Between sequestration, government shutdowns and continuing resolutions, budget uncertainty grips the U.S. Department of Defense (DoD) and the military space community. Not only is 2014 unsettled, but questions about the four following years are unanswered, leaving space priorities in limbo.
Todd Harrison believes these budget abnormalities may be here to stay and will push the Air Force and the Pentagon to re-examine how they fund the national space programs.
Earlier this year, the Center for Strategic and Budgetary Assessments released a report authored by Harrison, dubbed โThe Future of Milsatcom,โ that created waves for its recommendations for expanding U.S. military satellite communications capabilities within a constrained budget environment. Among other things, the report suggested that the U.S. Air Force develop a new class of satellites that use existing technology to fill the gap between protected and unprotected communications.
Harrison spoke with SpaceNews staff writer Mike Gruss as the budget shutdown began.
Is sequestration the new normal?
We should view that more as a ceiling rather than a floor in the defense budget. Weโre going to come down to that level and maybe even go below it in future years. I say that because weโve gotten this far into sequestration and it doesnโt seem to bother people on Capitol Hill all that much. If you look at the budget caps, you only go down slightly more in 2014 โ the defense budget will hit about $475 billion. Then after that it will actually be allowed to grow a little in the coming years.
What does that do long-term to the industrial base?
The bottom line is DoD will not be able to support an industry of the size and of the capabilities that we have today. There are several ways this could play out. There could be some consolidation in industry. You could see prime contractors buying up some of the smaller subs. You could see some companies choosing to exit the defense industry or exit part of it. At the end of this, weโre likely to have a defense industry where thereโs only one viable prime in many sectors.
Is space one of those areas?
I think weโll see some specialization in space where companies may give up on trying to compete for certain kinds of space programs and just focus on their strengths, perhaps where theyโre already an incumbent. We could see some primes saying, โSpace is not a large part of our businessโ โ military space in particular.
Do you see sequestration taking a bigger bite out of space and missile defense or are those areas somewhat sequestration resistant?
Strict sequestration is a uniform cut across everything, so space and missile defense would not be exempt. While I think DoD should prioritize space-based capabilities because itโs so important for enabling our forces, Iโm not confident they will. I think the senior leadership in each of the services is more focused on the types of weapons systems and platforms that are visible. You can see a fighter jet. You can see a ship. You can see a tank. But folks donโt see the satellite that protects them.
Could space advocates within the Air Force be doing a better job of ensuring that their voices are heard?
The space community within the Air Force has always been viewed as somewhat of a second-class citizens because theyโre not fliers. Thatโs a cultural issue and I donโt see that changing in the near future. Maybe one day weโll have a chief of staff of the Air Force who comes from a space background and then weโll see a shift. Iโm not sure that will happen in my lifetime.
Did DoD inadequately prepare for sequestration under the assumption that it wouldnโt actually happen?
They were caught flat-footed. When fiscal year 2013 started, they put out direction to the services and all the components to continue spending as if sequestration would not happen that year. That meant by the time sequestration took effect in March, they had already been spending for almost half the year as if they were going to be at a higher budget level. They did not have the contingency plans they could put into effect immediately to start reduce spending.
When did it finally sink in?
Itโs only in the past six months that folks throughout government started to wake up to the fact that this is real. There is not going to be more money for space in the future; thereโs going to be less. The resource constraints have sunk in and thatโs bringing people around to the notion that we have to fundamentally rethink architectures and the way that we acquire systems. There canโt be another T-Sat (Transformational Satellite Communications System).
How would you assess the space industryโs response?
With only a few exceptions, folks in industry are looking at this and theyโre embracing the opportunity. Theyโve got lots of great ideas about how to implement things like disaggregation, hosted payloads, being smarter about how DoD buys commercial satellite communications capacity.
How will the situation fundamentally change the way the military procures space capabilities?
