Is DoD Shrinking?
The Obama Administration's plan to cut costs in the federal agencies has not been lost on one of the largest—the Department of Defense (DoD). Even with the cost of military pay and allowances rising, the DoD cut $5.2 billion from the FY2012 base budget to the proposed FY2013 budget. According to the DoD, the FY2013 requested base budget is $522.4 billion, down from the $530.6 billion of 2012. The DoD does not just consist of active duty Armed Forces, but Reserve and National Guard, as well as nearly 700,000 civilian employs, all of whom will be subject to the cuts.
The FY2013 budget proposal is part of additional DoD reductions and continued cuts on business operations, overhead activities and support functions. And more reduction is expected as the budget proposes an additional $61 billion in cuts between FY2013 and FY2017.
According to the Department of Defense's FY2013 budget proposal, the FY2013–FY2017 cuts will save $30.8 billion, and will come from:
Department of Army: $18.5 billion
- Streamline installation support functions and reduce installation support ($5.3 billion)
- Consolidate information technology enterprise services ($1.4 billion)
- Streamline management headquarters and administrative support functions ($0.7 billion)
- Reduce number of civilians supporting overhead functions ($0.9 billion)
- Reduce recruiting, advertising and enlisted incentives as a result of economic conditions ($0.7 billion)
- Defer training range revitalization projects ($1.3 billion)
- Delay MILCON projects and facility restoration and modernization ($5.8 billion)
- Reduce equipment technical support and ammunition sustainment ($1.7 billion)
- Streamline Personnel Security Administration ($0.4 billion)
- Other streamlining efficiencies ($0.3 billion)
Department of Navy: $5.7 billion
- Implement strategic sourcing of commodities and services ($2.2 billion)
- Consolidate information technology enterprise services ($1.6 billion)
- Streamline organizations ($0.7 billion)
- Reduce procurement modifications ($0.3 billion)
- Increase buying power ($0.7 billion)
- Other streamlining efficiencies ($0.2 billion)
Department of Air Force: $6.6 billion
- Consolidate information technology enterprise services ($1.1 billion)
- Reduce service support contractors ($1.2 billion)
- Reduce administrative travel and permanent change of station travel ($0.5 billion)
- Streamline contracting ($0.4 billion)
- Reduce inventories ($0.3 billion)
- Reduce accessions and force development and training ($0.5 billion)
- Delay MILCON projects ($2.4 billion)
- Other streamlining efficiencies ($0.2 billion)
Viewed broadly, the $30.8 billion in DoD fiscal savings come from:
- Cuts in civilian pay raises ($10.4 billion) by limiting increases for FY2013 to 0.5%.
- Defense Agency/Office of the Secretary of Defense ($10.7 billion) initiatives including reducing overhead, staffing and expenses; more efficient contracting and acquisition; and other.
- Better buying power ($5.3 billion) that will obtain greater efficiency and productivity in defense spending by improving the way the department acquires critical defense goods and services.
- Ensuring compliance with the Executive Order on Promoting Efficient Spending ($0.5 billion).
- Reductions made to travel, printing and reproduction by leveraging technology to teleconference and providing information in electronic form.
- Reducing Combatant Command support costs ($1.5 billion), initiatives of which include reducing overhead.
- Reducing Defense Working Capital Fund rates ($1.1 billion) for supplies and printing provided by the Defense Logistics Agency, financial services provided by the DoD Finance and Account Service and Pentagon space.
- Delaying and restructuring various facility projects ($0.6 billion).
Cutting costs is not the only way DoD will save money. The Joint Contracting Command-Iraq/Afghanistan transitioned to a Joint Theater Support Contracting Command (JTSCC). The JTSCC has a single commander responsible for theater support contracting who will also focus on vendor fraud and combat corruption.
The JTSCC will implement:
- Employing procedures to identify questionable vendor conduct.
- Training, mentoring and assistance to local and national vendors in Iraq on how to be legitimate business partners with the United States.
- Non-U.S. contractor vetting before awarding contracts to ensure that contractors do not have a history of fraud or are otherwise not eligible for contract awards.
Both the Defense Contract Audit Agency (DCAA) and the Defense Contract Management Agency (DCMA) along with the Office of Inspector General (OIG)—an independent agency in the U.S. Federal Government—will be working together to make sure that audits and contract management will be consistent within the agency. The FY2013 DoD budget included a request for $2.2 billion for DCAA, DCMA and OIG to manage contracts and audits.
Over 50% of DoD's budget is spent on services such as information technology services, weapons-systems maintenance and transportation. Training those responsible for service contracts has been ongoing this year to make sure the correct contract is written. The proposed FY2013 budget states, "DoD will execute contracts with industry which include appropriate incentives and drive fair business deals which protect the taxpayer's interests while providing industry with reasonable profit opportunities and without putting industry at unacceptable risk."
The reduction is not only in dollars, but also in structure. The following cuts are proposed for FY2013 within the Armed Forces:
- The Army eliminates a minimum of 8 Brigade Combat Teams (BCTs) and studies brigade structure.
- The Navy eliminates 7 cruisers and 2 dock landing ships (LSDs).
- The Marine Corps eliminates 1 infantry regiment headquarters, 5 infantry battalions (4 active, 1 reserve), 1 artillery battalion, 4 tactical air squadrons (3 active, 1 reserve) and 1 combat logistics battalion.
- The Air Force eliminates 6 combat coded fighter squadrons (1 active and 5 reserve components) and 1 non-combat coded fighter squadron (active).
– The active component includes 1 A-10 squadron and 1 F-15C squadron.
– The reserve component includes 4 A-10 squadrons and 1 F-16 squadron.
- The Air Force reduces fleet by 303 aircraft:
– 123 combat aircraft: 102 A-10s, 21 F-16s
– 150 mobility and tanker aircraft: 65 C-130s, 27 C-5As, 20 KC-135s, 38 C-27s
– 30 intelligence, surveillance and reconnaissance (ISR) aircraft
– 11 RC-26s, 1 E-8Cs, 18 RQ-4s.
The cut in Armed Forces includes proposals up to FY2017.
On December 31, 2011, President Barack Obama signed into law the National Defense Authorization Act (NDAA) for FY2012. Legislation regarding contracting with the enemy and access to subcontractor records is included. View the complete law here.
Common Core Standards
Federal and State Department of Education agencies are looking for vendors that can help school districts with state standard testing assessments being adopted. Many states are moving from a state core assessment test to a national one, which includes adopting a completely new set of standards, or taking parts of the national testing standards and individualizing them to state specifications. The problem many school districts are having is having enough time to train teachers and administrators to use the new standards and still give students ample time to be ready for the change. The principal of one Oklahoma school has stated that finding vendors to help with the transition has not been easy—everyone in the state is fighting for the few available that are up-to-date on training. In addition to the time restraints, the cutting of federal grant funding for professional development to the states, and state funding for education are dwindling, putting even more burden on the school systems. It is imperative that good communication between school districts and vendors occur before the awarding of contracts so that definitive, well-written contracts can be finalized as quickly as possible so that training can commence.