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House set to consider defense bills next week

Thursday, April 24th, 2014

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Defense appropriations and authorizations bills will take center stage in the House of Representatives when Congress returns recess next week.

Before leaving for the spring recess, the House Appropriations Committee marked the beginning of the FY2015 appropriations season by approving the FY2015 Military Construction/VA Appropriations bill and the FY2015 Legislative Branch Appropriations bill. At that time, HAC chairman Rep. Harold Rogers said he would move aggressively to complete action on all 12 FY2015 appropriations bill in his committee by July 4.

With two bills ready for floor action, the full House could begin consideration of the FY2015 Military Construction/VA bill as early as next week, pending allocation of floor time by the House Republican leadership. If the House completed action on the MilCon/VA bill in the next few weeks it would underscore the House leadership commitment to an accelerated schedule this year. Last year, in part because the president did not submit the budget request to congress until early April, the House did not pass its first appropriations bill (the FY2014 Military Construction/VA appropriations bill) until June 4.

The House is also poised to begin action on the FY2015 Defense Authorization bill next week. In announcing the bill’s markup schedule, House Armed Services Committee (HASC) chairman Rep Buck McKeon said “this will be the fifty-third year in which the Congress has come together in a bi-partisan way to pass this vital national security authorization.”

Four HASC Subcommittees will markup their portions of the bill on Wednesday, April 30: Subcommittee on Intelligence, Emerging Threats and Capabilities; Subcommittee on Strategic Forces; Subcommittee on Seapower and Projection Forces; and the Subcommittee on Military Personnel. On Thursday, May 1, the Subcommittee on Tactical Air and Land Forces and the Subcommittee on Readiness will mark up their parts of the bill. The full HASC is scheduled to take up the entire bill on Wednesday, May 7.  

DoD reports slight decline in the total cost of major acquisition programs

Tuesday, April 22nd, 2014

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The total cost of 77 selected Department of Defense (DoD) major acquisition programs decreased by $4.4 billion (- .3 percent) in 2013, according to a report issued by DoD last week.  Total costs for these programs stood at $1.619 trillion as of December 31, 2013.

This small decrease reflects reduced planned quantities (-$14.9 billion), lower escalation rates (-$3.6 billion), and a drop in support costs (-$2.5 billion). Offsetting these declines for the most part were cost increases due to program schedule stretch-outs (+$6.8 billion), net increases in program cost estimates (+$5.5 billion), and higher costs due to engineering changes (+$4.4 billion).

The DoD report also identified two programs that experienced critical Nunn-McCurdy unit cost breaches—unit cost increases of 25 percent or more to the current Acquisition Program Baseline (APB) or 50 percent or more to the original APB: The Joint Precision Approach and Landing System (JPALS) due to the elimination of 10 shore-based training systems and an extension of the development program; and Vertical Takeoff and Landing Tactical Unmanned Aerial Vehicle (VTUAV) resulting from increased warfighting capabilities and a reduction in total quantities.

Two programs experienced significant Nunn-McCurdy breaches—unit cost increases of 15 percent, but less than 25 percent of the current APB or 30 percent, but less than 50 percent of the original APB: Airborne Warning and Control System (AWACS) Block 40/45 Upgrade due to a cut in quantities and a stretch-out in the planned buy schedule; and Joint Tactical Radio System, Hand Held, Manpack, and Small Form Fit Radios (JTRS HMS) resulting from an acquisition strategy revision for full-rate production, added requirements, and a revised fielding strategy (fewer radios per year).

The cost estimates for selected programs are reported in the congressionally-required Selected Acquisition Reports (SAR).  SAR estimates of total program costs include actual costs to date and estimated future costs.  Program costs include research and development, procurement, military construction, and operations and maintenance costs that are acquisition-related. 

DoD prepares these congressionally-required reports annually (with submission of the budget).  Quarterly reports are prepared for programs that experience cost increases of 15 percent or more, and schedule delays of at least six months.  DoD also submits quarterly reports for a program’s initial and final report, or for programs that are rebaselined during major milestone reviews.

