When does less cost more?
Almost anytime the Pentagon goes shopping for new weapons, according to a new study by the Congressional Budget Office.
Pentagon officials are quick to concede that it is cheaper in the long run to buy greater numbers of individual weapons in the short run. But, in recent years, even in times of fat budgets, the Defense Department has increasingly turned to one of the least economical ways of purchasing tanks, planes and missiles -- buying fewer weapons over longer periods of time, budget analysts report.
In Pentagon jargon, it is known as a "stretchout."
It has been used to salvage political pets, reward financially threatened defense contractors, keep needed assembly lines open and help budget planners find quick solutions to tough problems.
Half of the Pentagon's 40 largest weapons programs were purchased in numbers below the minimum requirements for economic production rates from 1983 to 1987, core years of President Reagan's defense buildup, according to congressional budget analysts. They noted that although the procurement budget authority for those years was 92 percent higher than the previous five years, with adjustments for inflation, the Pentagon continued to slow production rates on many of its weapons systems.
The Air Force F15 fighter, for example, should be produced at a rate of 120 planes each year to reach even its minimum economical production rates. Instead, the Pentagon bought an average of 41 aircraft per year.
"The military services seek to develop and acquire too many weapons simultaneously," the CBO report noted. "When defense budgets are limited, the services too often choose to underfund all of their programs rather than making the difficult decision to cancel or defer some of them."
The budget office study was requested by the Senate Armed Services Committee, which was concerned about the Pentagon's increased reliance on stretching out purchases to meet budget crises.
The practice has flourished despite orders imposed by then-Defense Secretary Caspar W. Weinberger in 1981 that were designed to avoid uneconomically low production rates.
Now as the Pentagon faces the tightest budget of the Reagan administration, its new chief has issued more direct warnings to the military services to curtail stretchouts sharply.
"Somebody's going to have to feel the pain," Defense Secretary Frank C. Carlucci said on his second day on the job. Carlucci told Pentagon leaders he expected them to kill some weapons programs rather than continuing to prolong production at inefficient levels.
The new CBO report could have added a few pages to Carlucci's speeches and memorandums. But the report also conceded it is not a simple issue to resolve. Frequently, Pentagon leaders and Congress decide having part of a weapons order is better than having none at all. Stretchouts also are among the least politically painful ways for dealing with budget limitations.
In addition, defense officials sometimes slow production of a system to keep an assembly line open in the event of an emergency. It is far easier and cheaper to produce large quantities of a weapon if the production machinery is in place than if the company has to gear up an entirely new program. It is also less expensive to modernize weapons systems that are already in production instead of recalling older models for modifications.
The report noted, however, that cutting aircraft production rates in half can increase the individual unit cost of a plane by as much as 35 percent, and reducing missile production by the same amount can end up costing taxpayers 60 percent more per missile.
According to Pentagon sources, one of the first programs that may be cut under Carlucci's directives is the Navy's improved versions of the A6 Intruder attack plane. The Navy planned to put 345 of the new models into service. According to Defense Department records, the Navy needs another 150 planes to meet that goal, yet in original budgets for fiscal 1988 planned to add 12 aircraft to the fleet. Over the past five years, an average of six planes were produced each year.
In addition to the financial costs, the CBO study noted that low production rates hamper modernization by delaying introduction of new, more capable weapons to the field.
The Army, for example, is less than halfway through its battlefield modernization program, with weapons like the M1 Abrams tank far behind schedule in reaching units.
The report offered an even more dramatic example -- the Air Force's Maverick missiles used against tanks and other ground targets in any weather conditions with their heat-sensing devices.
The Air Force planned to buy 60,664 of the missiles. Over the past six years it has purchased about one-sixth of the total planned buy. It asked Congress to fund 2,100 in fiscal 1988 and 1,900 in 1989. The CBO figured that at that rate of production, the full missile contingent would take another 27 years to acquire.