Under Secretary of Defense (Comptroller) Robert F. Hale. (Colin Kelly / Staff)
DoD 2014 base budget proposal: $527 billion
Current 2013 sequestration impact: $37 billion
2014 modernization budget proposal: $166.8 billion
Source: Defense News research
With the uncertainty surrounding the US Defense Department’s budget, it’s no wonder Robert Hale, the Pentagon comptroller, has worked just about every day since January.
Hale’s job is to figure out how the department will deal with a $37 billion cut to its 2013 budget due to sequestration, as well as increased war-fighting costs in Afghanistan. He also is overseeing the construction of a massive reprogramming action in which DoD will ask to shift more than $7 billion across its spending accounts.
Q. On sequestration, Congress has exempted meat inspectors and air-traffic controllers. What is your plan to get the same flexibility?
A. It is important because we are making major changes, and I hope we get a chance to talk to them, associated with sequestration. What we want the Congress to do is, and not just for meat inspectors and not just for DoD, and that is to pass a balanced reduction in the deficit that the president can sign and then de-trigger sequestration. If it stays in effect, we’re going to have to make, and have made in many cases, major changes that are devastating, frankly, to our readiness.
Q. How do you respond to people who say sequestration has not been that bad on the Defense Department?
A. I would say they’re not looking. The United States Army has ended all its training rotations … for the rest of the year. These are culminating training events for many brigade units. They’re getting them ready to deploy and defend us if they have to. Something like two-thirds of the active brigade combat teams will be below acceptable readiness by the end of the year. The Air Force has stopped flying at 12 combat-coded squadrons, and another seven are at minimal flying. We’ve seen the Navy cut back on deployments, including a carrier in the [Arabian] Gulf. We are making major changes that are having serious effects on readiness.
Q. Why has the sequestration impact level fallen to $37 billion from $41 billion?
A. The 1980 Balanced Budget Emergency Deficit Control Act that governs sequestration has a provision that says if the budget goes down significantly, in fiscal ’12 and fiscal ’13 in this case, more than the sequestration level, then that particular account doesn’t have to be cut further by sequestration. We had a number of accounts, mainly in “other procurement” and “military construction,” that were cut very sharply in ’12 and ’13. Initially, in the continuing resolution, we were assuming they’d stay constant, so they would have been sequestered. Now they came down, [so] they don’t get additional sequestration. That brought the figure down from about $41 [billion] to $37 billion.
Q. When will you be able to show how sequestration is impacting acquisition programs?
A. We’re starting to get that. The focus has been heavily on O&M [operations and maintenance] because that’s where our problems are. But the acquisition program, some of them have problems, too. We’re starting to get that internally. It hasn’t gotten nearly the attention. You’re going to see cuts in unit procurement. They won’t be huge, but they’ll be noticeable. Delays in some programs, especially our research and development, test and evaluation.
Q. What progress are you making in getting rid of the use-it-or-lose-it spending mentality in the department?
A. Well, I think taking $37 billion out of the budget will do it, but it’s a pretty meat ax approach. What I guess I’d like if I were a czar is multiyear money out of the United States Congress. The operation and maintenance budget is only good for one year, so 365 days after you get it, you’ve either spent it or you can’t use it any more. I’d like to see that be two-year money. Similarly for military personnel. I think that would help us change the culture, and we need to continue to emphasize to our people end-of-year spending binges are bad. Both, we need help from the Congress and more flexibility, we could use some help from our people too.
Q. Is there discussion about going ahead with this?
A. Discussion yes, but Congress’ view is they want to limit our flexibility to things that they tell us are appropriate to do, and then they’re reluctant to kind of expand this window.
Q. Congress has given you the authority to reprogram about $7 billion. When will we see that request and what will be included?
A. I hope soon, within the next couple of weeks. What we will do in general terms is move money from the investment accounts and from military personnel into O&M. The goal, though, is not to offset sequestration. We are experiencing higher-than-we-expected costs in [the] wartime budget. Operating tempo is higher in Afghanistan than we anticipated two years ago. Transportation costs are higher. This reprogramming is largely to offset those costs. In fact, almost entirely to offset those costs. We hope that Congress will do that in order to avoid adverse effects on our wartime operations.