Programs submitting their initial SAR reports are not represented in the total cost growth estimates for a particular year. For this reporting period, initial reports were submitted for the Air and Missile Defense Radar (AMDR) and Littoral Combat Ship Mission Modules (LCS MM) programs.

DoD report describes impact of potential sequestration cuts

Wednesday, April 16th, 2014

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A return to sequestration cuts to defense budgets in FY2016 and beyond “would leave our military unbalanced and eventually too small to meet the needs of our strategy fully,” according to the DoD report “Estimated Impacts of Sequestration-Level Funding” released this week. The report describes the reductions that would be necessary if sequestration were re-implemented in FY2016.

The FY2015 DoD budget included in the FY2015-19 Future Years Defense Program (FYDP), released last month, conforms to the funding limit set in the Bipartisan Budget Act of 2013. However, for FY2016-19, the DoD budget plan sets total funding $115 billion higher than the levels set in the Budget Control Act of 2011, which reflects automatic sequestration cuts.

The DoD report details the force reductions and modernization and readiness cuts that DoD would have to make if Congress did not act to alleviate sequestration.

In the absence of congressional changes to required future sequestration cuts, the report shows that Army funding would be cut by $26 billion from FY2016 through FY2019, Navy and Marine Corps by $35 billion, Air Force by $36 billion, and Defensewide accounts by $18 billion. Looking at the impact by major appropriation, operations and maintenance (O&M) funding would be cut by $40 billion, procurement by $48 billion, and research and development by $18 billion.

Returning to sequester-level budgets would require additional cuts to the active and reserve force, according to the report. The Army would be forced to cut its active force to 420,000 by 2019 rather than to 440,000 or 450,000 as specified in the FY2015-19 budget plan. The Army Guard and Reserve forces would have to decline to 315,000 and 185,000, respectively, rather than the 335,000 and 195,000 levels currently planned. The Marine Corps would have to draw down to 175,000 rather than the 182,000 in the budget plan.

The report also lays out the effect on modernization under a return to sequestration. Among major programs affected: the Army would not be able to fund the Stryker fourth brigade set, would buy 61 fewer Blackhawk aircraft, and would cut Apache remanufacture investments by $1.2 billion; the Navy would forgo buying eight ships (including three DSDG-51 destroyers and one Virginia-class submarine); and the Air Force would retire its KC-10 tanker fleet, one F-35 squadron (15 aircraft), and the Global Hawk Block 40 fleet.

The report emphasizes that readiness funding would have to be cut by $16 billion, including $9 billion in depot/ship maintenance. In addition, facilities sustainment, restoration, and modernization (FSRM) funding would be $7 billion lower and installation services funding would be cut by about $5 billion. All other O&M funding would be down $12 billion.

This report reinforces the message being stressed at every opportunity by DoD military and civilian leaders. Defense Secretary Chuck Hagel has repeatedly warned Congress that a return to sequestration in FY2016 would mean increased risks to U.S. security. Last month he told the House Appropriations Defense Subcommittee that “under a return to sequestration spending levels, risks would grow significantly, particularly if our military is required to respond to multiple major contingencies at the same time.” 

House Appropriations Committee approves FY2015 Military Construction funding

Wednesday, April 9th, 2014

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Today, the House Appropriations Committee (HAC) approved FY2015 funding for Military Construction (included in the total Department of Defense (DoD) budget request) and the Department of Veterans Affairs.

The MilCon/VA bill is the first appropriations bill to advance in the House. At the MilCon/VA Subcommittee markup last week, HAC chair Rep. Harold Rogers (R-KY) said his goal is to “have all of the bills through the [House] full committee by July 4th.” Rogers acknowledged that is a very ambitious schedule. Last year, the HAC had completed action on only seven of the 12 FY2015 appropriations bills by July 4th.

The Military Construction portion of the MilCon/VA bill provides $6.557 billion for military construction projects, family housing, Base Realignment and Closure (BRAC), the NATO Security Investment Program, and Chemical Demilitarization construction.  This amount is equal to the president’s FY2015 request, but $3.3 billion lower than the FY2014 enacted level.

