DoD on the Hill

Carter confirmed as Secretary of Defense

Friday, February 13th, 2015

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Yesterday, the Senate voted 93-5 to confirm Ashton Carter as the 25th Secretary of Defense. President Obama nominated Carter in December and the Senate Armed Services Committee cleared Carter’s nomination earlier this week 26-0.

Carter succeeds Chuck Hagel who announced his resignation in November, but has continued in service until a new secretary is confirmed and installed.

Carter served as Deputy Secretary of Defense from December 2011 to December 2013. Prior to becoming Deputy Secretary, he was Under Secretary of Defense for Acquisition, Technology, and Logistics, a post he held from 2009 to 2011. Carter also served in the Clinton administration as Assistant Secretary of Defense for international Security Policy from 1993 until 1996. 

During his Senate confirmation hearing (held February 4), Carter’s nomination was generally applauded by members of the Senate Armed Services Committee (SASC). SASC chairman Sen. John McCain (R-AZ) called him “one of America’s most respected and experienced defense professionals.” Ranking SASC member Sen. Jack Reed (D-RI) said Carter was “uniquely qualified to lead the Department of Defense.”

President Obama praised Carter’s confirmation in a statement from the White House. “With his decades of experience, Ash will help keep our military strong as we continue the fight against terrorist networks, modernize our alliances, and invest in new capabilities to keep our armed forces prepared for long-term threats, Obama said.

Carter is expected to be sworn in next week.

Proposed Senate legislation would penalize DoD for failure to achieve audit readiness by 2017

Thursday, February 12th, 2015

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A bill proposed by four Senators would impose penalties on the Department of Defense if the department does not meet its goal of being audit ready by the end of 2017.

The Audit the Pentagon Act of 2015 (S. 327) was introduced by Sen. Joe Manchin (D-WVA), Sen. Ron Wyden (D-OR), Sen. Ted Cruz (R-TX) and Sen. Rand Paul (R-KY) last week.

In a press release, Sen. Manchin said “it is simply unacceptable that the Department of Defense is the only major federal agency that has not completed a financial audit. Our bill will help to solve that problem.” Noting that DoD has consistently expressed its commitment to achieving a full audit, Manchin said “Congress should hold them to that.” A similar press release was issued by Sen. Wyden.

Both Manchin and Wyden expressed frustration that the Government Accountability Office (GAO) continues to label “the Department of Defense “High Risk” for waste, fraud abuse and mismanagement due to the agency’s inability to adequately manage its funds.”

Under the proposed bill, if DoD does not meet its audit goal in 2017, congress will increase its oversight every year thereafter leading to the termination of reprogramming a transfer authority of funds. However, If DoD achieves an unqualified audit “which analyzes both the internal systems of control and the details in the agency’s financial records,” the department will get additional transfer authority to use in the following year.

The bill would also require that any individual nominated to serve as DoD Comptroller or as a military department Assistant Secretary for Financial Management must have served as the chief financial officer, or the equivalent, of a federal or state agency or a public company that has received an unqualified audit opinion.

In addition, if DoD does not achieve an unqualified audit by December 31, 2018, the bill would require the Defense Accounting and Finance Service (DFAS) to be transferred from the Department of Defense to the Department of the Treasury on April 1, 2019.

DoD leaders have stressed that the department is on track to meet the 2017 goal. The FY2016 DoD budget overview emphasizes that “DoD Leadership is committed to achieving audit ready financial statements by the end of FY 2017.” The overview provides a detailed description of the various programs in place to ensure the department meets that goal. A press release on the FY21016 budget stated that “during 2015, 90 percent of Defense resources have budget statements under audit.”

The bill was referred to the Senate Armed Services Committee (SASC) where it will be considered in conjunction with the FY2016 Defense Authorization bill.

FY2016 DoD base budget request totals $534.3 billion

Tuesday, February 3rd, 2015

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The FY2016 DoD base budget request totals $534.3 billion for discretionary budget authority, $38.2 billion higher than the amount enacted in FY2015 ($496.1 billion).

The budget request also includes $50.9 billion for Overseas Contingency Operations (OCO), about $13.3 lower than the FY2015 enacted amount.  

While the FY2016 budget request is essentially the same as that included in the FY2015 budget plan, DoD’s five-year budget plan for FY2016 to FY2020 is $15.5 billion higher than planned last year.

DoD’s press statement stressed that the budget “supports the 2014 Quadrennial Defense Review (QDR) strategy, beginning with its three pillars: protect the homeland, build security globally, and project power and win decisively.”

Introducing the FY2016 DoD budget at the Pentagon yesterday, Deputy Secretary of Defense Bob Work described the budget as strategy driven and resource informed. Noting that the request is $36 billion above the sequestration caps, Work pressed for congressional action to block the return to sequestration. He warned that a return to full sequestration will guarantee a “resource-driven, strategy-deprived budget.”

The Army’s FY2016 base budget request totals $126.5 billion (23.7% of the total DoD base budget) up $7.0 billion from the FY2015 enacted level. The Navy’s budget (including the Marine Corps) totals $161.0 billion (30.1%) $11.8 billion above FY2015.  The Air Force base budget request is $152.9 billion (28.6%), up $16.0 billion. The budget request for Defense-wide accounts is $94.0 billion (17.6%), $3.4 billion higher than the previous year.

DoD’s budget overview states that the FY2016 DoD budget reflects six key themes: balance the force; manage enduring readiness challenges; continue focusing on institutional reform; pursue investments in military capabilities; provide for DoD’s people; and support Overseas Contingency Operations.

