* During fiscal year 2013, the Defense Department was funded by temporary measures, or continuing resolutions, that put a huge crimp on operations and maintenance spending. The stopgap measure set O&M budgets at the same level as 2012, and created a funding crunch for the military services as the cost of operations increased and appropriations were delayed.
The effects of this have been reflected in the cancellations of all non-essential O&M expenditures--training, travel, conferences--and curtailment of lower priority activities. Once the continuing resolution was replaced with a full-year budget--with sequester on top--the squeeze became more intense. The administration's proposed fiscal year 2014 budget was dropped not only late, but without consideration of sequester, so it became essentially DOA. The 2014 budget does, however, reflect priorities.
To cope with the disruption, the Defense Department is seeking congressional approval to reallocate funds in order to plug holes in O&M accounts. A draft reprogramming document for fiscal year 2013 is now circulating.
The 2013 sequester takes about $12 billion from each service. The bill paying accounts primarily will be research, development and procurement. The total hit for defense was $41 billion, but that now is moving toward $37 billion. The O&M deficit posits civilian furloughs of 14 days for civilians. The Air Force and Navy have the money to avoid this, but the Army doesn't. The Pentagon policy is "one team, one fight," which means that if the Army can't find a way to avoid furloughs, the Air Force and Navy must also participate. The other big losers are training, combat readiness and system maintenance.
The Air Force loses 203,000 flight hours, or the equivalent to two months of flying. Thirteen squadrons are now grounded--nine fighter, four bomber. Weapons system sustainment loses 18 percent while O&M drops by 10 percent. The Air Force estimates that recouping combat readiness will take at least six months, and nearly five years to make up the lost maintenance on existing systems. The service's overall ability to respond to contingencies is down by one-third.
There is intense pressure to execute acquisition programs, as unobligated funds will be swept off the table, perhaps never to return. The Air Force assumes that sequester and continuing resolutions will return in fiscal year 2014. The impact of that will be one-third of pilots won't fly and no officer will enter pilot training.
Unlike 2013, when prior year unobligated dollars are available to soften the blow, no such funds will be available in 2014. It will be a tougher year.
The 2013 budget will eliminate three to five F-35 aircraft. Air Force leaders insist that the acquisition system must be sped up to preserve appropriated dollars for programs before they expire. Their priorities are the KC-46 refueling tanker, the F-35 and the long-range bomber, which they will protect by reprogramming from the lowest 20 to 30 programs. The fiscal year 2015 budget is expected to reveal major strategic decisions.
The Army has a major O&M shortfall that has resulted in cancellation of six major combat exercises. Equipment repairs and facility maintenance have been deferred, and readiness is rapidly eroding. The Army entered fiscal year 2013 with an O&M deficit of approximately $18 billion. A modified continuing resolution fixed about $6 billion, but the Army's bill for war cost increases of about $7.5 billion still has to be paid. …