An Easy Way To Save Billions Of Dollars On Military Satellites

Deficit reduction doesn’t always mean hard choices. Sometimes it’s easy, if politicians are willing to rethink how the government goes about pursuing its goals. Perhaps that’s what Pentagon policymakers had in mind when they decided to name a new approach to purchasing satellites EASE. The official name is “Evolutionary Acquisition for Space Efficiency,” but the acronym says it all. Budget analysts have figured out a way of saving billions of dollars on space systems without having to give up anything. And unlike initiatives such as the F-35 alternate engine that require up-front investments to save money later, the EASE concept starts saving money right away.

It’s an amazingly simple idea. All Congress needs to do is agree to buy more than one satellite at a time, and then spread the appropriations out over several budget years. That’s not what the government does today. Instead, it buys one costly satellite in a constellation at a time, and then waits years to buy the next one — even though legislators know they will eventually need to buy several satellites of any given type to complete a constellation. And because satellites are bought one-at-a-time with all the money appropriated in a single year, staffers can’t find the money to buy another satellite for years and contractors can’t manage their production processes efficiently. So each satellite ends up costing a lot more than it needs to.

Here’s an example. The Pentagon is buying Advanced Extremely High Frequency (AEHF) communications satellites that will allow warfighters all over the world to communicate securely even in adverse circumstances. That’s an essential capability and military planners expect to buy several of the satellites over the coming decade. Now, if Congress buys the next two satellites separately with full funding of each in the year it’s requested, the cost for both will be about $4 billion. If it buys them in a “block” (together) and then spaces the money out over several years as EASE proposes, the two satellites will cost $3.1 billion. About $900 million is saved just by doing business differently, without giving anything up. And the same approach can be applied to any other satellite constellation where the government plans to buy more than one satellite of the same design, whether it’s for missile warning or weather reports or whatever.

You can’t really call EASE a breakthrough, because the National Reconnaissance Office has been buying its spy satellites this way for a long time. But most of the military satellites the government buys aren’t for spying, and all the other spacecraft are currently being bought one-at-a-time at very high cost. By switching to incremental funding of multi-satellite buys, the government can start saving billions of dollars in fiscal 2012. It can also help military planners and contractors to start thinking more coherently about how to introduce necessary upgrades into later versions of current satellites, since we know constellations like AEHF are going to be operating for decades to come. But the real savings come from being able to use workers and facilities more efficiently, because when the government commits to buying multiple satellites of the same type in a single “block” the work can be sequenced to make sure each employee with specialized skills is working every day, rather than waiting around for the next satellite to be funded.

This isn’t a budgeting gimmick and there are no catches. Congress can begin saving billions of dollars on military satellites in 2012 without killing any programs or closing any facilities. All it needs to do is agree to what staffers call “advanced appropriations,” which is technical language for agreeing to fund satellites over several budget years rather than setting aside all the money in a single year. Once it does that, budgeting for military space will become easier and savings will begin accumulating that can be applied to other purposes such as deficit reduction. Of course, somebody somewhere will probably complain about Congress changing the way it does business. But when you’re borrowing $4 billion per day from lenders like China, change is indicated.