Chickenhawk Response No. 8: The Economic Realities (and Unrealities) of a Trillion-Dollar Budget

"The same inherent disadvantages that crippled the Soviet centrally planned economy in trying to compete with the American free-market-capitalism model are coming to bear on the Pentagon," says a former Air Force officer.

The story so far: My piece on "The Tragedy of the American Military" is here; the "Gary Hart Memo" is here; an extra reading list is here; and for previous reader responses see No. 1, No. 2, No. 3, No. 4, No. 5, No. 6, and No. 7. Today's is No. 8.

I've spent most of the past two days reading through the ~ 1,200 emailed or paper-mailed responses I've gotten, most from past or current military people and most supportive overall if differing in degree. Obviously I can't quote from (or unfortunately even acknowledge) all of them, but I'll excerpt some as feasible in coming days. Again, I'll assume that I am free to quote from incoming messages unless specified otherwise, but I won't use real names unless you say so in advance.

Today's theme: business aspects of what I call the chickenhawk economy.

1) Centrally planned economies have failed elsewhere; so too with the Pentagon. Brian Weeden, with experience in military and civilian space projects, writes:

I served for nine years in the Air Force in both nuclear ICBM and space operations. I now work for an NGO on space policy, and your article touched on a lot of the issues the U.S. military is facing in space.

Early on you asked why military spending keeps going up as the capability delivered goes down. I think a big part of the answer is that the Pentagon is still trying to run their affairs like a centrally planned economy, while their adversaries (and the world in general) is increasingly being run as a free market. And the same inherent disadvantages that crippled the Soviet centrally planned economy in trying to compete with the American free-market-capitalism model are coming to bear on the Pentagon.

The Pentagon approaches the budget by first trying to figure out what threats it will face in the future, what capabilities it needs to address those threats, and then what specific systems are best suited to provide those capabilities. It then develops budgets and execution plans to procure and field those systems.

The problem is that this approach first requires the Pentagon to know exactly what threats it will face years in advance of when they will appear, just as the Soviet economy had to figure out consumer demand for products before it actually emerged. Moreover, the Pentagon has to figure out ahead of time what the one best way is to deliver a specific capability, as opposed to the free-market model of trying them all and the best ones emerging. Any political scientist will tell you that the principle of bounded rationality means it is impossible to have perfect knowledge, perfect understanding of that knowledge, and enough time to actually do what the Pentagon is trying to do.

When the only real adversary was the Soviet Union, you could make the system work because it was easier to figure out the threat. But the Pentagon currently faces a proliferation of threats from near peers, failed states, and non-state actors. It's no longer possible to build one single set of systems that can meet all those threats. Moreover, it is easier for those adversaries to take advantages of changes in technology. They are more agile because they don't have the same legacy systems or bureaucracy to deal with. As technological innovation speeds up, it becomes harder and harder for a centrally-planned system to keep up.

The only long-term answer that I can see is to shift towards more of a free-market approach that gives commanders in specific geographic regions, or perhaps even units preparing to face specific threats, more flexibility to go out and procure systems and capabilities that meet their own needs. Doing so would require breaking the centrally planned budget and delegating more budget authority to lower levels. But that would be a massive cultural and political shift, one that I don't think the military bureaucracy is ready for, as it would have huge repercussions on everything from training to logistics.

2) The specific instance of the F-35. My article spent a lot of time talking about the financial and technical problems of the F-35 multi-purpose fighter. In an article a dozen years ago, I said that the F-35, then known as the Joint Strike Fighter, would be an important test of whether Pentagon budget-and-contract problems could be solved. The results of the test appear to be in, and they're not positive. From someone in the business:

I would like to put my 2¢ worth in on the F-35.

I worked as a performance analysis engineer on the Boeing entry [which lost to the Lockheed Martin design]. From the beginning I had serious doubts about the combat capability of our design. Primarily it seemed the weapon load was too small and the combat radius too small. Also there was NO capability for engine growth, which is vital for a front-line fighter.

No one in management seemed concerned, so I figured I wasn’t completely informed. I can only assume Lockheed’s winning design had many of the same shortfalls.

The Australian assessment you offer a link to is quite frank, as opposed to U.S. and Great Britain head-in-the-sand approach.

