March 24, 2023
WASHINGTON – The Navy
admiral had a blunt message for the military contractors building
precision-guided missiles for his warships, submarines and planes at a moment
when the United States is dispatching arms to Ukraine and preparing for the
possibility of conflict with China.
"Look at me. I am not
forgiving the fact you're not delivering the ordnance we need. OK?" Adm.
Daryl Caudle, who is in charge of delivering weapons to most of the Navy's East
Coast-based fleet, warned contractors during an industry gathering in January.
"We're talking about war-fighting, national security, and going against a
competitor here and a potential adversary that is like nothing we've ever seen.
And we can't dillydally around with these deliveries."
His open frustration
reflects a problem that has become worryingly apparent as the Pentagon
dispatches its own stocks of weapons to help Ukraine hold off Russia and
Washington warily watches for signs that China might provoke a new conflict by
invading Taiwan: The United States lacks the capacity to produce the arms that
the nation and its allies need at a time of heightened superpower tensions.
Industry consolidation,
depleted manufacturing lines and supply chain issues have combined to constrain
the production of basic ammunition like artillery shells while also prompting
concern about building adequate reserves of more sophisticated weapons
including missiles, air defense systems and counter-artillery radar.
The Pentagon, the White
House, Congress and military contractors are all taking steps to address the
issues.
Procurement budgets are
growing. The military is offering suppliers multiyear contracts to encourage
companies to invest more in their manufacturing capacity and is dispatching
teams to help solve supply bottlenecks. More generally, the Pentagon is
abandoning some of the cost-cutting changes embraced after the end of the Cold
War, including corporate-style just-in-time delivery systems and a drive to
shrink the industry.
"We are buying to the
limits of the industrial base even as we are expanding those limits,"
Deputy Defense Secretary Kathleen Hicks said this month at a briefing on the
Biden administration's 2024 budget plan.
But those changes are
likely to take time to have an effect, leaving the military watching its stocks
of some key weapons dwindle.
In the first 10 months
after Russia invaded Ukraine, prompting Washington to approve $33 billion in
military aid so far, the United States sent Ukraine so many Stinger missiles
from its own stocks that it would take 13 years' worth of production at recent
capacity levels to replace them. It has sent so many Javelin missiles that it
would take five years at last year's rates to replace them, according to
Raytheon, the company that helps make the missile systems.
If a large-scale war broke
out with China, within about one week the United States would runout of
so-called longrange anti-ship missiles, a vital weapon in any engagement with
China, according to a series of war-game exercises conducted by the Center for
Strategic and International Studies, a Washington-based think tank.
The shortcomings in the
nation's defense industrial base are vividly illustrated by the shortage of
solid rocket motors needed to power a broad range of precision missile systems,
such as the ship-launched SM-6 missiles made by Raytheon.
It was the shortage of SM-6
missiles in particular that had Caudle fuming; they are used to defend ships
against enemy aircraft, unmanned aerial vehicles and cruise missiles.
There are only two
contractors today that build large numbers of rocket motors for missile systems
used by the Air Force, the Navy, the Army and the Marines, down from six in
1995.
A recent fire disrupted the
assembly line at one of the two remaining suppliers, Aerojet Rocketdyne,
causing further delays in delivering the SM-6 and other precision missile
systems, even as Pentagon orders for thousands of new missiles pile up.
"Rocket motors, a bane
of my existence, continued to be a problem," Gregory Hayes, Raytheon's
CEO, told Wall Street analysts last month. He said the shortage would affect
the company's ability to deliver new missiles on time and was a problem
unlikely to be solved "until probably the middle of '24."
Aerojet is building motors
for older systems such as Javelin anti-armor missiles and Stinger anti-aircraft
missiles, of which over 10,000 have already been sent to Ukraine. It is also
building new rockets needed to power so-called hypersonic missiles that can
travel much faster, as well as the rockets for a new generation of nuclear
weapons for the United States and even the rocket for a new NASA spaceship soon
headed to the moon.
The result is billions of
dollars in backlogged orders at the company – and frustration at the Pentagon
about the pace of delivery.
