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Pentagon To Slow 2014 Spending as Cuts Loom

Sep. 27, 2013 - 06:18PM   |  
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WASHINGTON — The Pentagon plans to slow spending in anticipation that federal defense spending caps will remain in place throughout 2014, a senior US Defense Department official said.

“[W]e will start at a level below the president’s budget in order to conserve resources until we get a better sense of where we’re actually headed,” Pentagon Comptroller Robert Hale said at a Sept. 27 briefing.

A year ago, DoD began fiscal 2013 with the hope that Congress would repeal sequestration and instead enact a comprehensive deficit reduction package. Pentagon officials refused to plan for the cuts.

When it became more apparent lawmakers would reach a stalemate on a debt deal and sequestration would begin on March 1, DoD began slowing payments to contractors in February in an effort to boost cash reserves in advance of the mandatory spending cuts. In the end, most of DoD’s 700,000-plus civilian workers were each furloughed for six days, Air Force planes were grounded, training was reduced and ship deployments delayed in order to cut $37 billion between April and September.

Pentagon budget officials will likely issue guidance to the military services and program managers to assume a lower budget level for the year, Todd Harrison, an analyst with the Center for Strategic and Budgetary Assessments, said of DoD’s plan to slow spending.

The guidance will vary depending on the specific acquisition program, he said.

“It could just mean they wait until later in the year to obligate funding, or they scale back their plans for the year,” Harrison said.

Officials will likely scale back service contracts — such as facility maintenance and other administrative duties — right away, Harrison said. Many of those types of activities have already been reduced or suspended in 2013 due to sequestration.

“Continue that and then do even more,” he said. “Instead of letting the grass go to 12 inches before you cut it, you let it grow to 14 inches.”

The Pentagon’s $527 billion 2014 budget proposal — sent to Congress in April — is $52 billion above federal spending caps. If enacted for the entire year, the continuing resolution — a measure that extends spending at the prior year’s level and typically does not allow new programs to begin or procurement quantity changes — currently being debated by Congress is $30 billion below that 2014 proposal, so another $20 billion or so is subject to sequester, Hale said.

DoD is still hoping for “more flexibility for new starts, for example, rate increases, and a variety of other activities that we won’t be able to carry out” should a continuing resolution remain in place throughout 2014, he said. The continuing resolution under debate in Congress would run through mid-November.

Since spending cuts will likely stick in 2014, DoD is preparing two budgets for 2015 — one that takes sequestration into account and one that builds on the Obama administration’s 2014 budget proposal.

In recent weeks, the services have been submitting their 2015 budget proposals to the Office of the Secretary of Defense. This has left Pentagon budget officials with a full plate as they brace for a potential government shutdown, find a way to manage sequestration in 2014 and prepare a 2015 budget.

“[W]e have to press forward, and it’s a particularly demanding task this year, because we really feel we have to plan for a range of outcomes,” Hale said. “We just don’t know where we’re going to end up; a decision the president will ultimately make in the December as to the size of the ’15 budget and the plan beyond. So we’re really planning for a pretty wide range of spending.”

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