3) The case for the F-35, from inside the Air Force. A lieutenant colonel on active duty in the Air Force writes to disagree with my criticism of the F-35. On equal-time principles I'll quote him in full:

After 20 years in the Air Force, mostly in the airborne reconnaissance business with about 11 years flying both the MQ-1 Predator and the MQ-9 Reaper (with thousands of hours flying close air support over Iraq and Afghanistan), there was a few points I found intriguing, and a few points with which I must take some issue. [JF note: to be clear, both the MQ-1 and MQ-9 are drones rather than manned aircraft.]

One question: In 2002 you wrote a fairly positive article on the acquisition of the F-35. Now you think it’s an example of wasteful spending. What changed? [JF note: What changed is what happened in the past dozen years.] As I recall, the fly-away costs of the F-35 significantly grew during the development years, but then the program was restricted and now the flow-away costs are pretty close to the projections made when the contract was awarded ($80M in 2001 dollars).

Still, that’s crazy expensive. Having spent some time at Air Combat Command headquarters, my own suspicion is that the concept of joint acquisition is to blame. Rather than realize efficiency, the attempt to make one program meet the unique requirements of each service just drives up costs and results in duplication of effort. That combined with the failed concepts of spiral development and low-rate initial production concurrent with developmental testing spell real trouble. In an effort to save money, we signed up for a much bigger bill.

I saw the same thing with the Army acquisition of the MQ-1C Grey Eagle [also a drone]. The Air Force program was much more mature, and the Air Force had already committed itself to transitioning to an all-MQ-9 fleet (a huge increase in capability over the MQ-1B for a marginal increase in costs, since all the ground elements of the system are the same). But the Army insisted that it had unique requirements for a separate airplane. And OSD’s insistence on trying to find common payloads and software only drove up development costs without ultimately achieving any common procurement.

I suspect the F-35 shook out the same way—especially with the Marine Corps “requirement” for short take-off and vertical landing. The Marine version is almost a completely different airplane. And even with a lot of common parts, all three services have to set up their own logistics chains, depot support, and operational maintenance—the real culprit when it comes to high operating costs and the reason the Air Force wants to kill the A-10 ($4.6B per year just to maintain an A-10-unique sustainment chain).

As for the Air Force and the F-35, we have to have it. We’re replacing about 2,000 F-16s and F-15Es with the 1,767 F-35s at the same time that we’re replacing 600 F-15Cs with 185 F-22s. We’re therefore accepting strategic risk in an age when we’re already too small of a force and possessing of too few resources to cover all the taskings expected of us.

With that small of a fleet, we will have a very difficult time defending Taiwan, South Korea, or our allies in the Gulf or Europe in the face of any serious aggression. There has not been an American killed on the ground by an enemy aircraft since the Korean War. We in the Air Force believe that air supremacy is an American birthright, and a gap in the combat air forces puts that at risk. It would one thing if our civilian leaders had made a conscience decision to accept that risk and took responsibility for it. But of course that hasn’t happened (the closest anyone came was when Secretary Gates put the procurement cap at 187 F-22s and declared that he believed the F-35 could fill the counter-air gap).

Notice that I did not include the A-10 as an aircraft that will be replaced by the F-35. In my view, the A-10 and the F-35 have little to do with each other. Rather, the aircraft that will replace the A-10 and fill the CAS role is the MQ-9.

Despite the emotionalism of A-10 proponents, the truth is we just don’t do CAS at 300 feet with a 30mm cannon any more. We do it at 30,000 feet with targeting pods and a bunch of laser-guided weapons. The MQ-9 is far better at this than the A-10, owing to its endurance (20+ hours vs. 2-ish for an A-10), it’s speed (just as fast as the A-10 but able to cover a lot more ground with its endurance), the situational awareness of the crew (due to the fact that it’s much easier to pump things like Link-16 and Blue Force Tracker with an unlimited number of communications links into a ground-based cockpit), the global distribution of data and video inherent in the way the MQ-9 is flown (allowing the crew to leverage the support of intelligence analysts, tactical ops centers, etc. anywhere in the world), and the fact that the MQ-9 pilot sitting at one G and zero knots has none of the physiological issues of manned flight, and therefore at least has the potential (along with the patience) to make better combat decisions.

