Wednesday, December 21, 2011

A Quick Look at the FY-2012 Defense Appropriations

FY-2011 was a frustrating time for government funding. During that economic year, funding was provided by a series of concurrent receipts, which affected the Department of Defense by limiting procurement, personnel moves, and training periods for the Guard and Reserve. Recognizing this frustration, the Senate passed a nine agency omnibus appropriations bill for FY-2012, on Saturday, December 17, 2011. Learning from the challenges of the FY-2011 budget, this substantial bill provides funding for the federal government through September 30, 2012.

The budget legislation included the Fiscal Year 2012 Defense; Energy and Water Development; Financial Services and General Government; Homeland Security; Interior, Environment, and Related Agencies; Labor, Health, and Human Services, Education, and Related Agencies; Legislative Branch; Military Construction, Veterans Affairs, and Related Agencies; and State, Foreign Operations, and Related Programs Appropriations bills.

The consolidated appropriations bill allocates $633 billion for the Department of Defense. Keeping with the spending cuts directed by the Budget Control Act of 2011, this amount is a $20.8 billion reduction from the President’s request for the base defense budget. Nevertheless, as Appropriations Chairman Daniel Inouye summarized at a committee press conference:

This agreement takes care of our men and women in uniform and their families, fully supports military readiness, protects the forces, and maintains our technological edge…At the same time, it reins in defense spending and takes important steps to improve the Department’s fiscal accountability. The conference agreement recommends 775 reductions to individual programs, primarily because of program terminations or delays, changes to policies or programs since the submission of the budget ten months ago, or inadequate justification in an era of fiscal discipline. 

The base budget appropriation for the Department of Defense is $518.1 billion, an increase of $5.1 billion over the FY-2011 level. The Defense bill also allots $115.1 billion for Overseas Contingency Operations (OCO) of the Department of Defense, a reduction of $2.5 billion from the amount requested by the President.

Included in the Overseas Contingency Operations section of the bill are funds for current military operations in Afghanistan and Iraq for fiscal year 2012. The funding allots the necessary budget needed as the last troops exited Iraq in December 2011. In the exiting procedure, military facilities are turning over to either the U.S. State Department, or the Iraqi military. The funding also includes adjustments for the drawdown of 10,000 troops from Afghanistan by December 2011, and an additional 23,000 withdrawn by the end of September 2012.   

The bill funds an active duty end strength of 1,422,600, and reserve component end strength of 847,100. It fully funds a 1.6 percent authorized pay raise for military personnel.

The Defense legislation also adds $1 billion to the National Guard and Reserve Equipment Account to ensure that the Reserve Components are prepared for their national defense, disaster response, and homeland security missions: dovetailing with a separate Defense Authorization bill which calls for the use of Title 10 Reservists in responding to natural and manmade disasters. 

The Defense legislation recommends $33.1 billion for the Defense Health Program, an increase of $900 million from the fiscal year 2011 level.  Earlier in the year, the Pentagon claimed that its health care costs were $50 billion, reflecting the accounting challenges faced when tracking where health dollars are actually spent. The recommendation still permits increases in TRICARE Prime enrollment fees, and larger co-payments for prescriptions.

To meet the spending allocation, the bill proposes 775 reductions to programs requested in the budget. These cuts are made as a result of program terminations or delays, changes to policies or programs since submission of the budget in February 2011, inadequate justification, or corrections to poor fiscal discipline in the Department of Defense. 

The following are examples of some of the bill’s major reductions:
  • Joint Strike Fighter – Funds production at 31 aircraft and reduces production ramp in FY 2013 to reduce concurrency in developmental test and production and limit the cost of modification bills in the future.
  • Joint Light Tactical Vehicle – Supports the restructured Army and Marine Corps program, which is projected to reduce development costs by $500 million.
  • Ground Combat Vehicle – Proposes reductions to the Army Ground Combat Vehicle due to schedule delays and changes to the acquisition strategy.
  • Defense Weather Satellite System (DWSS) – Directs the cancellation of DWSS and provides funds for a new competitive development program.
  • Joint Tactical Radio Systems – Eliminates funding for the Ground Mobile Radio and the Airborne/Maritime Fixed Radio due to delayed production decisions, and eliminates increases for premature Manpack capability enhancements.
  • Theater High Altitude Area Defense – Reduces funding for interceptors that cannot be produced in FY2012.
  • Double-Funding of Congressional Initiatives – Eliminates requests for combat loss replacement of aircraft and other equipment which were funded by Congress in Department of Defense Appropriations Act, 2011, but were also included in the Administration’s 2012 budget.
  • Rescissions – Cuts $2.6 billion in prior year funds that are excess to defense needs due to program terminations, schedule delays, or contract savings.
  • Funding Identified as Excess – Removes billions of dollars identified by the Department of Defense that are no longer required in FY2012.
In a later article, the Reserve Officers Association will be taking a closer look at equipment appropriations and how it will be affecting overall mission strategies. 

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