Army's Five-Year Plan Outlines a $25 Billion Shift in Weaponry

(Bloomberg) -- The U.S. Army’s new five-year defense plan would end or reduce 186 existing weapons programs and shift an estimated $25 billion to new core areas, a transformation likely to spawn fierce congressional debate and industry lobbying.

“Everything we are laying in place right now by 2028, if all goes well, you’ll see these things roll off and roll into units,” Army Secretary Mark Esper said in an interview. Esper and General Mark Milley, the Army chief of staff, spent months on what they called “night court,” where they operated as judge, jury and sometimes executioner over about 500 programs.

While the Army is seeking $182 billion for fiscal 2020, the same as this year, its budget proposal plants the seeds for a new generation of long-range cannons and rockets, vertical-lift aircraft, vehicles and soldier gear. The Army’s leaders say this will reposition their service from 17 years of wars in Iraq and Afghanistan to the new National Defense Strategy that emphasizes a renewal of great-power competition with China and Russia.

Among the growth programs and their increase at the end of five years compared with the Army’s current five-year plan:

• Long-range precision fire capability -- $6.4 billion, up from $1 billion.
• Next generation combat vehicles -- $14.7 billion, up from $5.4 billion.
• “Future Vertical Lift,” advanced helicopters -- $5.38 billion, up from $690 million.
• Air and Missile Defense” -- $9.65 billion, up from $5.68 billion.
• “Soldier lethality” improvements -- $5.93 billion, up from $1.4 billion.
• Improving battlefield communications networks -- $12.5 billion, up from $8.2 billion.

“It’s not like all the cuts are taken in Year One,” Esper said. A “big chunk of those dollars shift in 2023 and 2024 because that’s when we are going to be procuring things,” he said. He predicted mixed feelings in Congress and industry over the five-year plan.

“The Hill will love and hate it at the same time,” MacKenzie Eaglen, a defense budget analyst with the American Enterprise Institute, said in an email.

House Armed Services Chairman Adam Smith and others “have stated outright they want to see trade-offs in the budget and prioritization -- presumably in support of the National Defense Strategy,” she said. But “they’ll hate it because it will have clear winners and losers as a result,” she said.

Of the 186 existing programs affected, the biggest being terminated would be the Family of Heavy Tactical Vehicles made by Oshkosh Corp., an aviation missions planning system, a forward reconnaissance and explosive detection system and a high-explosive guided mortar.

Reductions include buying fewer of: the latest version of BAE Plc’s Bradley Fighting Vehicle for a five-year savings of $1.95 billion; Oshkosh’s Joint Light Tactical Vehicle program for about $1 billion; Boeing Co.’s CH-47 Chinook upgrade program, saving $932 million; and the combat engineer’s version of the new Armored Multi-Purpose Vehicle built by BAE, for about $51 million.

Congress and the defense industry shouldn’t focus on “winners and losers” when assessing the Army’s fiscal 2020 and five-year plan, said Undersecretary Ryan McCarthy. Instead, he said, they should study the service’s plans to reach an “investment crossover” after 2021 when procurement spending is expected to ramp up.

The focus instead should be on the “choices we have to make to modernize the Army,” and “new market opportunity,” he said.

Some companies may be required to “shift in new directions,”’ but there will be “great opportunities,” Major General Paul Chamberlain, the Army’s budget director, said in an interview.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editors responsible for this story: Bill Faries at wfaries@bloomberg.net, Larry Liebert

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