Another budget quandary for DoD: What if war funding dries up?

Pentagon officials have spent the last several weeks warning members of Congress that its current budget plan involves painful choices around force size, the divestment of entire weapons platforms and reduced compensation for military members.

But even those bleak assessments rest on the perhaps overly-rosy assumption that Congress will help DoD sidestep sequestration by continuing to approve tens of billions of dollars in annual contingency funding over the next several years for a war that is supposed to draw to a close by the end of 2014.

Congress has used Overseas Contingency Operations (OCO) accounts, an addition to DoD’s base budget, every year since 2001 to pay for military operations in both Afghanistan and Iraq.

The Defense Department has grown highly dependent on those funds, including for many budget items whose ties to the wars are tenuous. OCO funds accounted for nearly 15 percent of the Pentagon’s top-line budget this year.

The backup funding stream has come in especially handy since the onset of sequestration, because unlike DoD’s base budget, the OCO accounts are not subject to the automatic budget caps. Military leaders say the money is paying for things that still will comprise the military’s missions long after the last U.S. troops leave Afghanistan.

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OCO for 2 to 3 years

If Congress declines to keep those funds flowing after that, each of the military services would be in dire straits, officials said.

“We have a problem,” Lt. Gen. Burton Field, the Air Force’s deputy chief of staff for operations, plans and requirements, told the House Armed Services Committee Thursday. “We’re already cutting 20,000 airmen, we’ve already seen the effects sequestration had on us last year, and our requirements around the globe are increasing. At the end of the day, we would have to either cut back on those requirements, or we’d have to take more money out of some procurement program or from readiness, and probably both. Without this funding, we will not be able to do anywhere near what you’re asking us to do today.”

Military officials say they need Congress to keep the wartime accounts alive for at least another two to three years. Otherwise, they would be forced to wedge tens of billions of dollars of requirements that are not directly related to Afghanistan into a base budget that’s already capped under sequestration and is entirely spoken for already.

For example, all Horn of Africa operations from the Navy’s base in Djibouti, some 2,300 miles from Kabul, are funded entirely by OCO money. So are a Joint Task Force headquarters in Jordan and at least five Air Force bases in the Middle East.

The Marine Corps is using OCO funds to pay the salaries of 38,000 of its troops, and the Army has been using the fund to help train local forces in Africa and conduct other operations on that continent.

“If there’s not an OCO appropriation, the funding for these contingency operations will have to be absorbed into the base, and this is especially problematic during the times of declining budgets,” said Lt. Gen. James Huggins, the Army’s chief of staff for operations. “Another concern is that our temporary end strength, which was agreed to by Congress and funded through OCO, allowed the Army to support the demands of two troop surges in Iraq and one in Afghanistan. It enabled us to maintain some level of dwell time for our soldiers between multiple back-to-back deployments. The readiness in the Army for ongoing operations around the world and contingencies is critically dependent on OCO. The absence of that would severely undermine the Army readiness initiatives we’ve taken this year. It would, in my opinion, move us towards hollowness.”

Huggins said without the supplemental funding source DoD has relied on for more than a decade, the Army would only be able to afford to train soldiers who are currently deploying, or about to deploy.

All of the military services say they also need Congress to keep the funding stream alive, in order to repair and upgrade the military equipment that is coming back from Afghanistan — a process that will take several years.

Base budget can’t meet all the needs

Those “reset” functions are paid for from funds that Congress earmarks for operations and maintenance. In the case of the Marine Corps, about 40 percent of those dollars currently rest in the OCO accounts, said Lt. Gen. Glenn Walters, the service’s deputy commandant for programs and resources.

“We need that money for two or three more years,” he said. “Even if you put all of that equipment on a ship today and it got back here in a couple months, I don’t have the capacity in the depots to push it all through. We’ve tried to migrate as much of our training and field maintenance as we can into the base budget, but when we look at a sequestered budget in 2016 and out, what we would have to take out would be either our modernization programs or our force structure. I don’t think we want to get any smaller, and I don’t think the nation can afford to have us any smaller.”

The other services have the same concerns about reset.

The Navy has had relatively few boots on the ground in Afghanistan, but Vice Adm. Joseph Mulloy, the deputy chief of naval operations for integration of capabilities and resources, said an increased operational tempo over the past decade has meant the fleet has missed a lot of maintenance opportunities. It is counting on OCO to make those up, he said.

“The ships that deployed from 2006 to 2011 had to do extra steaming, and we had to cut short their maintenance availabilities,” he said. “It was in Norfolk or Guam, but it had to go. Now, the next time that boat comes due, it needs to go into dry dock and finish that maintenance. It’s about $1.8 billion, but it needs to be done over a number of years.”

OCO funds hit their high mark in 2008 at $187 billion, and this year, even with Afghanistan operations drawing down, Congress gave DoD $85 billion, $3 billion more than the year before.

The Defense Department has not submitted an OCO request for 2015 because the U.S. hasn’t yet reached an agreement with the Afghan government that would govern any residual troop presence once U.S. forces end their current engagements, but the Pentagon suggested a “placeholder” figure when it submitted the rest of its budget request: $79 billion.

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