Follow the Money

Aug. 1, 2004

The US Air Force is combat aircraft, most laypersons would say. Asked to gauge service strength, they would probably do so by simply adding up the numbers of F-15s, F-16s, B-2s, and other combat airplanes with which they are familiar.

Even some informed observers might take the level of combat forces as indicative of the strength of the force—and therefore of the adequacy of the Air Force budget.

The truth, of course, is that the sharp edge of the Air Force represents only a portion of its capability. The amount of money allocated to sustain these fighting forces represents a surprisingly small—and declining—share of the total Air Force budget.

An extensive service analysis of spending trends shows the Air Force now devotes almost half of its resources to airlift, space, intelligence-surveillance-reconnaissance (ISR) systems, and other capabilities that support the entire US military establishment.

By contrast, combat forces get only 25 percent. The remainder goes to infrastructure and support functions.

“In some cases, people just don’t realize how much we do on the joint enablers,” said Lt. Gen. Duncan J. McNabb, USAF’s deputy chief of staff for plans and programs.

The Air Force strategic planning directorate wanted a better understanding of the trends in resource allocation. They researched the actual spending record of 47 years, sorting some 900 individual programs into general mission and functional areas.

Planners then cross-referenced program budget numbers from 1962 to 2009, the end of the current planning cycle, to produce data depicting fluctuations in planned spending patterns.

The goal was to try to help determine the right balance of capabilities—old and new—for investment. The directorate white paper, “Past Trends and Future Plans,” noted that the data reflect thousands of decisions taken against a backdrop of decades of dramatic events.

“You can really see a lot of history” in this analysis, said Christopher J. Bowie, USAF’s deputy director of strategic planning.

More Spent on Jointness

The data show a huge shift toward joint support enablers—airlifters, tankers, and command, control, communications, computers, ISR (C4ISR) systems—and away from joint combat forces—fighters, bombers, special operations, ICBMs, and munitions—and foundations—training, health care, security, base operating activities, and other support functions. (See “Five Decades of USAF Resource Allocation,” below.)

“There are reasons why these things occur,” said Bowie. “There are very powerful institutional pressures driving them.” Bowie added that they are “often difficult to discern.”

In helping to produce the analysis, Bowie discovered some patterns that surprised even him.

First, the figures showed that spending on “foundations” has shrunk from about 36 percent of the total Air Force budget in the 1960s to about 30 percent in the current decade. McNabb and Bowie interpret this trend as fruits of a successful USAF effort to reduce spending on the service’s “tail.”

Second, spending on capabilities used by all the services has risen from about 33 percent of the budget in the 1960s to 45 percent in today’s plans. Growth has averaged more than a quarter of a percent each year.

“The really striking trend is that roughly half [the Air Force budget] goes into joint enabler forces,” said Bowie.

If the trend continues for another 20 years, spending on joint support areas will pass the 50 percent mark.

Indeed, Air Force planners have every reason to believe the trend will continue. The demand for airlift is growing. Some sort of program will eventually recapitalize the much-in-demand tanker fleet. E-8 Joint STARS radar aircraft, spaceborne sensors, and other ISR platforms are becoming ever more important to joint combat operations.

As the joint enabler share increases, the share for other categories declines, putting those functions under pressure.

Spending on combat forces at first rose from about 31 percent in the 1960s to 35 percent in the 1980s, but it has now fallen to about 25 percent.

This decline was not smooth. In the 1960s, the US bought large numbers of aircraft for continental air defense. Replacement efforts were moderate in the 1970s and 1980s, through Vietnam and the declining years of the Soviet empire. Then, they plunged.

Fleet recapitalization became sporadic. “In the ’90s, there were a couple of years where we didn’t do anything,” said McNabb. “We were living off the fat of the Cold War.”

Of course, fewer aircraft does not equal less capability. One F/A-22 fighter would be able to handle several of today’s fighters. Newer fighters are “dramatically more capable” than they used to be, according to McNabb.

Recapitalization Pressure

Still, recapitalization remains a difficult issue. Much of the aircraft fleet is old. Aging airplanes cost more and more to maintain, at a time the service needs money for new platforms.

The service has simultaneous modernization needs in all its mission areas. Some estimates have put the annual cost for recapitalization of USAF’s assets at $30 billion to $40 billion.

“You’ve got to continue to recapitalize all the time or you’ll get into a crunch,” said McNabb.

Given this budget context, how should the Air Force move forward? This was the central question of the “Past Trends and Future Plans” exercise.

Strategic planning for the service is not necessarily a straightforward enterprise. It is a bit like playing 3-D chess, said officials. On one level, the Air Force is planning for its transformation. On other levels, the Army, Navy, and Marines are laying their own transformative plans—all of which affect the Air Force with its growing role as a provider of joint combat and support capabilities.

