The Defense Department’s fiscal year 2015 budget submission includes many assumptions that, if wrong, could force the services to make additional cuts in manpower and platforms, the acting deputy secretary of defense said Wednesday morning.
Speaking at the American Enterprise Institute, Christine Fox said that in addition to some older DoD-wide efficiency efforts that have received much attention, the services are undertaking several new initiatives that need to work out for the budget to stay intact.
“The Navy, for example, is pursuing aggressive cost-savings initiatives, including reducing support contracts and achieving better pricing initiatives to maximize the possible size of their ship inventory,” she said. “However, if these efforts generate fewer savings than planned and counted on in our budget, there will be little choice but to further reduce the size of the Navy’s fleet.”
Asked to elaborate during the question-and-answer session, Fox added that the Navy has a whole package of ideas it proposed this year to bring down acquisition costs in a time when the shipbuilding funding needs are about to balloon despite the tight budget.
“When it comes to acquisition efficiencies, it’s difficult to count on them,” Fox said. “You want to have efficiency because you’re going to be tougher in your contract negotiations, or you’re going to get more stability in partnering with industry, or you’re going to live with fewer support contractors and you’ve got a plan. The Navy did some really detailed work on that this year, and they have projections, and we’re excited they did that because if the whole department could do that kind of thing, we could do even better with the money we have, which is obviously the goal. But I did want to mention that we’re counting on those predictions. They were able to keep force structure slightly higher than what we predicted in the [Strategic Choices and Management Review ] because of those efficiencies…There’s a bit of a gamble there, and I’m just excited the Navy’s giving it their best shot.”
The budget submission, which will be sent to Congress on March 4, also involves an interesting mix of assumptions about whether the government will return to full-sequester levels of spending in FY ’16. More complex cuts, such as extra Army and Marine Corps troop reductions that would be triggered under full sequester, are included in the budget. Cuts to acquisition programs and platforms in the fleet that would be needed under full sequester, however, are not included in the budget.
Fox said the personnel reductions take so much time and planning–with costs associated–that it made sense to include the worst-case scenario in the budget request.
“But, we know where the ‘off ramps’ are, so if we get assurances that we’re going to the president’s budget level in ’16 instead of sequester, we’ll plan that off ramp and we’ll put that into the budget submission next year and the year after,” she said.
With acquisition programs and platform maintenance and operation, less planning is involved–if something needs to get cut, the Pentagon can cut it. DoD assumed Congress will find a way to accommodate the president’s higher budget level, so many programmatic cuts are not included in the FY ’15 budget request.
“What we tried to put in there are things that we could reverse more quickly than the kinds of really complicated things I just mentioned,” Fox said. “So programs you would just cancel, like Global Hawk Block 40. Or parts of our structure you would just take out immediately, like the KC-10s. Or, unfortunately, readiness, which we put a lot of investment in in the $115 billion that, again, we’d just have to stop doing.”