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Military GPS Budget Appears Steady as President Bids to Slow Defense Cuts

But planners are looking at how to handle cuts of up to 30 percent

April 16, 2013

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Spending pressures on the Pentagon seem to be coming from every direction, and the GPS program appears unlikely to avoid them entirely.

The growing needs of veterans are poised to force up health care budgets and higher transportation costs and operating tempos have dug a $22 billion-hole in the accounts for Overseas Contingency Operations in places such as Afghanistan.

The biggest strain of all, automatic cuts in the majority of accounts, has yet to be addressed. Sequestration kicked in on March 1 because the two political parties could not fulfill a prior agreement to slash spending. Although a deal was finally struck to fund the government for fiscal year 2012, that agreement left sequestration cuts in place.

Defense managers have yet to figure out how to absorb the resulting loss of $41 billion in fiscal year 2013 (FY13), and that necessarily influences spending decisions for FY14.

“I mean, Houdini couldn’t figure [the sequestration cuts] out,” Army Gen. Martin E. Dempsey told the audience at the National League of Cities Congressional Cities Conference in March. “So when I get asked about why we’re not figuring it out, it’s because I’m not Houdini. There [are] some things we’re going to have to do to sweep up every bit of money we can find”

And the $41 billion is just for the first year. Sequestration cuts span 10 years and, for the military, total $500 billion — an amount that defense officials insist will damage military readiness.

President Obama’s solution is to rewrite the sequestration plan, slimming the cuts and putting off most of the pain.

“The President's Budget request offers a comprehensive deficit reduction plan that would permit Congress to eliminate sequestration,” Secretary of Defense Chuck Hagel told members of Congress Thursday (April 11, 2013).

That plan averts what would otherwise be another significant reduction in the defense budget, some $52 billion in fiscal year 2014 alone and $500 billion over a decade. Instead, it calls for $150 billion in defense savings over 10 years, Hagel said.

The cuts would be “back-loaded, occurring mainly in the years beyond FY 2018,” Hagel explained, adding that the approach gives the department “time to achieve these longer-term savings, without disproportionate harm to modernization and readiness, the budget categories that will provide the most immediate savings, but also encompass most of our military capabilities.”

Implications for GPS
Based on this approach Obama allocated $526.6 billion for the Department of Defense in FY14 budget, an amount only marginally different from his request of $525.4 billion for FY2013. Within that $1.276 billion is requested for the overall GPS program, an apparent increase over the FY13 budget request of $1.263 billion.

Unfortunately, the outlook is not quite as rosy at is first appears. Items have been added and subtracted making it impossible to do a simple apples-to-apples comparison of the FY13 and FY14 GPS program totals.

Specifically, some $137 million for developing user equipment was added to the total for FY14. Moreover, spending for research, development, test, and evaluation (RDT&E) for the GPS Space and Control Segments is ended, that is, zeroed out for FY14 and beyond. That made up $14.335 million of FY2013’s total.

Removing those two changes from the total makes the FY14 request $1.238 billion and FY13’s, $1.218 billion.

Even those numbers are only relative guide posts. They do not take into account the 7.8 percent across the board cut mandated for 2013 under sequestration or a further rescission of 0.1 percent. The FY14 numbers also do not incorporate sequestration reductions.

Meanwhile, real changes await the GPS III satellite program in the president’s budget. The FY14 request for GPS III procurement is $477.598 million, down from the FY13 request of $492.910 million — a modest cut compared to the drop in development monies where the FY14 request is $221.276 million and the FY13 request was $318.992 million.

Whether this is a cut or simply an evolutionary step in the program remains unclear. Prime contractor Lockheed Martin declined to comment directly on the reductions, noting in a statement that “the President’s request is the first step in the budgeting process. . . . Over the next few weeks we will review the budget in detail, to understand the specific impacts to our business.”

A similar forward-looking sentiment was shared by Boeing, the maker of the GPS IIF satellites for which the White House requested $55.997 million for procurement — slightly less than last year’s request of $58.147 million. “This is just the beginning of a long budget process,” said a spokesperson in an emailed statement. “It is too early for us to speculate on what it may ultimately mean for our programs and the facilities and employees supporting them.”

The FY14 request for development monies for OCX is $383.500 million — a slight bump-up from last’s year’s starting point of $371.595 million. Of this some $61 million is for the GPS Enterprise Integrator program, according to details provide by the Air Force.

The OCX monies will fund “Block 0, Block 1 and Block 2 development, capability maturation, risk reduction, systems engineering, and program support,” the Air Force said in an emailed response to Inside GNSS, adding that “FY14 activities include OCX/GPS III Launch and Checkout exercises and rehearsals; initial hardware installation at the Mission Operations Center at Schriever AFB, CO; completion of integration and test of the 6th of 7 increments in the Block 1 software development.”

Perhaps the biggest surprise is the request for civil funding — the money given by the Department of Transportation to the military to help offset the cost of civilian-focused elements in the system. Although not a large amount — the FY13 request was for $40 million, civil funding is an important part of the OCX program. The FY14 request is for only $20 million with an uncertain effect on the program.

Gaming the Budget Cuts
What is clear is that officials are worried about what happens next. While there is uncertainty surrounding sequestration, few doubt that reductions are coming — and that is triggering spending reviews.

According to a knowledgeable source, who requested anonymity to be able to speak freely, military planners are gaming out scenarios with cuts of as much as 20 to 30 percent to the GPS program as a whole over the next three years. The question they are working on is how to handle them.

One of the options is to extend the official life of the GPS satellites now on orbit, thereby stretching out the replacement schedule. This has the added benefit of easing the crunch for space on the launch vehicles — which could be made worse by budget cuts.

The potential already exists for a delay in the launch of the third and fourth GPS III spacecraft because of the shortage of launch capacity, said the expert. “The schedule is going to be tight, I mean really tight.”

An assessment of the satellites suggests that the life of the IIAs could be extended by 2 years, said the source, the IIRs by 2.6 years, and the IIR(M)s by 2.6 years. There would be no change in the anticipated life of the IIFs.

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