The HAC bill reduces the DoD funding request for active component military construction projects by $165 million, but fully funds the request for reserve components military construction projects, and for the NATO Security Investment Program (NSIP), Family Housing, Chemical Demilitarization, and Base Realignment and Closure (BRAC). The HAC bill takes no action on DoD’s proposal for another BRAC round in 2017.

The bill also provides an additional $125 million for construction projects that were previously authorized in the FY2014 Defense Authorization Act. This funding would go to projects for Navy and Marine Corps and Air Force active components and for Army and Navy reserve components. The bill also adds another $245 billion for the Army National Guard and Reserves the Army identified if the funds were authorized in the FY2015 Defense Authorization bill.

To offset some of this additional funding and bring the total bill in line with the president’s request, the HAC bill rescinds $204.6 million from prior appropriations Acts. 

Proposed 10-year House budget plan would cut federal spending by $5.1 trillion, but increase defense budgets

Thursday, April 3rd, 2014

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This week, House Budget Committee Chairman Paul Ryan (R-WI) proposed a House Budget Resolution that would cut $5.1 trillion billion in total federal spending over the next 10 years. Overall, Ryan says his proposal would produce a $5.3 trillion reduction in budget deficits through 2024.

The annual budget resolution, often referred to as a “congressional budget blueprint,” sets revenue and appropriations targets for the tax writing and appropriations committees, so they can begin work on the president’s budget request.  This is an internal congressional procedure, so a passed budget resolution is not sent to the president for approval.

Ryan said his plan, called the “Path to Prosperity,” will reduce the deficit and maintain low interest rates “which will spur greater investment and productivity.” Three-quarters of the $5.1 trillion in total spending savings would come from lower mandatory spending. Major changes to the Affordable Care Act would produce $2.1 billion in reduced spending, according to the Ryan plan. Changes to Medicaid and other mandatory programs would yield another $1.7 billion in spending cuts. Interest payments would also be $783 billion lower, according to the plan. Reduced discretionary spending (from funding provided in appropriations acts) would account for only $460 billion over 10 years (less than 9 percent of total spending savings) in the Ryan proposal.

The Ryan budget would not change the FY 2015 budget request for national defense (DoD plus other defense-related spending, such as the Department of Energy’s nuclear program) and nondefense discretionary budgets.  However, beginning in FY2016 the plan would set defense budgets above the level called for in the Budget Control Act (BCA) in each year through 2024, adding $483 billion. For the same period, Ryan’s plan would cut nondefense budgets by almost $800 billion.

The Ryan plan states that major mismatches exist in current U.S. defense policy: between threats and resources and between the administration’s stated policy and its budget plan. His budget resolution proposes “to resolve these contradictions by restoring defense budgets to the levels dictated by the national security interests of the nation.” While Ryan states the president’s proposed troop cuts go too far, he says any troop reductions should be accompanied by cuts in the civilian and contractor workforce. He expresses concern about rising costs of military personnel and supports the work being done by the Military Compensation and Retirement Modernization Commission to assess compensation plans and make recommendations to DoD.

Ryan also proposes to reduce the cost of the federal workforce. His plan would cut the federal workforce by 10 percent, primarily through attrition, by allowing the hiring of only one new employee for every three workers who leave federal service. The plan would also eliminate a program that allows federal agencies to repay student loans for federal employees, which is often used as a recruiting and retention tool.

The Ryan budget would require federal employees to contribute more to their retirement benefit, in line with recommendations from the National Commission on Fiscal Responsibility. Last year, the president proposed to increase federal employee pension contributions, but Congress took no action. This year the president did not include such a proposal in the FY2015 budget request.

The House Budget Committee has approved the Ryan plan and the full House is set to consider it next week..  However, the Democrat-controlled Senate will not act on a budget resolution this year. Senate Majority Leader Harry Reid (D-NV) and Senate Budget Committee chair Sen. Patty Murray (D-WA) have said there is no reason for the Senate to consider a House Budget Resolution or to produce a Senate budget resolution because the BCA set the FY2015 and FY2016 funding levels.

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