And the Air Force is buying 300 MQ-9s—the same number as current fleet of A-10s but with a lot more capability and reliability (over 95 percent mission-ready rates) per aircraft—and as you point out, lower acquisition and operating costs. It’s pretty clear to me that the MQ-9 is the A-10 killer.

What the MQ-9 can’t do, and what the A-10 was never expected to do, is something that the F-35 will excel at—kicking down the door on Day 1 of the big war. [JF note: This is for another day.] With its dependence on data links, lack of on-board self-defense systems, and low maneuverability, the MQ-9 would never survive in a contested air environment. But of course neither could the A-10—not against 4th-gen Russian fighters. And we just won’t have enough F-22s to do the job.

So we will absolutely need the F-35 in part for the counter-air mission, but mainly for the suppression of enemy air defenses and the electronic warfare missions in a contested or denied environment. Once Phase 1 of the big war is complete and air supremacy is achieved (which you would need as a pre-cursor to sending in the Army anyway), we can bring in dozens of MQ-9s and provide all the persistent close air support you like.

So we’ve got to make the F-35 work—and we will. We always do. But it won’t be cheap. And in the meantime, the MQ-9 is the breakthrough technology like they have in the private sector that does the job better and cheaper than the A-10.

4) Combat aircraft as viewed from the ground. An opposing view from an active-duty marine:

Thank you very much for writing about the excesses of the F-35 program and the DoD. I am a Marine captain who served in the infantry and reconnaissance fields with four deployments, two of those being combat tours in Afghanistan. Before commissioning, I studied political science in college and my senior thesis was on the "Iron Triangle." After seven years of service, the theories I read about and the warnings from leaders past sadly did not prove to be unfounded.

Military worship and the blank check that it guarantees for those on the hill is extremely dangerous, as has been borne out over the last decade. It clouds discourse over the real merits of our military interventions and campaigns abroad. And, for a variety of reasons, in the public sphere the topic is conveniently "out of sight, out of mind." Civic society and its decay was a popular topic a decade ago when I was in school, and I am glad you are trying to bring renewed attention to that theme in your writing.

I have personally experienced nearly being killed by the excesses of the collusion between industry and the military, a la the V-22 Osprey. I was forced to use this platform despite its limitations in theater, and due to various reasons I can't discuss, I feel it was responsible for nearly getting myself and my men killed. Yet, top brass shoves down the throats of career-minded subordinate commanders that it is a sound platform, with dog and pony shows put on toward "proving" that.

The Paladin system also comes to mind, being absolutely unnecessary among a branch (artillery) that is in an existential crisis as to why it exists at all in the modern era. Instead of busting rust on the venerable self-towed howitzers for the (remote) possibility that we must engage a conventional force in a WWII/Korea-style land campaign, they choose to buy a logistically expensive and mechanically complicated piece of equipment like the Paladin that has no real place on the battlefield.  

I am a believer in what my colleagues would describe as a bit of heresy—a complete restructure of the Department of Defense as a unified force.  Component services (Army, Navy, Air Force, Marines) are an anachronism, lead to budgetary infighting and politicking, and bleeds equipment and personnel through redundancy. A new model should be developed that is based on SOCOM [Special Operations Command] with a vertical alignment of budgets, a concerted effort to deconflict lines of operation, and a streamlining of equipment and personnel (read: smaller!) That is what the F-35 is all about, while failing miserably—one end system that all component services can dip their hands into for their purposes. It is a fallacy, and a symptom of the problem that a unified and truly Joint DOD would fix.

Let me explain why: Why would the Marine Corps need a VTOL (Verticle Take-Off and Landing) F-35 variant? To replace an aging Harrier as a close air-support platform is the official line. The real reason why is the protect the Marine Corps' raison d'etre; amphibious warfare, also largely an anachronism—a divorce from the Navy and its carrier fleet with platforms that can provide the same capabilities (the F-18). The result is an engineering dud if you are talking 5th-generation air war against a near-peer. This bureaucratic infighting with expensive consequences is repeated many times over with all sorts of major and minor end systems.

Thanks to all, more to come.