New calculations by the Office of Management and Budget have determined that sequestration will have little to no impact on DoD’s 2013 budget for military construction programs. But while there will be ample funds to build new facilities, maintaining existing ones is another matter.
DoD says its outlook on military construction programs still is somewhat preliminary, but for now, the math of sequestration doesn’t appear to require cuts from most of the department’s MILCON accounts. The news came after OMB reviewed changes Congress made when it approved a 2013 budget in late March. “Because of special crediting provisions in the current law that apply when Congress enacts cuts in an appropriation, the law says, ‘The cuts are big enough, there’s no further sequestration,'” Robert Hale, DoD’s comptroller told the Senate appropriations subcommittee on military construction last Thursday. “For the construction accounts that are affected, we believe we can absorb most of the sequestration reductions with available bid savings.”
Hale said the department will make it a priority with its 2013 dollars to finish or continue construction projects that already are underway. He said he also doesn’t expect to cancel, defer or reduce the scope of any projects, but pulling that off would require Congress to approve several complex budget reprogramming requests.
But even if the funds used to construct new buildings are relatively safe from sequestration, cuts from sequestration will squeeze the funds used to sustain and improve existing buildings for at least the remainder of the year. That money comes from DoD’s broad operation and maintenance accounts, and with the sudden cuts imposed by sequestration, the department is prioritizing operations and, by necessity, shortchanging maintenance.
“In fiscal 2013, we’re deferring all but the most critical repairs,” said John Conger, DoD’s acting deputy undersecretary for installations and environment. “Frankly, we can accommodate this for a short period of time, but if we do this for multiple years, facilities will break. Building systems will begin to fail. The cost to repair broken systems is much higher than that to maintain them, just like changing the oil in your car. Keep in mind though that this car is a real property portfolio of more than 500,000 facilities with a plant replacement value of more than $800 billion. If we don’t invest in keeping it up, we will end up with a steady increase in failing or unusable facilities.”
Hale said DoD is hoping not to have to re-learn the lessons of 20 years ago, when facilities languished without proper maintenance funding during the post-Cold War builddown.
“I was in the Air Force in the 1990s. We struggled. All of DoD did,” he said. “We were underinvesting significantly in facilities sustainment, restoration and modernization. I think we’ve gotten well to some extent in the subsequent decade, but I do fear that we might be going down that path again.”
The Pentagon argued that one sure-fire way to cut down on its facilities maintenance costs is to divest itself of real estate and buildings it no longer needs, and to dispose of them through a round of base realignments and closures in 2015. The idea has gotten virtually no traction on Capitol Hill so far.
BRAC getting no traction
Lawmakers, who are naturally hostile to the idea of base closures to begin with, are mostly pointing to the last round of BRAC in 2005, which cost DoD significantly more in one-time, up-front dollars than it originally projected.
Hale said that’s true, but that BRAC and its predecessors also are saving DoD money every year.
“We’re saving $12 billion a year from the past BRAC rounds. I hate to think what I’d be doing right now as comptroller of the Department of Defense if I had to find another $12 billion of savings in this fiscal environment,” he said. “I understand the concerns about 2005, but we do not intend to repeat that experience. That was a move-around BRAC. This is going to be a close-the-bases BRAC. It’ll be a lot less expensive and save money much more quickly.”