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Senate Appropriations Holds Oversight Hearing on DoD Fiscal 2014 Budget Request

On June 11 the Senate Appropriations Committee Defense Subcommittee conducted an oversight hearing with the Department of Defense (DOD) leadership. The subcommittee met to discuss the DOD Fiscal Year (FY) 2014 budget request with Department leadership. [Note: Traditionally, this is the last hearing before the subcommittee begins marking up its appropriations legislation.] The hearing took place as markups were occurring in the Senate Armed Services Committee subcommittees and the House Appropriations Committee was preparing to mark up its bill on June 12.
Witnesses:
• Secretary of Defense Chuck Hagel, DOD
• General Martin Dempsey, Chairman, Joint Chiefs of Staff, DOD
• Under Secretary of Defense (Comptroller) Robert F. Hale, DOD
Opening Statements
Chairman Dick Durbin (IL) said he wants an update on cuts due to sequestration. Budget issues cannot be solved without being smarter and ensuring certain reasonable budget cuts. “Quite simply, we do not have enough funds for business as usual.” He wants to know about personnel issues, among other things, about the Guard and Reserves and how to retain the most skilled leaders from across the services when the force is drawn down. Also said the Guard’s value as an operational reserve must be preserved. Said last year, death by suicide outstripped the number of combat-related deaths and this must be stopped. Sexual assault threatens to undermine the basic level of trust in the military: the trust that exists between personnel and trust in commanders to maintain discipline. He said that, while neither witness is taking this lightly, “the time for action is long overdue”. This culture has to change.
Ranking Member Thad Cochran (MS) also emphasized the importance of knowing the consequences of sequestration and its impact on DOD and, ultimately, on national security.
Witness Statements
Secretary Hagel promised that, as he discusses budgets, numbers, and strategic priorities, he will not lose sight of the men and women serving across the globe. Their welfare depends on the decisions made in Washington. The President has requested $526.6 billion dollars for the FY 2014 DOD budget.
DOD has implemented cuts this fiscal year. They decided to move the cuts away from those currently serving in operations overseas to DOD’s ability to equip and train those that will serve in the future. DOD is facing higher wartime costs than expected. As a result of these factors, there is a $30 billion shortfall in O&M accounts for FY 2013. Given this shortfall, reprogramming and other steps have been taken to cut non-essential spending, but this may not be enough. While national security is protected, DOD’s sustained activities may be significantly affected.
The President’s FY 2014 budget continues to implement spending reductions over the next 10 years. If sequestration is not removed, FY 2014 funding will be subjected to an additional $50 billion reduction over the next ten years. The President’s budget proposal replaces sequestration and gives DOD time and flexibility to plan and implement spending reductions “wisely and responsibly”. In particular, this budget allows DOD to still support troops at war in Afghanistan, protect troop readiness, modernize the military’s aging weapons inventory, and sustain the high quality of an all volunteer force. This budget also supports DOD’s approach to targeting growing costs. Over the next five years, DOD has identified $34 billion in savings in overhead costs and pay and benefits. This includes weapons acquisitions programs. The budget authorizes one round of BRAC in 2015. This is an imperfect process, but will lead to significant savings. Unnecessary infrastructure cannot be funded when the force is getting smaller.
General Dempsey noted this hearing comes during a period of extraordinary uncertainty. Risks to the nation’s security are increasing, while the resources for, and readiness of, the force is decreasing. The servicemembers’ will to win remains undaunted, but the means to prepare to win are becoming more uncertain by the day. This budget is built to keep the nation immune from coercion. It is a responsible investment in an unrivaled joint force that has options for a dangerous and unpredictable future. Most importantly, it protects investments in the true decisive advantage that is the people. It treats being the best trained and best equipped military as the non-negotiable imperative. It also makes sure wounded warriors and their families have world class care. There, are some things this budget does not do. It does not reflect the full sequestration amount. This budget also does not take into account the cost of restoring readiness. As military power becomes less sustainable, it will become less creditable. We risk losing the confidence of our allies, the industrial base, and the men and women in uniform and their families. This outcome is not inevitable. To prevent this, we need the certainty of a predictable funding stream and the time to implement reforms. And we need the ability to keep the force in balance.
Questions and Answers
Chair Durbin expressed concern about the cost of the contractor work force. Contract employees cost two to three times more than civilian employees doing comparable work. Contractors compose 22% of the workforce but account for 50% of spending. He asked if the civilian hiring freeze resulted in more or fewer contract employees. Hagel promised all contractors are under review.
Secretary Hale said the majority of the $37 billion sequestration cut from FY 2013 will come from contractors. There will be a drop in the number of contractors. He added that whether a contractor is cheaper than a civilian employee depends upon the circumstances. Sometimes, DOD does not have the skills required to complete the job or it is a short-term job. If the job is long-term, it is probably better and cheaper to have a civilian employee.
