Defense Budget and Financial Management

Congress extends the FY2017 CR until April 28, 2017

Saturday, December 10th, 2016

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Final action on the 11 remaining FY2017 appropriations bills must wait until the new Congress and the new administration take office in January.

With the Dec 9 expiration date for the current continuing resolution (CR) looming, the House voted (326-96) and the Senate went along (63-36) to approve an extension of the CR (H.R. 2028) until April 28, 2016.

There was a bit of late-night drama in the Senate as Sen. Joe Manchin (D-WVA) and other Senators from coal-producing states threatened to block passage of the bill unless health care benefits for miners were funded for the entire year.  Realizing they did not have the votes to block the bill and not wanting to shut down the government, Sen. Manchin and his supporters relented, vowing to continue the fight in the new Congress.

Commenting on the bill, House Appropriations Committee (HAC) chairman Rep. Hal Rogers (R-KY) called the CR a “band aid that will give the next Congress the time to complete the annual Appropriations process, and in the meantime take care of immediate national funding needs.”

Sen. Thad Cochran (R-MS), chairman of the Senate Appropriations Committee (SAC) agreed.  “This continuing resolution is not a substitute for full-year appropriations, but it is necessary to sustain the operations of the federal government until we can complete consideration of the remaining FY2017 appropriations bills,”

Rogers cautioned against the idea of using a CR to fund the government for the full year.  “This type of short-term spending should not be the answer to funding the federal government for the year,” he said.  He urged the next Congress to compete work on all remaining FY2017 appropriations bills “to ensure the proper and responsible use of tax dollars, to provide necessary resources for important programs and services, and to hold federal agencies accountable to the American people.”

The CR essentially allows agencies to fund FY2017 programs at the FY2016 level ($1.07 trillion for the total government) for almost five months.  During the CR period an additional $5.8 billion is provided to the Department of Defense (DoD) and $4.3 billion to the State Department of the Agency for International Development (AID) “to support  military and diplomatic efforts to fight ISIS and terror around the globe.”

The bill also includes $4.1 billion for disaster relief needed to respond to Hurricane Matthew, floods, droughts, and other weather-related events.  Of this amount, the Army Corps of Engineers will use $1.025 billion for flood and coastal protection projects and the Federal Highway Emergency Relief program will apply $1 billion for repair of damaged highways.  Community Development Block Grants in the amount of $1.8 billion will be used for recovery and rebuilding efforts for individual home damage caused by severe storms and hurricanes.

An additional $872 million is provided in the bill for “critical medical research, drug approval, and drug abuse efforts. Of this amount, $500 million is provided to states response to the opioid abuse crisis.  The bill also provides $170 million to communities (e.g., Flint, Michigan) affected by drinking water contamination.

In DoD-related activities, the CR includes provisions that allow funding to be used for the Ohio Class Submarine Replacement program, Apache Attack Helicopter and Black Hawk Helicopter multiyear procurements, and the KC-46A Tanker program.

The CR includes provisions preventing a pay increase for Members of Congress, providing $45 million (fully offset) for retired miners covered under the United Mine Workers Association 1993 Benefits Plan, and allowing funding for NASA’s Deep Space Exploration Program.

The bill also provides for an expedited process in the Senate next year for language that would allow retired Marine Corps Gen. James Mattis to be considered for the post of Secretary of Defense.  Mattis, who has been named the as prospective nominee for Secretary of Defense, retired from active service three years ago.  Because current law prohibits such service until a retired officer has been out of the service for seven year, the senate would have to pass a waiver for his nomination to be considered,

President Obama is expected to sing the bill.

Congress approves compromise FY2017 Defense Authorization bill

Friday, December 9th, 2016

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The Senate passed the final FY2017 Defense Authorization bill yesterday with broad bipartisan support, 92-7.  The bill, which had been worked out by House and Senate committee negotiators, overwhelmingly passed the House (375-34) last week.

The bill authorizes force levels, programs, and policies (including military pay raises) for Department of Defense (DoD) budgets and the programs and policies for the Department of Energy (DoE) nuclear weapons program.  Appropriations bills provide actual funding.

House Armed Services Committee Chair Rep. Mac Thornberry (R-TX) said the bill “focuses on our troops, America’s most important national defense resource.  It provides them a full pay raise for the first time in four years, it stops layoffs of our military personnel and actually increases the end strength of our Armed Forces.”

