Deficits and defense. Balanced-budget bill could shackle Pentagon efforts to plan for or buy weapons efficiently
The balanced-budget bill now on the verge of passing Congress may make it harder for the Pentagon to buy weapons in a businesslike way. One result of this, say critics of the bill, is that the Navy won't be able to loosen its ties to the troubled defense contractor General Dynamics, as it is trying to do.
An author of the bill, however, counters that this is loose talk. ``I just don't believe it,'' says Sen. Phil Gramm (R) of Texas.
At issue are arcane details of the Gramm-Rudman bill, which mandates an eventual balanced budget, and their effect on the contraption that is the defense acquisition process.
Gramm-Rudman is designed to be an automatic budget-slicing machine. If Congress can't agree on ways to bring the budget down, this machine gets turned on, and, with certain exceptions, removes a fixed percentage from every federal budget category.
House Armed Services Committee chairman Les Aspin (D) of Wisconsin contends that this automatic reduction will hit big-weapons acquisition accounts unfairly hard.
Weapons are bought much more slowly than United States government brooms. Congress authorizes the Pentagon to spend, say, $5 billion on Navy ships; the Navy then parcels out only small portions of that money each year, because ships take some time to build.
Representative Aspin says a Gramm-Rudman automatic reduction, for technical reasons, would have to chop the whole $5 billion to save the relatively small amount of it spent each year.
If true, this means that the Pentagon would have a difficult time efficiently planning for big weapon buys. It might make multiyear procurement -- in essence, long-term contracts with weapon suppliers -- a thing of the past.
``The accounting system of Gramm-Rudman has a bias againt multiyear procurement,'' a House Armed Services Committee aide says.
This is where the Navy and General Dynamics enter the picture.
General Dynamics has of late been a troubled company. After it was indicted last week on fraud charges, it was banned by the Pentagon for the second time this year from winning new defense contracts.
But such a ban will not last long if the Pentagon needs General Dynamics more than General Dynamics needs the Pentagon. And, among other things, the big defense company is the only producer of Trident ballistic-missile submarines.
To reduce its dependence on General Dynamics, the Navy has been trying to entice Newport News Shipbuilding in Virginia into gearing up for Trident production. According to a Navy spokeswoman, Lt. Becky Beckham, the service has sent two official letters to Newport News, asking it what it would take to get them to make such a decision.
But if it can't offer a multiyear, multiboat contract, the Navy stands little chance of getting Newport News into the Trident business, Aspin and other critics say. Newport News is currently building a new $300 million construction facility for attack submarines; adding the tooling for Tridents would cost tens, or hundreds, of millions more.
The company itself is mum. ``We're doing the necessary research to see if it's economically feasible'' to build Tridents, says Newport News information manager Jack Schnaedter.
Not everyone thinks the Pentagon would be better off with a new company jumping into a program that is relatively mature and involves incredibly complex machines.
When it first started building Tridents, General Dynamics toted up huge budget overruns. Today, ``we have just delivered our 14th consecutive nuclear submarine ahead of schedule and under target cost,'' says General Dynamics Washington spokesman Al Spivak. Six of those subs were Tridents.
``We don't see how economy or efficiency would be promoted by bringing in a new producer to take part in the Trident program,'' Mr. Spivak says.
Some defense specialists doubt whether a loss of multiyear weapons procurement contracts will be very significant. Joshua Epstein, a Brookings Institution research associate, is no fan of the Gramm-Rudman bill. But he says there are no studies proving that multiyear procurement actually saves the Pentagon money in the long run.