The 2020S Tri-Service Modernization Crunch Mackenzie Eaglen with Hallie Coyne MARCH 2021

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The 2020S Tri-Service Modernization Crunch Mackenzie Eaglen with Hallie Coyne MARCH 2021 Embargoed until Tuesday, March 23, at 12:01 a.m. EST The 2020s Tri-Service Modernization Crunch Mackenzie Eaglen with Hallie Coyne MARCH 2021 AMERICAN ENTERPRISE INSTITUTE The 2020s Tri-Service Modernization Crunch Mackenzie Eaglen with Hallie Coyne MARCH 2021 AMERICAN ENTERPRISE INSTITUTE © 2021 by the American Enterprise Institute for Public Policy Research. All rights reserved. The American Enterprise Institute (AEI) is a nonpartisan, nonprofit, 501(c)(3) educational organization and does not take institutional positions on any issues. The views expressed here are those of the author(s). Contents EXECUTIVE SUMMARY ................................................................................................ 1 INTRODUCTION ........................................................................................................ 3 Addressing the Tri-Service Spending Spike ...................................................................... 3 Why Does It Matter? ..................................................................................................... 4 What Factors Are Making the Modernization Spending Crunch Worse? ............................... 6 What Does Addressing the Modernization Crunch Mean for the US Military in the 2020s? .............................................................................................................. 15 What Went Wrong: Identifying the Causes of the 2020s Modernization Crunch ................... 16 The Shape and Size of the Tri-Service Modernization Crunch ............................................ 29 THE NAVY: THE CONSPICUOUS MODERNIZATION CRUNCH ............................................ 32 Navy Modernization Spending, FY21–FY25 ................................................................... 34 Navy Modernization Spending, FY26–FY31 ................................................................... 38 THE MARINE CORPS: A DEFERRED MODERNIZATION CRUNCH DRIVEN BY TRANSFORMATION .............................................................................................. 42 Marine Corps Modernization Spending, FY21–FY25 ........................................................ 43 Marine Corps Modernization Spending, FY26–FY31 ........................................................ 44 THE AIR FORCE: A MODERNIZATION CRUNCH FOR THE UNDERAPPRECIATED BILLPAYER .... 46 Air Force Modernization Spending, FY21–FY25 .............................................................. 47 Air Force Modernization Spending, FY26–FY31 ............................................................... 51 THE ARMY: A MODERNIZATION ABYSS AND HIDDEN CRUNCH ........................................ 54 Army Modernization Spending, FY21–FY25 ................................................................... 56 Army Modernization Spending, FY26–FY31 .................................................................. 57 ADDRESSING THE MODERNIZATION CRUNCH: ACTION TO TAKE NOW ............................. 61 ABOUT THE AUTHORS ............................................................................................... 72 NOTES .................................................................................................................... 73 iii Executive Summary resident Joe Biden’s new administration and War, the dominance of short-term spending priorities Pthe 117th Congress must respond to a uniquely during the wars in Iraq and Afghanistan, the legacy of difficult political and fiscal environment; as part of the 2011 Budget Control Act, and competing federal this mandate, they will be charged with addressing spending priorities and objectives. The results include the enduring mismatch of US defense strategy and climbing operations and maintenance costs for aging resources, which contributes to ongoing supply and military platforms—which put still more pressure on demand imbalances regarding requests for forces modernization programs—and the entrenchment of by combatant commanders. Since these challenges inefficient modernization decision-making patterns. have been growing unchecked for years, the com- This report also provides a comprehensive examina- ing decade looms large as the US military is facing tion of the bills facing each service to modernize over a massive spending spike to pay for modernization the next decade. While the Department of Defense pro- bills across the Navy, Marine Corps, Air Force, and vides most modernization cost data for the next five Army that have been ignored, deferred, or inade- years—or over the Future Years Defense Program—in quately considered. Although this was foreseen and its annual budget requests, this report projects costs forewarned, insufficient