U.S. defense industry advisor warns of potential post-sequestration shortfalls

U.S. defense industry advisor warns of potential post-sequestration shortfalls

Vector Strategy says U.S. Congressional inaction before automatic “budget sequestration” kicks in during 2013, the U.S. Department of Defense might be unable to amass funding for future armed conflicts.

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If the U.S. Congress takes no action before automatic “budget sequestration” kicks in on Jan. 1, 2013, the U.S. Department of Defense (DoD) might be unable to amass sufficient funding for future armed conflicts during the next two decades. That the contention of defense, military vehicle and armor industries market research firm Vector Strategy Inc. (Southern Pines, N.C.). Using a mathematical model developed by the Italian physicist Cesare Marchetti and statistical analysis, Vector Strategy has developed a funding scenario for the Iraq/Afghanistan War drawdown and what the consulting company predicts will be the next war-funding peak in 2027.

According to Vector Strategy president Marcia Price,“Cesare Marchetti has conducted several thousand analyses of historical time series and consistently finds that a logistic or diffusion model fits the data in a predictive format. Marchetti has applied his model to military and war cycles with well-documented results. We applied his model to DoD funding from 1805 to 2013 and use that analysis to present a historically derived scenario of future DoD funding.”

The results from Vector Strategy’s analysis reportedly suggest that the U.S. could be involved in another conflict or contingency operation that would exhibit peak DoD funding in 2027

“Most DoD funding analyses initiate with 1947 data,” says Price. “By reaching back to 1805, our analysis includes 150 additional years of DoD funding data. This allows us to provide a more comprehensive analysis with tighter confidence intervals than other published DoD funding analyses.”

Since 1805, the US has been involved in twelve significant wars or DoD funding ramp-ups. Using Marchetti’s model, Vector Strategy uses these 12 war-funding cycles to predict peak annual funding and total spending associated with the next war. In addition, they have calculated annual DoD funding for 2018 to 2036 using the cumulative distribution function.

A significant takeaway from Vector Strategy’s analysis is that $533 billion is the minimum annual funding necessary to sustain DoD operation and still permit DoD to adequately ramp up support for the next war funding cycle. If sequestration is not enacted, Price predicts that the DoD could meet the initial cap requirements of the Budget Control Act of 2011 and successfully ramp up to meet the funding requirements of the next war effort. If sequestration goes forward and annual DoD funding is capped levels between $498 billion and $508 billion during the period 2016 to 2020, Vector Strategy says the U.S. may not be able to successfully ramp-up to support the next war funding effort. (All funding amounts are stated in constant 2013 dollars.)Vector Strategy’s full analysis and report is available for purchase and immediate electronic delivery. Visit www.vector-strategy.com or contact Marcia Price at (910 420-2208 for more information.

About Vector Strategy, Inc. Vector Strategy advises companies in the defense, military vehicle, and armor industries on technology trends, government procurement, market size and growth, and supply chain issues. 


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