The compromise bill authorizes a total of $619 billion, including $532 billion for the FY2017 DoD base budget and $19 billion for in discretionary budget authority for the Department of Energy (DoE) nuclear weapons program.  The bill authorizes an additional $8 billion in mandatory spending and about $60 billion for Overseas Contingency Operations (OCO).

The legislation authorizes funding to support a 2.1 percent military pay raise, higher than the 1.6 percent raise proposed by the president.  The bill does not make any changes to out-of-pocket expenses by servicemembers or military retirees and makes no changes to the Basic Allowance for Housing (BAH).

The bill provides two TRICARE options—managed care option and no-referral network option—for servicemembers (and families) and retires, and extends the hours for care at Military Treatment Facilities (MTF) primary care clinics.

The bill does not require women to register for the draft, but directs the preparation of a study of the utility of the Selective Service.

The bill rejects the administration’s plan to draw down troop levels and adds 16,000 Army end strength and 3,000 Marine Corps end strength in 2017.

The conference committee also rejects an administration proposal for another Base Realignment and Closure Commission (BRAC) round.

The bill includes major reforms of the Department of Defense (DoD) organization.  The role of the Chairman of the Joint Chiefs of Staff (JCS) as the principal, independent military advisor to the president is preserved and the roles of the Combatant Commanders are clarified.  The size of the National Security Council (NSC) staff is capped at 200 under the bill.

In addition, the bill replaces the Under Secretary of Defense for Acquisition, Technology, and Logistics (AT&L) with an Under Secretary of Defense for Research and Engineering (R&E) and an Under Secretary of Defense of Management and Support and creates a new Assistant Secretary of Defense for Acquisition Policy and Oversight to set defense-wide acquisition and industrial base policy.

The bill now goes to the president for signature.  The president had earlier threatened to veto the bill, but the White House has given no indication of the president’s intent now that the bill has passed.

OMB issues revised guidance on conference participation

Tuesday, December 6th, 2016

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The Office of Management and Budget (OMB) has revised its guidance on policies and practices regarding U.S government employees and agencies participating in conferences.

In a memo to federal department and agency heads, OMB Director Shaun Donovan amended the guidance OMB issued in 2012 (OMB Memorandum M-12-12) that reduced travel spending and instituted tough management controls for conference participation.

The 2012 guidance was issued to comply with the president’s direction to cut administrative expenses. It was also in response to an Inspector General report that in 2010 the General Services Administration (GSA) spent close to one million dollars on a training conference in Las Vegas.

Donovan said that since 2012, agencies “have achieved significant savings in conference spending and strengthened internal controls to monitor travel and conference-related activities.” Donovan emphasized the revised guidance acknowledges the lessons learned and the actions agencies have taken, but also recognizes the challenges faced over the past few years, especially “reduced opportunities to perform agency functions, present scientific findings and innovations, train, recruit, and retain employees, or share best practices.”

The revised guidance “amends policies and practices for Federal conference sponsorship, hosting, and attendance.” The guidance stresses the importance of conferences and eases some approval requirements. But, it still requires detailed annual reporting on conference participation.

In the memo, Donovan stresses that OMB understands the important role conferences play in the operations of the federal government.  He said conferences enable “the sharing of knowledge among large groups, bringing together dispersed communities, or providing opportunities for interaction, collaboration and presenting cutting edge work.”

Under the revised guidance, agencies are directed to continue to ensure:1) “that Federal funds are used only for necessary and appropriate proposes” and 2) that all conference attendance and expenses are appropriate to the agency mission and comply with the Federal Travel Regulation (FTR) and Federal Acquisition Regulation (FAR).

OMB directs agencies to designate an official “to approve estimated spending excess of $500,000 on a single conference and submit justification that attendance is the most cost-effective way to achieve a “compelling purpose.”

Agencies should make sure that decisions on conference participation and attendance are made in a timely manner “to ensure that conference attendees are able to commit to participation in a timely manner and take advantage of cost-savings measures such as early registration and advance travel bookings,” according to the memo. To prevent lengthy review processes, OMB states that agencies “should pre-approve, as appropriate, employee attendance at known recurring conferences.

