DoD says it has legal authority to furlough working capital fund employees

Tuesday - 7/9/2013, 5:56pm EDT

Defense Department Comptroller Robert Hale says the Pentagon has the legal authority to furlough DoD civilians paid out of working-capital funds.

"The department does not want to furlough any of its valued civilian employees but must do so to help meet these budgetary shortfalls," Hale, the undersecretary of defense, wrote in a July 5 letter to lawmakers. "Furloughs of civilians at working capital fund activities are legal and will result in personnel cost savings."

Under sequestration, DoD is required to cut $37 billion from its planned 2013 spending. Pentagon leaders have settled on a plan to furlough about 85 percent of the department's civilian employees.

DoD's working-capital fund agencies include the Defense Logistics Agency, the Defense Information Systems Agency and the Defense Finance and Accounting Service.

Lawmakers question legal rationale

Hale was responding to an earlier letter from Rep. Derek Kilmer (D-Wash.), and more than two dozen other lawmakers, who wrote to Defense Secretary Chuck Hagel last month requesting the legal rationale for furloughing working-capital fund employees.

"It appears that there are substantial legal and economic questions surrounding the decision to impose furloughs on these employees," the bipartisan group of lawmakers wrote in the June 21 letter.

DoD working-capital fund employees, as "indirectly funded government employees," are granted some workforce protections separate from employees covered by annual appropriations, the lawmakers wrote.

The lawmakers also questioned the savings DoD would realize through furloughs of working-capital fund employees, since the work they do is already funded.

"We are concerned that, in addition to the loss of pay these civilian employees now face and the subsequent impact this will have on our local communities, moving forward with these furloughs will reduce the ability of our civilian workforce to complete the workload which is already funded. Further restricting available workforce resources will result in mission delays, eventual overtime, and greater cost to the department and taxpayers."

Hale: Working-capital fund furloughs will save more than $500M

However, Hale said the laws governing indirectly funded government employees do not prohibit DoD from furloughing working-capital fund civilians on a short-term basis, Further, DoD is permitted the authority to manage its civilian workforce based on workload and available funding, he added.

All told, civilian furloughs will save DoD $2 billion — more than $500 million coming from reduced personnel costs from working-capital fund activities.

"These working capital fund personnel savings provide us the flexibility to adjust maintenance funding downward to meet higher-priority needs," Hale wrote.

Furloughs for civilian DoD workers officially began Monday. More than 650,000 personnel will be forced to take one day per week without pay.

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