Hagel Releases DoD Contingency Plan

The sequester has always been a blunt and mindless way to reduce the deficit, and for the Defense Department, its effects are now clearly being seen. On Monday, the Defense Department began furloughs for its civilian workers, which will eventually affect more than 650,000 workers according to the Washington Post. Eleven furlough days are expected to be needed in order to meet targets or around one without pay per week until the end of September.

On Wednesday, Secretary of Defense Chuck Hagel sent a letter to Congress warning of the consequences of the sequester and outlining a contingency plan for next year should the sequester remain in place.  The contingency plan contains $52 billion in cuts to the Defense budget, in order to meet sequester levels. While the across-the-board cuts are hampering operations in the Defense Department (as well as many other departments and agencies), next year the sequester will sets a level for discretionary appropriations rather than implementing automatic cuts. But Hagel does not believe that additional flexibility will be a cure:

These serious adverse effects occur even if Congress provides flexibility in administering budget cuts and sequestration. Flexibility in this instance would mean that Congress approves program cuts denied in the past and allows reallocation of funding , without regard to existing budget structures or limitations on transfer authority. However, the cuts are too steep and abrupt to be mitigated by flexilbility, no matter how broadly defined.

The contingency plan shows that military personnel cuts would likely be modest, as reducing troop levels would yield little savings next year. Involuntary separations would especially be costly given the compensation associated with that decision. Hagel argues the challenge will be even greater if Congress approves a military pay raise above the 1.0 percent proposed by the Defense Department, like the 1.8 percent raise approved by the House.

Day-to-day operations, Hagel argues, have already been hit with cuts in FY 2013, and further cuts would be difficult. Operations and Maintenance (P&M) appropriations makes up around 40 percent of DoD's overall budget and thus would likely face cuts similar in magnitude to the rest of the defense budget, at around 10 percent. DoD would attempt to avoid furloughs, but would still require reductions in the civilian labor force. Training exercises, limited by this year's sequester, would be further reduced.

Military modernization would likely be hit the hardest by sequester cuts in FY 2014, with Hagel suggesting that cuts as high as 15 or 20 percent would be required. Procurement would be reduced as would research and development.

To help ease the burden faced by DoD, Hagel requests that Congress accept the President's TRICARE fee changes. He also asks Congress to allow the immediate retirement of seven cruisers, two dock-landing ships and ending the C-27 aircraft program. Previous rounds of Base Closure and Realignment (BRAC) are credited with saving $12 billion a year, and another round is suggested to provide future savings.

Click here for the letter and contingency report.