Hagel warns of possible DoD layoffs in 2014 if sequestration continues

Wednesday - 7/10/2013, 7:44pm EDT

By Cogan Schneier
Special to Federal News Radio

The Defense Department may consider targeted layoffs in personnel for fiscal 2014 if sequester-level budget caps remain in place.

In a letter to the Senate Armed Services Committee Wednesday, Defense Secretary Chuck Hagel said if the budget caps continue, DoD will face $52 billion in cuts.

Hagel said cuts in operations and maintenance (O&M) would require the department to consider targeted reductions in civilian personnel, as well as limits on funding for facility maintenance and training activities. Hagel also said the cuts would have severe effects on investment and modernization.

"DoD is hoping to avoid furloughs of civilian personnel in FY 2014, but the department might have to consider mandatory reductions-in-force (RIFs). As with involuntary separations of military personnel, RIFs don't save much in FY 2014 but would help accommodate funding caps in later years. While painful, RIFs would permit DoD to make targeted cuts in civilian personnel levels rather than the more across-the-board cuts associated with furloughs," the letter said.

Roughly 85 percent of the department's nearly 900,000 civilians around the world will be furloughed one day each week over the next three months as a result of the across-the- board cuts in the current budget year.

Rep. Adam Smith (D-Wash.), the ranking member of the House Armed Services Committee, said he agrees with Hagel that sequestration has a damaging effect on the military.

"I have consistently stated that sequestration is damaging. Secretary Hagel's letter to Sens. Levin and Inhofe echoes that sentiment regarding sequestration's impact on defense, and it points out that, if Congress does not act, sequestration will continue to damage military readiness. Congress must end sequestration and pass a reasonable approach to reducing federal deficits," Smith said in a statement.

The letter said the department also would need to reduce funding in facilities maintenance, base operating and support to community events. Maintenance cuts would force military employees to work in "substandard" facilities, Hagel said.

The letter said the department could only impose small cuts for military personnel funding, because layoffs do not save much money. Hagel said that's because DoD would have to foot the bill for unused leave and unemployment insurance for those employees with at least six years of service.

"The inability to reduce military personnel costs quickly would put additional downward pressure on other portions of the FY 2014 budget," Hagel said. "To avoid a repeat of this situation in future years, DoD could draw down the size of the military more quickly beginning in FY 2013 in order to free up resources in later years."

Legislative help needed

To reduce the military more quickly, Hagel said Congress would need to repeal laws restricting military-end strength reductions. The letter said enacting reductions quickly could mean laying off personnel who have recently served in Afghanistan.

Hagel also said if the military pay raise rises to 1.8 percent, as some in Congress have proposed, DoD would need to add $500 million to its funding requirements. Hagel said this would mean even more cuts in other areas.

The letter also stated the $52 billion in cuts would cause reductions between 15 percent and 20 percent in funding for procurement, military construction and research development test and evaluation (RDT&E). The department would cut weapons buys, research funding and investment funding, Hagel said.

Hagel added such cuts would hurt technological growth, as well as DoD's procurement practices.

"Slowing investment would also adversely affect DoD's efforts to improve its acquisition practices and become a better buyer," the letter stated. "Hundreds of weapon and support program line items, which are now being bought based on stable and efficient acquisition plans, would be disrupted. Unit costs would rise, reversing successful efforts in recent years to hold down unit cost growth or even reverse it."

Pleas fall on deaf ears

The letter was Hagel's strongest statement to date, and continued to push back against congressional resistance to alternative Pentagon proposals to save money. The administration has called for another round of domestic base closings, elimination of several weapons systems, a speedier drawdown in the size of the Army and Marine Corps, and increased fees for health care. Yet the House and Senate, in crafting their versions of the 2014 Defense Authorization Bill, have soundly rejected the Pentagon's plans.

For months, senior military leaders, including Hagel's predecessor, Leon Panetta, have called on Congress to stop the budget cuts, known as sequestration, or face the consequences of a military unable to handle all of its missions around the world. But even with sequestration, the Pentagon still will maintain an annual budget, adjusted for inflation, of more than $500 billion a year for the rest of the decade. That's a modest reduction when compared to the previous draw downs in defense spending that came after the wars in Korea and Vietnam and the Cold War.