Begin saving cash now, Air Force tells commanders

Wednesday - 1/16/2013, 11:08am EST

Jared Serbu, DoD reporter, Federal News Radio

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The Air Force is telling the heads of all of its major commands to take immediate steps to start conserving cash in preparation for two impending budget problems: the prospect of a full-year continuing resolution and the possibility that sequestration really will happen this time.

The specific directions were sent out Monday by the Air Force's vice chief of staff, Gen. Larry Spencer, and its acting undersecretary, Dr. Jamie Morin. They include directions to implement a freeze on civilian hiring, curtail spending on non-critical flight operations and travel, and cut back on all non-essential purchases.

Also, commands are being told they can hold off on modernizing and renovating facilities and only spend money on emergency situations.

Gen. Larry Spencer, vice chief of staff, Air Force

Morin said the Air Force issued the guidance in-line with directions the Pentagon laid out last week in anticipation of the possibility that Congress would fail to enact a DoD appropriations bill for the remainder of 2013 and the possibility that sequestration would make automatic across-the-board defense cuts of $45 billion for the final seven months of the fiscal year. But Morin cautioned that no amount of cash conservation could fully offset those budget impacts.

"The fact that the norm has become six-month continuing resolutions, and that the norm is going up to various fiscal cliffs is deeply disruptive to the institutions. It drives costs to the taxpayer. It undermines the military capability we provide to the nation," Morin told an Air Force Association breakfast in Rosslyn, Va., Tuesday.

Greatest impact would be to operations and maintenance accounts

Morin said the impact of a full-year CR would be felt most acutely in the Air Force's operations and maintenance accounts. He said while the service has done a good job of figuring out ways to shield its major acquisition programs from major disruptions, when it comes to activities like paying personnel and funding training programs, it's very difficult to make quick spending reductions.

"We have civil service laws and protections in place for very good reasons. That means I can't turn off that $18 billion expenditure. I couldn't do it mission-wise, and I can't adjust it in a short period of time," he said. "There are options that are being looked at there, and we'll be implementing a civilian hiring freeze. Those generate some savings, but nothing like the scale of sequestration. So that means the other accounts will get hit disproportionately, to include the readiness accounts. The impacts are blunt, the impacts are very serious. This is not a small matter."

One of the biggest servicewide impacts of a full-year CR, Morin said, would be to the Air Force's military construction programs. Living under a continuing resolution generally means the government can't start new projects or programs since no money has been appropriated for them. Even if Congress and the White House pass an appropriations bill for DoD for the rest of the year, many of those construction projects already will have been delayed by six months.

Dr. Jamie Morin, acting undersecretary, Air Force

"In a large and complex enterprise like the Air Force, losing six months on a military construction project can mean the difference between being able to successfully bed down a new weapons system and not," he said. "It can mean the difference between incurring large costs from a standing army of folks working on a project half a year or not. These are real impacts that drive inefficiency and get in the way of us providing necessary capability."

The Air Force isn't alone in taking steps to cut spending right away. Navy Secretary Ray Mabus sent a message to the Navy and Marine Corps last Friday saying he's considering several actions, including a hiring freeze, cutting out spending on facilities sustainment, reducing travel and firing temporary employees.

Mabus also warned that even without sequestration, the Navy may have to furlough parts of its civilian workforce if the department remains under a continuing resolution for the balance of the year.

"But all decisions in that regard will be made at the DoD level," Mabus wrote. "We will follow whatever guidance we receive."

Greenert: Don't worry about budget fights

Adm. Jonathan Greenert, the chief of naval operations, told sailors in a video message to the fleet last week that he doesn't want them to worry about budget fights in Washington, but the Navy's spending patterns are very likely about to change.

"We've been operating on the same level of funding as the year before, and that's not enough money to get us through the year. So we need to kind of ratchet down some of the less-critical operations, and you'll see us taking those actions in the future," he said. "It will involve, probably, some changes in what we buy and how we buy. It will involve some changes in non-deployed operations."

The Navy's annual IT conference in San Diego is among some of the first victims of those cutbacks. The event, which had been set to take place in less than two weeks, was abruptly cancelled Tuesday afternoon.

The Air Force's Morin said as disruptive as it is to have no enacted budget year after year, the service is getting used to it. And it's begun to manage programs as though repeated continuing resolutions are the new normal.

"The reality is that we already have, to a large extent, built our modernization programs around the assumption of continuing resolutions. The big programs are carefully constructed to avoid major obligations in the first quarter," he said. "Program managers have gotten very savvy to the fact that if you build a program that depends on an on-time appropriation, you're likely to be disappointed, and that will disrupt your program and drive cost. But the fact that they've changed the programs in order to avoid that has itself driven cost. It gets to a fundamental inefficiency we've accepted sort of quietly. I do think that as budgets get tighter, if we could avoid that inefficiency, we would be able to deliver a given amount of combat capability for less money."

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