Bipartisan Budget Act a Positive Step
The recent enactment of the Bipartisan Budget Act of 2015 represents a positive step. While this legislation does not give the Department of Defense 100 percent of the resources we and the president sought, it gives us most of what we need and provides some badly needed budget stability and predictability. It does the same for non-defense agencies across the government, such as the Departments of State and Homeland Security, which are vital partners in protecting and promoting our national security. Just as importantly for the nation, it removes the threat of default on U.S. government obligations for the next two years.
More recently, the inclusion of military retirement reform legislation in the National Defense Authorization Act for Fiscal Year 2016 demonstrates that members of the House and Senate from both parties can come together not only to establish a budget framework, but also to resolve complex, substantive issues.
These signs of progress are a tribute to the efforts of a number of people, including the strong leadership of the National Defense Industrial Association, which has been a consistent and forceful advocate for bipartisan compromise and for a solution to sequestration. The department, like the National Defense Industrial Association, welcomes Congress’ return to bipartisan problem solving, for we have much to do together. There are challenges and opportunities across the globe and across the spectrum of conflict, to include a newly resurgent and aggressive Russia, our rebalance to the Asia-Pacific region and the strengthening of partnerships there, and the emergence of dangerous new actors like the Islamic State.
Having an agreed budget framework for fiscal years 2016 and 2017 provides us with the predictability we need to make efficient use of taxpayer resources to address the nation’s security challenges. That stability is welcomed not only by those of us at the Pentagon, but also by our military personnel and their families, our service leadership who can more effectively build the readiness of our units, our industry partners who can provide goods and services more efficiently with a stable target to shoot at, and by our allies and partners around the globe who share the benefits of U.S. budget stability and predictability.
Despite the two-year budget deal, financial challenges to the Department of Defense are plentiful and difficult.
As our service secretaries and chiefs and chairman of the Joint Chiefs of Staff articulated this spring, our services have lost readiness because of the budget limitations imposed by the Budget Control Act. For several years now, the services were forced to short readiness accounts to cover “must pay” bills. The larger caps for FY 2016 and FY 2017 will help us begin to buy back readiness. However, those fixes will not happen quickly. In fact, the secretary of the Air Force has stated that the Air Force will not recover full combat readiness until 2023.
We have also been badly hampered over the last few years by fiscal year budgets that aren’t passed by Congress until December or even January, effectively turning a 12-month fiscal year into a nine-month fiscal year.
Now that we know our budget top line for both FY 2016 and FY 2017, we know the contours of the choices we will have to make to get from the last president’s budget submission to the new, lower caps that have been established by the Bipartisan Budget Act. In the coming days there are tough choices that need to be made to stay within the ceilings.
As Secretary of Defense Ashton Carter said in his budget hearings early this year, “nothing is off the table.” Whether we manage to find further efficiencies in headquarters downsizing and back office functions, decrease or slow weapons acquisitions, or decide we must take some risk in terms of readiness or force size, we are and will be looking hard at all of our options, with an eye on maintaining a strong and vigorous defense of our national security interests around the globe.
As we strive for further efficiencies, the department continues to seek vital reforms. We are still restricted from retiring older, less capable platforms, pursuing a necessary Base Realignment and Closure round and consolidating our health care plans to make them more efficient. To fund a modern, lethal and agile force, we need these tools of progress.
The call to action for industry is very clear: Be the advocate and agent for change and modernization. Continue to be DoD’s partner. Bring us your best ideas and new defense solutions. We need them now more than ever. As we work to innovate and attract the best minds to the defense sector, I know that we can ensure America’s national security at home and abroad.
We need to innovate, to continue to attract the best minds, to develop the next generation of capabilities and to meet the current generation of threats around the world.
I want to thank the members of NDIA for their leadership and ask you to remain active, aware and involved in our common work of protecting and advancing our national security interests.
Mike McCord is undersecretary of defense (comptroller)/chief financial officer and serves as the principal advisor to the secretary of defense on all budgetary and financial matters.