The Department of Defense has checked all the couch cushions and shook all the pennies out of its piggy bank. There will be no more cuts to furlough days for Fiscal 2013, says the Pentagon’s top money man.
“We’re not going to make any more changes in furlough days,” Robert Hale, undersecretary of defense, comptroller and chief financial officer at DoD, told In Depth with Francis Rose Friday. “We’re in our fifth day this week. Next week, for almost all of our employees, will be the last week and it will end next week.”
When sequestration went into effect on March 1, DoD was about $30 billion short in its operating budgets. Originally, the agency considered furloughing civilian employees for 22 days. In May, it reduced the number to 11 days. Through a combination of moving money and pushing some maintenance costs into the next fiscal year, the Pentagon was able to reduce furloughs from 11 days to six earlier this week, but that will be all the cuts DoD will be making.
“As we get right down to the end of the fiscal year, there may be some changes in other areas, but none that will affect furloughs,” Hale said.
DoD took a number of steps to economize, including a hiring freeze on civilian employees as well as cutting back on training and facilities and weapons maintenance.
Hale admitted that when DoD announced the furloughs in May, planners did so with eyes open, understanding it would have a huge impact on the Pentagon’s workforce.
“When you cut people’s paychecks 20 percent, it’s going to affect their morale and their financial situation,” he said. “And we knew that we rely on civilians. We can’t fight effectively without them. They fix our weapons. They staff our hospitals. They teach our kids. They take care of our people and they man many of our offices at our bases. So, I think we knew that productivity would be adversely affected.”
For these reasons, Hale said, DoD did whatever it could to avoid or at least lessen the number of furlough days it needed to impose.
“By late April, early May, when we were making the furlough decision, we were down to a gap of about $11 billion,” he said. “At that point, Secretary (Chuck) Hagel decided that, reluctantly, we had to impose furloughs of up to 11 days, but he said we’ll try to close the rest of the gap and let’s see if we can try to reduce the number. And we did just that, with reprogramming and moving money around.”
DoD also pushed some of its facilities maintenance costs into Fiscal Year 2014 to help close the gap.
“Even though that will defer some bills — we would have preferred to do that — nonetheless, the furloughs were seriously affecting productivity and morale and we thought that was the right decision,” Hale said.
Although DoD’s civilian workforce has been most affected by sequestration and furloughs over the last few months, Hale said, military personnel have been impacted as well.
“We’ve stopped training at a number of places,” he said. “And our military personnel didn’t really join to sit around and not train. So, I’m sure they’re as frustrated as well. Hopefully, we’ll resolve this issue over the next few months and move to a more orderly process.”
Congress helped DoD out by allowing to shift money around between its accounts.
“Most of those moves were from acquisition accounts, weapons systems, into our operating accounts,” Hale said. “So, yes, we definitely made some reductions in the acquisition side as we closed that $11 billion gap and got to the point where we could reduce furloughs.”
Shifting the focus to Fiscal Year 2014
While all of the focus has been on furloughs and the impact of sequestration in Fiscal 2013, the start of the next fiscal year is just around the corner.
“We are planning under a number of scenarios,” Hale said. “We still fully support the president and his budget request for Defense, we think it’s the right amount of funding that we need to meet a complex set of national security objectives. But, we are also looking at what will happen if the current caps in the Budget Control Act remain in place and we have to execute at lower levels.”
He added there was so much uncertainty at this point that he can’t predict what will happen in Fiscal 2014. “But I can say that we will do everything we can to avoid imposing furloughs again next year,” he said.
If DoD is required to adhere to the current limits in the Budget Control Act, it would have to reduce the president’s budget request by $52 billion in Fiscal Year.
“Even if that happened under regular order and appropriation, it would be a huge challenge,” Hale said.”It takes a while to get savings in an organization like this that has forces spread all around the world and that remains at war, I might add. It takes a while for it when you reduce forces, you don’t get immediate savings. You’re forced to make disproportionate cuts in modernization and readiness accounts, so the $52 billion cut will be a major probelm even if done through regular order.”
The $52 billion would be even worse if it took place through sequestration.
“They mandate that the cuts be equal and percentage terms that say every line item, essentially, in the investment account, you have to take every single weapon,” Hale said. “You have very limited flexibility unless you go back to this difficult process of reprogramming. The cut itself is a problem and it’s even worse if we do it under formal sequestration rules.”