Congress passes FY2016 Defense Authorization bill, awaits presidential veto decision

Wednesday, October 7th, 2015


Today the Senate passed the FY2016 Defense Authorization bill (70-27) that reconciles the differences between the House and Senate versions of the bill. The House passed the conferenced bill last week (270-156).

The Senate vote sets the stage for a presidential veto that the White House has threatened ever since the House passed its version of the bill in May.

Although the president has expressed strong opposition to provisions about detainees at Guantanamo, the main White House concern is the $38 billion of base budget requirements that the bill includes in funding for Overseas Contingency Operations (OCO), which is considered emergency funding not constrained by the budget caps. Defense Secretary Ash Carter recommended that the president veto the bill. Earlier this year Carter told the Senate Appropriations Committee that this approach “risks undermining support for a mechanism – OCO – meant to fund incremental costs of overseas conflicts in Afghanistan, Iraq, and elsewhere.”

If the president vetoes the bill and the veto is upheld in Congress, the bill would go back to the House and Senate Defense Authorization Committees.

The conferenced bill authorizes a total of almost $612 billion, including about $496 billion for the Department of Defense (DoD) base budget and $89 billion for Overseas Contingency Operations (OCO). OCO funding includes $50.9 billion requested by the administration and $38 billion in base budget requirements for Operations and Maintenance (O&M) readiness requirements.

The bill also includes $18.6 billion for the Department of Energy (DoE) nuclear weapons program. An additional $7.6 billion is provided to meet the statutory requirements for DoD Concurrent Receipt payments.

The agreement approves the president’s request for a 1.3 percent military pay raise, lower than the 2.3 percent military raise included in the House-passed bill.

The bill rejects most of the administration’s proposals for TRI-Care pharmacy co-pays, but does approve an increase in co-pays for brand name and generic medications. Conferees also approved the president’s request to reduce the Basic Allowance for Housing (BAH) by one percent each year for four years.

The agreement denies the administration’s plan to retire the A-10 attack jet. It also rejects a proposal to initiate another Base Realignment and Closure (BRAC) round, but directs the preparation of a capacity study that reflects the current threat and “makes conservative assumptions about future end strength.”

The conference report includes reforms to military compensation and retirement. Under the agreement, new service members would be automatically enrolled in the Thrift Savings Plan (TSP) with a matching contribution from DoD starting in FY2018. The bill also would allow retirement-eligible servicemembers to take from 25 percent to 50 percent of their retirement benefit in a “lump sum.”

The agreement also includes significant reforms to defense acquisition. The bill calls for streamlining the acquisition process by advancing critical decisions, reducing the number of legal certifications, and giving acquisition program managers greater flexibility to address programmatic risk. The bill also makes permanent the “Defense Acquisition Workforce Development Fund,” requires workforce training on the commercial market, and authorizes expedited authorities for hiring and training the acquisition workforce.

The conference report also includes a provision allowing post commanders to establish procedures (by December 31, 2015) for servicemembers to carry firearms for self-defense on DoD installations, reserve centers, and recruiting centers.

In Memoriam – Ernest J. Gregory

Wednesday, October 7th, 2015


              It is with deepest sympathy that we report the passing of Ernest J. Gregory, former Principal Deputy Assistant Secretary of the Army (Financial Management and Comptroller), a past member of the ASMC National Executive Committee, and lifelong friend and mentor to the Department of Defense financial management community.  Mr. Gregory passed on October 5, 2015 after a valiant three month fight against a brain tumor.  Ernie is survived by his loving wife Johanna and his children Maura, Ernest Jr., and Jason. 

              Ernie was a lifetime member of ASMC, served as Vice President (Army) from 1999-2000, a speaker at innumerable Professional Development Institutes and Washington Chapter events, and a beloved colleague and friend.  His 37 years of service to his country touched and inspired the professional and personal lives of many of us.  His tireless efforts focused upon Financial Management support of warfighters and their families and driving high performance in financial operations.  Also, his dedication to the training, professional development, and mentoring of others inspired us all.  It is with deepest respect and gratitude that the ASMC National Executive Committee has approved naming an ASMC National Achievement Award in honor of Ernie and his contributions to defense financial management.  The first annual “Ernest J. Gregory” Comptroller/Deputy Comptroller Achievement Award will be presented to a deserving individual selected based upon his or her outstanding achievements in financial management in the position of a Comptroller or Deputy Comptroller at our National PDI in Orlando during the period 1-3 June 2016. 

