Full financial costs of 2013 sequester won’t be known for years, GAO says

Even before sequestration was first triggered in 2013 — trimming DoD’s s budget by $37 billion in a single year — Defense officials warned that over the long run, the automatic cuts would cost money, not save it. A new review by the Government Accountability Office points out several instances in which that’s exactly what happened.

As my colleague Emily Kopp reported last week, the report’s upshot is that DoD needs to do a better job of risk mitigation in case it gets hit with another automatic cut in the future, but it also highlights many cases, large and small, in which the suddenness of the reductions racked up long-term costs the government wouldn’t have otherwise faced.

For example, the Navy says it had to back out of plans to upgrade its depot maintenance facilities for P-8 aircraft, leading to about $191 million in unnecessary future costs. The service blames $7.6 million in other costs on having to suddenly cancel the deployment of the U.S.S. Truman just after sequestration was triggered.

In all, GAO reported that four of the 19 weapons systems it reviewed reported unnecessary spending because of the start-and-stop inefficiencies caused by the cuts.

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Many of the effects involved sudden cancellations of contracts and delays to the development and fielding of systems, and in many cases, DoD officials weren’t able to quantify those delays in dollar terms. But in the case of the Navy’s CH-53K helicopter program, delaying the fielding of an upgraded version cost an estimated $20 million-$30 million for that program alone.

Auditors pointed to numerous other cases in which the 2013 cuts didn’t save money, but simply delayed spending into future years. The Army, for instance, had to cancel repairs for 13,000 pieces of war-damaged equipment in 2013. That action reduced spending in that year by $630 million, but the repairs had to be done at some point and the deferred bill came due this year.

The review also pointed out much smaller, simpler cases that nonetheless can add up to large costs. Like many other elements of the department, the Navy cut back its support services during civilian furloughs. Because the port employees on its bases were only working 9-5 for a while, ships arriving in port had to wait until the next morning to connect to shore-side electric services. At one base, the cost to keep just three ships running under their own power overnight was $135,000.

GAO also pointed out that many of the costs from the 2013 episode won’t be fully known for years. The office noted the cost of decreased employee morale due to furloughs is impossible to fully calculate. And funding for base maintenance took an especially severe hit since it was one of the easiest areas of the budget to cut quickly, but the costs involved in the deteriorating buildings can’t be tallied yet. The Army slashed its budget for preventative maintenance by $1 billion, or 40 percent in 2013, causing its backlog of unfilled maintenance requests to shoot up by 500 percent in one year.

Likewise, Navy officials stated that the deferral of many non-emergency maintenance and sustainment activities may eventually diminish facility life cycles and lead to higher future costs for restoration or demolition, but these officials were unable to determine the increased costs, auditors wrote.

The facilities picture is also unlikely to improve overnight, because as defense officials have pointed out, facility sustainment and military training are generally paid for out of the same operating and maintenance accounts. And the military services are more concerned right now about overcoming their training deficits than heading off roof leaks.

This post is part of Jared Serbu’s Inside the DoD Reporter’s Notebook feature. Read more from this edition of Jared’s Notebook.

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