Pentagon challenges CBO’s cost estimates for new space organizations

A selection board for the 1C6 Space Warfighter Advanced Instructor Course meets at Peterson Air Force Base, Colorado. Credit: U.S. Air Force

DoD spokesman: “The establishment of the United States Space Force is a small investment to ensure American leadership in space.”

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DoD spokesman: “The establishment of the United States Space Force is a small investment to ensure American leadership in space.”

WASHINGTON — The Defense Department is disputing the analysis by the Congressional Budget Office on the long-term costs of the space organizations that the Trump administration has proposed.

According to the May 8 CBO report, standing up an independent Space Force under the Air Force, a U.S. Space Command and a Space Development Agency would increase DoD’s annual costs anywhere from $1.1 billion to $1.9 billion, and incur onetime costs of $1.8 billion to $4.7 billion.

“The CBO estimates are based on different assumptions than the DoD’s legislative proposal,” Pentagon spokesman Tom Crosson said in a statement to SpaceNews. “The CBO did not consult with DoD or evaluate the DoD Space Force proposal. The Department proposed a lean organizational structure for the Space Force that avoids significant bureaucratic growth by leveraging existing Air Force capabilities.”

DoD’s proposal “represents less than 0.1% of the DoD budget,” said Crosson. “The establishment of the United States Space Force is a small investment to ensure American leadership in space, protect our $19 trillion economy that runs on space, and ensure space capabilities for our soldiers, sailors, airmen and Marines.”

The CBO analysis, done at the request of the leaders of the Senate Armed Services Committee, attempts to provide a long-term view of what the space organizations might cost over time. A CBO spokesperson said this why the office was created in the first pace, to provide Congress objective analysis that lawmakers can use to make decisions — in this case, on whether to authorize a new military service

CBO analysts made assumptions about the number of people, facilities and other one-time expenses that would be required to run these new organizations based on historical trends and how the other military services are run. The analysis is “for illustrative policy options, and they do not represent cost estimates for any particular piece of legislation,” the CBO report noted.

CBO also pointed out that DoD’s proposal has few details on the projected size of the new space organizations, which suggests it would have been difficult for CBO to price it out. DoD has not provided specific cost estimates other than a five-year $2 billion projection for the Space Force. In its fiscal year 2020 budget proposal, it has requested $72 million to stand up the Space Force, $83 million to establish U.S. Space Command and $149 million for the Space Development Agency.

A senior defense official who reviewed the CBO study and spoke with SpaceNews on condition of anonymity said CBO did an evidence-based analysis of the number of people that would be required to run five different types of space organizations, three of which happen to coincide with what DoD is proposing.

In the appendix, CBO lays out in detail how it determined that the three space organizations would require 5,700 to 9,700 new positions mostly for overhead and management, not for new operational activities.

The additional annual costs of $1.1 billion to $1.9 billion, and onetime costs of $1.8 billion to $4.7 billion take into account that many people will transfer to the Space Force from other services, mostly from the Air Force. CBO estimated that even if most of the forces transfer from other branches of the military, at least 5,700 additional people will be required for overhead and management functions, to support combatant commands and for recruiting and training.

“DoD officials have said they would want people to transfer voluntarily and they might consider bonuses, but that was not priced out,” the defense official said. Trying to compare the DoD proposal with CBO’s estimate is apples-to-oranges but the question is whether CBO’s is a realistic analysis, the official said.

CBO pointed out that the headquarters of a military service, based on historical trends, is going to be a certain size no matter how small the actual force. The report estimates the Space Force headquarters would be about 2,500 people, the same size as the headquarters of the Marine Corps and the Air Force, even though the Marine Corps is one-third the size of the Air Force. DoD has said the Space Force would have about 15,000 members so it would be the smallest service by far. Regardless, “this is what all service headquarters grow to, eventually,” the official said. “That’s how CBO did their estimate, using an evidence-based approach.”

Budget analyst Todd Harrison, of the Center for Strategic and International Studies, challenged the CBO projection arguing that current base operations, logistics and medical personnel would transfer from the Air Force to the Space Force. But CBO is taking that into account, the defense official pointed out. Most of the additional people that CBO estimates will be needed are for overhead and management, not for base operations or medical functions. Additional personnel would be needed to support the Joint Staff and all DoD combatant command, which all military services must do by law, the official said. CBO also included about 2,000 addition people for recruiting and training, which arguably might be too high, the official said.

For one-time costs, CBO includes payments of bonuses and incentives for people to transfer, information systems and facilities. The defense official said these are similar to the estimates the Air Force developed in September that included a billion dollars for a Space Command headquarters. CBO says the potential one-time cost of a billion-dollar facility is based on what DoD paid to build U.S. Strategic Command’s headquarters. It is possible that DoD will decide to repurpose Air Force Space Command’s headquarters in Colorado Springs but that has not been decided yet. If U.S. Space Command were to move to a different location, the cost of a headquarters would easily reach a billion dollars, the official said.

For the Space Force headquarters, there would be some construction costs as well. “If you add 1,000 people in the Pentagon you’ll have to add a new building, lease a building or kick people out and provide them a new facility,“ the official said.

DoD is correct that the CBO report did not actually score its Space Force, Space Command or Space Development Agency proposal, the official said. That would be hard to do because DoD has not given a top-line estimate of the size of all three.