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The Potential Impact of Sequestration on the Department of the Army and DoD Non-Military Agencies

In this blog, I will point out notable exemptions as specified in the White House report, as well as notable sequestration amounts for the Department of the Army and the Department of Defense (non-military agencies).
Notable Exemptions:
The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA) as amended, identifies programs exempt from sequestration and subject to special rules. The percentage cuts in the Office of Management and Budget’s sequestration report, and the identification of exempt and non-exempt accounts, reflect the requirements set forth in the BBEDCA. The administration cannot choose which programs to exempt, or what percentage cuts to apply.
Notable exemptions (>$200m) to budget accounts for the Army are shown below:
Dept./Bureau
Budget Account
Total Budget Amount ($m)
Exempt Amount ($m)
Army
 
 
 
Military Construction
Military Construction, Army
8,486
4,414
Military Personnel
Military Personnel, Army 
50,436
50,436
 
National Guard Personnel, Army 
8,267
8,267
 
Reserve Personnel, Army 
4,521
4,521
 
Medicare-Eligible Retiree Health Fund Contribution, Army 
2,404
2,404
 
Medicare-Eligible Retiree Health Fund Contribution, National Guard Personnel, Army 
913
913
 
Medicare-Eligible Retiree Health Fund Contribution, Reserve Personnel, Army 
524
524
Operation and Maintenance
Operation and Maintenance, Army 
81,090
8,037
Procurement
Procurement of Ammunition, Army 
4,514
2,078
 
Missile Procurement, Army 
2,087
285
Research, Development, Test, and Evaluation 
Research, Development, Test, and Evaluation, Army
12,897
2,749
Revolving and Management Funds
Working Capital Fund, Army 
12,279
12,101
 
The 3 highest dollar value exemptions for Department of the Army are the Military Personnel (100% exempt) budget, the National Guard Personnel (100% exempt), and Working Capital Fund (98.5% exempt). The exemption of 98.5% of the Army’s Working Capital Fund from sequestration is significant for vendors working with Army Materiel Command in particular, as a considerable percentage of the AMC’s budget for supply management comes out of the Working Capital Fund. This includes the Logistics Modernization Program and IT spending related to the supply management activities of the Army.
The potentially hardest hit Army accounts relevant to IT spending are the Army’s RDT&E budget, of which 79% is susceptible to sequestration, and the procurement account, of which approximately 51% is vulnerable to sequestration. Cuts to the Army’s procurement budget could have a particularly dramatic effect given that Army procurement is already severely stressed.
Notable exemptions (>$200m) to budget accounts for the DoD non-military agencies are shown below:
Dept./Bureau
Budget Account
Total Budget Amount ($m)
Exempt Amount ($m)
DoD (Non-Mil Agencies)
 
 
 
Military Personnel
Concurrent Receipt Accrual Payments to the Military Retirement Fund 
6,950
6,950
Operation and Maintenance
Operation and Maintenance, Defense-wide 
43,890
2,624
 
Defense Health Program 
37,168
2,388
 
Allied Contributions and Cooperation Account 
905
905
 
Department of Defense Acquisition Workforce Development Fund 
751
570
Procurement
Procurement, Defense-wide 
8,009
506
Research, Development, Test and Evaluation
Research, Development, Test and Evaluation, Defense-wide 
23,344
1,994
Revolving and Management Funds
Working Capital Fund, Defense-Wide 
54,877
54,473
 
Working Capital Fund, Defense Commissary Agency 
7,475
6,092
 
National Defense Sealift Fund 
1,833
610
 
Pentagon Reservation Maintenance Revolving Fund 
551
551
The 3 highest dollar value exemptions for DoD non-military agencies are the Defense-wide working Capital Fund (99% exempt) budget, the Concurrent Receipt Accrual Payments (100% exempt), and the Working Capital Fund for the Defense Commissary Agency (98.5% exempt). The exemption of 99% of the DoD’s Working Capital Fund from sequestration is significant for IT vendors because a considerable percentage of the DoD’s IT spending at DISA and other agencies comes out of the Working Capital Fund. This includes most of the large network infrastructure work at DISA.
The potentially hardest hit DoD non-military agency accounts relevant to IT spending are the DoD’s RDT&E budget, of which 91.5% is susceptible to sequestration, and the procurement account, of which approximately 93% is vulnerable to sequestration. Cuts to the DoD’s procurement budget could slow already bottlenecked DoD procurement channels.
Notable Sequester Amounts:
Notable sequestration amounts per budget account (>$200m) for the Army are shown below:
Dept./Bureau
Budget Account
Total Budget Amount ($m)
Sequestration Amount ($m)
Army
 
 
 
Operation and Maintenance
Operation and Maintenance, Army 
81,090
6,867
 
Operation and Maintenance, Army National Guard 
7,496
686
 
Operation and Maintenance, Army Reserve 
3,356
309
Procurement
Other Procurement, Army 
13,386
1,251
 
Aircraft Procurement, Army 
9,116
843
 
Procurement of Weapons and Tracked Combat Vehicles, Army 
3,003
276
 
Procurement of Ammunition, Army 
4,514
229
Research, Development, Test and Evaluation
Research, Development, Test and Evaluation, Army 
12,897
954
Military Construction
Military Construction, Army 
8,486
383
 
The most notable amount potentially relevant to IT programs is the $1.25 billion sequestered from the Army’s other procurement budget. These cuts would have a direct and palpable impact on Army IT procurement if they are implemented.
Notable sequestration amounts per budget account (>$200m) for the DoD non-military agencies are shown below:
Dept./Bureau
Budget Account
Total Budget Amount ($m)
Sequestration Amount ($m)
DoD (Non-Mil Agencies)
 
 
 
Operation and Maintenance
Operation and Maintenance, Defense-wide 
43,890
3,879
 
Defense Health Program 
37,168
3,269
 
Afghanistan Security Forces Fund 
14,100
1,325
Research, Development, Test and Evaluation
Research, Development, Test and Evaluation, Defense-wide
23,344
2,007
Procurement
Procurement, Defense-wide 
8,009
705
 
Mine Resistant Ambush Protected Vehicle Fund 
3,338
314
 
Joint Improvised Explosive Device Defeat Fund 
3,148
296
Military Construction
Military Construction, Defense-wide
4,415
415

 

The most notable amounts potentially relevant to IT programs are the $705 million sequestered from the DoD's procurement budget and the $296 million sequestered from the JIEDDO program's budget. The cuts to DoD procurement would be felt across IT contract competitions if they are implemented. The cuts to JIEDDO would have a directly negative effect on that program's technology development and fielding efforts. 

 

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