflection of the tightening budget environment but also a general dissatisfaction with the pace and performance” of Pentagon acquisition programs, Harrison said.

Mackenzie Eaglen, a defense analyst with the Washington- based Heritage Foundation said that, coming after the round of the April 2009 cuts and terminations, Mullen’s remarks were “astounding.”

“There is no more low-hanging fruit in this account, and now cuts will have to come from mostly” mature programs, she said. “There is simply no way for the Pentagon to cut further into the bone without having direct impact and negative consequences on those in uniform.”

The Navy’s 55-vessel Littoral Combat Ship program, with Bethesda, Maryland-based Lockheed Martin Corp. competing against General Dynamics Corp., of Falls Church, Virginia, is an example of a program with early cost growth that must be corrected, Mullen said.

Contain Costs

“If LCS is unable to contain itself in terms of cost and schedule, then I don’t think it has much of a future,” he said.

The first two vessels under contract were initially expected to cost about $220 million apiece. Those costs are estimated to have at least doubled, according to the nonpartisan Congressional Research Service.

To contain costs, the Navy is now conducting a winner-take- all competition for the next 10 warships through 2014 and to provide the design that would become the baseline for the entire 55-ship fleet.

The Pentagon postponed a meeting scheduled for today that was to review the competition, Pentagon spokeswoman Cheryl Irwin said.

‘Key Capability’

Gates last year called the new ship “a key capability for presence, stability and counterinsurgency operations in coastal regions.”

Any weapons cuts would be on top of the planned shift of $100 billion through fiscal 2015 of overhead savings to weapons and personnel accounts. The goal is to find a way to increase spending on weapons and personnel by as much as 3 percent a year even as the Obama administration seeks to limit overall defense spending to growth of about 1 percent a year after inflation.

“If those dollars are reinvested in programs that are unfolding effectively, that are achieving their performance goals, that is a better place to be,” Schwartz said.

Mullen, 64, said that the Pentagon will face pressures to shrink even the 1 percent increase because defense spending constitutes more than half of the annual budget that Congress controls. Pentagon programs will make up 56 percent of discretionary spending in fiscal 2011, according to OMB estimates.

Budget Expectations

In an earlier Navy assignment, Mullen said, he “handled all the money for the Navy, so since 2002-2003 I had expectations that our budget would eventually start going down. And that has started to happen.”

Mullen said he has tried to “prepare those around me, originally in the Navy and now the other chiefs. And we’ve talked an awful lot about expectations that the budget is going to see increased pressure.”

The Pentagon also is seeking to eliminate unneeded private service contractors and increase the use of contracts that give defense companies greater incentive to reduce costs in exchange for larger profit.

To contact the reporter on this story: Tony Capaccio at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva4@bloomberg.net.

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