Rising Cost of Low Readiness – A Senior Logistician’s
Lament Lays Out the Challenge for the New QDR

May 25, 2000

Comment: #359

Discussion Thread – Earlier comments discussing different aspects of the Rising Cost of Low Readiness #s 350, 347, 299, 298, 259, 231, 227, 202, 191, 185, 184, 183, 182, 177, 167, 165, 159, 157, 134, 129, 127, 126, 123, 121, 120, 117, 114, 112, 102, 101, 98, 61, 45.


[1] William H. McMichael, “Band-Aid Navy: How Shortages Are Burning Out Sailors And Wearing Out The Fleet,” Navy Times, May 22, 2000.

[2] William H. McMichael, “Keeping Aircraft Flying On A Wing And A Prayer,”Navy Times, May 22, 2000.

[3] William H. McMichael, “Workload Swamps Ship-Maintenance Depots,” Navy Times, May 22, 2000.

[4] Figure 1: Rising Cost of Operations – Separate attachment in Adobe Acrobat Format. Attached.

The May 22 issue of the Navy Times carried a three-part series on the Navy’s mushrooming readiness crisis [see Refences 1-3 below]. This is an appalling portrait of how the un-addressed consequences of the RISING COST OF LOW READINESS are inducing the Navy to eat its young.

Advocates of higher defense budgets would have you believe the Navy’s predicament and similar problems in other services are the result of budget cuts since the end of the Cold War.

This is utter claptrap and only serves to prop up and protect a deteriorating status quo as well as the factions that benefit from the ongoing waste.

It is true the budget has been cut since the height of the Cold War, but the size of the combat forces have been cut by a proportionally much greater amount in all services. Today, the Pentagon is spending more money to operate each unit of combat power than at anytime in history. This can be seen in Figure 1 [link], which compares the total Defense Department’s Operations and Maintenance budget (inflation-adjusted dollars) to the size of several force components, including the Navy fleet, the tactical fighter force in the Air Force, the number of active duty maneuver battalions in the Army, and the ratio of O&M spending to the number of people on active duty.

In the case of the Navy, for example, the Navy’s the Operations and Maintenance budget, expressed in inflation-adjusted dollars, is 28% smaller in 2000 than it was than in 1987, but during the same period, the fleet has been cutback by 46%, so on a per-unit basis the Navy is spending far more today than in 1987 after adjusting for the effects of inflation.

Despite the higher level of spending per unit of combat power, References 1 thru 3 below show the Navy is in the middle a readiness meltdown.

Why would a readiness meltdown occur if spending per unit of force is increased?

I sent these reports to a senior logistician with almost 30 years experience in tracking these kinds of problems and asked him to explain why he thinks readiness is going down the tubes. This is his answer—it is a partial explanation of a much larger problem, helps us understand why the Pentagon is in deep doodoo with its head in the sand.

~~~~~~~~[Lament by the Senior Logistician]~~~~~~~~~~~~~~~~~

The most recent articles in the Navy Times of May 22, 2000 should really alert the educated observer to the fact that the Navy is really hurting. These problems reflect a complex set of interactions that I will try to describe in the following paragraphs.

This deplorable state of affairs is the direct result of a CONSCIOUS EFFORT over the last 6 to 8 years to make the logistics system more efficient as part of the “acquisition reform” agenda. What you call the Rising Cost of Low Readiness is making it more difficult to pay for modernization. So the “acquisition deformers” are trying to lower the cost of operations by building budget plans with assumptions based on predictions of future efficiencies. That way they can transfer the “savings” into modernization budgets in their futile effort to bail out the procurement accounts.

The Navy reports show that the scam is falling apart, as we knew it would. The logistics system (all segments) is now tapped out by a reform policy that piles one phony efficiency on top of another in order to free up money needed to protect the modernization programs. The cumulative effect of this lunacy has caused a serious breakdown in the ability of the logistics system (maintenance and supply) to support the operational customer (in this case, the Navy Fleet) even in peacetime.

My real concern is about our ability to handle the higher pace of operations in a wartime surge, because that surge capability is being fully utilized just to support normal peacetime operations (witness the accounts in the articles).

I firmly believe that the Navy is now in the same shape that it was during the Carter Years … poor material and personnel readiness, lack of training and war reserve munitions … unable to execute assigned wartime taskings … literally struggling each and every day to conduct the peacetime presence mission.

This is a self-inflicted wound, inevitably brought about by rising costs, aging systems, and phony savings in the name of greater efficiency. The supply system has borne the brunt of these demands for efficiencies. Decision makers deliberately reduced actual spares inventories. Furthermore, the safety levels of inventory stockpiles that are supposed to handle the unpredictable variations in demand of a military organization operating all over the world are now GONE.

One reason is military organizations are being treated as though they were profit centers in a civilian corporation … operating with the "Just in Time" supply management philosophy as if running military operations was like producing cars on a production line with Japanese management methods. Consequently, the most efficient peacetime operation becomes the criteria for shaping the resourcing decisions. The problem is that military history teaches us that you must train in peacetime as you plan to fight in wartime – and the chaos of war is about as different from an efficient production line as one can get. The idea of "Just in Time" maintenance practices during the chaos of war is preposterous – particularly when applied to the American military culture which has a chronic tendency to defeat our enemy by overwhelming him with resource.

To make matters worse, logisticians are so busy inventing and reinventing logistic management processes—like Just-in-Time, that they have now lost track of what the military’s support requirements really are.

This is most evident in the computer models that determine inventory requirements of spare parts. These models embody unrealistic or unachievable assumptions for the time needed to order and ship parts from supply activities to operational units, for example. The same is true for repair turnaround times for those parts that must be fixed at depot and intermediate maintenance activities (the number of which are increasing because our technology is shifting more repairs to the rear echelons, notwithstanding the fact that combat history since the time of Alexander the Great shows that you want to repair as “far forward” as possible).

The computer models for predicting the supply of spare parts also assume falsely that the maintenance activities are all manned by their required personnel in the appropriate skill with the proper level of training and proficiency. This is not the case in the real world, as the attached articles show. Maintenance activities are understaffed and those people who are available are predominantly inexperienced (because of poor retention). These personnel shortages and skill deficiencies stretch out repair times, but these stretch out times are not accounted for in the computer models, so the model underestimate the number of spare parts needed to keep the system functioning.

To make matters worse, the budgeting process then UNDERFUNDS the underestimated requirements of the computer models in the name of future efficiencies which is a cover and deception operation for the real game, which is to free up money to pay for the unaffordable modernization program.  At least in the 70s, we were honest about robbing readiness to pay for modernization.

Plans and budgets, consequently, become disconnected from the reality of the operating environment for units. Repeating the same stupid mistakes is frustrating for me to watch  … particularly as the force structure comprised of complex equipment ages. And this time, there is no light at the end of the tunnel for alleviating the aging equipment crisis, because the modernization program still can not buy enough new equipment to replace existing equipment on a timely bases.

The result in the fleet is that we are beating our dedicated youngsters into the round.  Our most experienced and productive people are double tasked … they have to support the aging weapons with less spares and are forced to cannibalize (which creates at twice as much work) on a regular basis … and train the growing number of inexperienced personnel being assigned to their activities. This has an impact for instance on the number of training sorties that can be produced in support of increased levels of inexperienced` aircrews that need a higher number of sorties to refine their skills.

In the case of training munitions, there is a lack of available assets … as contracts have expired and we wait for a supply of munitions.

