Defense Budget and Financial Management

OMB signals intent to exempt Military Personnel accounts from potential sequester in FY2016

Thursday, August 13th, 2015

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The Office of Management and Budget (OMB) has notified Congress that Military Personnel accounts will be exempt from across-the-board cuts if sequestration is implemented in FY2016.

In a letter to the House and Senate this week, OMB Director Shaun Donovan said the president intends “to exempt all military personnel accounts, including Coast Guard personnel accounts, from any discretionary cap sequestration in FY 2016, if a sequestration is necessary.”

Donovan said the Balanced Budget and Emergency Deficit Control Act of 1985 authorizes such an exemption if Congress is notified by August 10.   The president also exempted military personnel accounts from sequestration in FY2013 and FY2014. Congress and DoD have routinely exempted Military Personnel accounts when implementing across-the board cuts to defense budgets.

Exempting military personnel accounts will mean that cuts to other DoD accounts will be increased if sequester goes into effect, Donovan noted. Unless an agreement is reached to stop sequestration, OMB, in its report on sequestration issued in February, estimated the FY2016 defense spending cap would be reduced by $53 billion. The report also sets the potential cuts to nondefense accounts at $37 billion.

Donovan said the exemption “is considered to be in the national interest to safeguard the resources necessary to compensate the men and women serving to defend our Nation and to maintain the force levels required for national security.”

DoD Secretary Ash Carter has warned Congress that if sequestration returns in FY2016 “our nation would be less secure.” Carter also said that he would join other senior administration officials in recommending the president veto any bill that “locks in sequestration,” because it would be “unsafe and wasteful.”

Navy chief issues Navigation Plan for 2016-20

Thursday, August 6th, 2015

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ADM Jonathan Greenert, Chief of Naval Operations (CNO), issued the Navy’s Navigation Plan for 2016-20 that describes how the Navy will use its resources to sustain a “balanced and capable force.”

The Navigation Plan, Greenert said “highlights our Navy’s key investment’s which support missions and functions outlined in the defense strategic guidance (DSG), Sustaining U.S. Leadership Priorities for 21st Century Defense, and the Quadrennial Defense Review.”

Greenert said “the Navy must have the capability and capacity to conduct war at sea, and win decisively through: deterrence, sea control, power projection, maritime security, and domain access [including cyberspace and the electromagnetic spectrum].”

The Plan emphasizes that “forward naval presence is essential to strengthening alliances and partnerships, providing the secure environment necessary for a global economic system based on the free flow of goods, promoting stability, deterring conflict, and responding to aggression.” The five-year Navy’s budget plan provides for a fleet of about 115 ships by 2020 with an increased presence of some 36 ships in the Middle East. “Innovative, low-cost and small-footprint approaches” will be utilized in the AFRICOM and SOUTHCOM areas, according to the Plan.

Greenert emphasizes that supporting ready sailors, civilians, and families will “remain the foundation of the Navy’s warfighting capability.” He acknowledges that the continuing high demand for Naval forces worldwide is stressing the force, but says the budget plan “continues to provide services and support to ensure that our people remain resilient and ready.”

The budget “emphasizes and rewards sea duty by continuing increased sea duty pay, sea pay premium, and critical skill retention pays,” Greenert stressed. The budget plan uses savings from compensation reforms to improve quality of service for sailors, provide more realistic training, and promote use of smart technology devices.

House Committee approves FY2016 Coast Guard funding

Monday, July 20th, 2015

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Last week, the House Appropriations Committee (HAC) approved FY2016 appropriations for the Coast Guard, which are included in the Department of Homeland Security appropriations bill.

This marks the 12th and final FY2016 appropriations bill approved by the House Appropriations Committee (HAC).

HAC chairman Harold Rogers (R-KY) said, “all committee work on funding measures [for FY2016] –the first time this has happened since 2009.” The full House has passed six bills, (Commerce/Justice/State, DoD, Energy and Water, Legislative, Military Construction/Veterans Affairs, and Transportation/HUD).

