Defense Budget and Financial Management

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.

President requests additional FY2017 funding for DoD operations against ISIL

Wednesday, November 16th, 2016

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President Obama sent Congress a FY2017 budget amendment request last week that would provide $5.8 billion in additional Overseas Contingency Operations (OCO).  This funding will support U.S. military operations in Afghanistan and operations against the Islamic State of Iraq and the Levant (ISIL) in the Middle East

The FY 2017 OCO amendment of $5.8 billion brings the FY 2017 total Department of Defense (DoD) OCO request to $64.6 billion.

Congressional defense oversight committees have been pressing the administration to submit a request for additional funding to support increased operations since the president announced this summer that 8.400 military personnel would stay in Afghanistan and because of the increased pace of operations against ISIL.

Almost 50 percent ($2.8 billion) of the total $5.8 billion budget amendment request would be for operations and force protection including:  special pays and subsistence for deployed personnel, operating tempo, communications, and deployment and redeployment costs.  Base and installations support costs and support for forces located in other parts of the U.S. Central Command (CENTCOM) region account for 22 percent ($1.3 billion) of total costs.  Funding for the Afghan National Defense and Security Forces Aviation Modernization program is 14 percent of the total ($0.8 billion). 

Other costs include: classified programs ($0.4 billion); Iraq Train and Equip Fund to support Kurdish Peshmerga forces ($0.3 billion); equipment and reset ($0.2 billion); and Joint Improvised-Threat Defeat Fund ($0.1 billion).

Looking at the total request by operation, $3.4 billion would be for Operation FREEDOM’S SENTINEL (OFS) in Afghanistan.  These additional funds would support the higher troop level (8,400) approved by the president ($2.5 billion) and provide for Afghan aviation modernization ($.8 billion).

An additional $2.4 billion would be for Operation INHERENT RESOLVE (OIR) in Iraq to support about 5,500 U.S personnel (2,000 more budgeted) deployed to the U.S. Central Command area of operations, support Kurdish Peshmerga forces, and address emergent force protection issues.  The additional forces approved by the president are providing training and advice to coalition partner security forces in efforts to defeat ISIL.  

The budget amendment would also provide $20 million for the incremental operational costs for Operation ODYSSEY LIGHTENING (OOL) in Libya.

Details of the DoD request are available on the DoD Comptroller’s website.

The president also requested an additional $5.8 billion for the State Department and the Agency for International Development (AID).  These funds would be used to “implement the diplomatic engagement, governance, and stabilization components” of the administration’s strategy against ISIL, and humanitarian aid for areas in Iraq liberated from ISIL control. 

Support included in this funding are: removal of unexploded ordnance; immediate stabilization needs in areas liberated from ISIL control; police training in the Northern Nigeria region and other areas affected by Boko Harem/ISIL; longer term stabilization needs for areas liberated from ISIL control; technical assistance to the transitional government in Libya and support for the political process in Yemen; humanitarian assistance; and increased embassy security.

Defense Business Board recommends the new administration run DoD like a “modern business”

Thursday, November 10th, 2016

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Presidential transition teams open for business this week at federal agencies to provide for the transition of power to the new administration. 

A prime subject during transition at the Department of Defense is usually how to make the department run more efficiently and effectively.  Each new administration develops its own set of defense management and acquisition improvement reforms aimed at making the Office of the Secretary of Defense (OSD) and the Military Services operate better.

The Defense Business Board (DBB) has developed a set of recommendations for the DoD transition team directed at making DoD run more like a “modern business.” The DBB is an authoritative, advisory committee that provides independent advice to DoD’s senior leadership on the use of best business practices and management improvement programs for DoD.

In its report, Focusing a Transition:  Challenges Facing the New Administration, the DBB opines that the defense department is “too costly, too slow and often unable to devote the resources necessary to enhance modernization and readiness.”  The report further states that “without a disciplined effort to rein in costs and overhead, the Department will not only be unaffordable, it will be unable to swiftly and shrewdly adapt to maintain superiority over determined adversaries.”  The goal, the report says, should be to free up more resources for readiness improvement and modernization efforts.

The DBB stresses that the department must develop and aggressively execute an “outcomes-based program of change to overcome bureaucratic inertia.”  The Board argues that “organizations, contracts, activities, etc., must be eliminated.”  It warns against only making marginal piecemeal cuts.  Doing so, the report emphasizes, “leaves the door open for adding them back during the next budget cycle.”  Change must come as a result of “major surgery,” the Board says.

To ensure that tough decisions are made and the whole department is focused on achieving the necessary changes, the DBB argues that the role of the Deputy Secretary of Defense must be redefined.  The Deputy does not pay enough attention to the primary function—managing the department, the report states. The Deputy spends too much time away from the Pentagon representing the Secretary or attending to coordination with other agencies, allies, or the White House.

The DBB strongly recommends that the Deputy must become the department’s Chief Management Officer (CMO) in fact as well as in name because managing the department demands the full-time attention of the CMO.

To this end, the DBB recommends that the Deputy must “drive the Department to continue to shrink overhead.”  As an active Chief Management Office, the report urges the Deputy to: 1) Exert “constant fiscal discipline;” 2) Streamline processes to be “more agile and responsive;” 3) Make speed and cost “valued commodities;” 4) Cut layers of decision making and increase accountability and track performance; 5) Address “an unaffordable health care system and pension benefits;” and 6) Establish metrics and track written goals and objectives for senior leaders.

In addition, the DBB recommends that the department engage in a “zero baseline” effort to identify and eliminate duplicate and redundant functions and capabilities, and the Service Secretaries become an executive committee to support the secretary’s priorities.  The DBB stresses that the department’s civilian and military leaders must “collectively drive tradeoffs that support the Department’s National security priorities, often at cost to their individual organizational priorities.”

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