action has been taken. Res- for a 10-year time frame to demonstrate the scale of the olution requires political courage, persistence, inno- challenges facing the armed forces. Although such cost vation, risk, and resources. data are inherently subject to change and variation, this Fleets of ships, aircraft, vehicles, and other equip- analysis identifies the overarching trends shaping the ment are reaching the end of their service lives, hit- modernization cost profiles of each service. Accord- ting the edge of their upgrade limits, and losing ingly, while the total costs of specific modernization combat relevance. As great-power competition accel- programs may evolve, many of the patterns discussed erates, the United States is offering a free and open in this report will not. For example, the Navy has no window of opportunity and advantage to its adver- choice but to continue replacing its old attack subma- saries. Unless policymakers take concrete steps now, rines, even though analysts may debate how many new defense leaders will continue America’s sleepwalk ones should be built and how quickly. into strategic insolvency and its consequences. The Finally, the report lays out policy recommenda- aptly named “Terrible 20s” have arrived. tions for how Congress, the White House, and the The intention of this report is not to propose ideal armed forces can begin developing and implement- or preferred defense investments. Rather, it aims to ing a serious plan to meet the modernization crunch. deliver an unvarnished overview of the existing mod- Such options include taking immediate action to ernization bill before the Pentagon today, forcing an relieve pressure on procurement and accelerating overdue confrontation with reality. the fielding of advanced technologies—in some cases The 2020s Tri-Service Modernization Crunch under- using legacy platforms as playgrounds for innovation. takes three paths of analysis. The report initially Unfortunately, as this report demonstrates, there reviews decades of defense investment decisions that is no easy way out of this fiscal bind for the US mil- resulted in the current composition of the US military. itary. Rather, now is the time for effective mitigation This history considers the ramifications of delayed strategies, urgent worst-case scenario planning, hard equipment recapitalizations from the end of the Cold choices, and political leadership. 1 Introduction s was long forewarned but easy to ignore to “Terrible 20s” to describe the modernization chal- A address more immediate problems, the United lenges before the US military this coming decade. He States military is now confronting a massive and offered an ominous overview of the next 10 years as underappreciated spending spike in paying for con- “that horrible mix of debt bombs, recapitalizing our tinuously delayed weapons modernization bills in the SSBN [ballistic missile submarines] fleet, and the 2020s. Former Chairman of the Joint Chiefs of Staff need to replace and modernize legacy aircraft, ships, Gen. Joseph Dunford testified in 2016 to Congress that and the concepts that designed them.”2 It is a brac- “my most significant concern is the bow wave of mod- ing and accurate summary of the following analysis. ernization that has been deferred.”1 In this case, the first step in addressing the problem is It was postponed in the 1990s after the Ronald reminding the policymakers that it exists. The second Reagan buildup and peace dividend, in the early 2000s step—incumbent on leaders in Congress, at the Pen- for the wars, and then during the 2010s to pay down tagon, and in the White House—is being honest about debt from the financial recession. Time is up, and the consequences. The third is generating the will- many pieces of military equipment can no longer power and spending the political capital to pay for it. limp along—having aged chassis, hulls, and airframes that cannot be upgraded with today’s technology and cannot generate the kind of power needed to survive Addressing the Tri-Service any fight. The solutions are simple, but they are far Spending Spike from easy. Chief among them are awareness, urgency, investment, and creativity. First things first: What is a spending spike? This phe- Unfortunately, while the solutions are simple to nomenon is known among analysts as the procure- conceive, they are more complicated to execute. Polit- ment or acquisition “bow wave,” a term derived from ical willpower is needed from Congress. The services the wave created by the bow of a ship pushing water must make difficult choices about their future spend- into a wave in front of it. At its most basic level, a ing trade-offs and accurately represent the real costs bow wave—or modernization spending crunch, to be of trying to address decades of postponed moderniza- more exact—describes a period when an overwhelm- tion
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