“In fact, everybody’s wanting more of the Air Force,” said McNabb, “not only our combat kinetic kill capability but all of the other things that we bring to the fight, whether that’s joint enablers … or expeditionary combat support.”

In high-level planning meetings, representatives of the rest of the military never say they want less of something the Air Force provides. They always say they need it all, according to service planners.

“The good part of that is that the investment in joint enablers is allowing everybody to get better from a capability standpoint,” said McNabb.

Consider the race to Baghdad last year during major combat operations in Iraq. Ground forces, including special operations units, relied on air and space power as never before. And the Air Force delivered, providing accurate fire support, unprecedented situational awareness, rapid resupply and troop movement, and secure communications and navigational data.

As with chess, the difficult part is to look into the future and make judgments about how various possibilities will play out. A key factor is jointness.

“That’s just going to expand,” said McNabb. The fundamental question becomes “how do we work with [other services] to make sure we’re supporting them, they’re supporting us, and we’re doing best by the taxpayers?” he noted.

The Squeeze

Growth in the budget share devoted to joint programs has been made possible partly by a corresponding reduction in the slice of the pie spent on the “foundation” activities. USAF has worked successfully for years to develop efficiencies in those types of activities.

“We have been squeezing the foundation,” said McNabb.

The cost of headquarters operations, base operating support, general research and development, and other baseline operations has been squeezed in the past and is likely to be squeezed harder in the future.

“People don’t realize how much we have done … to be more efficient and show declining dollars in our foundation accounts,” said McNabb.

The Air Force continues to encourage units to find savings by letting them retain a percentage of the money saved.

More savings will come from the next round of base realignment and closure efforts. USAF officials say the new BRAC is crucial to its attempts to “right size” the service’s infrastructure.

The Air Force also is considering new, money-saving ways of basing its forces. One plan calls for co-locating, with those of other services, Air Force troops and assets that perform similar functions. Service officials want to make training more efficient, possibly by embedding less-experienced active duty fighter pilots and maintenance personnel into veteran Air National Guard units.

However, foundation accounts can be squeezed only so much.

“The data indicate that the ‘low-hanging fruit’ has already been plucked,” stated the McNabb-Bowie paper. “Gaining additional increases in efficiency will undoubtedly become more difficult.”

Making Legacy Cuts

McNabb and Bowie believe that it will be necessary to give up some legacy weapon systems—specifically those whose operation and maintenance has become expensive. Eliminating those could make upgrades to other existing platforms affordable.

Some older weapon systems continue to play key roles in today’s Air Force, though. “We are certainly using legacy systems in ways rarely considered before,” noted the strategic planning paper.

For example, B-1Bs and B-52s, combined with GPS targeting data and Joint Direct Attack Munitions, destroyed enemy forces in Afghanistan and Iraq, even if they were uncomfortably close to friendly units.

Still, it is new systems that offer the highest reliability and capability. The challenge for the Air Force will be in taking advantage of these resources.

Take the C-17 fleet. Originally, some 120 aircraft were slated to replace 265 C-141s. Numbers, in this case, are not comparable. The newer airlifter has higher reliability rates, requires fewer backup aircraft, and offers substantially lower cargo transport costs, noted the planning paper.

“Today, you will not find anyone who would want to trade the smaller C-17 force for the larger C-141 force,” said the white paper.

USAF assigns five crews to each C-17, compared to 3.6 for each C-141. The move has helped strengthen US mobility. Other systems might benefit from such an approach. For instance, increasing the crew-aircraft ratio could maximize use of fighter, tanker, and ISR aircraft. Increasing the number of trained air operations center personnel and enhancing reachback capabilities might be a big boost to joint US military capabilities.

Striking the right balance between old systems, technical upgrades, and new weapons is a difficult one. This is reflected in the current controversy over what to do about Air Force refueling aircraft. Expanding airlift requirements have led the Air Force to increase its planned buy of C-17s to 180 airframes and undertake C-5 upgrades. At the same time, it must make a decision about its tanker fleet—obtain new tankers, either through purchase or lease, or purchase expensive upgrades for the current ones.

“That’s why you see the debate about the tanker,” said McNabb.

Given the obvious restraints on the Air Force budget, a mix of approaches to modernization seems the most logical planning option. According to the white paper, holding on to the “whole range of legacy systems” means that “increasing operations/support costs will consume” scarce dollars, and the “decreasing availability” of those legacy systems will impair USAF’s ability to perform its mission.

Concluded the McNabb-Bowie paper: “We need to transform: utilize capabilities-based planning to establish priorities, upgrade some legacy systems to do new things, divest other legacy elements to free up resources, modernize, and then fully resource new capabilities using organizational changes to active and reserve units to maximize their potential.”

Peter Grier, a Washington editor for the Christian Science Monitor, is a longtime defense correspondent and a contributing editor to Air Force Magazine. His most recent article, “The Space Cadre,” appeared in the June issue.