              The following is excerpted from the remarks made on the floor of the Congress on the occasion of his retirement in 2004, by then Congressman Tom Davis, Chair of the House Government Reform Committee:

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              Mr. Speaker, it has come to my attention that Mr. Ernest J. Gregory is retiring after 37 years of exemplary Federal service, initially with the United States Air Force and then as a career civil servant in the Department of Defense (DoD). Mr. Gregory is a gifted leader and manager, and has served his country with dignity, honor and integrity.  Ernest Gregory, a native of the Commonwealth of Pennsylvania, is a 1967 graduate of the University of Scranton in Scranton, Pennsylvania, and holds a Bachelor of Science in accounting from that institution. He began his service to the Nation in 1968, when he entered the U.S. Air Force as an aircraft maintenance officer at the Strategic Air Command, Loring Air Force Base, Maine. 

              Upon completing his military term in 1972, Mr. Gregory was hired as a staff auditor for the U.S. Army Audit Agency in Philadelphia.

              In 1982, Mr. Gregory was selected to join the Army secretariat staff as assistant comptroller for internal review, office of the comptroller of the Army. He was a relentless master in reviewing financial management systems and integrating measures to address shortcomings uncovered during the process.

              In January 1993, the Army acknowledged Mr. Gregory's abilities and leadership, elevating him to the Senior Executive Service and the position of deputy assistant secretary of the Army for financial operations. As deputy assistant secretary, he was responsible for all Army policy, programs, systems and procedures associated with the service's accounting and finance operations, financial systems and internal review and controls. He took charge of combating fraud, waste and abuse.

              Mr. Gregory was again promoted in February 2002, when Ms. Sandra Pack, then assistant secretary of the Army (financial management and comptroller), chose him as her principal deputy. (When she departed the Army in December 2003, he succeeded Ms. Pack as acting assistant secretary and served in that role for eight months.) During his tenure as principal deputy, Mr. Gregory shared responsibility for the development, formulation and advocation of policies and programs to improve the efficiency and effectiveness of U.S. Army resource management. He took bold and decisive measures to improve business procedures, and tirelessly pursued financial system integration and streamlining of Army processes.

              On every day of his service to our country, Mr. Gregory demonstrated honor, integrity and personal courage. He projected the values and the broad perspective of the government, and provided the solid executive skills demanded by the American public. He helped to ensure that the Army was of the highest quality and was responsive to the needs, policies and goals of the Nation.

*     *     *

We will all miss Ernie and our most sincere condolences go out to his family.  The family asks that in lieu of flowers, donations may be made in Ernie's memory to either Voices Against Brain Cancer or The Wounded Warrior Project.  Please keep Ernie’s family in your thoughts and prayers and consider making a contribution to one of these great charities in Ernie’s name.  

OMB provides operating guidance to agencies for FY2016 CR

Tuesday, October 6th, 2015


The Office of Management and Budget (OMB) has issued guidance setting the rules under which federal agencies will operate during the FY2016 Continuing Resolution (CR) enacted (H.R. 719) last week. The CR period runs from October 1 through December 11, 2015.

Under guidance in a memo from Director Shaun Donovan, OMB will apportion (distribute funds to agencies to be available for obligation) funds automatically to appropriations accounts during the CR period, unless language in the CR provides for specific levels of funding or special rules.

The amount provided in the FY2016 CR is the “rate for operations provided in the applicable appropriations acts for fiscal year (FY) 2015 and under the authority and conditions provided in such Acts,” according to the OMB memo. The amount is net of any rescissions, plus or minus mandated transfers, and includes a 0.2108 percent reduction required in the CR (Section 101(b). However, funds designated for Overseas Contingency Operations/Global War on Terrorism and disaster relief are excluded from the 0.2108 percent cut.

OMB calculates the automatic apportionment rate by multiplying the annualized amount by the percentage of the year covered in the CR.  In this case the automatic apportionment rate is 19.67 percent to cover the 72-day CR period.

Not all accounts receive funding during the CR period.  Agencies cannot obligate funds for accounts for which no funding was included in an FY2016 appropriations bill that has been passed or reported out of committee in either the House or the Senate. If a program (PPA) within an account has not been funded (zero-funded) by the House or Senate, the account will receive an automatic apportionment and the agency can, at its discretion, fund the program within the account total.

