With a 2013 budget now finally in place, the Pentagon is making changes to the way it intends to implement civilian employee furloughs for the remainder of the year. The changes will soften the impact of furloughs on DoD civil servants, but they will still be substantial.

In a briefing with reporters Thursday, Defense Secretary Chuck Hagel confirmed a revised furlough plan previously reported by the Associated Press. Due to the funding bill Congress passed last week, DoD civilians will now be furloughed for 14 work days this year, rather than the originally-planned 22.

While the measure, which President Barack Obama signed this week, does not cancel sequestration, it does realign money so that the budget comes closer to what DoD requested, reducing the need to scour for savings in its operation and maintenance accounts. But Hagel said the legislation was not enough to eliminate furloughs entirely. DoD still faces an O&M crunch and needs to find savings in that portion of the budget.

“This will save the department around $2.5 billion. These numbers are floating, but it’s good news,” he said. “The comptroller and service chiefs are still working these numbers.”

Outcomes of the number-crunching that are yet to be determined include how many employees will be exempted from furlough, though the Pentagon still expects to take a miserly approach to issuing those waivers. That would mean the vast majority of DoD’s 780,000 civil servants will face a furlough totaling up to 14 work days.

As for timing, a senior defense official told reporters, on the condition of anonymity, that furlough notices will now be sent to employees in early May, beginning a 30-day waiting period. That means actual unpaid days-off won’t begin until mid-to-late June, and will stretch over the final seven pay periods of fiscal year 2013, which ends in September.

In general, DoD’s original plan for scheduling the furlough days still holds true — employees will have to take them one day per week, although the official said local managers will be given discretion to come up with alternative furlough schedules.

Hale: Criteria for choosing exempted employees are unchanged

Robert Hale, the DoD comptroller, told a sequestration briefing hosted by the Association of Government Accountants earlier in the day that the criteria DoD will use to decide whether employees are exempt or not remain basically the same. They must be serving in active combat theaters or their jobs have to be essential to preserving life or safety. Also, the Pentagon will exempt workers whose salaries are paid from non-appropriated funds. Foreign national employees who work for the U.S. government overseas will also be exempt, since their payroll status is complicated by status of forces agreements with other nations.

“In some cases, in Japan for example, the foreign government pays their salaries, so we will have saved nothing by furloughing them,” Hale said.

The Pentagon said it’s being careful not to use the word “essential” in describing who is exempt from furlough and who is not. Officials said each employee’s job is important, and that workers should not conclude that a furlough notice indicates otherwise.

And Hale told the accountant audience that DoD would vastly prefer to not have to furlough anyone.

“We can talk about all the mechanics here, but I think it’s not lost on any of us that we have already had serious effects on the morale of our civilian employees,” he said. “This is one of the most distasteful tasks I’ve had to do in my more than four years on this job. Low morale translates into low productivity, and we’re even further adversely affecting the readiness of our forces.”

Hale noted that federal law “embarrassingly” shields the jobs of Senate-confirmed political appointees such as himself from furlough. He has previously pledged to voluntarily give back his earnings to the U.S. Treasury in proportion to the effective pay cut that will befall the rest of the DoD civilian workforce. Other DoD senior leaders, including deputy defense secretary Ashton Carter, have made similar pledges.

Furloughs remain in new continuing resolution

Hagel said the furloughs remain in place because while the budget Congress passed last week removed the threat of a full-year continuing resolution, it did not eliminate sequestration, which will still draw down funding for each of the programs, projects and activities Congress appropriated money for last week by an indiscriminate 8 percent.

“It did fix some of our urgent problems. In particular, it put some of the dollars back in the right accounts, though we still don’t have the flexibility we’d hoped for,” he said. “And we came out better than we went in under the sequester. Our [budget reduction] looks like it’s $41 billion instead of $46 billion, and it gives us the ability to start new programs, which is significant.”

But the same operation and maintenance account shortfalls that are still requiring the Pentagon to impose furloughs will have other effects across the military, said Gen. Martin Dempsey, the chairman of the Joint Chiefs of Staff. He said the “readiness crisis” military leaders have been warning about for months is still an impending reality.

“The uncomfortable truth is that, on Monday, we’ll be halfway through the fiscal year and we’ll have spent 80 percent of our operating funds. We don’t yet have a satisfactory solution to that shortfall, and we’re doing everything we can to stretch our readiness out,” he said. “To do this, we’ll have to trade, at some level and to some degree, our future readiness in exchange for current operations. It will cost us more, eventually, in terms of both money and time to recover for years to come. We’ll be trying to recover lost readiness at the same time we’re trying to reshape the force. We can do that. We simply can’t do it though without additional budget certainty in the out-years.”

Dempsey argued DoD needs time to absorb the cuts. The cuts in law right now under the Budget Control Act and the additional cuts required by sequestration do not add up to the largest defense drawdown in the nation’s history, but they are certainly the most abrupt, he said.

He said DoD also needs flexibility: not just the authority to move money between programs, but the ability to shed itself of costly assets and programs it no longer needs or wants, but that Congress insists must continue.

“I’m talking about the unpopular but unavoidable institutional reforms that will be necessary. We can’t afford excess equipment, and we can’t afford excess facilities,” he said. “We have to reform the way we buy weapons and services, we have to reduce redundancy, and we have to change our compensation structure. Without that kind of reform, we will lose our human capital, and we will lose combat capability. But with that kind of reform, we have it within us to stay strong, despite declining dollars and increasing risk. If our elected leaders can help us with full flexibility, our people will do the rest.”

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