In 2000, it ranked as the most important planned buy for the Army. Four years later, the program — which had consumed close to 20 years of work and nearly $6 billion — was abruptly shuttered.
It is one of 22 major Army weapons programs canceled since 1995, ringing up a price tag of more than $32 billion for equipment that was never built. A new study, commissioned by the Army and obtained by The Washington Post, condemns the service’s efforts as “unacceptable.”
The study is the latest indication that the Pentagon — and the defense industry, in turn — is undergoing a seismic shift in its approach to new programs. As pressures mounted in Iraq and Afghanistan, the military retreated from its ambitions for multibillion-dollar, technologically superior systems. Instead, it was forced to make better use of tried-and-true equipment.
For almost a decade, the Defense Department saw its budgets boom but didn’t make the kind of technological strides that seemed possible.
“Since 9/11, a near doubling of the Pentagon’s modernization accounts — more than $700 billion over 10 years in new spending on procurement, research and development — has resulted in relatively modest gains in actual military capability,” Defense Secretary Robert M. Gates said in an address last week.
That outcome, he said, is both “vexing and disturbing.”
Gone are the days of “no-questions-asked funding requests,” he said. The Defense Department must make do with less. It is focusing on fixing up older equipment and taking a more measured approach to weapon development.
The shifting strategies and a shrinking defense budget have triggered the biggest restructuring in the defense industry since the end of the Cold War. Contractors big and small have been rethinking their portfolios and buying and selling accordingly. Northrop Grumman, for instance, spun off its shipbuilding unit. And Robert J. Stevens, chief executive of Lockheed Martin, said last week that the company’s workforce, which has shrunk by 20,000 since 2009, “may well continue to decline.”
While the defense industry has always had an unusual business model in which it’s hard to predict future needs, officials say an uncertain trade has become all the more so.
“We can invest and make a great product and set a good price point, but demand is completely out of our control,” said Linda Hudson, who heads BAE Systems’ Arlington-based U.S. operations.
In recent years, the Pentagon has killed off some of its most heralded — and most pricey — weapons programs, and many of those that remain are not certain to move forward. In some ways, this represents a market correction — and a realization that the Defense Department has to live within its means and buy weapons it can afford.