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US DEFENSE

US DEFENSE – DAMAGING SEQUESTRATION RIPS THROUGH MILITARY CAPABILITY
By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

12 Jul 13. I am once gain grateful to Byron Callan at Washington DC based Capital Alpha Partners this time for bringing to my attention that Bloomberg obtained a copy of a letter that sent by US Secretary of Defense Chuck Hagel to the Senate Arms Committee with regard to proposed $52bn of FY14 sequester requested budget cuts. In summary Callan suggests this as a signal to Congress that the early version Department of Defense FY14 contingency plan inclusive of $52bn of cuts will be very damaging to the DoD and investment.

I agree that the Hagel letter should be interpreted as being an accurate warning against cuts of such magnitude and a final plea to Congress that enacting cuts on such a scale will damage not only the Department of Defense but also America as a whole and its standing in the rest of the world. The letter also goes on to state that reducing military personnel funding as planned in FY14 would likely require disproportionately large investment (procurement and research and development, test and evaluation – RDT&E) cuts in the region of 15% to 20% and that of Operations and Maintenance to be cut by approximately 10%.

Noting that Secretary Hagel referenced that a “few programs that are most the critical would be protected” but that hundreds more program line items both large and small together with modification and research programs would need to be significantly cut Byron Callan notes that although no detailed information has yet been provided to Congress the letter itself is best seen as a plea to Congress to act promptly and to avoid the proposed FY14 sequester cut.

So where are we in reality with regard to FY14 defense sequestration? In April 2013 the Pentagon unveiled a $526.6bn defense budget that called for wide ranging base closures, operational and equipment cuts, program cancellations, reduced RDT&E expenditure together with a lower element of pay rises and health benefit cuts. However, the proposed defense budget was still $52bn higher than the actual spending caps employed under sequestration based law.

The Department of Defense budget request for the FY14 year (this begins in October 2013) states that to comply with the sequester Congress will need to accept and allow implementation of large scale cuts across defense that will include additional base closure, additional capability and equipment cuts, increased healthcare fees for armed force members and veterans plus lower across the board pay rises. These cuts are politically difficult for Congress not just because they reduce US military capability but also that they do damage to the defence diplomacy role and employment across a great many US states. There is no certainty yet that any revised proposals will be accepted.

There are very few crumbs of comfort to be found in US defense except that in terms of new or planned equipment capability the FY14 budget has I understand included $8.4bn for continued development of the three variants of Lockheed Martin’s F-35 Joint Strike Fighter, $10.9bn for new ship construction, $9.2bn for missile defenses, $379m for development of a new long-range bomber, $4.7bn for cyberspace operations and $10.1bn for space technologies.

Separately at a Center for Strategic and International Studies (CSIS) event held in DC yesterday at which Chief of Naval Operations, Admiral Jonathan Greenert and Commandant of the Marine Corps, General Amos presented the latter reiterated that in terms of investment his two main capability priorities continue to be the Amphibious Combat Vehicle and the B (STOVL) variant of the F-35 Joint Strike Fighter. I welcome the emphasis and prioritization of view on both programs and regard this emphasis as another welcome boost to the F-35 program as a whole. That General Amos should choose to remind that the existing fleet of AV-8B aircraft which

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