Pentagon Rolls Out FY2015 Budget, 2014 QDR Aimed at Future Years Sequester
The Obama administration, including DoD, rolled out their FY2015 budget request on March 4, alongside the release of the new quadrennial defense review (QDR). Here is an overview of both the QDR and the FY15 budget request, with their highlights and flaws.
The Pentagon’s 2014 QDR [PDF], though it is meant to be a strategy-driven document, has a whole chapter dedicated to the Department’s efforts to convince Congress to permanently undo sequestration. Otherwise, it emphasizes the sort of non-land based force components that are currently fashionable: cyber, missile defense, nuclear deterrence, space, air/sea, precision strike, ISR, and counter-terrorism. In other words, the politically-palatable components that don’t involve infantry and armor “boots on the ground.”
A $495.6B Baseline in a FYPD That Attempts to Deny Sequestration
The Ryan-Murray agreement from December 2013 dampened the effect of sequestration into FY15, and the Administration is submitting a budget at the $496B baseline level of the Bipartisan Budget Act. DoD is now shifting its pressure on Congress to FY16, when the sequester will still be supposed to be fully in effect by law. The Pentagon is giving up on last year’s long-term budget, but the new FY15-19 FYDP still projects a total of $115B in spending above sequester levels over the period, with yearly amounts in the $535M-$559M range. This would break a 3-year streak at a $496B base discretionary level. Though the new FY16-19 projection is below what it was in FY14, it is still closer to last year’s president budget than to sequester numbers.
Procurement Decrease, BRAC Postponed
At $153.9B, weapons procurement is $1.3B below the enacted FY14 level once rescissions are taken into account. Before recissions procurement is down by $9.7B, or almost 6% from FY14 enacted. Mission support, and to a lower extent aircraft, account for the bulk of that drop.
Base realignments and closures will be put back on the agenda in 2017. Just putting another BRAC round on the agenda has been rejected by Congress for the last two years, and it is plain realism to acknowledge lawmakers will not be more amenable to the idea just months before mid-term elections. Now they will have to wait for a new president.
The classified Military Intelligence Program (MIP) base request is set to $13.3B (vs. a $14.6B FY14PB), and that’s all the public will know about it.
Air Force Sticks to Biggest Programs, Targets Legacy Platforms
- The USAF’s priorities remain its participation in the JSF program – which appears mostly unscathed – the KC-46 tanker, and a new strategic bomber.
- The T-X trainer replacement is set to start with a contract award in FY17.
- The Combat Rescue Helicopter is list as delayed in the documents released by the Pentagon on March 4, with development funding beginning only in FY16. Yet the Air Force scrambled on the very same day to announce that, after all, they had found the money to proceed with a June 2014 award thanks to FY14 leftovers.
- A-10s remain on the chopping block, despite sustained opposition in Congress. F-35s are expected to provide close air support by the start of the next decade.
- U-2 bombers are to be replaced by Global Hawk UAVs. Global Hawk Block 40 aircraft, which were supposed to be cut by the FY14 budget, are back on probation, pending FY16 sequester relief. Likewise, the KC-10 tanker fleet may be shelved unless FY16 funding comes above sequestration levels. And there would be fewer Reapers and Predators.
- $1B is to be allocated to new jet engine technology.
Navy Considers Changing Course on LCS
- The Littoral Combat Ship is frozen to a 32-ship buy, as recently recommended by acting Deputy Christine Fox, until the Navy delivers a study weighing continuing with the existing designs, modifying the existing LCS, or pursuing an entirely new frigate design. This does not mean that LCS is ultimately “cut”, rather this will likely recompete and reorient the program beyond its current Flight 0. This year 3 LCS are purchased, rather than 4.
- A total of 11 carrier groups will be maintained if Congress delivers FY 2016 funding above sequester ceilings. Otherwise the Pentagon may revive a plan to retire USS George Washington (CVN 73) that was shelved earlier this month.
- 36 F-35Cs are featured in the FY15-19 plan, down from 69 in the previous FYDP. This is strictly for affordability reasons rather than performance, according to the Navy’s brief.
