Pentagon moves into uncharted waters

 

 

The Department of Defense is bracing for the possibility of operating under an emergency spending measure for the next fiscal year, something it has never before been asked to do.

While lawmakers only intend for their stopgap funding measure — known as a continuing resolution (CR) — to last through mid-December, the Army is bracing for the possibility that funding is eventually put on auto-pilot for a whole year, according to official documents obtained by The Hill. 

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A yearlong CR would be unprecedented for the Department of Defense, but is one of two likely scenarios for fiscal 2016, budget experts say.

Pentagon budget officials are "starting to realize that a full year CR is a real possibility," said Todd Harrison, director of defense budget analysis and senior fellow at the Center for Strategic and International Studies. 

"It's a real possibility this year because we've got a budget stalemate in Congress and between Congress and the administration, and both camps are pretty firmly dug into their trenches," he said.  

Under a yearlong CR, the Army would have approximately $6.6 billion less in funding than under requested 2016 levels. 

That means the Army would continue to have less than one-third of its Brigade Combat Teams trained and ready to deploy, according to the documents.

"Also, equipment, ground vehicle and aviation maintenance would be curtailed or deferred, resulting in lower equipment readiness rates."

The documents also assert that a long-term CR would disrupt the Army’s ability to start new programs and increase the production rate for equipment, potentially wasting hundreds of millions of dollars. 

The Army would not be able to fund 35 new start programs — 16 procurement programs and 19 research and development programs totaling $660 million. 

It would also not be able to fund 16 production rate increases, which would add $870 million to existing programs. 

An emergency funding bill would affect procurement of the 4th Brigade Set of Double V-Hull Strykers, and decrease production of the Army’s Joint Light Tactical Vehicles (JLTV), from 450 vehicles to 184 in 2016. The $6.7 billion JLTV contract was awarded to Wisconsin truck-maker OshKosh last month. 

The Army would also default on the last year of a multi-year contract with Boeing to renew 27 CH-47F Chinook heavy lift helicopters and buy 12 new aircraft. The default would create a $99 million contract termination liability and negate $355 million in price savings. 

The Army would also not be able to start 32 new military construction projects for the active Army, Reserves and National Guard, and four Army family housing construction projects, totaling $960 million, according to the documents.

The construction funding affected would include $90 million for the Cyber Facility Headquarters at Fort Gordon, Ga.; $85 million for the Powertrain Facility at the Corpus Christie Army Depot in Texas; $29 million for the Joint Forces Headquarters in Richmond, Va.; $55 million for the Army Reserve Center at MacDill Air Force Base in Florida; and $61 million for a family housing construction project at Camp Walker in Korea. 

If a CR lasts beyond December, the Army would require a one-year extension on bonuses and special pay authorities, otherwise pay raise rates would actually revert to the Employment Cost Index rate of 1.8 percent, costing the Army $85 million more than in 2015. 

Housing allowances for troops living off base would also increase, costing the Army $117 million more than in 2015. 

Harrison said in the event of a yearlong CR, the Pentagon would surely seek fixes, or "anomalies" from the previous year budgeting to address these problems, and Congress would almost certainly grant them.

The real problem, he said, is that under a 12-month CR, the Pentagon would have $25 billion less in 2016 than requested.

"Even if the anomalies are fixed, even if they get reprogramming authority to move money between accounts, they would still have to find $25 billion worth of things to cut in FY '16, and that's hard," Harrison said. 

Although a yearlong CR would provide the Pentagon overall with $10 billion more than under sequestration — budget caps that require the Pentagon to slash its budget by $500 billion over a decade, it would leave the Army with $500 million less than under sequestration. 

Sequestration was meant to be so harmful that lawmakers would seek a budget compromise before they kicked in. Lawmakers partially relieved the cuts for 2014 and 2015, but they are slated to begin again in 2016. 

The Pentagon on Tuesday urged Congress to avoid a long-term emergency funding measure.

"We've been clear, as well as the secretary in particular, [that a] continuing resolution that lasts for an extended period of time would be the equivalent for us in many aspects [to] a sequester," Pentagon press secretary Peter Cook told reporters. 

The new fiscal year begins on Oct. 1, but lawmakers don't appear to be anywhere close to a compromise on a defense spending bill for 2016. 

On Tuesday, Senate Democrats blocked a 2016 defense appropriations bill to fund the Pentagon's activities and programs. 

Republicans have proposed to leave the budget caps in place while boosting defense spending through a war fund. Democrats are demanding that the caps be lifted for both defense and non-defense spending. 

President Obama has vowed to veto any budget that does not also lift non-defense spending. 

Sen. David Perdue (R-Ga.), whose state would not be able to execute the $90 million Cyber Facility Headquarters project, blasted Democrats' move.

"Congress is responsible for ensuring that American servicemen and women have the tools they need to do their jobs and remain safe," said Perdue, a member of the Senate Budget Committee. 

"But today, my colleagues on the other side of the aisle have done our nation a great disservice. By failing to bring up the defense appropriations bill, Democrats aren’t letting us do our job. That’s dangerous," he added. 

With both parties dug in on the budget caps, experts are skeptical that the gridlock can be broken.

"Republicans seem pretty set on not raising those budget caps for the non-defense side of the budget, and Democrats seem pretty set on not allowing an increase in defense without an equal increase in non-defense," Harrison said. 

"So there's not a lot of ground left for compromise. And if you can't reach a deal on that, the default position is just to continue everything at last year's level," he said.

-- Updated at 1:30 p.m. ET.