Get ready for a no-frills budget proposal

Experts predict program cuts, spending reductions and other austerity measures

The Obama administration appears to be on board the cost-cutting train, and senior administration officials have spent the past few months talking up the need for budget cuts and streamlined operations.

Now the administration's budget request for fiscal 2012 is nearly ready to drop, and speculation is rampant about what it will contain.

The Defense Department may serve as a model. Defense Secretary Robert Gates has already outlined plans to shave more than $100 billion from the department's costs, with the money saved redirected toward reducing the federal deficit and war coffers. Gates and other DOD officials have called for restructuring U.S. military forces, which can expect to see some reduction during the next five years.  However, Gates insists his planned changes are to eliminate wasteful spending, not to cut programs, and that the actual budget figure will be higher than in past years.

Ray Bjorklund, senior vice president and chief knowledge officer of FedSources, said DOD's plan may prove to be a template for much of the rest of government.

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“The main public evidence about what the budget might hold are DOD leadership pronouncements about trimming the defense budget and maybe some re-investment there,” he said. Obama provided more clues in his State of the Union address, where he spoke of reorganizing the government and five-year freeze on most discretionary spending.

Bjorklund said there will probably be little growth, if any, in contract spending and few new programs where contractors can have a fresh role.

“Even though the White House started to issue limited-growth guidance for the fiscal 2012 budget last spring, I think that the election results created messages about smaller government,” he said. The administration is trying to embrace that message, he said.

Lawmakers are already sharpening their scissors. House Appropriations Committee Chair Hal Rogers (R-Ky.) on Feb. 9 released a partial list of 70 drastic spending cuts that will be included in an upcoming continuing resolution bill. The legislation is to prevent the government from shutting down when the current CR expires March 1. Some of programs that would experience the biggest cuts in the legislation include: a $2 billion cut to job training programs, a $1.7 billion cut to the General Services Administration Federal Buildings Fund, a $1.6 billion cut to the Environmental Protection Agency, a $1.3 billion cut to community health centers, and a $1.1 billion cut to the Office of Science.

The administration has already saved more than $3 billion from budgets by eliminating the largest, most problematic IT projects and decreasing the time it takes to get the IT systems up and running, said Jeffrey Zients, deputy director for management at the Office of Management and Budget and chief performance officer.

“Changing the way government works and getting results for tax payers is the central focus,” Zients said.

He and Dan Gordon, administrator of the Office of Federal Procurement Policy, said the administration had reached a milestone in federal contract spending in fiscal 2010. Agencies awarded $15 billion less through contracts in fiscal 2010 compared with 2009 in a year-over-year comparison — a first since 1997. Gordon said agencies have re-engineered how they buy and what they buy.

Other agencies have also trimmed their spending, Gordon said. The Housing and Urban Development Department has saved $44 million by adjusting its spending on financial management systems, while Justice Department officials have cut back on a litigation case management system because they decided they could not justify the investment.

NASA, the General Services Administration and other departments have also taken steps to save money, Gordon said.

“This is across the government, in the civilian agencies, at the Defense Department, at large agencies and small,” Gordon said.

In recent months, some management systems projects, especially those on the OMB’s high-priority list, have been delayed or suspended. Amber Robinson, a defense analyst at Input, said it will only continue.

“We are focusing on human resources and logistics systems projects, which, because of their large size, could be vulnerable to delays,” she said.

Obama’s State of the Union address emphasized his proposal for a newer, leaner government.

“We shouldn’t just give our people a government that’s more affordable. We should give them a government that’s more competent and more efficient,” Obama said in the speech, delivered Jan. 25.

However, it may not be all minimal resources and shuttered programs. For example, the Federal Aviation Administration’s NextGen satellite-based air traffic management system is still a project Obama will spend for, Transportation Secretary Ray LaHood said this month.

The transformation of the FAA's National Airspace System represents an evolution from a ground-based system of air traffic control to a satellite-based system. FAA officials say it’s vital to meeting future demand and avoiding gridlock in the sky.

LaHood said the fiscal 2012 proposed budget will give clear guidance to lawmakers and the airline industry that moving ahead with NextGen remains a high priority for the administration. After Obama’s address, LaHood touted in his Fast Lane blog how NextGen will keep skies safer and boost the economy.

Nevertheless, funding concerns linger for the program, especially amid talk of spending cuts on Capitol Hill and the release of a Transportation Department inspector general's report in June that questioned the FAA’s ability to deliver on the project.

On the whole, Obama also is looking to merge, consolidate and reorganize the government to make it more competitive. He put Zients in charge of the reorganization efforts.

Organizational restructuring is already underway at DOD, with some previously announced closures slowly beginning to take shape, including the Business Transformation Agency and the Joint Forces Command. The changes are affecting offices of the assistant secretary of defense for network intelligence and integration and the Joint Staff’s section for command, control, communications and computer systems.

Like other sectors of the government, DOD is consolidating its IT, like the data center consolidation effort and enterprise e-mail, both of which the Army is using to save $500 million, according to Gates.

Gates is also targeting service support contractors and acquisition policies as he cuts. However, he has stressed that the measures are not cuts to the budget, but reallocation of funds from unproductive programs to areas where the money is better spent.

“To be clear, the task before us is not to reduce the department’s top-line budget,” Gates said last August when he first announced his plans for slashing the budget. “Rather, it is to significantly reduce its excess overhead costs and apply the savings to force structure and modernization.”

Gordon too said the government as a whole will cut spending on contracts for professional and technical services, such as advisory services, by 10 percent.

He said the administration plans to save money by “buying less and buying smarter.”

“Buying less means, for example, being realistic about what we can afford and focusing on what we need — and not on bells and whistles,” he said.


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