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Satnews Daily
April 15th, 2013

U.S.A.F... Slashing Space Program Spending... (Budgets)

[SatNews] Sandra I. Erwin at National Defense magazine, published by the National Defense Industrial Association (ISDA), offers the following article...

...that deals with how the U.S. Air Force has to slash spending on its space programs.

The U.S. Air Force is requesting $6.4 billion for space programs in fiscal year 2014. The proposed budget is nearly one-third smaller than the 2013 request of $9.6 billion.

The 2014 budget includes $2.6 billion for research and development, and $3.8 billion for procurement of satellite systems and associated ground equipment.

The Air Force buys and maintains space systems that are used by all branches of the military and U.S. intelligence agencies for missile warning, weather forecasting, global communications and navigation.

The largest programs in the 2014 budget are the evolved expendable launch vehicle, or EELV ($1.8 billion), the space based infrared missile warning satellite, or SBIRS ($964 million), the global positioning system GPS III satellite ($699 million), the advanced extremely high Frequency, or AEHF, military communications satellite ($652 million) and the space situational awareness surveillance satellite ($400 million).

Cutbacks in space programs are taking place as the Pentagon scrambles to bring down spending by $41 billion by September 30, which is required by law. The Air Force’s $110 billion budget for 2013 would be trimmed down to $102.8 billion. These mandatory cuts, called sequester, could happen again in 2014 unless the White House and Congress can agree on a budget plan to offset government-wide spending reductions with other deficit-reduction measures.

Sequester could not have come at a worse time for Air Force space programs, said Jamie M. Morin, undersecretary of the Air Force. The service has been struggling for years with soaring satellite and launch-vehicle price tags and it is now beginning to rein in costs. Sequester cuts could undermine the progress achieved so far because it would jeopardize efforts to inject efficiency into satellite manufacturing, Morin told reporters on April 15.

Two of the Air Force’s costliest satellite programs, AEHF and SBIRS, are transitioning from development to production. Air Force officials have spent the past two years negotiating with manufacturer Lockheed Martin Corp. to shift these programs to fixed-price contracts that could save the government up to $1.5 billion over the next five years, Morin said. The Air Force, he added, intends to protect AEHF and SBIRS from the 2013 sequester in order to secure these cost savings.

Even though sequester requires across-the-board cuts, Congress has given the Pentagon some leeway to reallocate funding as long as it meets the top line requirement. In the case of these two satellite programs, recent contract negotiations have yielded prices that are lower than what was projected in last year’s budget. “That frees up money to pay the cost of sequester,” Morin said. If these automatic cuts continue in 2014, there will be no more flexibility to do this, he said. “That’s a one-time good deal.” In 2013, he said, “We are going to do everything we can to keep the programs where we got great fixed prices on track.”

A key bargaining chip for the Air Force has been a commitment to buy two satellites at a time, instead of the usual practice of purchasing one per contract. Building a single satellite tends to become a “hobby shop project,” Morin said. Buying two makes the program more stable and efficient, he said. To save money, the Air Force also is courting allied nations to invest in U.S. satellite programs in exchange for future services. The EELV satellite-launch program—with a budget of $10 billion over the next five years—is being revamped to allow new industry competitors. The current arrangement is a sole-source deal with the United Launch Alliance, a joint venture of Lockheed Martin and The Boeing Company. “We anticipate some new entrants may be able to be certified and compete by 2015,” said Richard W. McKinney, deputy undersecretary of the Air Force for space programs. Among the expected competitors is SpaceX.

The largest cancellations proposed in the 2014 budget are the space based surveillance follow-on satellite, which would save $500 million, and a precision tracking space system that would yield savings of $1.7 billion. McKinney said these programs are not being terminated, but are being reorganized and delayed by several years.

Morin said he hopes for a grand budget bargain that will cancel sequester as soon as possible so the Air Force can keep current programs alive and invest in future systems. There will be growing needs for more advanced satellites that can operate in “contested” environments where a potential enemy could disable them, he said. “U.S. military dependence on space is a vulnerability that enemies can exploit. We are doing some serious thinking about how to respond to that,” Morin said. For now, the bigger worry is the budget. “Sequester, if it continues, is clearly going to do serious damage.”