As the end of the fiscal year gets closer, the Pentagon says it’s looking in every area of its budget for unexpended funds that could help cancel out civilian furloughs. Lower than expected oil prices and lower costs for the war in Afghanistan may help.

About 650,000 of the Defense Department’s 800,000 civilians are currently scheduled for one unpaid furlough day per week through the end of the fiscal year that ends Sept. 30. DoD says it desperately wants to end those furloughs early, though officials have not made any final decisions yet.

“We’re looking in every way as we reach the end of the fiscal year, can we find money somewhere?” Deputy Defense Secretary Ashton Carter told the House Armed Services Committee Thursday. “I’ll give you some examples. In Afghanistan, it’s a war, so you don’t know exactly how much you’re going to spend, but if by the end of the fiscal year we have money left over, so to speak, we want to be able to see that in advance and apply that to furloughs. Also, fuel prices are a little different. They’re changing in our favor. So we’re looking around as part of our general effort to manage under sequestration in the smartest way possible, given that it’s a dumb thing. If we do find funds between now and the end of the year, we have two priorities: one is to restore maintenance and the other is to relax furloughs.”

That’s for fiscal 2013.

Defense Secretary Chuck Hagel has said he can’t rule out more furloughs next year. And Carter said if sequestration stays in place into 2014, DoD still considers involuntary reductions in force to be a possibility for both service members and civilians.

At the same time, the Pentagon is moving forward with actions that are likely to reduce DoD’s civilian workforce over the longer term.

Instructions to cut 20 percent

As part of this week’s rollout of the Pentagon’s Strategic Choices and Management Review, Hagel ordered a 20 percent reduction in the size of all of DoD’s headquarters organizations, including his office, the military departments, the Defense agencies and the military combatant commands.

Carter issued a memo on Wednesday giving managers and commanders more detailed directions, telling them to start the downsizing no later than 2015, to begin in 2014 if possible, and to submit detailed plans to his office by Sept. 23.

For reductions in the Office of the Secretary of Defense, Hagel ordered Carter to find and recruit an outside expert to lead the downsizing process.

“We can’t ask our military people and civilian employees all over the world to make sacrifices if we’re not willing to make sacrifices ourselves,” he said. “So, what this is about is showing the way. And [Adm. James Winnefeld, vice chairman of the Joint Chiefs of Staff] has a great expression he always tells me, which is, ‘The pig won’t slaughter itself.’ I can’t go to my staff, which is the Office of the Secretary of Defense, and say, ‘How would you streamline the Office of the Secretary of Defense?” I won’t get a good answer, and I’ll put them in a bad position. So I’m going to get somebody who knows enough about the department and management to advise us, and that’s how I’ll make those decisions.”

The headquarters cuts were one of the few areas of the management review that Hagel decided to move forward with right away. He described the rest of its outcomes as a painful menu of options that the Pentagon doesn’t want to consider, but would have to begin to execute if Congress declines to repeal the automatic 10-year budget caps.

DoD says even if it exercised all the options the review identified, the department still could not comply with the caps in the Budget Control Act for several more years. Carter said that’s because many of the changes DoD would need to make in order to produce savings on the order of $50 billion a year won’t pay off right away.

“What you have to do in these early years under sequestration is go where money can be had quickly. And there’s some places where money can’t be had quickly,” he said. “For example, military compensation. Even if you wanted to reduce the size of the force, you can’t do it quickly. You don’t save money right away, because even if you involuntarily separate a service member, there’s a process for doing that under the law, and you end up paying them as much money to leave as you would if they had stayed. You can only save money quickly by curbing readiness, so you will see readiness changes more severe than in 2013. You’ll see us taking money out of investment programs, which means we won’t be issuing contracts that we had planned to issue. You’ll see bases that aren’t maintained the way that they should be and are planned to be. This is not good government, it’s not good management, but you just have to go where the money is.”

Readiness continues to be at risk

Winnefeld said that’s exactly what DoD had to do to comply with abrupt cuts that were triggered midway through 2013, and he said the military has already created a readiness hole as a result. It’s left funding for uniformed personnel intact so far, but he says that too would have to change in 2014 if sequestration stays in place.

“This is what the services will have to do under those numbers: they will stop bringing people into the military. They will stop their promotions. And they will stop moving them on [permanent change of station] moves,” he said. “So, that’s one slice of this thing. And you can imagine that bump going through the snake over 20 years after one year when you just don’t take anybody in. It’s very, very harmful to the force. Another one is the modernization programs. You can grab cash there, but that starts to break programs. You’ll see unit costs go up on the Joint Strike Fighter. You’ll find Nunn-McCurdy breaches. And then finally, the most important thing to us, of course, is readiness, which is the elephant in the room. If you have an F-15 squadron in your district, a lot of people don’t care if it’s flying or not. They just want it to be there. It’s a silent thing, and that’s why they call it a hollow force. It looks good on the outside, but they’re not flying.”

Winnefeld said he’s worried that lawmakers will try to wall off individual areas of potential savings from DoD’s internal management decisions, even while they leave sequestration in place. He said readiness is one of the few aspects of the military budget that doesn’t have a political constituency, so it’ll suffer even further.

Some examples of that phenomenon already are apparent: early versions of Pentagon legislation for 2014 take steps like prohibiting civilian furloughs, rejecting DoD proposals for base closures and health care fee increases, and requiring a military pay raise of 1.8 percent instead of the 1 percent increase DoD requested for 2014.

“You would think that the Joint Chiefs would be last group that would want to slow the rate of compensation, but we’ve taken a very, very hard and close look at this, and we’re gonna have to slow the rate of increase. It’s not decreasing anybody’s pay. It’s slowing the rate of increase,” Winnefeld said. “Or we’re just gonna run out of money to provide the tools that these troopers need to do their job. And the most important compensation for them is to come home alive. The best way to bring them home alive is to get them the stuff they need.”

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