“This is the third or fourth time we’ve run out of munitions in the last 20 years,” Under Secretary of Defense Bill LaPlante
said
at a recent CFR event. The United States military is regularly running out of armaments to prosecute wars. Why?
Two primary reasons include a lack of consistent funds, and little focus on “production, production, production.”
LaPlante went on to say if Washington wants a “no kidding” surge capacity for a China fight, then Congress—
specifically appropriators
—have to support the doubling of certain munitions production lines through multiyear procurement contracts.
House appropriators went in the opposite direction.
Citing
unrealistic cost estimates and lack of adequate savings as a result of Economic Order Quantity (EOQ) funding in support of the requested multiyear procurements, the bill does not provide this authority for the Standard Missile-6 and Advanced Medium-Range Air-to-Air Missile.
This “pink Flamingo”
situation
, where a predictable event is “ignored due to cognitive biases of a senior leader or a group of leaders trapped by powerful institutional forces,” must not be allowed to continue.
While appropriators claim lack of paperwork, the truth is wider in scope. The secret is, as the Pentagon acquisition chief put it, the people in charge of the money like it “liquid.”
Unlike the broader procurement account which is obligated over three years, munitions is one of the most quickly accessible accounts in fungible dollars for the Defense Department money hands in comptroller, the Pentagon’s CAPE overlords, and appropriators to shift funds around when needed in a pinch.
The result of this self-imposed sine wave funding is an industrial base that cannot surge when called upon due, in part, to lack of predictability in dollars and stability in outlook (a customer that will commit for a period longer than 12 months).
The private companies that produce missiles, rockets, bombs and ammunition will not invest in newer facilities, advanced manufacturing, or upskilling workers absent a longer-term contract. Their customer is too unpredictable when the funds are so tempting to yank for other purposes at the last minute.
As atonement, multiyear contracts
provide
a steady demand signal, which then
incentivizes firms
to build and hold excess capacity, spend company money on research and development, recruit and retain skilled employees, and second source vendors where possible. Multiyear contracting authorities
also
allow big companies to work with their (often small business) suppliers and vendors to buy parts in advance.
Taken together, all of these actions lead to cost reductions over time. The
Congressional Research Service
has noted those savings can come as low as five percent to as high as over 15 percent when compared to the Pentagon’s normal annual approach to purchasing.
The failure to buy enough weapons and munitions is one shared across Washington. Instead of investing slightly above need to build in margin and keep manufacturing lines hot, the Pentagon has traditionally valued compliance to process. Congressional appropriators have shown they value strict adherence to paperwork requirements over more quickly refilling the nation’s munitions magazines.
House appropriators in their report reminded the Pentagon of the requirements in Title 10 to grant multiyear contracts—including “substantial savings, the stability of the requirement, the stability of funding, stable configuration,” and realistic cost estimates.
What they failed to mention was Congress’ role in maintaining stability—and adequacy—of funding. Senate appropriators should send the right signal for the urgency of the moment and approve multiyear contract authority for the SM-6 and AMRAAM missiles.
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This article originally appeared in the AEIdeas blog and is reprinted with kind permission from the American Enterprise Institute.