The HAC approved $8.5 billion in FY2016 discretionary appropriations (to be appropriated by Congress) for the Coast Guard, $361 million more than the budget request. The bill also identifies $1.6 billion in Coast Guard mandatory spending, including retired pay. The HAC bill does not include Coast Guard funding for Overseas Contingency Operations (OCO).

Operating expenses totaling $6.9 billion are funded in the bill, about $77 million higher than the request.  The bill fully funds a military pay raise, but does not contain funding for a civilian pay raise. Funding would be increased by $14 million for critical enlistment and extension bonuses and $55 million for critical depot maintenance programs.

The bill would increase the request for acquisition, construction, and improvements by $284 million to $1.3 billion. The bill fully funds the request for six Fast Response Cutters (to replace the aging 110-foot patrol boat fleet) and adds $70.5 million for design and construction of the Offshore Patrol Cutter (OSP), a high acquisition priority. An Additional $95 million is included to buy the 13th HC-130J, $82.7 million for Shore Facilities construction (aviation facilities +$31 million, ship lift facility +$20 million, and training center +$31.7 million), and $21 million for Coast Guard housing.

The HAC also proposes $20 million in rescissions from prior-year programs.

The Senate Appropriations Committee (SAC) approved its version of the FY2016 Homeland Security Appropriations bill last month. The SAC bill provides $8.7 billion for Coast Guard discretionary appropriations, $570 million above the request. The bill also includes OCO funding of $160 million for the Coast Guard.

Army reveals plan to reduce force structure and cut 40,000 troops

Monday, July 13th, 2015

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Last week the Army announced its plan to further reduce force structure in 2016 and 2017 and cut troop strength by another 40,000 by 2018. The plan would also involve the reduction of 17,000 army civilian employees.

Force structure cuts “will best posture a smaller Army to meet global commitments,” according to a press release. These cuts will involve reductions in headquarters, cuts to brigade combat teams and enabler and generating forces, changes to operational force designs, and changes as a result of the Aviation Restructure Initiative.

Headquarters reductions will focus on headquarters commanded at the two-star and above level. The number of Army Brigade Combat Teams (BCTs), about 4,000 soldiers each, will drop to 30 in FY2017 down from a wartime high of 45. Two BCTs (Fort Benning, GA and Joint-Base Elmendorf-Richardson, Alaska) will convert into maneuver battalion task forces (about 1,050 soldiers each) by 2017.

Active Army troop strength will fall from 490,000 to 450,000 by the end of FY2018 (15,000 in FY2016, 15,000 in FY2017, and 10,000 in FY2018) under the plan. In FY2012, the Army’s active strength was 570,000. Previously, the Army had announced a cut of 80,000 from that level to be achieved in FY2017.

Although the Army’s plan will affect 30 installations, much of the Army’s troop strength cuts will be at six installations: Fort Benning, GA, -3,402; Fort Hood, TX, -3,350; Joint Base Elmendorf-Richardson, AK -2,631; Joint Base Lewis-McChord, WA -1,251; Schofield Barracks, HI -1,214; and Fort Bliss, TX -1,219

The previous 80,000 cut was to be achieved, for the most part, by eliminating temporary increases and reductions in Europe. To meet the additional 40,000 cut, the Army hopes to use attrition as much as possible, but will also use continuing officer and enlisted involuntary separations and early retirement boards.

The Army will also reduce civilian strength by 17,000 during FY2016 and FY2017. This reduction comes on top of 8,000 civilian cuts previously made. The Army hopes to achieve the 17,000 civilian reduction “through attrition and not filling currently unfilled positions.”

These decisions are being forced by ongoing budget constraints, according to Lt. Gen Joseph Anderson, Army Deputy Chief of Staff for operations and plans. “In the end, we had to make decisions based on a number of strategic factors, to include readiness impacts, mission command and cost,” he said.

