Highlights
News: The
House is expected to consider its annual defense appropriations bill
next week, which would allocate $519.2 billion for the Pentagon’s base
budget.
News: Politico
reports that a small group of senators, led by John McCain (R-AZ) and
Lindsey Graham (R-SC), are making progress in finding $110 billion in
savings that could be used to replace the sequestration of federal funds
scheduled to take effect early next year.
Reports: CBO
has published a new analysis of the Pentagon’s five year spending plan
which asserts that the department has underestimated the ten year costs
of its budget by $123 billion. Furthermore, CBO concludes that the
department’s FYDP would violate statutory spending caps implemented by
the Budget Control Act.
State of Play
Legislative: The House is expected to consider its annual defense appropriations bill
on the Floor next week, a measure that would provide $519.2 billion for
the Pentagon’s base budget, roughly $3.1 billion above the President’s
budget request. Several House members plan on offering a range of
amendments that would reduce the topline amount appropriated by the
bill, including a bipartisan amendment to be offered by Representatives
Mick Mulvaney (R-SC) and Barney Frank (D-MA) to reduce the bill’s total
amount by roughly $1.1 billion. Defense appropriations may be the last
spending bill considered by the House this fiscal year.
The Senate defense appropriations committee is waiting until the House
passes its military spending bill before marking up the Senate version,
which would provide $511.2 billion for the base defense budget, but
would also allocate $93.5 billion to the war funding account - $5
billion more than the President requested in his budget submission.
Senate Armed Services Committee Chairman Carl Levin says he hopes the Senate will be able to take up its version of the National Defense Authorization Act later this month,
even though the Senate’s Floor schedule is quite packed. If the upper
chamber is unable to bring the measure forward in July, it would only
have three weeks to consider it in the fall before the election and
forthcoming lame-duck session, during which Congress must tackle a
number of complex issues, including the expiration of the Bush-era tax
cuts as well as Fiscal Year 2013 appropriations and a compromise to ward
off scheduled sequestration cuts.
Meanwhile, Politico reports
this week that Sens. John McCain, Lindsey Graham, and a small group of
other senators are making progress in developing a compromise
alternative that would negate sequestration cuts for at least one year,
and are actively considering including some form of increased government
revenue as a means of preventing the automatic cuts. The group is
aiming to forge a compromise that would save $110 billion via a ratio of
3-1 spending cuts to revenue increases. According to McCain and
Graham, Republicans would need to agree on $40-50 billion in revenue
increases while working with Democrats to identify $60-70 billion in
spending cuts. And CQ Today quotes
an unnamed Congressional staffers saying that, “lawmakers are beginning
to talk about creating bipartisan, bicameral working groups to work out
a deal to avert sequester, but nothing has yet taken shape.”
At the behest of the Senate Budget Committee, the Congressional Budget Office has analyzed
the Pentagon’s five year budget plan (FYDP) and determined that it will
cost $123 billion or five percent more than the department estimates in
its budget submission. As a result, CBO concludes that the
department’s FYDP would violate the spending caps placed in law by the
Budget Control Act last August by $508 billion over ten years without
accounting for forthcoming sequestration cuts. In Fiscal Year 2013, CBO
estimates that the defense department budget is $14 billion above BCA
spending limits.
All of the defense spending and authorization bills currently under
consideration by Congress would also violate the Budget Control Act’s
spending caps, demonstrating that any compromise to avoid sequestration
and enact full-year appropriations for Fiscal Year 2013 will likely need
to amend the BCA to alter the discretionary spending caps and avoid
violating current law.
Executive:
After initially declining to testify before the House Armed Services
Committee on the impact of sequestration cuts to defense, acting Office
of Management and Budget director Jeffrey Zients has agreed to appear
before the panel during a committee hearing on August 1. Zients will
be joined by deputy defense secretary Ashton Carter. For the first
time, Zients has acknowledged
that OMB has indeed begun planning for sequestration, though Pentagon
officials are increasingly acting as if Congress will cut a deal to
avoid sequestration at least for one fiscal year, with Pentagon
spokesperson George Little commenting,
“We need to move beyond sequestration. And we believe that members of
Congress do want to get beyond it.” Perhaps in anticipation of the
August 1 hearing, a group of seven senators has written
fifteen major defense contractors requesting that they provide
information on the potential impact of sequestration cuts to their
contracts, workforce, and future plans.
Speaking at the Farnborough International Airshow in London, Boeing Mobility vice president Tommy Dunehew told reporters
that the latest order for 24 C-17 Globemasters, scheduled to be
completed in 2014, may be the last batch of C-17 cargo planes ordered by
the Pentagon for the foreseeable future. Textron Inc. has been awarded a $212 million contract
to begin development of a next-generation hovercraft called the Ship to
Shore Connector to transport Marines from their ships to beachheads.
The Ship to Shore Connector will replace the Landing Craft Air Cushion,
first constructed in 1982, which is all the more important to the
service since former Secretary of Defense Robert Gates cancelled the
Expeditionary Fighting Vehicle, an armed amphibious assault platform
which also would have transported Marines to shore.
As part of the 2005 BRAC process, the Army merged the Fort Lewis and
McChord Air Force Bases into one joint facility, which was originally
estimated to save $2.3 billion over twenty years. However, a recent GAO report
found that the 2005 BRAC will save significantly less money than
originally estimated, and that Lewis-McChord merger will in fact only
save $249 million over twenty years. And although Congress has
expressed its strong opposition to additional base closures and
realignments, the Air Force is moving forward with plans to consolidate Materiel Command centers
by moving some missions from Eglin Air Force Base in Florida to the
Wright-Patterson Air Force Base in Ohio and the Air Force Test Center in
California. However, if provisions included in the House National
Defense Authorization Act barring the administration from proceeding
with base closures is passed into law, then the Air Force will be forced
to undo the consolidation.
