The Defense Department began to detail its response to the realities of last summer’s debt ceiling deal Thursday, proposing to spend six billion fewer dollars in its base budget next year than it will in 2012, followed by four years of growth.

Savings areas identified by DoD officials run the gamut from reductions to the size of the Army and Marine Corps’ end strength to delays of several major acquisition programs, $60 billion in new proposed efficiencies, a new round of base realignments and closures and yet-to-be clarified personnel cost reductions.

The Pentagon did not divulge its entire fiscal year 2013 budget, but yesterday’s announcement added some detail to how DoD plans to implement $487 billion in cuts from its previously-planned spending over 10 years. In 2013, the department will ask for a total of $614 billion: $525 billion in the department’s base budget, along with $88 billion in the overseas contingency operations account to cover the costs of fighting in Afghanistan.

From there, the Pentagon’s base request would increase each year between 2013 and 2017 to an eventual $567 billion. Although the budget would still grow over the future-year defense plan (FYDP), Defense Secretary Leon Panetta noted the 2017 figure was far lower than the $622 billion the department had previously planned for that year.

“That growth we had planned for would have provided for almost (another) $500 billion, and we had obviously dedicated that for a number of plans and projects,” he said. “The reason you’re seeing the tough decisions that are being presented to you is that we had to achieve savings that would meet the requirement that Congress gave us.”

Reduced Army and Marine Corps

As expected, DoD’s budget would lead to a smaller Army and Marine Corps. The Army would go from 570,000 soldiers to 490,000 within five years, and the Marine Corps’ end strength would fall by 20,000, down to a total of 182,000 by 2017. Both services would still be larger than they were on Sept. 11, 2001, Pentagon officials noted.

For the Army, the cuts will mean the removal of two brigades from Europe, leaving two on the continent. The Army footprint in Asia would stay roughly unchanged.

Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, said he’s comfortable with those numbers.

“I’m confident that’s the right number for 2017. It might not be the right number for 2020,” said Dempsey, a former chief of staff of the Army. “I’ve always said that the Army needs to be adaptable enough to provide the greatest number of options, given whatever security environment we face. We grew the Army to conduct a particular type of conflict, the counterinsurgency strategies we were asked to execute. Those demands are going down, and I think it’s perfectly reasonable that the force structure of the active Army would go down as well.”

DoD’s strategy is to try to draw down, numerically, the large standing ground forces it maintained during the Iraq and Afghan wars while holding onto as much of the intellectual and experiential capital those forces got from the conflicts as possible. A concept called “reversibility” calls for the military’s ground forces to retain many of their midgrade and non-commissioned officers even as the services make overall personnel reductions, with the hope that those future leaders will allow the Army and Marine Corps to rapidly scale up in case of future contingencies, without having to re-learn lessons of past wars.

Salary increases to taper off after two years

Within the next few years, those leaders’ future salary increases may be part of DoD’s contribution to deficit reduction, though Panetta said the Pentagon looked in every nook and cranny before considering cuts to pay and benefits.

“We focused first on every other area of the defense enterprise for savings in order to minimize the impact,” he said. “As a result, we were able to enhance or sustain critical support programs, while reforming or reorganizing others to be more effective and responsive to the needs of the troops and their families. Yet, in order to build the force needed to defend the country under existing budget constraints, the escalating growth in personnel costs must be confronted.”

So, military members will get what Panetta called standard pay raises for the next two years, increases he said would keep pace with the private sector. After that, the increases will shrink, though he did not say by how much. Panetta said the Pentagon delayed the imposition of the salary measures in order to provide as much notice as possible to servicemembers and their families.

Also on the personnel savings front: DoD will ask Congress for permission to increase fees, copays and deductibles for military retirees, to be phased in over a five-year period.

“But let me be clear,” Panetta said. “Even after these increases, the costs borne by retirees will remain below levels in most comparable private-sector plans, as they should be.”

The Pentagon did not specify by how much it wanted to increase fees and premiums. Last year, then-Defense Secretary Robert Gates sought and obtained permission to increase retiree fees for family coverage by $5 per month after having similar requests rebuffed Congress in previous years.

On retirement benefits, DoD doesn’t have a proposal yet, other than to ask for a Congressionally-authorized commission to study the issue and make recommendations.

For DoD civilians and contractors, the department’s proposals are less clear. A white paper the Pentagon released Thursday calls for reductions in service contracting as part of its $60 billion in new efficiency savings. Another of its efficiency measures targets “reductions in planned civilian pay raises.” The department was asked for additional details on the proposals by Federal News Radio immediately after Thursday’s briefing, but none were available by Friday morning.

The same document, made available to reporters at Thursday’s briefing and later posted on DoD’s website, promises additional efficiencies through “streamlined staff”, “better use of information technology,” better contracting practices and “better uses of business and enterprise systems.” No further details were provided.

New round of BRAC

One area of savings that isn’t accounted for in the budget proposal, but where DoD thinks is could still save money, is in a new round of base realignments and closures, even as the military continues to settle in from the 2005 BRAC round.

Panetta said the potential savings from a new round of BRAC weren’t included in the budget proposal because the new series of base closings would have to be approved by Congress separately.

But he said that with a smaller military in the works, the department’s base structure is going to have to come down too.

“It’s a fundamental problem we have to confront. As we draw down the force, the best approach, politically, to working it through Capitol Hill is to do it through the BRAC process,” said Panetta, who served several terms in Congress and saw a major base in his district closed during his Hill tenure. “I’ve been through BRAC. I know its weaknesses. We’ll continue to work to make sure it’s done effectively and to make sure we achieve the savings we hope to achieve. But I have to tell you there’s no more effective process to make it actually happen than the BRAC process.”

The budget plans also call for delays or cancellations to several acquisition programs. Other parts of the military’s force structure would be maintained or enhanced. Among the changes:

• The Navy, Air Force and Marines will slow down their planned purchases of the F-35 Joint Strike Fighter.
• The Air Force will retire several dozen of its oldest cargo planes, including some C-130 and C-5a airframes.
• The Navy will delay for two years its procurement for a replacement for the Ohio class submarine.
• The Navy will maintain its current fleet of 11 aircraft carriers and 10 air wings.
• The Pentagon will continue to fund a new long-range bomber
• Other areas of protected or increased funding include special forces, cybersecurity and intelligence, surveillance and reconnaissance, Pentagon officials said.

Pentagon officials maintained that the months-long process that led to the strategy governing its new budget priorities was dictated by strategy, not solely by budget dollars. And Panetta and other officials repeated the department’s frequent message that the currently-planned reductions are the most the military can handle for now.

“We’ve just been through a very healthy process in this department in developing this budget. It’s something that I’ve never seen before in my 33-and-a-half years doing this sort of work,” said Adm. James Winnefeld, vice chairman of the Joint Chiefs of Staff. “We did strategy, and then we allowed strategy to guide our budget decisions. It was very refreshing. If we get into a sequestration position, that turns that entire process on its ear. It takes a chainsaw to a budget that’s developed. And out of the ashes of that budget, we’re going to have to write an entire new strategy. That’s not the way we want to do business.”

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