FROM: U.S DEPARTMENT OF DEFENSE
Pentagon Official Provides Budget Update
By Claudette Roulo
American Forces Press Service
WASHINGTON, March 20, 2013 - Expressing the hope that a bill will pass through Congress this week to fund the government for the rest of the fiscal year, a senior Pentagon official today told an audience at the Precision Strike conference here that while the bill would fix some problems, other fiscal challenges will remain.
"We live in interesting times. It's an insane budget environment that we're living in," said Frank Kendall, undersecretary of defense for acquisitions, technology and logistics.
But the Defense Department will get through it, he added. "The center may hold," he said. "We're not there yet, but I'm seeing some things that make me a little bit hopeful."
Congressional negotiations over a continuing resolution to fund government operations for the remainder of the fiscal year, which ends Sept. 30, may yield a bill to send to the president for signature this week, Kendall said. The bill probably would roughly resemble the Defense Department's requested fiscal year 2013 budget, he added.
The bills currently before the House and Senate both leave the Defense Department's budget "reasonably intact," Kendall said.
"At the end of the day, I'm still hopeful the center will hold, but I think we're going to go through a very tough time getting there," he said.
If the bill passes, Kendall said, the budget situation will improve, but sequestration would remain as a challenge.
"The Hill is fixing a piece of the biggest problem we have right now, which is [operations and maintenance] funds," he told the audience.
The Army is about to run out of operational funds, Kendall said, and the other services aren't far behind. A continuing resolution, he said, would address some of that issue.
"We still are not where we need to be, ... [but] at that point in time, things will be a little bit better," Kendall added.
If a continuing resolution for the duration of the fiscal year passes, he said, furloughs of federal civilian employees still would take place, he said, but possibly not for the 22 unpaid days now projected.
Though sequestration spending cuts that took effect March 1 didn't immediately lead to a "cliff," Kendall said, they will still have a "huge impact" that will occur gradually.
"The snowball's starting to slowly roll," he said, "and we're seeing more things happening. I think people have been holding back a little bit, hoping it will go away. I don't know that it's going to go away."
Under the 2011 Budget Control Act, the Defense Department was required to cut $487 billion from its budget. The department devised a new budget consistent with the remaining resources, Kendall said.
"It's tight," he told the conferees. "We took some risk there. We're tight on things like readiness. ... We're not assuming any overruns in our development programs, our acquisition programs --- which is, historically, certainly how it happens. ... But it is consistent with the strategy, and it does fund a reasonably healthy Department of Defense."
Further budget reductions will require the department to make some tough choices, Kendall said. One of the strategy's tenets is technological superiority, he noted, and "we are being challenged, in terms of the technology that we have in fielded systems, by others."
Part of the reason for the shift to the Asia-Pacific region in the new defense strategy was in recognition of China's "very aggressive and very focused" modernization program, he added.
Other countries also are investing in military technologies, Kendall said, and are capitalizing on commercial investment to gain a competitive edge. "And they're doing things that are focused on our capabilities and how to defeat our capabilities," he said.
Since the Cold War ended more than 20 years ago, he said, there's been a presumption that the United States is technologically superior. "I don't think we can safely carry that presumption forward," he added. "We have to work to maintain that."
As the Defense Department makes additional budget cuts, Kendall said, he will dedicate himself to protecting future capabilities.
"This is a race that isn't over," he added. "We need to be thinking about the next generation. What comes after the [technological] revolution that we showed to the world?"
DOD's force structure is sized appropriately for the missions it carries out, Kendall said, but there is excess capacity elsewhere. The Defense Department's budget carries a lot of fixed costs, he noted, one of which is installations.
"We didn't get rid of nearly all of our excess capacity in the first three rounds of [base realignment and closure], so there's more to be done there and money to be saved," he said. "Essentially, the taxpayers of the country are carrying the load of these extra installations -- these extra facilities -- that we don't need, because of local politics. That's not the right thing to do for the country or for national security."
Congress needs to strike a "grand deal," Kendall said.
"It seems to take a ... strong forcing function to get the Congress to do anything," he said, noting that the next crisis that will force Congress to act is the debt ceiling, expected to hit in June or July.
"We really need the politicians to sit down and resolve their differences and come to some compromise about how to handle the deficit," Kendall said
