DoD likely to send Congress a ‘what if’ report, detailing impacts of sequestration

After having gotten a partial, two-year reprieve from sequestration, the original caps Congress set for the Defense Department in the Budget Control Act (BCA) a...

A fter having gotten a partial, two-year reprieve from sequestration, the original caps Congress set for the Defense Department in the Budget Control Act (BCA) are scheduled to go back into effect in October. So beyond simply repeating the assertion that the current defense strategy won’t work at that funding level, the Pentagon will seek to draw a clear picture of exactly how the spending cuts would affect the discrete programs members of Congress care about.

The tactic has been tried before, noted Mike McCord, DoD’s comptroller and chief financial officer. The department released a 36-page report last year detailing sequestration’s potential impacts on the 2015 budget, but it got almost no attention on Capitol Hill, since the two-year Ryan-Murray agreement had already solved the problem for fiscal 2015.

“We will in all likelihood submit a similar document this time with similar levels of detail, and it may engender more discussion this year just because sequester is a real possibility this year, unlike last year,” McCord told a small group of reporters. “We also need to show the new secretary a draft document like that and see if that’s the right way to handle it. But hopefully we’ll also be able to talk about in terms of how it affects mission output, not just in terms of what it means to a particular base or whether there’s a furlough.”

A specific sequestration impacts report could also carry more weight this year because it would be the Pentagon’s only written explanation of how it would handle BCA-level cuts. Last year, the department prepared and submitted what amounted to two budgets — one at the President’s requested funding level, and one that assumed DoD would have to live under the original caps.

“We discussed and rejected doing that again many months ago,” McCord said. “Because it’s an enormous workload for our people to produce an alternative budget. We believe in the budget we submitted. If Congress doesn’t support it, we may be forced to participate in some kind of alternative, but at this time we don’t have a back-up plan.”

McCord said the DoD financial management workforce’s lives have gotten slightly easier over the last couple years, in part because they only built one budget this time, and because they haven’t been put on involuntary furlough lately.

“2013 was kind of a low-water mark of badness in terms of having the threat of sequester, then the actual sequester, then the shutdown. And then we moved more money around than we ever have trying to fix the worst aspects of the sequester,” he said. “We have gotten a little better since then because the level of budget pandemonium is definitely down right now, but our workforce has also continued to shrink, because we’re ‘overhead’ in terms of Secretary Hagel’s order to reduce headquarters staff, so we’re part of that 20 percent cut. I think the military services’ workforces are pretty close to right-sized, but anytime you ask for some extra work, you do hear some concerns from them about how hard we’re working the workforce already.”

Among the other impacts of sequestration, McCord said a return to the BCA caps would doom any plan to re-categorize spending in DoD’s overseas contingency operations (OCO) budget and place it in the base budget.

OMB has told DoD, the State Department and the intelligence community to draw up a plan to move OCO money into the base budget by the end of this year.

OCO has been a convenient budget tool for both DoD and Congress over the last several years, because the overseas account is not subject to the budget caps, so it’s tended to become home to a host of spending initiatives that have a questionable relationship with the wars in Afghanistan and Iraq.

But the BCA puts a firm cap on DoD’s base budget: $499 billion. If it stays in place, there’s simply no room to move current OCO spending into it.

“We’re developing a database of what’s in OCO today based on what we submitted in 2015 and 2016, and we’ll use that to examine further so we can submit a proposal this fall that can be vetted within at least the executive branch so we can guide the 2017 budget,” McCord said. “But none of this is possible if sequestration is not dealt with. This effort would have to fall by the wayside.”

This post is part of Jared Serbu’s Inside the DoD Reporter’s Notebook feature. Read more from this edition of Jared’s Notebook.

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