DoD needs updated cost savings data when considering furloughs

Tuesday - 6/17/2014, 2:10pm EDT

More comprehensive information sooner — that's what a new Government Accountability Office report says Defense Department planners need when they're weighing the cost savings of future administrative furloughs.

Tasked with evaluating how DoD implemented administrative furloughs in 2013, GAO looked at how cost savings were estimated to determine what lessons could be applied to potential administrative furloughs in the future.

Last year, the Joint Select Committee on Deficit Reduction failed to head off sequestration — a round of automatic, across-the-board cuts to federal spending totaling $1.2 trillion. This forced agencies big and small to scramble in order to reduce spending before the cuts took effect on March 1, 2013.

To help offset its share of the cuts — $37 billion — DoD told its components in January to begin planning for up to 22 administrative furlough days for civilian employees.

According to the GAO report, this was the first departmentwide administrative furlough DoD had ever implemented, although it had conducted shutdown furloughs in 1995 and October 2013, when employees had to be sent home because Congress failed to pass an annual appropriations bill to fund the government.

In May, DoD cut the total number of furlough days to 11 and then, in August, the agency reduced it further to six.

Number of Civilians DOD Reported Furloughed and Excepted from Furlough in Fiscal Year 2013 by DOD Component
DOD ComponentTotal Civilians Furloughed Total Excepted Civilians
Army221,322 45,469
Navy152,890 53,646
Air Force57,468 23,080
DOD Agencies92,724 20,407
TOTAL:624,404 142,602
Source: DOD. GAO-14-529

"DoD officials stated the decision to reduce the number of furlough days was due to DoD gaining greater flexibility from fund transfers and reprogrammings that occurred towards the end of the fiscal year," the GAO report said. "DoD identified categories of furlough exceptions for personnel including those assigned to a combat zone and those necessary to protect safety of life and property. Clarifying guidance was issued to help ensure that borrowed military personnel were not used to compensate for work resulting from the furlough, and to prohibit contracted support from being assigned or permitted to perform additional work or duties to compensate for workload or productivity loss resulting from the furlough."

When DoD projected the initial savings it would accrue from civilian furloughs, GAO found that DoD did not exclude the pay of those who would eventually be exempted from the furloughs. In addition, GAO reported that DoD did not update its estimates as it received more information during the furlough period.

In the end, DoD furloughed 626,404 and exempted 142,602 civilians employees. The furloughs generated about $1 billion in savings from civilian pay.

"The initial estimated cost savings were calculated at $300 per person per furlough day, totaling about $2.1 billion for 11 furlough days," the report said. "When DoD reduced the furlough from 11 to 6 days, the estimated cost savings were reduced by about $900 million. However, the estimated savings per person per day was not updated to reflect actual payroll reductions, in part because, according to DoD officials, there was only 1 week's worth of payroll data available at the time the decision was made. While officials stated that the estimated savings per person per day was not updated because they thought it was sufficient for their purposes and that the decision to reduce the number of furlough days was primarily based on funding received from transfers and reprogramming actions, the determination of exceptions was made 3 months earlier. If this initial estimate had been updated it may have provided more-comprehensive information for DoD officials to consider regarding the length of the furlough and DoD's cost-savings estimate."

GAO recommended that if DoD considers implementing future administrative furloughs it should include cost savings data in its planning as soon as that information becomes available.

"Officials at selected sites GAO visited noted a number of actions taken to prepare for the furlough and described impacts of the furlough, such as decline in morale, mission delays, and inconsistencies and clarification issues with the furlough guidance," the report said. "However, attributing these impacts directly to the furlough is difficult given other factors, such as a civilian hiring freeze and pay freeze that may also have contributed to declining morale."

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