Hurricane Costs May Squeeze Air Force Space Acquisition Program

The massive unexpected cost of the Hurricane Katrina relief efforts mounted by the U.S. government could put additional pressure on the Pentagon budget - especially the space acquisition programs that are already in the crosshairs of congressional budget cutters.

The new spending could make it more difficult for the Pentagon to move ahead with the development of new space systems that already face considerable scrutiny on Capitol Hill due to their high price tags, said George Muellner, senior vice president of Air Force systems under Boeing Integrated Defense Systems, which is based in St. Louis.

Congress has appropriated $60 billion for hurricane relief efforts so far, and congressional aides said that figure may be only the tip of the iceberg.

Even before Hurricane Katrina struck the Gulf Coast, many defense experts had projected that the Pentagon's budget could not continue to grow as rapidly as it did in the immediate aftermath of the Sept. 11, 2001 terrorist attacks.

During a Sept. 13 roundtable discussion with reporters at the Air Force Association's 2005 Air and Space Conference and Technology Exposition in Washington, Muellner said the added budget pressure could cause the Pentagon to pursue incremental improvements through modifications to existing systems rather than continue on the course to field so-called transformational systems.

The budget pressure prior to the hurricane already had prompted Boeing to present a variety of options to the Pentagon outlining ways DoD could evolve its existing space and aircraft systems,  and such discussions likely are to increase as the full impact of the relief effort begins to be felt in budgets, Muellner said.

Air Force Lt. Gen. Michael Hamel, who oversees most unclassified military space acquisition work as the director of the Air Force Space and Missile Systems Center in Los Angeles and program executive officer for space, said at a panel discussion during the same conference that the service's leadership has not yet directed him to look for lower-cost options for satellite efforts as a result of the hurricane.

The U.S. Air Force already is facing significant cuts to its 2006 budget request for the two most expensive unclassified space programs now in development - the Transformational Satellite Communications System, or T-Sat, and Space Radar. Key members of the congressional committees that oversee the defense budget have expressed frustration with the status of the service's space acquisition work.

The House of Representatives already has passed its version of the 2006 Defense Appropriations Act, which includes a $126 million reduction to the $226 million request for the radar satellites, which are intended to provide surveillance of moving targets on the ground regardless of weather or time of day. The House also approved a $400 million reduction to the Bush Administration's request for the laser-linked T-Sats.

The Senate Appropriations Committee has yet to mark up its version of the 2006 defense budget, but the Senate Armed Services Committee's version of the bill trimmed the request for Space Radar by $75 million, and the request for T-Sat by $200 million.

Spending on those two programs is the largest factor in the rapid increases in the space acquisition budget, which is expected to reach $10 billion in 2010, according to a Sept. 12 report from the Congressional Budget Office. That $10 billion figure - more than twice the 2005 budget estimate - only addresses the biggest ticket items in the space acquisition portfolio, and does not include spending on related ground systems or operations and support cost.

The Congressional Budget Office study, "The Long-Term Implications of Current Plans for Investment in Major Unclassified Military Space Programs," found that if cost growth on space programs continues at its projected rate, spending in 2010 could pass $14 billion.

Congressional aides said that the poor management of space programs that has led to spiraling cost growth and schedule delays is likely a more potent threat to the space portfolio than the hurricane.

While the defense budget may see tightening or restructuring due to the cost of the hurricane relief, space programs could be spared from major funding reductions - provided that the Pentagon shows that it has those efforts on a stable course, the aides said.

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