Pakistan has agreed to reopen NATO supply routes into Afghanistan,
which were closed late last year following an accidental attack on a
Pakistani border post by U.S. aircraft. Pakistan had recently demanded a
$5,000 per truck fee, however, it has agreed to retain the original fee
of $250 per truck following an apology by Secretary of State Hillary
Clinton for the accidental attack. During an interview this week,
deputy defense secretary Ashton Carter noted that removing U.S. military
hardware from Afghanistan will cost billions of dollars and prove much
more difficult than the recent redeployment of U.S. forces from Iraq.
Project on Defense Alternatives Perspective: CBO has published a new analysis
that serves as reasonable cause to accuse DoD of gaming the efforts by
the Administration and Congress to cut the deficit. The ten year DoD
budget reductions since the beginning of 2011 (the greatest percentage
of which were included in the Budget Control Act) were supposed to save
upwards of $475 billion. CBO estimates that at least $123 billion in
savings will be negated by the actual costs of current DoD budget plans.
Of course, the CBO estimate of the costs of plans does not mean that
they will be actually funded by Congress. But this discrepancy
certainly suggests that DoD is not planning to the budgets they are
submitting and that they expect they will have higher budgets when debt
and deficit reduction is no longer viewed as a top policy priority.
News and Commentary
A group of major defense contractors, led by Lockheed Martin, has
threatened to send out hundreds of thousands of pink slips to their
workers as a result of forthcoming sequestration cuts. The group claims
that the 1988 Worker Adjustment and Retraining Notification Act
requires them to notify workers of impending layoffs. However, labor
experts question whether this is simply a scare tactic on behalf of
defense contractors or if they are actually required under the law to
carry out such notifications. General Dynamics, another major defense
contractor, has stated that it will not join the Lockheed effort, citing
the lack of legal necessity and their concerns about the effect on
employee morale. (7/10/12)
CNN Security Clearance: Fighting terrorism softly
In an op-ed piece, former Representative Jane Harman (D-CA) laments the
“hijacking…of our national narrative” in which projecting military
power is increasingly seen as the primary role of the United States on
the global stage. Harman suggests that, not only must we win the
physical war with extremists, but “We need to win the argument.” She
identifies disaster relief as a prime opportunity to project American
values and exhibit generosity around the world. (7/10/12)
Winslow Wheeler discusses a recent GAO report on the F-35 that listed
cost growth of 42 percent in the aircraft program. However, Wheeler
shows that GAO summary data uses the 2007 baseline when the system
development actually began in 2001. When accounting for that, the cost
increase is actually closer to 70 percent. Wheeler commends GAO’s
assessment of the F-35’s service life as “unaffordable and simply
unacceptable in the current fiscal environment.” Lockheed Martin,
meanwhile, has dismissed the $1.1 trillion price tag DoD has put on the 55 year operating cost of the F-35. (7/10/12)
Defense News: IG Raps Army for Lax Cost Controls on Stryker Deal
In a recent report,
the Defense Department Inspector General (IG) criticized the Army for
failing to implement cost controls in its logistics contract for the
Stryker vehicle family. Allegedly, “managers failed to establish
effective means to tie the level of operational funding to the actual
workload needed to sustain the Stryker [and instead] relied on estimates
made years earlier.” The report estimates that $335.9 million has been
spent on maintaining excess inventory. (7/10/12)
The Washington Post: 13 minutes to doomsday
“Two decades after the end of the Cold War, one-third of U.S. strategic
forces, including almost all land-based missiles and some sea-based,
are still on launch-ready alert” writes the Post editorial
board. Some experts, including retired General James Cartwright, have
called for a reevaluation of the current policy that sets the necessary
time required to launch at 24 to 72 hours instead of the infamous “13
minute” timeframe. The editorial board notes that today the United
States and Russia have “as many as 1,800 warheads on alert at any given
time…both countries should ease off the alert status for strategic
forces.” (7/8/12)
A recent Congressional earmark ban has not only eliminated earmarks,
but also made it “difficult for watchdog groups and lobbyists to figure
out what’s going on.” Kate Brannan reports that generic increases in
program spending is the new and indiscernible manifestation of earmarks
that are more vulnerable to large funding shifts and much more
beneficial to contractors whose needs are still met by Congressional
champions. (7/5/12)
Reports
Congressional Budget Office: Long-Term Implications of the 2013 Future Years Defense Program (7/11/12)
Government Accountability Office: Electronic Warfare: DOD Actions Needed to Strengthen Management and Oversight (7/9/12)
Congressional Budget Office: Monthly Budget Review (7/9/12)
Government Accountability Office: Observations on the Navy's Use of Live and Simulated Training (6/29/12)
Government Accountability Office: The National Geospatial-Intelligence Agency's Technology Center Construction Project (6/29/12)
Government Accountability Office: Updated Costs and Savings Estimates from BRAC 2005 (6/29/12)
Government Accountability Office: Steps Taken to Better Manage Fuel Demand but Additional Information Sharing Mechanisms Are Needed (6/28/12)
Congressional Research Service: Criminal Prohibitions on the Publication of Classified Defense Information (6/26/12)
Congressional Research Service: Conventional Prompt Global Strike and Long-Range Ballistic Missiles: Background and Issues (6/7/12)
Congressional Research Service: Military Construction, Veterans Affairs, and Related Agencies: FY2013 Appropriations (6/5/12)
Government Accountability Office: Governance Mechanisms for Implementing Management Controls Need to Be Improved (6/1/12)
International Security: Testing the Surge: Why Did Violence Decline in Iraq in 2007? (Summer, 2012)
Department of Defense Chief Information Officer: Mobile Device Strategy (July, 2012)