"At the end of the
day, I want the magazines filled," Caudle told contractors and Navy
personnel in January, referring to the storage areas on his ships for guided
missiles. "OK? I want the ships' tubes filled."
Other shortages slowing
production include simple items such as ball bearings, a key component of
certain missile guidance systems, and steel castings, used in making engines.
There is also only one
company, Williams International, that builds turbofan engines for most cruise
missiles, according to Seth G. Jones, a former Defense Department official now
at the Center for Strategic and International Studies, weapons that would be
vital for any war with China given their long range.
The current problems have
their roots in the aftermath of the Cold War's end, when a drive for the
"peace dividend" led to cuts in weapons procurement and consolidation
of the industry.
Since the end of the Cold
War, the United States – from the perspective of demands on its industrial base
– has faced either short, high-intensity fights, like the first Gulf War in
1990-91 and periods of the Iraq War starting in 2003, or prolonged but
lower-intensity conflicts like the decades-long war in Afghanistan, said
Michael E. O'Hanlon, a Brookings Institution military scholar.
But even these engagements,
far different in scale from potential confrontations with other major powers,
exposed the emerging risks: By 2016, the United States ran short of precision
missiles after a series of fights in Afghanistan then Iraq, Libya and finally
Syria.
The Pentagon briefly ramped
up production to rebuild missile supplies, but it was a temporary move, said
William A. LaPlante, the undersecretary of defense who oversees acquisition.
Defense Department leaders, and lawmakers who set the budget, would often turn
to missile programs to cut spending totals.
Prodded by military
industry lobbyists – and the hundreds of retired high-ranking military officers
they have hired to their sales and marketing teams – the government has instead
mostly focused on buying new ships, planes and other extremely high-priced
pieces of equipment, where the major contractors make most of their money.
Lobbyists have also pushed
Congress to hold on to older ships and planes that even the Defense Department
says have limited military value but which burn large amounts of money to equip
and staff.
But the lower-priced items
– including the missiles and other munitions – became an easy way to cut
budgets to keep up spending on the big-ticket items.
The Pentagon is now working
to jettison an approach built around a Walmart-style just-in-time philosophy of
keeping inventory low and instead focusing more on production capacity,
LaPlante said in an interview.
The Biden administration
this month proposed a 51% increase in the budget to buy missiles and munitions
compared with 2022, reaching a total of $30.6 billion.
And that is just the start.
The White House's proposed budget just for Air Force missile procurement is set
to jump to nearly $13 billion by 2028 from $2.2 billion in 2021. (Congress is
just beginning to consider the administration's proposals and those from both
parties on Capitol Hill.)
Major contractors such as
Lockheed Martin, with the support of the Pentagon, are looking across the
United States to bring on new suppliers for missile programs. The Defense
Department is also sending in teams to help them eliminate bottlenecks,
including turning to allies from around the world to find particular parts in
short supply that are holding back assembly lines.
Last year, Lockheed could
produce 7,500 of the artillery rockets that Ukrainian troops have fired to
great effect from the advanced launchers known as HIMARS. This year, that
number will jump to 10,000. But that is still far less than the Pentagon needs,
even just to resupply Ukraine, and it is one of more than a dozen rocket and
missile systems that contractors are now rushing to expand.
The Pentagon last year also
created a team assigned to work with contractors to identify labor and supply
chain shortages – and then gave out more than$2billion in funding to quickly
help resolve them.
That team started with a
focus on resupplying weapons sent to Ukraine, LaPlante said, but it has now
been set up as a more permanent unit inside the Pentagon to help the Defense
Department make an "overall shift away from the just-in-time
mindset."
The Air Force has started
to change the way it buys missile systems in part to expand the number of
companies that manufacture key items such as rocket engines, said Andrew
Hunter, an assistant secretary at the Air Force in charge of acquisitions.
President Biden has also
turned to the Defense Production Act – used during the pandemic to speed up the
manufacturing of respirators and vaccines – to move ahead with new missile
programs faster, including a number of hypersonic weapons being developed for
the Air Force, the Army and the Navy.
All the moves have been
needed because the United States underestimated the threats it now faces – or
failed to prepare adequately, Pentagon officials acknowledged.
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