Q. How do you plan to plug the $22 billion operations and maintenance hole that DoD faces?
A. Well, we’ll do the remaining major things to try to plug it. One is, and we’ve already done this, to cut back I’ll call it the overhead aspects of our operating budgets. Facilities, maintenance, base operations. A second one is the reprogramming we spoke of before. Yes, it will try to move or ask authority to move money from investment and some from military personnel into O&M.
Q. Bringing that figure down to about $15 billion.
A. Yeah, probably in that vicinity. The rest of it unfortunately is going to come out of training and maintenance cuts, and the things I talked about earlier, cutbacks in training rotations, squadrons that aren’t flying, carriers that aren’t steaming in the Gulf, major effects, adverse effects, on our readiness.
Q. You’re expected to request another $88.5 billion for overseas contingency operations [OCO] in Afghanistan. You had said earlier that the costs are higher than you anticipated, which is one of the reasons it’s a little bit vague. Do you actually need more money than that in order to cover operations in Afghanistan?
A. We haven’t finished the budget yet, but we’re getting close. The placeholder is $88.5 billion. I don’t think we’ll be above that. I don’t know yet how much we will be below it. But it is worth saying, as we move toward a responsible drawdown, the budget isn’t going to come down proportionately to the forces there because there are a lot of costs, some for forces that are involved in other things than Afghanistan. Some for supporting activities like intelligence, that just don’t come down proportionately to troop levels.
Q. Do we have any idea what the withdrawal cost is going to be?
A. Well, I don’t have a total figure; next year, I anticipate in the $3-4 billion range. I don’t know over the whole withdrawal what it would be.
Q. For years, DoD has talked about shifting warfighting money from the overseas contingency operations accounts to the base budgets. Have those plans ended, since we’re seeing the OCO remain fairly steady?
A. For fiscal ’14, they’re on hold. We agreed that we would not try to move any further money from OCO to base, just because there is so much going on. In the years beyond, we believe we need OCO budgets for several more years. For one, I expect there will be some enduring presence in Afghanistan that will be OCO funded. We have reset, the money to fix equipment. That will take a couple of years. We see the need for OCO budgets for several more years. Some of the money that’s in there probably is going to have to migrate back into the base. How we’re going to do that in the light of [the] current budgetary situation, that will be a challenge.
Q. You are part of the Strategic Choices and Management Review [SCMR]. What types of things is that group looking at?
A. We’ll have to look at everything. We will have to look at force cuts. We’re going to have to cut back on modernization. There won’t be any other way, especially at the $52 billion level if we end up there, there won’t be any other way to do it. We are also well aware and are focusing on things like overhead, however you define it, headquarters staffs, we’re actively looking at ways we can cut back there, too.
Q. Is the SCMR the deep review that many people hope and expect, or is this something that merely maps a $52 billion cut?
A. Well, it will be as deep as we can given the time that’s available, but we need to focus on the choices we have to make in ’15 and beyond. And also, possibly, in fiscal ’14. So I think the strategic choices part of it will be an important aspect. But it will be informed by the strategy that was put forth by the president a year ago, and we will keep strategy in mind at every step of this review.
Q. Has it been estimated how much DoD spends on overhead? Why are there are a lot of different estimates?
A. That’s because you get a lot of different definitions. That 40 percent figure, which has been around a long time, is really an infrastructure cost. Simplistically, it’s everything that doesn’t deploy or fight. So it’s a lot of our research and development, it’s command and control, it’s all the training base, as opposed to the cost of the people actually being [in] training. So it is very large, but I sure wouldn’t call it overhead. When I think of overhead, I think of comptrollers and sort of back-office kinds of functions, not the training establishment and research and command and control. I think that number, as a measure of overhead, is nonsense. ■
By Vago Muradian and Marcus Weisgerber in Washington.