- Only 8 P-8A Poseidon aircraft in the base budget, with 8 more in a side wishlist (more below).
- AIM-120Ds procurement is backloaded to FY16-19.
- MQ-4C Triton start postponed to FY16 as the program is late.
Army On Force Structure Diet
- Army force structure is the primary target of cuts, with an end strength at or possibly below 450,000 soldiers in active duty, 335,000 in the National Guard, and 195,000 in the Reserve. Sequester through FY19 would bring the active end strength down to 420,000 troops. Though comparisons to pre-WWII levels recently seen in the media are overblown – the Air Force didn’t have a separate department back then – this is not a size the Army’s commanders are looking forward to.
- JLTV is looking at Low Rate Initial Production with 176 vehicles. Paladin Integrated Management has LRIP funds too.
- AMPV EMD is funded.
- As telegraphed in recent months, the Army is terminating GCV.
- Army Guard Apache attack helicopters will be transferred to active-duty units, which will transfer Blackhawk helicopters to the Guard for emergency response.
A Budget with Significant Missing Pieces
Missing War Budget
Like last year, the Administration is again failing to release a full budget since its submission lacks the Overseas Contingency Operations (OCO) component. At $79B, the FY15 OCO placeholder is equal to last year’s placeholder, a pretty high number as the war in Afghanistan is winding down and thousands of MRAPs are scrapped rather than shipped out of the CENTCOM AOR.
Further out, the Administration continues to propose a $450B cap on OCO spending over 2013-2021. On one hand that is very high in the absence of war in the years to come, but on the other hand the adversary has a vote. This is less weird than it seems when you take into account the absence of BCA caps on OCO spending, making them a tempting escape hatch to make these caps, or the baseline budget really, somewhat meaningless.
OGSI: Don’t Call it an Unfunded List
Leaks that the unfunded lists terminated by Secretary Gates were to return were scorned in the media, so they have been rebranded as an “Opportunity, Growth and Security Initiative” worth $26B that is supposed to be funded by equivalent spending and tax reform. That is part of a broader $58B package across the whole federal government. The Administration has yet to provide a precise explanation of the mechanics of that funding. In the absence of that explanation, this looks like an unfunded priorities list.
The OGS is listing, among other items dangled in front of Congress’ nose:
- Air Force: 10 C-130Js for $1.1B, 12 MQ-9s, 2 F-35s.
- Navy: 8 P-8As for $1.1B, 1 E-2D.
- Army: 28 AH-64Es, 28 UH-60s, 2 CH-47s.
Where Are the Justification Books?
Finally, also repeating last year’s precedent, despite a budget request made after the legal deadline, the Administration could not be bothered to publicly release procurement and RDTE justification books alongside with the overview. These detailed documents were later made available over several days in mid-March.
Not a Way to Roll Out a Budget
In summary: on March 4 the Administration made a late budget submission, without OCO, without justification books, with an unfunded wishlist, and the Air Force scrambling to announce a last-minute change of heart on a multi-billion program. This is another sloppy budget rollout, which while not as out-of-touch as last year’s, shows a lack of seriousness and little respect for the notion of public accountability.
Additional Readings & Sources
- DID – Primer on how federal and DoD budgets are made.
- DID – Centralized, extensive budget and NDAA coverage: FY 2014 | FY 2013.
- DID – Guest Article by Lou Crenshaw, Vice Admiral U.S. Navy (ret.) on the FY2012 budget
- DID document repository – many budget briefing, procurement, and RDTE files released by the Pentagon’s Comptroller and the services are in our Google Drive.
- Congressional Research Service: The 2014 Quadrennial Defense Review (QDR) and Defense Strategy: Issues for Congress [PDF]
- CSBA – The FY2015 Defense Budget: Balancing Strategy and Resources [PDF]
- CSBA’s Todd Harrison: A tale of two budgets
- CSIS – Going Hollow: The Hagel Preview of the FY2015 Defense Budget
- CRFB – The President’s FY2015 Budget
- Stan Collender – Congress Will Do Nothing On The Budget Rest Of This Year