Durbin expressed frustration that DOD can never tell him how many contractors work for the Department. Hale explained that, on a fixed price contract, the contractor has no obligation to say how many people are working on the project. DOD is in the process of asking contractors to report how many people work on these projects. Right now, there are roughly 700,000 service contractors.
Cochran brought up the shortfall in the Army’s request in excess of $8 billion in the overseas contingency operations and maintenance account. Hagel said the cost of withdrawing from Afghanistan has been significantly more than anticipated. There is more to it, but that is part of it. Hale added the reprogramming request will help with this shortfall and expressed a hope Congress will approve it.
Cochran, unsatisfied, questioned whether the same thing will happen with unexpectedly high cost estimates as military strategy shifts to the Pacific. Hagel said assets have had to be moved in the last few months, resulting in additional costs. The coming dip in shipbuilding will result in significant savings going forward. Dempsey said the Strategic Choices Management Review will allow DOD to determine when cuts have become so deep that the Defense Strategic Guidance is no longer feasible. That review should be done in the next few weeks.
Full committee chair Barbara Mikulski (MD) focused on the troops, their families, and their well being, from recruitment all the way to retirement. On the Healthy Base Initiative, she noticed that 13 sites were selected, three of which were in Virginia and none in Maryland. “Not a good idea,” she chided the witnesses, and encouraged them to add Fort Meade to the list. Moving on to sexual assault, she addressed the Service Academies, and the need for superintendents to set the tone. She asked whether the ability to incorporate sexual assault prevention into the command climate is taken into account when selecting a superintendent. Hagel said there is an evaluation process, although sexual assault itself has not been heavily emphasized as part of it. When asked, he said he would “have no problem” with Senate confirmation of the superintendents.
Sen. Collins (ME) asked whether there will be a supplemental budget request to pay for budget shortfalls in overseas operations. Hagel said a supplemental has not been considered. The only thing that will fix the issue will be the elimination of sequestration. Collins asked whether the Secretary supports continuing with the multi-year ship procurement plan. Hagel said it is being closely monitored and is part of the overall strategic interest. Sixty percent of the Naval forces are being moved to the Pacific region.
Sen. Leahy (VT) warned that, if the military continues to not take action on sexual assault cases (such as at the Naval Academy), Congress will take prosecution decisions out of the hands of commanders. Hagel promised “there will be changes made.” However, it must be done on a thoughtful basis, and the Congressionally-required panel should have a chance to do its work. Leahy asked whether Afghanistan will be able to sustain itself after the US leaves, or whether it will descend into sectarian violence. Hagel replied many of the Coalition allies will continue to have a role in Afghanistan. The question is the will of the Afghans to be successful. He thinks they will. The US lead combat role is over and the hand-over is in two weeks. Dempsey said what really hangs in the balance in Afghanistan is the confidence of the Afghan security forces, and the confidence of the Afghan people in them, to maintain stability after US departure. Everything over the next year should be aimed at building their self-confidence.
Hagel assured Sen. Shelby (AL) cybersecurity is top priority and is appropriately resourced to reflect that.
Sen. Reed (RI) asked why the Administration wants to raise copayments and premiums on TRICARE. Service members have expectations that, due to their sacrifices, they deserve a high level of benefits. Hagel agreed servicemembers make large sacrifices and earn excellent benefits. TRICARE is a central part of that benefit package. However, “modest” changes now will keep this program sustainable. Hale promised TRICARE will continue to be a generous benefit. Reed asked whether DOD has engaged veterans services organizations and other outside groups in making these recommendations. Hagel assured him “we give everyone an opportunity to weigh in.” (Emphasis added by Legislative staff.)
Hale confirmed for Sen. Graham (GA) that DOD spending on health care will continue to grow if TRICARE does not change. The last premium increase was two years ago; the increase before that was in the 1990s. Graham agreed with Hale that, without change, TRICARE is not sustainable, noting that, “we are not going to beat the enemy with a good healthcare plan.” Graham asked Dempsey whether the US is winning or losing in Afghanistan; the general said the US is winning. He added that the region will become less stable if the Coalition and Afghan National Security Forces lose, with the re-emergence of violent extremist groups; trouble for Pakistan; and an even more aggressive Iran.
Sen. Pryor (AR) asked how the military health care system should be reformed. Hale said there are many options. In the next year, DOD will look at the usage of its health centers. Some are considerably under-used. Some modest increases in cost for retirees is also reasonable. (Emphasis added by Legislative staff.)
Sen. Murray (WA) questioned when the review of mental health in the military will be completed and information will be available to combat suicide in the Armed Forces. Hagel promised he is committed to completing the review, although he does not know when it will be finished. He agreed suicide is “one of the great, great internal problems we have.” Neither Hagel nor Dempsey was able to give her a progress report on the Congressional requirement to create a joint comprehensive suicide prevention program. Hale assured her that mental health will not be sacrificed to sequestration. In particular, wounded warriors will be taken care of.

 

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