The CR does provide limited authority (Section 112) to mitigate civilian furloughs during the CR period. The bill does not provide additional budget authority for this purpose, but allows OMB to apportion for civilian personnel compensation and benefits higher than the pro-rata share.  However, OMB advises that agencies must receive written pre-approval to receive a higher rate, but expects few if any written apportionments using this authority.

OMB advises that written requests for amounts higher than the automatic apportionment (“exception apportionments) must include a written justification based on legal grounds. OMB expects, according to the memo, to grant approval for such requests “only in extraordinary circumstances.”

Federal employee health insurance premiums to increase 6.4% in 2016

Thursday, October 1st, 2015


Health Insurance premiums for employees covered under the Federal Employees Health Benefits (FEHB) Program will increase an overall average of 6.4 percent in 2016, the Office of Personnel Management (OPM) announced this week.

This average increase is twice the increase registered in 2015 and higher than the increases in 2014 (3.7 percent) and 2013 (3.4 percent).

OPM attributed some of the increase to higher drug costs, which are a higher percentage of FEHB spending than private employers.

The FEHB program covers over 8 million people who can choose from among more than 250 health plans.  FEHB plans cover about 85 percent of all federal employees and 90 percent of federal retirees. According to OPM, FEHB is the largest employer-sponsored health benefits program in the U.S.

This year FEHB will offer a Self Plus One enrollment type that will provide coverage for an enrollee and one designated family member (spouse or child). Enrollees can switch to this enrollment type during the open season in November.

While premiums vary with each plan, enrollee’s average bi-weekly payments next year will increase by $5.50 for self-only and by $19.61 for family plans.  The federal government pays an average of 72 percent of total premium cost. Premiums for specific plans are available on the OPM website.

The Open Season for health, dental and vision, and flexible spending accounts will start on November 9, 2015 and end on December 14, 2015.  Open season allows federal employees and retirees to make changes to their plans and eligible employees to enroll in the plan of their choice.

Congress passes CR to keep government running until December 11

Wednesday, September 30th, 2015


This afternoon, the House passed (277-151) a Continuing Resolution (CR) that funds federal government agencies through December 11, 2015. In the final vote, 91 Republicans joined all voting Democrats (186) in passing the CR.

Earlier today, the Senate passed the CR 78-20 as 32 Republicans joined all 44 Democrats and two Independents (who caucus as Democrats) in voting for passage. The president is expected to sign the bill before the fiscal year begin tomorrow.

The final, fairly bipartisan votes today ended a dramatic week of action on the CR. Last Thursday, the Senate blocked a vote on a CR that would have defunded Planned Parenthood. The 47-52 vote fell far short of the 60 yes votes needed to proceed to a vote. Eight Republican Senators joined 42 Democrats and two Independents in voting against the motion. Then on Monday, the Senate voted 77-19 to proceed to a vote on a CR that does not defund Planned Parenthood.

The CR essentially allows agencies to fund FY2016 programs at the FY2015 level ($1.017 trillion for the total government).  The CR also includes funding for Overseas Contingency Operations (OCO) at an annual rate of $74.8 billion and provides $700 million in emergency funding to fight wildfires. The bill also extends authority for the Federal Aviation Administration (FAA) for six months. During the CR period, no new starts are permitted nor are programs allowed to increase production rates above the FY2015 rate.

The stage is now set for House and Senate leaders to work with the White House to agree on a budget deal before the CR ruins out on December 11. House Speaker John Boehner (R-OH) and Senate Majority Leader Mitch McConnell (R-KY) want to begin talks with the White House on a two-year deal. House Minority Leader Nancy Pelosi (D-CA) and Senate Minority Leader Harry Reid (D-NV) have been pressing Republicans for months to start discussions on a deal.

However, the bipartisan nature of the final votes on the CR in the House and the Senate today mask the deep divisions that remain between Republicans and Democrats on FY2016 and future appropriations.

Speaker Boehner is scheduled to resign at the end of October and many House Republicans will press for their new leaders to take a hardline position on defense increase, while maintaining budget caps. This would mean cutting nondefense programs, which the Democrats and the White House strongly oppose. At the same time, Senate Democrats continue to threaten to block votes on FY2016 appropriations bills (none of which have moved through Congress) until budget deal discussions show progress. And, the fight to defund Planned Parenthood is not finished.

So, while one fight on FY2016 appropriations has ended, a much larger one, with possibly far greater implications looms.

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