The QDR calls for rebalancing within the Army. The Army will lower its active end strength level to from 490,000 in 2015 to 450,000 by 2018. Army National Guard strength will drop from 350,200 in 2015 to 335,000 in 2017. DoD warns that if sequestration returns to full force the active Army will have to go down to 420,000.

The FY2016 budget provides significant funding for modernization programs. The budget funds procurement of 57 Joint Strike Fighters and 9 ships. Development funding is included for the KC-46 tanker and the Long Range Strike bomber. The Navy funds the overhaul of the George Washington and development of the Ohio replacement strategic submarine. And, the Army includes $4.5 billion for helicopter modernization.

The FY2016 budget would raise military pay by 1.3 percent. The budget also funds a 1.3 percent pay raise for civilians. The FY2015 pay raise was 1.0 percent. The 1.3 percent pay raise is a full percentage point below that which is called for in current law. Planned pay raises will also be limited in the FY2016-20 budget plan. The planned pay raises are 1.3 percent in 2017, 1.5 percent in 2018 and 2019, and 1.8 percent on 2020.

The budget also includes a number of proposals to slow growth in military compensation and benefits. The budget slows the growth in Basic Allowance for Housing (BAH) costs by 4 percent until the BAH rates equal 95 percent of housing and utilities costs.

Reduced commissary subsidies will come from operating efficiencies rather than a direct cut to the commissary subsidy, as proposed last year. Commissary operating days and hours will be reduced and the budget requests approval to include second destination transportation costs in the cost of goods.

The budget proposes to streamline the TRICARE options (Prime, Standard, and Extra) into a more simplified structure that includes in-network and out-of-network cost sharing. Active duty personnel will continue to be exempt from co-pays and fees. Modest enrollment fees would be implemented for new TRICARE-for Life Medicare-eligible retirees and pharmacy co-pays would be increased under the budget proposal.

The FY2016 DOD budget again requests congressional authority to conduct a new Base Realignment and Closure (BRAC) round to reduce excess infrastructure. Congress has repeatedly denied such requests in recent years.

The budget also renews other proposals that were rejected by the congress last year. The Air Force requests divestiture of the A-10 aircraft program to reallocate funds from supporting excess force structure to readiness needs. The Army requests, in its Aviation Restructure Initiative (ARI) to divest the oldest, least capable aircraft and retain more capable aircraft.

Additional detail (including Military Service briefings) on the FY2015 DoD budget request is available on the DoD Comptroller website.   

FY 2016 federal budget will be released on Tuesday, Feb 2

Thursday, January 29th, 2015

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President Obama will release the FY2016 federal budget to the public and the Congress on Tuesday Feb 2, 2013. This will be the first budget submitted by the Obama administration on the required date. Previous Obama budgets have been submitted one week to two months later due to late congressional action on the prior budget.

After the FY2016 budget is released on Tuesday, senior administration officials will brief the press and begin testifying before congressional oversight committees.

OMB Director Shaun Donovan is scheduled to testify on the FY2016 budget at the Senate Budget Committee (SBC) on February 3rd at 10:00am. He will appear before the House Budget Committee on February 4th at 10:30am.

Defense budget oversight committee hearings on the budget, normally held soon after the budget is released, will be delayed this year until after Ashton Carter is confirmed (as expected) as Secretary of Defense. Both the House (HASC) and Senate (SASC) Armed Services Committees leaders have said this delay will allow the committees more time to study the president’s proposals before the new secretary testifies.

SASC chairman Sen. John McCain (R-AZ) announced that the committee will hold a confirmation hearing on Carter’s nomination next week. While Carter will be grilled on the administration’s security policies, SASC approval and full Senate confirmation is expected to occur soon. In anticipation of a new secretary’s Senate confirmation, a farewell ceremony was held for outgoing secretary Chuck Hagel at Joint Base Myer-Henderson Hall, VA yesterday.

Next week, Defense Highlights will include a brief overview of the FY2016 DoD budget request and identify links to official statements and available budget material.

House passes FY2015 Homeland Security bill, but amendment blocking immigration order draws veto threat

Friday, January 16th, 2015

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This week, the House passed the FY2015 Homeland Security Appropriations bill (236-191), the last FY2015 appropriations bill to be considered.

In December, Congress approved and the president signed an Omnibus Appropriations bill that contained 11 of the 12 FY2015 appropriations bills. However, the Homeland Security Appropriations bill, which was subject to intense debate after the president announced executive action on immigration, was funded under a Continuing Resolution (CR) through February 27, 20175

The House action opens the bidding final action on what should prove to be difficult negotiations between the House and the Senate and the White House. The House bill includes two amendments that block the president’s action on immigration. This immediately brought a veto threat from the White House.

A Statement of Administration Policy (SAP) expressed support for the House-passed underlying FY2015 Homeland Security Appropriations bill, but strongly opposed the addition of the two immigration-related amendments. If the final bill includes these amendments, the SAP stated, the president’s senior advisors would recommend that the president veto the bill.

However to get to the president, the House bill would have to pass the Senate, which appears unlikely. Democrats, while in the minority, could still hold up the bill through a filibuster, which would require 60 votes to proceed on an up-or-down vote. But, the House bill is also problematic for some Senate Republicans. Several of them, including Sen. Lindsay Graham, have indicated that while they oppose the president’s actions on immigration, they are uncomfortable with forcing a showdown on Homeland Security funding over the issue. \

So, while House passage starts the process towards final action on the FY2015 Homeland Security bill, it will probably take much of the remaining time between now on February 27th to reach an agreement.

This means that the agencies funded in the bill (totaling about $40 billion), Secret Service, Customs and Border Protection, Immigration, Transportation Security Agency (TSA), Federal Emergency Management Agency (FEMA), and the Coast Guard will continue to operate under a CR.

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