OMB also requires agencies to report conference expenses on their official websites. OMB directs agencies to report by January 31 of each year a “description of all agency-sponsored conferences from the previous fiscal year where net expenses exceed $100,000. If net costs for an agency-sponsored conference exceed $500,000 the website should identify the approving official and the rational for approval.

Carter urges Congress to avoid long-term CR for FY2017

Friday, December 2nd, 2016

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With Congress appearing ready to consider a long-term continuing resolution (CR) well into next year (possibly until May 2017), Secretary of Defense Ash Carter warned of the detrimental effects on U.S. national security of such action.

In a letter to congressional leaders, Carter called the prospect of operating under a CR for nearly two-thirds of the fiscal year “unprecedented and unacceptable.”  He stressed that DoD has never operated under a long-term CR during a transition to a new administration.

The longer the length of the CR the more damage will be done to DoD’s capabilities because DoD will be “locked into last year’s budget and last year’s priorities,” Carter said.  He cited the most harm will be resulting shortfalls in operations and munitions accounts, especially those accounts funding counterterrorism operations. 

Carter emphasized that operating under a CR means that DOD will not have the authority to begin new programs, increase program production rates, or start multi-year procurement projects.  He said in FY2017 DOD will need 57 new starts and 87 increases in program production rates.  Delaying these actions during a CR would undercut important programs (e.g., KC-46 Tanker, helicopter buys, and replacement of the Ohio submarine).

Carter said if Congress can’t complete action on the FY2017 DoD appropriations bill by the time the current CR runs out on December 9, it should at least keep the CR as short as possible to allow time to finish the bill.

FY2017 Military Construction/VA appropriations bill stands alone as Congress seen likely to extend CR into next year

Tuesday, November 22nd, 2016

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With the end of the current FY2017 Continuing Resolution (CR) set to run out on December 9, Congress appears likely to pass an extension until March 2017.

Congressional Republicans, who now control both houses of Congress seem ready to defer action on the final 11 remaining FY2017 appropriations bills until March 2017.  There had been movement in the House to propose an FY2017 Omnibus Appropriations bill.  But, last week House Appropriations Committee Chairman Rep. Harold Rogers (R-KY) announced that his committee will start work on a CR that would keep the government operating until March 31, 2017.

“While I’m disappointed that the Congress is not going to be able to complete our annual funding work this year, I am extremely hopeful that the new Congress and the new Administration will finish these bills.” Rogers said.  Rogers also said he hoped “regular order” would return to the appropriations process next year “so that the damaging process of Continuing Resolutions will no longer be necessary.”

Some Senate republicans, including Senate Armed Services Committee (SASC) chairman Sen. John McCain (R-AZ) pushed back against the House movement towards extending the CR into next year.  McCain has been working with his House counterparts to try to complete a compromise version of the FY2017 Defense Authorization bill.  However, without a completed FY2017 DoD Appropriations bill, final action on the defends policy bill will likely also be deferred until next year.  Congressional Democrats have been pushing for a series of “minibus” appropriations bills, batching the remaining 11 bills.

If that the CR is extended into next year, the FY2017 Military Construction/Veterans Affairs appropriations bill would be the only appropriations bill to become law this year.  The FY2017 MilCon/VA bill was passed and signed into law in September along with the CR extending FY2017 government funding until December 9.

The Military Construction portion of the FY2017 MilCon/VA Appropriations Act provides $7.75 billion for military construction projects, family housing, Base Realignment and Closure (BRAC), and the NATO Security Investment Program. This amount is $280 million above the president’s request. The Act also funds $172 million in the Military Construction Overseas Contingency Operations (OCO) appropriation.

Funding for specific active and reserve component military construction projects in the Act is set at $5.7 billion.  In addition, the Act provides another $615 million in FY2017 for the Army ($41 million), Navy and Marine Corps ($316 million), Air Force ($150 million), Army national Guard ($67 million), Air National Guard ($11 million) and Army Reserve ($30 million) to be used for projects identified in unfunded priority lists identified by the military services and provided to Congress.

The Act fully funds the request for Family Housing projects ($1.3 billion) and the NATO Security Investment Program ($178 million) to support fixed and mobile infrastructure projects for NATO operations.  The DoD Base realignment and Closure Account is provided $240 million for cleanup and disposal of property under the four closure rounds already approvedThe Act also rescinds $283 million from prior military construction appropriations Acts.

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