~~~~~~~~~~[end logician’ lament]~~~~~~~~~~~~~

In the ten years since the cold war ended, the United States has found it impossible to come up with a sensible military strategy.  Effort to date – the Base Force Review of the Bush Administration, the Bottom-Up Review, the review of services roles and missions, the independent National Defense Panel, and the first Quadrennial Defense Review – have all ended in the dustbin of history because they failed to provide a sensible adaptation to the conditions brought about by the end of the Cold War.

Now we are facing a crisis—one that was perfectly predictable. The American political system is gearing to execute its time-honored solution—to see who can be the most “pro-defense” by throwing money at the problem.  The fact that the Navy is in middle of a readiness meltdown while it is spending more money per unit of combat power to operate its fleet today than it did in the mid 1980s ought to suggest there is a little more to the defense meltdown than a budget reduction to the level spend during the Cold War in the 1950s.

In fact, twenty years of research has convinced me that spending more money without addressing the problems that are creating the present crisis will simply serve to set the stage for even larger problems in the future.

To understand why feeding this monster only increases its voracity, I urge new readers to start their inquiry by reading “Defense Power Games,” which was written in 1990.

The Pentagon has begun preparing for its Second Quadrennial Defense Review (QDR-II). The first was an utter fiasco [See my analysis of what went wrong with QDR-I.]

QDR-II is scheduled for delivery on September 30, 2001, so there is plenty of time to correct past mistakes, analyze problems like those described above, and prepare a realistic plan to put us on a glide path to better health without breaking the bank just when the baby boomers retire. But today, the biggest roadblock to progress is a bookkeeping system that is in a state of unauditable chaos [see Comment 169 as well as the IG and GAO reports]

An honest accounting system is necessary to understand how internal constraints tat limit our ability to respond to external threats. Without comprehensible books, it does not take a rocket scientist to figure out that it is logically impossible to fix any of these problems and that, therefore, it is also logically impossible to have a strategy that will work in the real world.

Unfortunately, to date, there is absolutely no sign that senior QDR planners in the Pentagon have any intention of making an effort to fix the bookkeeping system before they put together their Strategy, including those in my own organization who should know better.

When Sun Tzu said ‘know your enemy and know yourself in his opening chapter of the oldest extant book on war (circa 400 BC), he recognized that the job of the strategist is to meld internal constraints with external goals into a course of action that can be executed in the real world.  No competent battalion commander would go into action without first accounting for the constraints that might limit his action, like ammo stocks, numbers of wounded, mission capable rates of equipment, etc., but the Pentagon does this routinely when shaping a national “strategy.”

If the QDR ‘strategists,’ like their predecessors, ignore their constraints AGAIN, a large number of people are going to spend gobs of man-hours producing yet another useless product, and the American people will be subjected to another disservice, because a continuation of business as usual is setting the stage for a crash between defense spending and social security (and Medicare) late in this decade.

Chuck Spinney

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