Staff, Defense Daily
30 November 2015
Some major modernization programs, including the Long-Range Strike Bomber (LRS-B) and Ohio-class nuclear submarine replacement, will be slowed as the Defense Department absorbs a $15 billion cut after fiscal year 2017, the Pentagon's chief accountant said Nov. 30.
Pentagon bean counters are not thrilled with the budget deal passed at the 11th hour, but recognize that two years of relative financial stability is as good as the Defense Department's budget outlook is going to get until a new administration arrives in 2017. The deal will cut about $15 billion from the base budget laid out in the Pentagon's fiscal year 2017 plan.
"One of the ways we will accommodate this $15 billion cut is there will probably be slowdowns in some modernization programs, and of course LRS-B had a little delay driven by its own schedule dynamics anyway,"
Pentagon Comptroller Mike McCord said during a forum hosted by the Center for Strategic and International Studies in Washington, D.C. "I think that there will be some slowdowns in a few places."
The final two fiscal year budgets prepared under the Obama administration will be only the third in the past eight years without a continuing resolution. The Pentagon has operated under continuing resolutions for at least part of the past six fiscal years, which McCord said was the worst record in three decades. McCord said the administration was right to plant its feet during budget negotiations.
"In the end. I think that we were right to hold out for a deal and not just go along with this one-time maneuver that would help us for one year," McCord said. "In the end, although we didn't get all the money we wanted out of this deal, we felt good about the outcome.Our reluctance to just go for the short-term easy solution helped, produce the outcome that we got in this budget deal."
The Defense Department is focused on investing in modernization, though McCord said the money to back up Secretary Ashton Carter's Force of the Future initiative could be scarce. That includes funding for the extremely expensive LRS-B and Ohio replacement programs, McCord said.
"I wish I could say that I had long-term budget stability or predictability to underwrite the investments that we want to make as a department," McCord said. "I do not have that, of course. We do know some of the big issues on our plate.One of which is the big bill that is coming to recapitalize our nuclear deterrent."
The deal reached by Congress in October does not prevent a future government shutdown and it provides no guidance about military spending beyond fiscal year 2017. Defense contracting analysts Capital Alpha partners said the deal covering fiscal years 2016 and 217 is "good for DoD, but it is not out of the woods in terms of long-term needs and likely resources."
Combining the Pentagon's base budget projections and Overseas Contingency Operations (OCO) funding, the budget deal left DoD with 99 percent of its budget request for fiscal 2016 and 97 percent of its proposal for fiscal 2017, which McCord said was "a good day."
The deal gives DoD $8 billion in relief by moving funds to OCO funding, an account that is immune to federal budget caps but not sequestration. However, that relief margin has been cut to about $5 billion because of the need to pay for troops to stay in Afghanistan beyond 2016, McCord said.
The budget proposal to be submitted in February is two to three weeks from completion, McCord said. Left to iron out are the OCO appropriation, military compensation and spending on the military's renewed presence in Europe called the European Reassurance Initiative, or ERI, aimed at bolstering NATO allies against further Russian expansion on the continent.
ERI spending will be on more troops rotations through the continent, prepositioning of supplies and an uptick in military exercises with NATO allies, McCord said.