If a system is going to cost billions of dollars per satellite, it isnโt going to happen. If you think of what people call the iron triangle of engineering โ cost, schedule and performance โ you can only make one of those a priority for a system. In the past, we alternated between schedule being a priority and performance being a priority. Now I think itโs completely changed and cost is the driver. Thatโs the priority here and youโre going to have to sacrifice schedule and youโre going to have to sacrifice performance if you want to stay under your cost cap. You canโt get everything you want in a satellite anymore.
Can you elaborate on the schedule aspect?
Youโre going to have to be more flexible. Youโre going to get it when you get it. This is going to be a really hard transition for people who for their whole career, this is how itโs been โ โWell, performance is king or schedule is king and Iโll get the money I need because I can justify it.โ Itโs not going to work anymore. Youโre going to be given a certain amount of money and youโll be lucky to get that.
What have you learned from the commercial satellite industry since your report came out?
Theyโre ready to move out and there are ways that they can provide commercial satellite communications services with an increased level of protection at a more affordable cost to DoD if DoD will act more like a commercial customer.
Some people have said DoD will never do that.
Itโs going to be hard. This is one of those things thatโs going to require a complete rethink of how we acquire commercial services. Itโs foolish to continue buying off the spot-market, using short-term leases as needed. Thatโs how we end up in a situation like where we are now where we have really no choice but to lease capacity from a satellite owned by a Chinese company.
If you look at companies like Xtar, what did they do? They went out and built something DoD needed and hoped, โIf you build it, they will come,โ and DoD is not showing up. Are commercial providers going to continue to throw money at ventures like that? No.
But I guess Iโm an optimist because I think that change can happen.
What, in your view, will the next U.S. military communications satellite system look like?
Itโs going to be an evolution of systems and components that we already have today. Whether itโs a hosted payload or some sort of modular satellite bus, thatโs still TBD.
Is this budget process โ with continuing resolutions and shutdown threats โ what we should expect every year?
If you look at the makeup of Congress, particularly in the House of Representatives, one-third to one-half of the members are less than six years in office. Theyโve never seen firsthand how the system is supposed to work. That scares me a bit that we may be leaving behind the regular order of the budget process and not be able to come back to it easily. I sure hope we get back to regular order, but I donโt see it happening anytime soon. Because the fundamental issues that divide folks in Congress, the issues causing this budget turmoil, theyโre not getting resolved.
And then that creates turmoil within DoD.
Absolutely. How do you plan? You had a sequester in 2013. You have no idea what the budget for 2014 is going to be. Youโre planning for one level. Itโs probably going to be $50 billion less than that, but you donโt know. You donโt even have a continuing resolution so how do you project that out? How do you think of 2015, much less the [five-year defense plan] that goes with that budget? Right now, DoD has two parallel budgets that theyโre working and they donโt even know which one theyโre going to go forward with in the spring.
What did you think of recent remarks by Gen. William Shelton, commander of Air Force Space Command, that sequestration will break every U.S. military space program?
I donโt think heโs overstating it too much. I think itโs going to break a lot of things. And in space, programs are already on tight timelines and budgets, and it doesnโt take much to derail a program. The kind of budget turmoil weโre seeing from sequestration, from continuing resolutions, from a government shutdown, that almost makes it mission impossible for program managers.
What should the military space community expect as the budget shrinks?
In previous drawdowns, procurement spending dropped to about $62 billion in todayโs dollars. At the end of the Vietnam drawdown, procurement came down to about $62 billion in todayโs dollars. At the end of the Cold War drawdown, procurement came down to $62 billion. Right now weโre at about $99 billion. What if we came down to $62 billion? Think about the impact that would have. How many satellites could you buy if that much of the procurement budget is cut?
What number is likely?
Probably somewhere in between. You look at major acquisition programs within the Air Force budget that are going to be competing with each other. The big ones are things like the tanker, the Joint Strike Fighter, the next-generation bomber that are supposed be ramping up over that time period. You canโt do all of those in a $62 billion total procurement budget, much less anything space.
Follow Mike on Twitter: @Gruss_SN
