Comptroller: Instability Affects Readiness, Civilian Workforce

By Cheryl Pellerin
American Forces Press Service

WASHINGTON, Nov. 18, 2013 - The Defense Department has assumed a substantial level of risk to military readiness and to its civilian workforce because of the long-term instability of its budget and the budget process, Pentagon Comptroller Robert F. Hale said here last week.

Speaking Nov. 14 at the Defense One Summit, the department's chief financial officer told interviewer Tom Shoop, editor in chief of Government Executive, that DOD had to cut $37 billion in 2012, $20 billion of that in its operating budget.

"Unfortunately, last year we also underestimated somewhat our wartime budget, so we faced a $30 billion shortfall in our operating budget with six months to go -- about 15 percent," he added. "And we did have to jam on the fiscal brakes."

DOD officials slashed facilities maintenance, froze hiring, laid off temporary and term workers and made major cuts in training and maintenance, Hale said, causing the Air Force to stop flying and the Army to stop training brigade combat teams.

"That has taken a toll," the comptroller said. "We clearly have degraded readiness in the military right now."

Hale told Shoop that he likens defense to an insurance policy.

"What we've done is greatly raise the deductible," Hale said of the 2011 Budget Control Act's severe budget cuts known as sequestration. "If you never have to make a claim, you won't notice it. [But] if you have to make a claim, if there's a major contingency operation, I think we'll regret what we've had to do in terms of military readiness."

Hale said he also worries about the civilian workforce, 650,000 of whom were furloughed for six days this summer without pay and then again during the government shutdown in October. Defense Secretary Chuck Hagel arranged for many DOD civilians to return to work during the shutdown, and all employees eventually were paid for the work days they missed in October.

"I think low morale, which is clearly the case right now in our civilian workforce, is going to hurt productivity throughout our support activities," Hale said, "so I'm quite concerned about our civilians, and I'm hoping things stabilize so we can treat them the way we want to."

Hale said if the department has to do "more bad things" to the civilian workforce, he's concerned DOD could lose its best employees and might not be able to recruit the best.

"We haven't been recruiting all that much because of the hiring freeze, but that's going to change," he said. "And I don't know what will happen when we compete with private industry in an economy that's beginning to pep up a bit, so it's a worry. I think it's a worry to all of us."

Uncertainty is one of Hale's biggest challenges, he told Shoop.

"We're not only facing uncertainty on the fiscal 2015 budget, but we're facing uncertainty on the fiscal 2014 budget, and we're a month and a half into the fiscal year.

"At the moment we're looking at ranges, because we don't know where we're going to end up," Hale said. 

The difference between the president's budget level and the sequester level required by the Budget Control Act is about $50 billion in fiscal years 2015 and 2016, Hale said.

"We're trying to plan across that range," he added. "And we're taking a good guess at where we will end up in fiscal 2014, since it, too, could experience a range of ... at least plus or minus $20 billion or $25 billion. So [we have] enormous uncertainty -- I think unparalleled. I've been at this a while, and I don't ever remember a time when we faced as much uncertainty as we do at this moment."

So far in fiscal 2014, which began Oct. 1, the Defense Department and every other government agency are operating under a continuing resolution instead of a budget for the full fiscal year.

"Continuing resolutions are tough -- a kind of 'Groundhog Day' approach to budgeting when you can't figure out what to do, so you do the same thing this month you did last fiscal year," Hale said. "Essentially, we have elected to start executing at the continuing-resolution level, which is around $30 billion lower than our budget request, or even a bit below that because of the enormous uncertainty we face -- particularly for the operating accounts where you spend a twelfth of the money every month."

The comptroller said his department wanted to be at a lower level so they didn't have to face a situation in two or three months when they'd have to jam on the fiscal brakes as they had to do last year.

"We need some budgetary stability out of the Congress," he said. "I hope it comes about."