CBO predicts defense cost overruns

The Defense Department will spend 5 percent more than planned over the next five years, according to a Congressional Budget Office analysis. However, a Pentagon official dismissed the CBO’s projections.

In a report dated July 11, the CBO said DOD would likely spend $123 billion more than estimated in its Future Years Defense Plan (FYDP), which outlines spending plans through 2017. CBO also said the department will exceed budgetary limitations mandated in last year’s Budget Control Act.

Using estimated cost factors and growth rates based on those in recent years, the CBO singled out the increasing costs of operations and maintenance – especially military health care and employee compensation – as well as the high price of replacing and modernizing weapons systems as key culprits likely to inflate DOD’s budgetary requirements.

But George Little, DOD spokesman, dismissed the findings and called on Congress to give the department the power to make the difficult cuts necessary to ultimately save money.

“The CBO report underscores the point the secretary has been making: To responsibly square fiscal discipline with national security, you have to make tough decisions informed by a strategy, as we've done,” Little said in a July 12 Pentagon briefing. “If Congress does not allow us to proceed with these changes, we will be forced to look elsewhere for savings in order to meet the requirements of the Budget Control Act. That means cuts to training, weapons modernization and other programs that are essential to avoiding a hollow force.”

DOD’s requested budget for 2013 totals $526 billion, not including the overseas contingency operations budget reserved for war spending, which is roughly $5 billion less than last year’s. If sequestration is enacted in January, that will further shrink DOD’s budget to $469 billion, a scenario that top DOD officials have repeatedly decried as a disaster scenario.

Still, even with the drastic cuts that would come from sequestration, DOD spending in 2013 would be still tally above 2006 levels, according to the CBO report.

“For most categories of DOD’s budget, costs under the CBO projection are higher than the costs estimated by DOD in the FYDP and the assumed costs for the extension of the FYDP,” the CBO report noted. “In particular, DOD’s costs of providing health care, paying military and civilian personnel, and developing and buying weapons have historically been higher than the department’s planning estimates.”

But Little argued that CBO failed to account for DOD’s aggressive cost-cutting plans that are already under way, assuming that the department would fail to meet its targets and that future acquisition program costs would “perform as they have too often in the past.”

“If you can't control costs, then it’s hard to live with tough budget caps. CBO’s report makes it clear why we need to continue to press ahead on all fronts with our efforts to achieve cost savings, and we need the close partnership of Congress to do so,” Little said.