DOD COMPTROLER SAYS NEED MORE STABILITY IN BUDGET SIZE, PROCESS

FROM: U.S. DEPARTMENT OF DEFENSE
DOD Comptroller: Budget Stability Key to National Security
By Cheryl Pellerin
American Forces Press Service

WASHINGTON, Jan. 8, 2013 - Stability in the size of the Defense Department's budget -- and especially in the process of funding it -- is critical to maintaining national security, DOD Comptroller Robert F. Hale said here yesterday.

During a keynote address at the Brookings Institution here, Hale discussed three steps that must be taken to accommodate lean budget times.

Two of the steps already are in place, he said: determining a defense strategy to guide spending and instituting initiatives that stretch defense dollars.

"And third, we need -- I would say desperately need -- more stability, both in terms of budget size and, maybe particularly, budget process," Hale added.

In more than three decades of working in and around the defense budget, he said, he has never seen a period featuring greater budgetary uncertainty than the next few months present.

Meanwhile, Hale said, he hopes to submit the fifth defense budget he's overseen as comptroller.

"The first two [budgets] featured increases in the top line," he said. "The third one, in February 2011, featured substantial top-line reduction, and the last one featured a significant reduction: about $260 billion over a five-year period relative to our planned $487 billion [reduction] over 10 years. And we may not be done."

The 2012 American Taxpayer Relief Act, which Congress passed Jan. 1, may force further reductions, Hale said. Although the law avoided activating a "sequestration" mechanism in a budget law passed last year, the threat of that mechanism's automatic across-the-board cuts now looms beginning March 1, he added.

"We're still working on the details, but the total sequestration for DOD appears to be roughly $45 billion if it all goes into effect -- about 9 percent of our budget," Hale explained.

"That is less than the sequestration [amount of about $62 billion] we faced before passage of the New Year's Day act. That could have been as much as 12 percent. But we also have two fewer months in which to accommodate those changes," he said.

At a time when U.S. national security challenges have never been more complex, Hale said, the lack of budgetary stability and the reliance on continuing resolutions, which fund only a portion of the fiscal year budget at a time, makes it very hard to plan and extremely hard to plan well.

"We also cannot rule out an extension of the continuing resolution throughout the rest of this year, and that would sharply reduce the operation and maintenance funds that we have available and that we need to maintain readiness," one of the department's highest priorities, the comptroller said.

And while U.S. troops are in Afghanistan, protecting funds for wartime operations means even larger cuts in base budget dollars available for readiness, he noted.

"I think the nation's security would be better served if Congress adopted and then stayed with a more stable budget plan," Hale said.

The department hasn't enjoyed much budget-process stability during his tenure as comptroller, Hale added.

"I have personally coordinated four shutdown drills," he said. "During two of them, I was sitting in my office at 8 at night, not knowing whether at midnight we would shut down the department or not. Fortunately, we didn't in either case."

Continuing resolutions -- the nation is operating under one right now, he pointed out -- "really hogtie the department and its ability to manage," Hale added.

A questioner asked Hale how industry can help the department navigate in a leaner budget environment. "We need you to sharpen your pencils as much as we are trying to do with regard to your overhead and anything else that would help us hold down costs," he replied.

The department's Better Buying Power initiative, established in 2010, was directed at improving efficiency and productivity for the $400 billion DOD spends annually on goods and services. Part of the initiative seeks to work "more closely with industry to see what you can do there. In return, we owe you some stability, and ... we're not there yet," Hale said.

"My hope is that in the next two months, all of us in the leadership of the nation and the Congress can work together to provide that stability," he added. "Our national security demands no less."