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Budget Brief: FY 2015 NDAA

The Carl Levin and Howard P. McKeon National Defense Authorization Act (NDAA) for fiscal year (FY) 2015 passed the Senate Friday night by a bipartisan vote of 89-11, after the House passed the measure 300-119. The bill includes $495.9 billion for the Department of Defense’s (DoD) base budget, $63.7 billion overseas contingency operations (OCO) budget, and $17.9 billion for the Department of Energy related to maintaining the nation’s nuclear arsenal (Alexander, 2014). The FY 2015 NDAA also institutes a host of provisions related to curbing military benefits, creates a new DoD leadership position – the Under Secretary of Defense for Business Management and Information (USDBMI), and provides the Navy with billions in extra procurement funding.  

The 2015 NDAA enacts measures to curtail rising DoD personnel costs, such as increasing co-pays related to prescription drugs by $3, decreasing pay raises to 1% - below the current rate of inflation, and prohibiting further wage raises for flag officers. Departing Chairman of the Senate Armed Services Committee Carl Levin expressed his concern that the spending caps imposed by sequestration, in conjunction with rising of personnel costs will erode military readiness.

Personnel-related DoD expenditures rose to $177 billion in FY 2014, and non-DoD spending related to veteran care and benefits totaled $235 billion (Harrison, 2014). The concurrent rise of personnel costs with budget caps imposed by sequestration on the DoD’s base budget effectively causes the DoD’s O&M, RDT&E, and procurement accounts to be disproportionately affected. 

As part of his final contributions in Congress, Mr. Levin also crafted provisions related to the creation of the USDBMI position, which will be filled in 2017. The USDBMI will be the third highest ranking official within the DoD, and will assume the current responsibilities of the Office of the Chief Information Officer (CIO) and the Deputy Chief Management Officer (DCMO). Former DCMO Beth McGrath is a staunch supporter of the new position, and stated, “We were looking across the whole of the IT space to make sure we were more synergistic than operating separately. The DCMO office and the CIO office do so many things together already that, to me, it’s not unnatural at all.” The DoD requested a position similar to the USDBMI in the 2013 Strategic Choices and Management Review, as part of a five year initiative to find additional savings by consolidating headquarter operating costs (Boyd, 2014). By instituting cost saving measures such as reductions in personnel overhead and consolidation of the DCMO and CIO, Defense Secretary Chuck Hagel hopes to mitigate the effects of sequestration on O&M and procurement budget items, in order to preserve the nation’s military capabilities. 

The US Navy received an additional $2.9 billion in procurement funding, raising the total Navy procurement budget to $41.3 billion out of the DoD’s $101.9 billion procurement budget.  A total of $1.46 billion has been allocated to purchase an additional 15 EA-18G aircraft, an electronic attack variant of the F/A-18E/F Super Hornet, which will partially meet the Navy’s unfunded priority request for 22 additional EA-18Gs. With the new order for EA-18Gs, Boeing will be able to keep the F/A-18E/F production line open until 2017. This supplemental procurement funding also enables the Navy to acquire an additional Austal built Joint High Speed Vessel, three MQ-8C Fire Scout UAVs, and partially funds the construction of LPD-28 - a new San Antonio-class amphibious transport dock vessel (Cavas, 2014).  Operations and maintenance (O&M) funds were cut to compensate for the relatively higher procurement budget; the ship operations and maintenance (O&M) budget was cut $1.7 billion and the Marine O&M budget was cut from $5.9 billion to $5.6 billion. Overall, the high-end added procurement items reflect the transition within the DoD from operating in Iraq and Afghanistan to countering great power threats from Russia and China. 


Sources

  1. Congress Authorizes $577 Billion in U.S. Defense Spending, David Alexander, 2014. 
    http://www.reuters.com/article/2014/12/12/us-usa-defense-spending-idUSKBN0JQ28B20141212
  2. Congress Inserts $554B for DoD in 'Cromnibus' Spending Bill, John T. Bennett, 2014.
    http://www.defensenews.com/article/20141210/CONGRESSWATCH/312100030/Congress-Inserts-554B-DoD-Cromnibus-Spending-Bill
  3. DoD Management Would Be Reorganized in NDAA, Aaron Boyd, 2014.
    http://www.federaltimes.com/article/20141205/FEDIT03/312050015/DoD-management-would-reorganized-NDAA
  4. Senate Sends Massive $560 Billion NDAA to Obama's Desk, John T. Bennett, 2014.
    http://www.defensenews.com/article/20141212/CONGRESSWATCH/312120028/Senate-Sends-Massive-560-Billion-NDAA-Obama-s-Desk
  5. Massive Defense Policy Bill Sent to President, Jeremy Herb, 2014.
    http://www.politico.com/story/2014/12/defense-policy-bill-2014-113548.html?hp=c1_3
  6. After Dramatic Day, House Approves $554B for Pentagon, John T. Bennett, 2014.
    http://www.defensenews.com/article/20141211/DEFREG/312110044/After-Dramatic-Day-House-Approves-554B-Pentagon
  7. Spending Bill Shields Commissaries from Cuts in 2015, Travis J. Tritten, 2014.
    http://www.stripes.com/news/spending-bill-shields-commissaries-from-cuts-in-2015-1.318539
  8. 15 Things to Know about the NDAA, Andy Medici, 2014.
    http://www.federaltimes.com/article/20141208/MGMT04/312080006/15-things-every-federal-employee-should-know-about-National-Defense-Authorization-Act
  9. Navy Gains a Ship, 15 Growlers in Defense Bill, Christopher P. Cavas, 2014.
    http://www.defensenews.com/article/20141212/DEFREG/312120029/Navy-Gains-Ship-15-Growlers-Defense-Bill
  10. Levin Is Leaving Congress Disappointed the NDAA Doesn’t Do More, Molly O'Toole , 2014.
    http://www.defenseone.com/politics/2014/12/levin-leaving-congress-disappointed-ndaa-doesnt-do-more/101004/?oref=d-river
  11. House Passes $585B Defense Bill, Kristina Wong and Cristina Marcos, 2014.  
    http://thehill.com/blogs/floor-action/house/226039-house-passes-2015-defense-authorization
  12. Chaos and Uncertainty – The FY 2014 Budget and Beyond, Todd Harrison, 2014.
    http://www.csbaonline.org/publications/2013/10/chaos-and-uncertainty-the-fy-14-defense-budget-and-beyond/
  13. Analysis: Congress Reworks 10 Percent of DoD Procurement Budget, PAUL McLeary and Bradley Peniston, 2014.
    http://www.defensenews.com/article/20141215/DEFREG02/312150014/Analysis-Congress-Reworks-10-Percent-DoD-Procurement-Budget
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