DoD Comptroller Bob Hale told the House Armed Services Committee (HASC) that sequestration would “result in a less-capable, less-modern, less ready force and risks creating a hollow military.”  Testifying along with the Service Vice Chiefs of Staff and the Assistant Commandant of the Marine Corps on DOD’s plans for sequestration, Hale reiterated statements by Secretary of Defense Leon Panetta that the sequester would have a “devastating” effect on U.S. military capabilities.

HASC chairman Rep. Buck McKeon has been very critical of what he terms DoD’s lack of planning for sequestration.  Hale responded by maintaining that the consequences of sequestration “really can’t be avoided or even substantially mitigated by planning alone.  The reason is simple; sequestration was designed by law to be inflexible.”   He underscored this inflexibility by describing the implementation parameters that DoD, working with OMB, has identified should Congress and the administration not reach agreement on an alternative by January 2, 2013. 

Citing the recent OMB report, Hale said sequestration would require a $52.3 billion cut from the FY2013 DoD budget (96 percent of the $54.7 billion cut from the total defense function).   Non-exempt discretionary funding for DoD accounts would be cut by 9.4 percent.  The president has exercised the authority to exempt military personnel accounts. Otherwise, Hale said “the administration cannot choose which programs to exempt or what percentages to apply.”

DoD hopes to mitigate the effects of the across-the-board cuts by using reprogramming authority to shift funds from lower to higher priorities, Hale told the committee.  However, he cautioned that reprogramming thresholds limit the amounts that can be transferred.  This dollar limitation, combined with the time-consuming process of reprogramming (all congressional oversight committees must agree to the proposed transfer) restrict DOD’s ability to make “wholesale revisions,” Hale said.

Because Overseas Contingency Operations (OCO) funding will not be exempt, Hale said DoD would move to protect war operating budgets “by making disproportionately large cuts” in base budget Operations and Maintenance (O&M) accounts.  To minimize the effects on readiness, he said the Services would have to cut other O&M accounts, such as facilities maintenance, administrative costs, and base operations.  Even so, Hale said he could not assure Congress that training readiness would not be affected.

Describing the potential effects of sequestration, Hale said it would force DoD to cut civilian personnel funding, which might make it necessary to “impose a hiring freeze, consider unpaid furloughs, and take other actions.”  As a result, he pointed out, there would be fewer people to fix war-damaged weapons, less attention to contract preparation and oversight and financial audit efforts, and less support for critical mission functions.

Sequestration would not apply to funds from prior budgets already on contract at the time sequestration is implemented Hale said.  But, he warned, the 9.4 percent reduction to FY2013 investment accounts (procurement, research and development, and military construction) would result in fewer weapons at a larger unit price, delays in deliveries, and “adverse affects on the industrial base supporting DoD.”

Speaking to the longer term, Hale said cuts required over the next nine years (over $490 billion) would double the reductions required by the Budget Control Act and already included in DoD’s long-term budget plan.  This would mean, he warned, “fewer aircraft carriers, brigade combat teams, and fighters” and reductions to military personnel and units to avoid having units that are not effectively trained and equipped.  This would limit DoD’s options to respond to emergencies and crises, Hale said.

Hale and the senior military witnesses told the committee they were particularly concerned about the effects of sequestration on the morale and welfare of servicemembers and their families.  They warned of potential recruiting and retention problems caused by reductions to base support services, facility maintenance, and family housing maintenance.  In addition, reductions to the Defense Health Program could produce delays in payments to service providers and result in some denial of service.

DOD is equally concerned, Hale said, about the effects of action taken in anticipation of sequestration, should sequestration not occur.  Therefore, he said DoD would not act prematurely on personnel actions, withholding obligations of funds, or cutting back on training, but rather “will continue normal operations unless sequestration is actually triggered.”