The operations account is being spared because defense officials say it already is skeletal. The minister says that the current €1.5 billion is below the minimum required to keep the armed forces operational. At this level, it is possible only to keep forces prepared for overseas deployment or for key national defense duties at readiness, and little more.
That leaves procurement as a major bill-payer. The ministry has requested €3.9 billion versus the €3.4 billion approved in 2011, but there is just €2.47 billion available for 2012 (with another €1.3 billion or so provided by the ministries of economic development, research and universities, bringing the total to €3.8 billion). This forces defense to make extraordinary maneuvers to maintain coherence in its program financing while postponing deliveries and payments, delaying new program starts and renegotiating contractual terms and quantities in every case it was legally and financially able to do so. The latter exercise is continuing, but the minister warns that in many cases canceling or reducing quantities will result in litigation and the prospect of heavy penalties.
New contracts will be written differently, but this will influence only the future. Di Paola says procurement quantities will be specified over only a set number of years. He referred to a process of gradually improved systems versus “umbrella” contracts for fixed quantities, with deliveries spread over decades and additional spending to prevent system obsolescence.
Nevertheless, the ministry hopes that 2012 will be the worst year, and that in 2013 and 2014 the total procurement funding, including “external” money will rise back to the pre-crisis level of €5 billion—a dim hope, given the seriousness of the Italian financial crisis.
For now, the ministry has avoided making any major decisions in terms of program termination or cancellation. But several programs are under scrutiny and if contracts will allow cuts—or even walking away—the ministry is expected to exploit the opportunity soon. Officials stress that scarce procurement money will be allocated only to high-priority and high-operational payoff programs, with all the rest reduced or possibly scrapped.