Size of Increase Depends on Non-Budgetary Assumptions
The Center for Strategic and Budgetary Assessments (CSBA) today released its latest report, Buying Tomorrow’s Military: Options for Modernizing the US Defense Capital Stock. Authored by CSBA’s Director of Budget Studies, Steven Kosiak, the study provides a range of estimates of the Defense Department’s long-term procurement funding requirements, each of which rests on different assumptions about the level of threat faced by the US military, the pace of technological change, and other factors.
CSBA estimates that fully implementing the current modernization plan—inherited by President Bush from the Clinton Administration—would require average annual procurement budgets of nearly $80 billion (fiscal year 2002 dollars) over the next 15 years. The cost would rise to some $95 billion if it is assumed that DoD would seek to replace its existing inventory of weapon systems with next-generation systems on a one-for-one basis over the longer term (i.e., on a “steady-state” basis). By comparison, DoD now spends about $60 billion a year on procurement.
On the other hand, it is far from clear that all of the new next-generation weapon systems called for under the current plan are necessary to keep the US military adequately modernized. The report explores one option that involves buying a mix of new current-generation systems (e.g., F-16 block 60s), and smaller numbers of next-generation systems than currently planned. If it pursued this option, DoD could cut its annual procurement funding requirements to perhaps $70-75 billion a year.
Procurement funding requirements could be reduced even further by cutting the size of the force structure that would need to be modernized over the long term. The willingness to trade off quantity for quality has been a hallmark of US defense planning and budgeting over much of the past 50 years.
The CSBA report discusses how differing perspectives concerning each of the following factors might influence one’s views about the appropriate strategy for “recapitalizing” (i.e., replacing) the existing inventory of weapon systems (i.e., the “defense capital stock”), and the level of funding required:
- Rising operations and support costs;
- Modernization among potential adversaries;
- Changes in expected standards of performance for US forces;
- Advances in weapons platforms;
- Revolution in Military Affairs (RMA), driven by advances in military technology;
- Increased effectiveness of precision-guided munitions; and
- Improvements in computers, sensors and communications systems capabilities.
Any review of DoD’s modernization requirements must take into account the need to maintain a robust defense technology and industrial base. At the most basic level, DoD should implement policies designed to foster and maintain four different attributes for industry: competition; innovation; production; and profitability. For the most part, the CSBA report concludes this should be possible without major government intervention. However, given the contraction in the defense industry that has taken place over the past decade, the days when market forces alone could be trusted to ensure the protection of industry’s critical capabilities are probably over.
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If you would like to obtain a copy of the report, contact Missy Martinez at (202) 331-7990 or info@csbaonline.org
If you would like to see the executive summary of this report, please click here.
If you would like to purchase a copy of this report, click here.
The Center for Strategic and Budgetary Assessments (CSBA) is an independent policy research institute established to promote innovative thinking about defense planning and investment strategies for the 21st century.
