Navy running out of options to reduce the pain of sequestration in 2014, beyond

Monday - 7/22/2013, 5:56am EDT

Jared Serbu talks about sequestration and what it means for the Navy.

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The Navy says sequestration has already proved painful in 2013. But in some ways, next year could be even worse.

If Congress remains deadlocked on reaching a big deficit reduction deal, as it has been for two years now, the automatic 10-year spending cuts will remain in effect when fiscal 2014 starts Oct. 1. The caps imposed by the 2011 Budget Control Act would cut the Defense Department's overall planned spending by $52 billion, with the Navy's share being $14 billion.

The military, in theory, would have more flexibility to apportion the cuts — they would not be applied inflexibly across the budget to each item with a dollar figure attached to it, unlike in 2013.

If one thinks that would make the second year of sequestration less painful than the first, Adm. Jonathan Greenert, the chief of Naval Operations, said they'd be wrong.

Adm. Jonathan Greenert, chief of Naval Operations

Take shipbuilding for example. He said even though the Navy cut every program by about 10 percent, the service has managed to hold all of its major ship construction contracts mostly intact so far this year, in part by using unobligated dollars from the year before.

"We had money available from previous appropriations and laws coming in that we used to get us through '13. That's not available in '14. And so the impact on the investment accounts will be deeper cuts, and that's a concern," he said Friday during a press briefing at the Pentagon. "My goal and the secretary's goal would be to preserve shipbuilding and those ship contracts and those aviation contracts as much as possible, meet our forward presence requirements and make sure we hold onto multiyear procurement. That is the most efficient way to purchase equipment and platforms. But, again, as we do that, those reductions are real, and they'll take place in other accounts."

Needs to get creative

In 2014, Greenert said the Navy would have to once again find creative ways to keep from canceling or modifying its hard-won multi-year shipbuilding contracts. But the task would be more difficult.

"What we need to do is sit down and look at what specifically have you contracted to do. What's in each line item? And how much does that cost? For example when you build a ship, you get the ship, you get documentation, you get some ancillary gear, and you get some support, and you actually get some outfitting spares to get you through the first number of years. So you say, 'all right, can we keep this ship under contract and maybe deal with some of these other things later? Is that feasible?' And we will do that with each of the builders," he said. "Some of the things we buy have that sort of flex into them, and some of them don't. And if they don't, we'll lose the unit. And if you lose the unit, all the other ones in the contract, that price will go up accordingly."

Greenert said he also has serious concerns about the Navy's military readiness in 2014 and beyond. The service, like the Army, Air Force and Marines, already had to cancel numerous training and maintenance activities in 2013, and would need extra money in 2014 in order to begin to recover what leaders are calling "consumed" readiness.

But under a second year of sequestration, Greenert said the Navy would have to cancel the maintenance on even more ships.

"About half of the 60 availabilities that we have planned will have to be deferred, and you can't buy those back right away. If you don't do that maintenance period and that ship is then called out to do other things, it's a missed opportunity. So it takes time to get back," he said. "Reduced certification training in FY '14 would affect FY '15 deployers, so we've got to reconcile that. We've got to watch our air wing readiness, folks coming back and shutting down due to inability to have money because they're not deploying right away. You can't get down far, deep into the readiness bathtub. It makes it that much harder to get out, so we'll have to watch that very closely."

RIFs possible in 2014

Greenert said the Navy once again would face a quandary with regard to paying one of its biggest bills: personnel. President Barack Obama elected to use his authority to exempt military members from sequestration in 2013, but Defense Secretary Chuck Hagel suggested to the Senate in a letter this month that DoD would look to find savings in military personnel spending if sequestration continues, and that civilians might be subject to involuntary reductions in force.

Greenert said he would advocate to protect civilians from either RIFs or furloughs, but he says with both military personnel and civilians, it's tough to reduce the force fast enough to produce immediate savings.

"It's very difficult in the year of execution and suddenly to say, 'all right, we're going to reduce manpower.' That's payroll, and you have to get people off the payroll. And under the current rules and regulations, you have to pay them to depart, especially if it's non-voluntary," he said. "You can put in enticers to retire or whatever, or you can involuntary separate them. That payment precludes much savings, and we need the people in the near term anyway."

If sequestration continues beyond 2014, Greenert said it would have an impact on the size of the Navy, which seapower advocates on Capitol Hill argue already is too small. The service aims to build to a fleet of 300 ships by 2020. Greenert said that probably would not be achievable if the budget caps stay in place for the full 10 years.

"If we can't retain the ships under contract in that multi-year, where each one costs significantly less because you're buying them in bulk, if you will, or in larger quantities, then those multi-years sort of unravel. The unit price goes up. You have less money, and this just starts spiraling down," he said. "If sequestration continues beyond '14, I'm pretty confident that we would not be able to meet those goals. That's too much at $50 billion a year."

As for this year, Greenert said the Navy is advocating for a reprogramming of funds so that it can begin to add back some of the training programs it's been forced to cut, as the Air Force recently succeeded in doing to flying hours of several combat units that had been grounded for several months. But in terms of military capability, he said the Navy still would be at a lower level of readiness than it would like. It currently has only one carrier strike group and one amphibious ready group prepared to deploy.

"The rest of the fleet is not ready to deploy with all the capabilities that are needed that we would normally have in our fleet response plan, and that's really the issue that we have there," he said. "A year ago, we had three carrier strike groups and three amphibious ready groups ready to surge. And if there were a contingency, the surge force would be a concern, and the concern would be the capabilities that we would bring and whether or not they were the right capabilities. It may not be readily apparent to many, because as you look out there, you say, 'Hey, it kind of looks the same out there.' But it's the surge issue, and it's a real issue."

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