Vol. 19 No. 10 • Mar 6, 2015

As Admin. Makes Pitch for Modernization Support, ‘Affordability Problems’ Loom

Todd Jacobson
NS&D Monitor
3/6/2015

Modernizing the nation’s nuclear deterrent will begin to create “affordability problems” starting in 2021, Under
Secretary of Defense for Acquisition, Technology and Logistics Frank Kendall told the Senate Armed Services
Strategic Forces Subcommittee this week. The 2021 period is just outside the five-year window included in budget
documents earlier this year, and coincides with the beginning of construction on the Ohio Class replacement
nuclear submarine, work on the long-range strike bomber, as well as a significant uptick in warhead refurbishment
work. “In 2021 we’re going to start to have a problem finding ways to afford these systems,” Kendall said. “We will
work to do that. It’s a very high priority and we will work to do that. But it’s going to be a challenge for us.”

Kendall said the modernization funding issues are about a “$10 billion a year problem” for the 2020s for which the
Pentagon doesn’t currently have an answer. “We don’t have an obvious solution right now to that problem,” Kendall
said after the March 4 hearing. “Deputy Secretary [of Defense Bob] Work has a team that I’m co-leading looking at
that, looking at options. We’re going to be talking about that as we build the FY ‘17 budget.” Kendall stressed that
difficult decisions would need to be made about national priorities. “I don’t think the United States of America
cannot afford it,” he said. “It’s a choice. We can afford it if we choose to.”

Admin. Would ‘Do Our Best to Protect’ Nuclear Forces Under Sequestration

Kendall also addressed the near-term threat to modernization, suggesting that sequestration would cause
significant problems for efforts to modernize the nation’s nuclear deterrent and the Pentagon would do its best to
prevent significant impacts. Echoing comments made by NNSA Administrator Frank Klotz about the “devastating”
potential impact of sequestration on the NNSA’s weapons program, Kendall said the Administration’s
modernization plan no longer had any “flexibility” in it to absorb funding cuts. “This is an extremely high priority for
us,” Kendall said. “We would, I think, have to reexamine everything in both Departments [Defense and Energy]
under sequester,” he said. “That said, we’re looking at the percentage of our budget that’s involved here. We
would do our best to protect this area because the strategic deterrent mission area is so vital.”

But Kendall said it would be very difficult to protect everything, forcing tough choices. “We are going to be doing a
lot of things we regard as unacceptable under sequestration,” he said after the hearing. “So there is no free lunch
in there anywhere. There are no easy good choices left. We’re already at a point with the current level of the
budget where we’re out of easy good choices or things we could take that are relatively painless. It all gets painful
when you get there.”

Klotz: If Sequestration Hits, NNSA Will Collaborate With DoD on Priorities

In a March 2 speech at the Air Force Association, Klotz said any decisions about prioritizing work in case of
sequestration haven’t been made, and he said those decisions will only be made in consultation with the
Department of Defense. “We will have to prioritize but it will be a collaborative effort,” Klotz said. “This will have to
be a dialogue, if we get to that, and our great hope is we don’t have to get to that. If we get to that this will have to
be a collaborative discussion with the Department of Defense in terms of what their priorities are and where they
will go forward with particular delivery systems under the same conditions of sequestration that we have to deal
with.”

Klotz said previously that sequestration cuts could force the Administration to delay or cancel the NNSA’s
surveillance and life extension programs. He emphasized that decisions must be made with DoD in part because
budget cuts would impact warhead work as well as the modernization of nuclear delivery systems at the same
time. “It’s all part of the national defense budget,” he said. “If that’s hit by sequestration or some variant of that in
the way of budget caps it’s going to affect both of us and the trades, the option space that will have to be
considered, could impact the entire budget.”

Will Budget Caps be Bumped Up for Defense?

President Obama requested $561 billion for defense activities in Fiscal Year 2016, $38 billion more than budget
caps established in the Budget Control Act. Rep. Mac Thornberry (R-Texas), the chairman of the House Armed
Services Committee, has pushed the House Budget Committee to relax the caps and allow for $577 billion in
defense spending in FY 2016. “If this is not feasible in the first year, the committee recommends, at a minimum,
last year’s House-passed Budget Resolution level of $566.0 billion for national defense in the base budget for FY16
with restoration to pre-sequestration level funding in FY17 and out,” Thornberry said in a Feb. 27 letter to House
Budget Committee Chairman Rep. Tom Price (R-Ga.).

House appropriators, however, haven’t taken the same approach. At a House Energy and Water Appropriations
Subcommittee hearing March 4, Rep. Rodney Frelinghuysen (R-N.J.) asked Klotz to cooperate with appropriators
in finding ways to cut funding to adhere to sequestration levels. “There is a distinct possibility we have to mark to
the wall here,” Frelinghuysen said. “We’re going to need your cooperation and support to make the right decisions.
No matter what our military brass says, and I think most members feel the nuclear deterrent is critically important,
we still have to mark to those budget caps. More cooperation, not that we have any resistance, is better than less.
And I’m confident we’ll meet our obligations to support the deterrent.”

Sessions: ‘This Level is Not Only Affordable but Certainly Necessary.”

The Congressional Budget Office has projected that the Obama Administration’s plans for nuclear forces will cost
$348 billion from 2015 to 2024. When the modernization is in full swing in the 2020s, spending on strategic forces
will amount to about 5 or 6 percent of the DoD budget, up from current spending, which is about 2.6 percent of the
DoD budget. “The nuclear warheads themselves are a particularly small part of the budget,” Sen. Jeff Sessions
(R-Ala.), the chairman of the Senate Armed Services Strategic Forces Subcommittee, said. “Considering the
decades of decline in spending on nuclear forces, this level is not only affordable but certainly necessary.”

Sessions expressed frustration with previous cost overruns on nuclear infrastructure projects but said he was
pleased with the modular approaches being used to build the Uranium Processing Facility at the Y-12 National
Security Site and maintain plutonium capabilities at Los Alamos National Laboratory. “I believe we need to
complete the goals we’ve got, and to refurbish these weapons on the time frame we are. But it’s an expensive
proposition,” Sessions said. “We talk about how little we spend but, still, it’s billions of dollars. … If we have to have
more buildings, more infrastructure, let us know. But don’t ask for more than we need.” He added: “If you can keep
that cost down, that is going to free up some money that we can do things we need to do with.”