American Society of Military Comptrollers

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Most Department of Defense (DoD) civilian employees can expect to spend up to 11 days on furlough by September 30.  The furlough period will begin on July 8 at a rate of one day per week. 

Secretary of Defense Chuck Hagel announced the decision at a town hall meeting in Alexandria, VA, yesterday.  “I have made this decision very reluctantly, because I know that the furloughs will disrupt lives and impact DoD operations,” Hagel said.

Initially, DoD had set the number of furlough days at 22, but later lowered it to 14.  At that time Hagel said “we have moved from 22 to 14 and maybe we can do better.”  Today, Hagel did not close the door to making additional cuts in the number of furlough days at a later date saying “if our budgetary situation permits us to end furloughs early, I would strongly prefer to do so.”

The decision comes after weeks of review and analysis of the final FY2013 DoD appropriations bill and DoD’s budgetary situation, especially the existence of major Operations and Maintenance (O&M) shortfalls.  Congress did enact some important flexibilities in the FY2013 bill (additional O&M dollars and reprograming authorities) and DoD has been cutting back on overhead and operating costs to address these shortfalls.  But, Hagel said even with these actions, the $37 billion sequestration cut and larger than projected war costs will result in a shortfall in operating funds.

Regarding the implementation of the furloughs, Hagel reiterated DoD’s policy to be consistent across the department.  He told DoD employees at the town hall meeting “we are all in this together” and he emphasized the decision has to be “fair.” 

Nevertheless, he noted that there would be some exceptions that are “driven by law and by the need to minimize harm to the execution of our core missions.”  “For example, all employees deployed or temporarily assigned to a combat zone will be excepted from furloughs,” he said.  And, employees necessary to protect life and property, including select medical personnel, will be exempt.

In a memo to DoD leaders explaining the decision, Hagel also identified “a few categories of workers that will be excepted for specific mission reasons.”  Among those are Navy shipyard employees “because it would be difficult to make up delays in maintenance on nuclear vessels.”  However, all other depot employees are not exempt from furloughs.  The Navy had pushed hard to be allowed to have the flexibility to avoid furloughing its shipyard workers.  Congress had pressed DoD leaders to exempt most depot workers.

Other furlough exemptions include employees funded by non-appropriated funds (NAF), as furloughs of these employees would not reduce the budget, and those employees not paid directly from the DoD military budget (e.g., Arlington National Cemetery and DOD Civil Works).  More detailed information on exemptions is included in the attachment to Hagel’s memo.

The memo laid out the following timeline for furloughs:

                May 28-June 5:  Furlough notices to employees

                June 4- June 12:  Individual 7-day reply period

                June 5-July 5:  Furlough decision letters to employees

                July 8:  Furloughs begin

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The decision on how long DoD will furlough civilian employees may be just days away.

Secretary Chuck Hagel is currently reviewing an analysis of the effect the final FY2013 appropriations bill is having on DoD’s budgetary situation and the potential effects of a $37 billion sequestration cut in the next six months.  Pentagon spokesperson George Little told reporters on Wednesday that Hagel will make a decision on furloughs “in the near future.” 

Originally, DoD announced it would furlough civilian employees for 22 days ,then later reduced that number to 14 days.  Hinting that perhaps the number of furlough days might be lowered again, Secretary Hagel told Congress last month “we have moved from 22 to 14 and maybe we can do better.”

As the Secretary and his staff review requests for exemptions, the Military Departments, especially the Navy, are pushing hard to have as few furlough days as possible.  At a budget briefing, Rear Admiral Joe Mulloy, Navy’s budget officer, said “our issue on furloughs is to get down to zero.”  Army and Air Force leaders have underscored the critical importance of their civilian employees and warned of the negative effect furloughs would have on the employees and their families.

DoD has consistently emphasized that any decision on furloughs would reflect the problems the entire department has with implementing the sequester.  So, even though the Military Services and Defense Components might be able to deal with sequester by furloughing fewer or even no employees, Secretary Hagel and his staff have stuck to the “one team, one fight” policy (as Little described it).  This means that a final decision on the number of furlough days would be applied consistently across the department.

Last month, 126 members of Congress wrote Hagel pressing him to base furlough decisions on merit and give flexibility to the Military Services.  In response, Secretary Hagel reiterated that the final decision on how resources are reallocated because of the sequester would reflect fairness and consistency across DoD.

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DoD issued guidance implementing Better Buying Power (BBP) 2.0, the department’s program to achieve greater efficiency and productivity in defense spending.

BBP 2.0, introduced in November 2012, identifies seven focus areas for improving the way DoD does business:  achieving affordable programs; controlling costs throughout product lifecycles; incentivizing productivity and innovation in both government and industry; eliminating unproductive processes and bureaucracy; promoting effective competition; improving tradecraft in acquisition; and improving professionalism in the acquisition workforce.

The implementing guidance, demonstrating the continuing nature of the acquisition improvement process, requires specific actions and deadlines for each focus area. 

The implementation memo from Frank Kendall, DoD Under Secretary of Defense for Acquisition, Technology, and Logistics (AT&L), has special guidance for the DoD acquisition workforce.  Acquisition professionals, Kendall emphasizes, must be cognizant of the “key overarching principles” underlying BBP 2.0 in order to improve acquisition outcomes.

Acquisition professionals must think and apply “education, training, and experience through analysis and creative, informed thought,” Kendall underscores.  The acquisition workforce should not “automatically default to a perceived ‘school solution’ just because it is expected to be approved more easily,” but should apply professional judgment, he says.

The acquisition workforce must be “experienced, trained, and empowered” to apply acquisition policies and processes, Kendall says.  “Qualified people are essential to successful outcomes,” he adds.

Acquisition professionals must apply the fundamentals effectively, he stresses.  These fundamentals, which drive thought processes and judgments, are: competitive pressures; understanding and managing technical risk; demonstrating progress before major commitments; getting big early decisions right; and using the right contracts for the job.

Streamlined processes and oversight are necessary to provide value added, Kendall says. If acquisition managers are to be effective, process alone cannot consume all of their time, he emphasizes.  Managers must find ways to acquire relevant data and to direct differences of opinion to the appropriate decisionmakers.