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 Frank Kendall, Under Secretary of Defense for Acquisition,
Technology and Logistics, said deep cuts across the government due
to budget "sequestration" were happening faster than the Pentagon
could adjust troop levels and weapons program.
"We do not find the sequestration levels to be what we need to
defend the country and implement our strategy," Kendall told
reporters at the Singapore Airshow.
"If you're going to take a sequestration level cut and pay for your
people and pay for their readiness, you have to cut the other part
of the budget ... So that's essentially research and development and
procurement."
The White House is expected to send its fiscal 2015 budget request
to Congress on March 4, which will set off months of wrangling over
spending priorities, including for the military.
"It's also going to be hard to protect readiness, which means we'll
have some units at least which are not being trained or getting
spare parts," Kendall said.
"I'm most concerned about the research and development cuts because
we cannot buy back time."
U.S. weapons makers have sought to reassure investors, saying they
see military budgets likely hitting low points in 2014 and 2015
before spending stabilizes and then rises.
Known as "the chief weapons buyer for the Pentagon", Kendall said he
was working to improve efficiency in the acquisition process,
including looking at contracts, incentives and competition while
pushing a cost-management mentality.
But that does not mean big-ticket items are vulnerable.
"You have to look at weapons on their value to the war fighter and a
system like the F-35, which is a high-cost system comparatively, is
a very high-value system," he said.
"The F-35 remains — despite its relatively high cost — a premier,
number one priority conventional warfare program for us, so we're
going to continue that under almost any budget level I would imagine
that we would have to live with."
KEEPING WATCH ON CHINA
Kendall said the Pentagon was keeping a close watch on China's
military modernization and its "fairly aggressive investments" in
anti-access and area denial technologies.
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"I'm concerned, with our declining budgets, that we keep pace," he
said. "We've relied on technological superiority for decades now as
one of the fundamental things that sets our military apart. I do see
that's not assured given the investments being made by China as well
as other powers."
To continue government funding of weapons development, Kendall said,
the Pentagon may adopt a "hedging strategy" to invest in earlier
phases of research but tight budgets make it "very hard for us to
make the kinds of decisions we need to make to preserve our options
and to move technology forward".
He said sharing development costs with the defense industry must
ensure the probability of a profit for the companies — the biggest
of which are Lockheed Martin Corp, Boeing Co, Raytheon Co and
Northrop Grumman Corp.
"I don't think it's fair to industry to ask them to make investments
that are dead-ends," he said. "We will try to fund the things that
we need to do ... We'll also have to do it selectively."
Kendall said the big defense companies will ride out the tight
budgets but smaller firms could get hit.
"We're looking at the supply chain all the way down to the component
suppliers very carefully to make sure we can identify those critical
suppliers who might be at risk," he said.
"We can look at creative ways of buying in some cases ahead of need.
As we work with the larger firms, they can do some things such as
financial assistance to the firms that are at risk. We can make some
investments in technology in areas where it will be helpful to those
firms as well."
(Editing by Ron Popeski)
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