Comptroller Explains DOD Budget Challenges

COLUMBUS, Ohio, June 29, 2011 — The slug­gish growth of the econ­o­my will make it dif­fi­cult to main­tain cur­rent defense fund­ing, the Defense Department’s chief finan­cial offi­cer told atten­dees at the 2011 Defense Logis­tics Agency Indus­try Con­fer­ence and Exhi­bi­tion here yes­ter­day.

Under­sec­re­tary of Defense (Comp­trol­ler) Robert F. Hale said to expect ane­mic growth in the defense bud­get in the near future.

“There’s a rule of thumb that says you need a 2- to 3‑percent growth [in the nation­al econ­o­my] to main­tain cur­rent forces,” Hale said, warn­ing that there may be no growth in the DOD bud­get because of the cur­rent eco­nom­ic cli­mate.

“My guess is we’ll end up with some­thing like zero growth,” he con­tin­ued. “Even a con­stant bud­get will be a chal­lenge to imple­ment.”

Hale said the same 2- to 3‑percent growth is nec­es­sary if DOD wants to fund big­ger and bet­ter weapon­ry.

“It’s because we want to buy the very best weapons so that we’re nev­er in a fair fight,” he said. “Those more sophis­ti­cat­ed weapons tend to cost more than the ones they replaced, and they also tend to push up the costs of train­ing and main­te­nance.”

Health care and oth­er costs add more pres­sure to the bud­get, Hale said.

“Mil­i­tary health care has gone up 10 per­cent a year, and fuel costs haven’t helped, either” he said.

Hale said he knows upcom­ing bud­gets will be lean­er, and the chal­lenge will be how depart­ment offi­cials deal with it. “We’ll have to takes some risks, and stretch our dol­lars,” he said.

Some of the biggest chal­lenges will be the freeze on civil­ian bil­lets and con­trac­tor cuts, Hale said.

“We owe it to the pub­lic to stream­line and hold down costs,” he said.

Incom­ing Defense Sec­re­tary Leon E. Panet­ta is the right per­son for the job, Hale said. “He has a strong knowl­edge of the bud­get, and has some strong man­age­r­i­al skills,” he said.

Hale also laud­ed the Defense Logis­tics Agency, its employ­ees and its indus­try part­ners.

“We depend on the pri­vate sec­tor and the 26,000 in the Defense Logis­tics Agency who make it hap­pen,” he said. “We very much appre­ci­ate your sup­port.”

U.S. Depart­ment of Defense
Office of the Assis­tant Sec­re­tary of Defense (Pub­lic Affairs)