Summary | Team | Federal Role | Current Environment | Process | Case Histories

Faced with rising budget deficits, the federal government is now looking to trim billions of dollars from a multitude of accounts and agencies, including the Department of Defense.  With dollars and priorities in flux, it is more important than ever for companies, hospitals and universities looking to do business with DoD to have substantive experts on the ground that understand the coming changes and how they will affect the already complex procurement procedures within the Agency.

Recently, Secretary Gates unveiled his plan to eliminate redundant, unnecessary or inefficient programs and services.  $100 billion is scheduled to be culled from low-priority programs and reallocated over the next five years: approximately $70 billion into other weapons systems and projects, and $30 billion to pay unexpected fuel, health-care and other costs (“must pay” bills).  An additional $78 billion is slated for true budget cuts over the next five years (not counting the costs of combat operations in Afghanistan and Iraq).  As it stands now, the White House’s proposed budget for the Pentagon FY12 will be $553 billion (less than a 1 percent increase over the FY11 request).  The Pentagon will then begin a budgetary decline in its rate of growth for two years, and stay flat (growing only to match inflation) for the 2015 and 2016 fiscal years.

Highlights of these budgetary changes are listed below:

Proposed Service Branch Cuts

Navy ($35 billion)

• Use multi-year procurement for new airborne surveillance, jamming, and fighter aircraft ($1.3 billion)
• Terminate the Marine Corps’ Expeditionary Fighting Vehicle (EFV) ($14.4 billion)
• Place the Marine Corps’ vertical landing (STOVL) variant of the F-35 Joint Strike Fighter on a two-year probation (124 planes; the Air Force variant and Navy’s carrier-based variant will proceed)
• Disestablish the Second Fleet headquarters at Norfolk, Va.

Air Force ($34 billion)

• Improve depot and supply chain processes for weapons systems, thus improving readiness at lower cost
• Consolidate air operations centers
• Reduce costs of communications infrastructure by 25 percent
• Save $500 million by reducing fuel and energy consumption within the Air Mobility Command

Army ($29 billion)

• Terminate the SLAMRAAM surface-to-air missile and Non-Line of Sight missile launch system
• Save $1.4 billion in military construction costs by sustaining existing facilities
• Consolidate email infrastructure and data centers, saving $500 million over five years

Additional DOD-Wide Cuts

Health

• Increase TRICARE fees (premiums and spot fees) from $460 per year to $5000 for working-age retirees and their families (not for those on active duty or 65 and older) to save $7 billion over five years – the plan assumes Congressional approval of these increases
• Defense TRICARE agency will cut more than 780 contractors

Other

• Shrink ground force (starting in 2015)
• Reduce contractor staff cadre
• Consolidate IT support
• Cull redundant intelligence organizations
• Eliminate unnecessary reports and studies
• Downgrade overseas command
• Decrease number of generals, admirals, and civilian executives
• Freeze civilian salaries (government-wide)

Reinvestment of Efficiencies Savings

Navy

• Accelerate development of new electronic jammers
• Increase the repair and refurbishment of Marine equipment used in Iraq and Afghanistan
• Develop a new generation of sea-born unmanned strike and surveillance aircraft
• Buy more F/A-18/F Super Hornets and extend the service life of 150 of these aircraft as a hedge against more delays in JSF deployment
• Purchase additional ships, including a destroyer and a Littoral Combat Ship

Air Force

Buy more Reaper unmanned aircraft and move essential ISR programs from temporary war budget to permanent base budget. Going forward, advanced unmanned strike and recon capabilities must become an integrated part of the service’s regular institutional force structure

• Increase procurement of the Evolved Expendable Launch Vehicle
• Modernize F-15 radars
• Develop a new long range, nuclear-capable penetrating bomber

Army

• Improve suicide prevention and substance abuse counseling
• Modernize battle fleet of Abrams tanks, Bradley fighting vehicles, and Stryker wheeled vehicles
• Accelerate procurement of most advanced Grey Eagle UAVs
• Buy more MC-12 reconnaissance aircraft to support ground forces, and begin development of a new vertical unmanned air system to support the Army in the future

Across All Branches

• Approximately $28 billion for higher than expected operating expenses such as fuel, maintenance, health care, and training costs over next five years (“must pay” bills).

Along with changes in warfighting technologies and initiatives, the Obama Administration has placed a premium on improving the healthcare for active-duty and retired military personnel. Advanced research and development of new medical technologies and delivery capabilities both in theater and in military treatment facilities (MTFs) is now at the forefront of the Department of Defense’s priority list.

Central to this effort are the joint efforts between the Department of Defense and the Veterans Administration to create an interoperable health IT system that will allow for a seamless transfer of medical data along the continuum of care from active duty to veteran status. The Department of Defense's Armed Forces Health Longitudinal Technology Application (AHLTA) and the VA's Veterans Health Information Systems and Technology Architecture (VISTA) will be bridged and the underlying architectures of the two systems will be refined and improved. The Military Health System, under the leadership of the Assistant Secretary of Defense for Health Affairs, is leading the way in revolutionizing the systems to ensure our men and women in uniform receive the healthcare that they deserve.

Additionally, advanced research and development in other areas presents enormous opportunities for hospitals, private sector companies and universities to work with the Department of Defense.

The Department of Defense continues to shape new opportunities and respond to evolving military needs and technological advances.For instance, the US Army’s current medical research portfolio includes:

• Biomonitoring technologies
• Medical robotics
• Medical imaging technologies
• Teleconsultation
• Infectious disease
• Blood safety and supply
• Trauma
• The Hospital of the Future
• Neuroscience
• Traumatic brain injury initiatives
• Regenerative medicine
• Nano medicine and biomaterials
• Ocular health
• Military amputee research program
• Advanced prosthetics and human performance
• Integrative health
• Medical logistics
• Health information technology
• Computational biology
• Genomics
• Medical modeling and simulation
• Simulation and training for Medics and Surgeons
• Large-scale disaster response

There continues to be substantial funding for each of these program initiatives; either from congressionally directed spending, Small Business Innovative Research (SBIR) funding, or funding directly from the USAMRMC (smaller grants).  Companies, universities and hospitals looking to do business with DoD to further develop R&D programs will find there are many avenues available within the Agency to help both the warfighter and private sector medical care.