Lynn said DoD would end up “robbing Peter to pay Paul.”
“Moving funds in this way is detrimental to our readiness, our modernization and to efficient business practices. For example, funding would likely be reduced for some or all of the three brigade combat teams that will be returning Iraq and Afghanistan soon. The Navy would likely be forced to reduce flying hours and steaming days, and to cancel exercises and training events. The Air Force would face a 10 percent cut in its flying hours. Equipment maintenance would also have to be deferred. All of these cuts would impact on readiness.”
If Congress passes a bill to fund agencies at the 2010 levels through Sept. 30, DoD’s budget would be $23 billion less than President Obama’s request, Lynn said. The House’s version of a full-year CR currently would give DoD a bump in spending, but still about $9 billion below the President’s request. Without any increase from 2010 levels, Lynn said DoD would be short about $23 billion.
Former federal officials say DoD could live with the cuts. Gordon Adams, a professor of international relations at American University who used to handle Defense programs in the Office of Management and Budget in the 1990s, said military officials are overstating the financial problems. He said DoD has faced these challenges before and came out in good shape.
But Lynn said if DoD had to continue spending at 2010 levels, it would have about $8 billion in unpaid bills, including meeting payroll and ensuring they have enough to pay for healthcare costs.
Lynn reassured lawmakers that DoD would pay its military and civilian employees, and healthcare would continue to be a top priority.
“We’d be short at least $2.5 billion in DoD personnel accounts,” said Robert Hale, DoD comptroller and chief financial officer. “Since they are essentially entitlements for the workforce-we will pay you-we would be forced into some really fairly brutal reprogramming actions to try to move that money into personnel in order to meet paydays.”
President Obama requested a 1.6 percent pay raise for servicemen and women and Congress is expected to approval the proposal, but not give DoD any more money.
Hale says many services already have frozen civilian hiring so if a person who repairs tanks leaves, they are not replacing them. This leads to delays in getting things done across the board, he said.
Lynn says DoD also would have to transfer money from other accounts to meet the $1.3 billion it needs for healthcare.
“The impact of the CR would more be on the accounts we transferred from rather than the medical accounts themselves,” Lynn said. “A billion dollars in a $530 billion budget seems like a small amount of money. But in fact even with a budget that size all of the money is spoken for. All of the money is dedicated to a particular mission, whether it is a readiness mission, an acquisition mission or medical mission. We would have to deprive one of those readiness or acquisition missions of a $1.3 billion in order to make sure we paid our military medical bills.”
Lawmakers offered support for DoD. Sen. Susan Collins said the Senate should be considering the military spending bill for 2011 instead of the patent reform legislation currently on the floor for debate.
But none of the members promised to aggressive push for DoD’s 2011 spending bill to the floor and get it passed.
And Lynn said acquisition may take the biggest hit.
“We would have to move resources from areas in contracts,” he said. “We would have to defer and cancel some contracts. Surely some of those would be small and disabled businesses. That would be inevitable. In order to pay those personnel and medical bills, it would require decisions at multiple levels to decide exactly which contracts you are going to defer and which contracts you are not.”
Additionally, Lynn said program managers will delay contracting actions and then have to make up time and contract out too quickly, which in the end could cost DoD more money. He said other contracting officers will have to use short term contracts that also adds more cost to the government and brings instability to the vendors.
DoD’s ability to audit contracts already is feeling the budget pinch. Hale said the Defense contract audit agency already is under a hiring freeze, meaning it is not filling new positions to oversee acquisitions.
Taking money from one area to pay for another isn’t straightforward for DoD, either. Hale said DoD has some authorities to move money around in some account, but as it moves more and more money to meet their needs, the military will run out of areas to pull from and then they will need Congressional approval.
“We can’t meet our national security needs without reprogramming if we did end up under a continuing resolution,” Hale said. “We will need help with agreement on sources, which is always very difficult. We will have to look to some acquisition programs and terminate them or at least cut back significantly on them, and that is always very painful because are affecting jobs and commitments made by the Congress. But we will not have a choice.”
Lynn added that DoD makes up between three-and-four percent of the country’s economy so stopping contracts even for a short time will have a large impact.
“The money we do have wouldn’t be in the right places so we would have to move enormous amounts of money around, which is a very difficult process and causes great inefficiencies,” Lynn said. “We wouldn’t have the management authority that we would need to do new starts, to increase production and to do new military construction projects. It isn’t just money, it’s management and having the money in the right places.”
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