As Defense Department leaders defend before Congress the president’s
$526.6 billion base defense budget request for fiscal year 2014, DOD
officials are preparing a review that reassesses assumptions driving the
Pentagon’s investment and force structure decisions, Defense Secretary
Chuck Hagel said today.
In testimony before the Senate Armed Services Committee, Hagel said the review, conducted by Deputy Defense Secretary Ash Carter and Army Gen. Martin E. Dempsey, chairman of the Joint Chiefs of Staff, is expected to be complete by May 31.
Rather
than accommodate the Budget Control Act’s abrupt and severe budget cuts
known as sequestration, the 2014 Defense Authorization Request contains
an alternative that proposes $150 billion in added defense savings over
the next decade as part of a balanced deficit-reduction package, Hagel
said.
The cuts would occur in the years beyond fiscal year 2018,
he added, giving the department “time to implement such reductions
wisely, carefully [and] responsibly.”
But the secretary said DOD
must plan for more reductions to the defense budget that could result
from an agreement by Congress and the administration on a
deficit-reduction plan, or for sequester-level cuts that persist for
another year or over the long term.
“Consequently,” Hagel told the
Senate panel, “I directed a strategic choices and management review in
order to assess the potential impact of further reductions, up to the
level of full sequester.”
The review, which includes the service
secretaries, service chiefs, Office of the Secretary of Defense
principals and combatant commanders as essential participants, will
identify strategic choices and further institutional reforms that may be
required, including reforms that should be pursued regardless of fiscal
pressures, he said.
Such a review will help to sort out the
challenges, articulate the risks and look for opportunities for reform
and efficiencies presented by resource constraints, the secretary said,
adding that the results of the review will inform DOD’s fiscal 2015
budget request and serve as the foundation for the Quadrennial Defense Review due to Congress in February.
Hagel
said the review will put everything on the table, including roles and
missions, planning, business practices, force structure, personnel,
compensation, acquisition and modernization investments, along with how
the department operates and maintains readiness.
“It is already
clear to me, Mr. Chairman,” Hagel told Michigan Sen. Carl Levin, “that
achieving significant additional budget savings without unacceptable
risk to national security
will require not just tweaking or chipping away at existing structures
and practices, but, if necessary, fashioning entirely new ones that
better reflect 21st-century realities. And that will require the
partnership of Congress.”
The fiscal 2013 DOD appropriations bill
that Congress enacted last month allocated DOD funding more in line with
the president’s budget request, giving DOD authorities to start new
programs and proceed with important military construction projects, the
secretary said.
“Nonetheless, the bill still left in place the
deep and abrupt cuts associated with sequester, as much as $41 billion
in spending reductions over the next six months,” he noted, adding that
military pay and benefits are exempt from sequester.
If the
sequester provision remains intact, Hagel said, DOD funding will be cut
by $52 billion in fiscal 2014 and by about $500 billion over the next
nine years.
In his description of the budget request, Hagel said
the president’s $526.6 billion DOD base budget request for fiscal 2014
continues to implement President Barack Obama’s defense strategic
guidance issued in January 2012 and enhances DOD efforts at
institutional reform.
“Most critically,” the secretary added, “it
sustains the quality of the all-volunteer force and the care we provide
our service members and their families, which underpins everything we do
as an organization.”
The budget request also contains a
placeholder request for overseas contingency operations at the fiscal
2013 level of $88.5 billion, he said.
The submission does not
include a formal overseas contingency operations request because
Afghanistan force level and deployment decisions for this year were
delayed to give commanders time to fully assess responsibilities and
requirements, the secretary explained.
The base budget targets
growing costs in areas of support, acquisition and pay and benefits
before cutting military capabilities and force structure, and identifies
new savings of about $34 billion in fiscal 2014 through 2018, the
secretary said, including $5.5 billion in fiscal 2014 from these areas.
To
eliminate excess infrastructure, the budget request calls for one round
of base realignment and closure, called BRAC, in 2015, Hagel told the
senators.
“BRAC is a comprehensive and fair tool that allows
communities to have a role in reuse decisions for their property and
provides development assistance,” he said. “BRAC, as we all know, is
imperfect, and there are up-front costs. The future-year defense program
adds $2.4 billion to pay for those costs. But in the long term, there
are significant savings. The previous five rounds of BRAC are saving $12
billion annually, and those savings will continue.”
The
department continues to streamline its acquisition programs and
processes, and over the past four years it has realized significant cost
savings as a result of reforms implemented by the Weapons System and
Acquisition Reform Act of 2009, he said.
In the current budget
request, Hagel added, DOD has achieved $8.2 billion in savings from
weapons program terminations and restructuring, and will substitute a
new package of military compensation proposals that save about $1.4
billion in fiscal 2014 and $12.8 billion in fiscal 2014 through 2018.
“This
package includes a modest slowing of the growth of military pay by
implementing a 1 percent pay raise for service members in 2014,” he
added.
The department seeks more changes to the TRICARE program in
fiscal 2014 to bring beneficiary costs closer to levels envisioned when
the health care plan was implemented, particularly for working-age
retirees, the secretary said, adding that “survivors of military members
who died on active duty or medically retired members would be excluded
from all TRICARE increases.”
Even after the proposed fee changes, Hagel said, TRICARE will remain a substantial benefit.
“These
adjustments to pay and benefits were among the most carefully
considered and most difficult choices in the budget,” he added, “[and]
they were made with strong support of the Joint Chiefs of Staff and the
senior enlisted leadership.”
Cuts and changes to capabilities,
force structure and modernization programs all will be required, based
on priorities and parameters set in the strategic guidance, he said.
Last
year, the department proposed reductions of about 100,000 in military
end-strength between fiscal 2012 and 2017, the secretary said.
“By
the end of 2014,” he said, “we will have completed almost two-thirds of
the drawdown of our ground forces, and the drawdown should be fully
complete by fiscal 2017.”
This budget request continues to put a
premium on rapidly deployable, self-sustaining forces and seeks to
leverage new concepts of operations enabled by advances in space,
cyberspace, special operations, global mobility, precision strike,
missile defense and other capabilities, the secretary said.
It
also includes $137.1 billion for military personnel and $49.4 billion
for military medical care, Hagel said, and the department continues to
support service members and their families, spending $8.5 billion on
initiatives that include transition assistance and veterans’ employment
assurance, behavioral health, family readiness, suicide prevention,
sexual assault prevention and response.
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