Defense Department News
This information is provided for historical purposes only. It may contain outdated information and links may no longer function.
Please contact the DOD Webmaster if you have any questions about this archive.

Acquisitions Official: 'Very Unusual' Budget Environment Hinders New Product Development

Dec. 4, 2016 | BY Terri Moon Cronk

U.S. Navy Petty Officer 3rd Class Tom Xue, U.S. Navy Seaman James Ketler and U.S. Navy Petty Officer 3rd Class Ryan Stephenson move an F/A-18E Super Hornet from the Strike Fighter Squadron 14 into the hangar bay of the aircraft carrier USS John C. Stennis in the Pacific Ocean, Dec. 10, 2014. Xue is an aviation boatswain's mate handling, Ketler is an aviation electrician's mate airman, and Ryan Stephenson is an aviation boatswain's mate handling.
Navy sailors move an F/A-18E Super Hornet into the hangar bay of the aircraft carrier USS John C. Stennis in December 2014. Frank Kendall, undersecretary of defense for acquisition, technology and logistics, spoke at the Reagan National Defense Forum on Dec. 3, 2016, and mentioned the F/A-18 as an example of an older aircraft whose repair backlog is hindering the "acquisition of much more modern aircraft." Navy photo by Petty Officer 3rd Class Ignacio D. Perez
U.S. Navy Petty Officer 3rd Class Tom Xue, U.S. Navy Seaman James Ketler and U.S. Navy Petty Officer 3rd Class Ryan Stephenson move an F/A-18E Super Hornet from the Strike Fighter Squadron 14 into the hangar bay of the aircraft carrier USS John C. Stennis in the Pacific Ocean, Dec. 10, 2014. Xue is an aviation boatswain's mate handling, Ketler is an aviation electrician's mate airman, and Ryan Stephenson is an aviation boatswain's mate handling.
U.S. Navy Petty Officer 3rd Class Tom Xue, U.S. Navy Seaman James Ketler and U.S. Navy Petty Officer 3rd Class Ryan Stephenson move an F/A-18E Super Hornet from the Strike Fighter Squadron 14 into the hangar bay of the aircraft carrier USS John C. Stennis in the Pacific Ocean, Dec. 10, 2014. Xue is an aviation boatswain's mate handling, Ketler is an aviation electrician's mate airman, and Ryan Stephenson is an aviation boatswain's mate handling.
Navy sailors move an F/A-18E Super Hornet into the hangar bay of the aircraft carrier USS John C. Stennis in December 2014. Frank Kendall, undersecretary of defense for acquisition, technology and logistics, spoke at the Reagan National Defense Forum on Dec. 3, 2016, and mentioned the F/A-18 as an example of an older aircraft whose repair backlog is hindering the "acquisition of much more modern aircraft." Navy photo by Petty Officer 3rd Class Ignacio D. Perez
VIRIN: 761633-J-ITD45-928
The Defense Department does not have enough resources in its new-product pipeline, and if it doesn't address that issue, it will be a much less healthy organization five to ten years down the road, the undersecretary of defense for acquisition, technology and logistics said today at the Reagan National Defense Forum in Simi Valley, California.

Frank Kendall participated in a panel discussion focused on whether the national defense enterprise needs to reform or rebuild. He said if a new corporate management team was considering that question from a business perspective, it would assess whether the entity is capitalized adequately; look at how well the infrastructure is maintained; see if the capital equipment is adequately budgeted to replace equipment as it ages out; and examine the cost structure of personnel.

Viewing the Defense Department the same way, he said, what that hypothetical team would find is the result of a "very unusual" budget environment over the last several years.

Budgetary Constraints Plague DoD

“There’s the artificial constraint of sequestration, budgets that have consistently come in below what the department asked for, [while] our planning has been for a much higher revenue stream. We’ve tried to maintain a capital structure that’s been consistent with that,” Kendall said.

“The force structure of DoD is where it is because of our obligations in the world,” the undersecretary said. And while trying to make cuts, “we’ve been prioritized toward near-term requirements. Adequate resources are necessary for a force to wage wars, he said.

Installations are operating on about 75 percent of the funds needed, he added. “We have been doing emergency-only repairs on our vast real estate enterprise for several years."

The department needs the ability to replace aging equipment, he said, noting that he visited an F-18 Navy depot yesterday near San Diego. “We are way back-logged in rebuilding and restoring to operational capacity some very old airplanes there at large cost,” he said. “It’s very inefficient, and we’re cutting back … on our acquisition of much more modern aircraft that should replace them and would give us much better return on our ability to perform our mission.”

The DoD carries about 20 percent of its real estate empire that’s not necessary and is burdened with the cost of it, Kendall said.

Looking Toward Future

“The first order of business for the new administration should be to look at the health of the enterprise and to understand all the different elements of that enterprise -- not just at its near-term immediate requirements, but five, 10, 15, 20 years down the road,” he said.

“We are being challenged internationally by competitors who are successfully building weapons systems to defeat our forces, and they’re fielding them,” Kendall said. "We are not keeping up with that.”

And while the department is doing a lot to fund early-stage risk reduction in its programs, he said, the lack of funded new products will make it a challenge to stay No. 1 competitively.

“What we need is the money that will make things into real products and put them in the hands of our warfighters," the undersecretary said. "That’s where we need to rebuild.”

The top priorities if DoD were to rebuild, he said, would be to: get the financial house in order, stop sequestration and artificial constraints between domestic and defense spending, and get an adequate-level budget.

(Follow Terri Moon Cronk on Twitter: @MoonCronkDoD)