However, if sequestration is not resolved before the automatic cuts go into effect in FY2016, the Army stresses that it could be forced to cut troop strength by another 30,000 (to 420,000) by the end of FY2019. This would produce a 26 percent reduction (-150,000) over seven years. If this should occur, the Army warns that the force “would be incapable of simultaneously meeting current deployment requirements and responding to the overseas contingency requirements of the combatant commands.”

National Military Strategy 2015 released by JCS

Thursday, July 9th, 2015

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The Joint Chiefs of Staff (JCS) has released the 2015 National Military Strategy describing how the U.S. will use its Joint Force to meet current and future security challenges presented in an increasingly complex global security environment.

Describing the current security environment, Gen. Martin Dempsey, Chairman of the Joint Chiefs of Staff (JCS), said “we now face multiple, simultaneous security challenges from traditional state actors and transregional networks of sub-state groups—all taking advantage of rapid technological change.” Dempsey stressed that conflicts will come faster, last longer, and increasingly have implications for the U.S. at home.

In a press conference, Dempsey said while the United States still has the most powerful military force, other countries continue large investments in military capabilities and the gap is closing. The military strategy calls for “greater agility, innovation, and integration’ and reinforces the need for the U.S. to stay globally involved. Just as important, Dempsey said, the strategy “renews our professional commitment to develop leaders who will bring this strategy to life.”

In describing the strategic environment, the Strategy identifies Russia, Iran, North Korea, and China as countries that “pose serious security concerns” to the U.S. and its allies.

Security contributions by Russia in counternarcotics and counterterrorism are noted, but the Strategy charges that “Russia’s military actions are undermining regional security directly and through proxy forces.” It lists a number of agreements (e.g., UN Charter, Helsinki Accords, and Intermediate-Range Nuclear Forces Treaty) Russia has signed, but has violated by these actions.

Iran‘s pursuit of nuclear and missile delivery technologies and its support for terrorism “has undermined stability in many nations, including Israel, Lebanon, Iraq, Syria, and Yemen,” the report charges. North Korea’s pursuit of nuclear weapons and ballistic missile technology in the face of demands to cease such activity is a direct threat to the Republic of Korea and Japan, according to the report.

China could pose a threat to the United States because of its actions in the Asia-Pacific region, the report stresses. However, the report also encourages Chine to “become a partner for greater International security” by settling regional issues “without coercion.”

Under the U.S. military strategy, the military supports activities that advance the security of U.S citizens, allies, and partners, a strong economy, respect for universal values, and a “rules-based international order” that fosters peace, security, and opportunity. To ensure the survival of the nation and prevent a catastrophic attack on U.S. territory, the military seeks to: deter, deny, and defeat state adversaries; disrupt, deny, and defeat violent extremist organizations (VEO), and strengthen allies and partners.

The Strategy calls for a “Joint Force capable of swift and decisive force protection around the world.” This Joint Force’s globally integrated operations includes: Maintain a Secure Nuclear and Effective Deterrent by keeping strategic forces at a high state of readiness; Provide a Global, Stabilizing Presence around the world; Combat Terrorism with “sustained pressure using local forces augmented by specialized U.S. and coalition military strengths; Counter Weapons of Mass Destruction; Deny an Adversary’s Objectives with “highly-ready, forward-deployed forces, [and] well-trained and equipped surge forces at home;” Respond to Crises and Conduct Limited Contingency Operations; Conduct Stability and Counterinsurgency Operations “working with interagency, coalition, and host-nation forces;” Provide Support to Civil Authorities to work with civilian first-responders to deal with natural disasters and other domestics events; and Conduct Humanitarian Assistance and Disaster Response to deliver “life-sustaining aid to desperate people all around the world.”

The Strategy emphasizes innovation and efficiency to meet U.S. strategic objectives. This includes “promoting greater interoperability with joint, interagency, and international partners while encouraging action through decentralized execution.” The Strategy notes the existence of a resource-constrained environment t requires achieving savings through a more effective acquisition process (Better Buying Power 3.0) and reducing unneeded overhead and streamlining operations.

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